ORDER
V.K. Ashtana, Member (T)
1. In this appeal against Order-in-Original No. 13/87-Collector dated 10th December, 1987 passed by Collector of Central Excise, the issue involved is absolute confiscation of Indian Currency of Rs. 5,47,000 on the ground that it constituted sale proceeds of contraband 25 gold bars. The said currency has been confiscated under Section 121 of the Customs Act and a penalty of Rs. 1.00 lac each imposed on S/Sri Manoharlal Jain and Radheshyam under Section 112(b) ibid. The suit case contained currencies has also been confiscated under Section 118 ibid.
2. The learned advocate for the appellants submits as follows:
(a) The appellant’s own statement dated 12.7.86 is exculpatory and the amount of currency in his possession has been explained as pertained to sale proceeds of silver which he has sold in Akola to one Sri Pannalal Pasari.
(b) The mahazar under which the said currency was seized at the residence of one Sri Gokulchand Surana is not reliable because while one witness to the mahazar was not made available for cross-examination during the original proceedings and the other witness one Sri M.L. Satyanarayana deposed during cross-examination that he was not present during the period when mahazar was drawn and he had signed the mahazar to oblige the Central Excise/Customs officer at his residence at 7.30 pm. When this is also viewed in the light of the cross-examination of said Sri Surana, who has also deposed that mahazar was drawn without the presence of witnesses shown therein, the learned advocate submits that then the mahazar has become totally unreliable and unacceptable document.
(c) In his statement dated 12.7.86, the said Sri Surana had implicated but the said statement was resiled on 4.9.86 and therefore, the statement has no evidential value.
(d) The main evidence relied upon by the department is the statement dated 21.7.86 of Sri Agarwal, who is alleged to be the purchaser of 25 gold biscuits from the appellant. The learned advocate submitted that the said statement was resiled within 10 days of being its made on his own deposition before the Magistrate on 29.7.86 wherein the denied anything to do in the matter with the appellant. This resilement before the Magistrate was further reinforced as recorded in para 7 of the Order-in-Original wherein during the cross-examination, the said Agarwal had once again denied having even known the present appellant, let alone having purchased any gold from him. The learned advocate submits that therefore, in the light of these two evidences, the second statement dated 26.8.86 of the said Agarwal, which is inculpatory for the appellant cannot be relied upon. This statement was also retracted during the personal hearing by the said Agarwal. It cannot be relied upon for the two reasons. Firstly, when the initial statement was resiled that activity took place with close proximity to the seizure of the currency and therefore, is not reliable evidence. Secondly, the second statement was recorded after a month and contradictory deposition contained therein is contradictory to both these evidences that given before the Magistrate as well as that in cross-examination before the adjudicating authority. Thus, the sole evidence relied upon by the department is of highly contradictory in nature.
The learned advocate, therefore, concludes that since the mahazar is not reliable and since the only evidence of the department is the second statement of Sri Agarwal which itself due to the reasons noted above cannot be relied upon and further since there is no seizure of foreign marked gold as also no evidence led by the department to show that the said Sri Agarwal had dealt with any gold and since the appellant’s own statement is exculpatory, therefore, there is no substantial evidence to prove the department’s case. He further submits that under Section 121 this burden has to be discharged by the department. He also submits that if as per the department’s case 25 gold biscuits were infact, sold to said Sri Agarwal, the investigation should have shown as to how the 25 gold biscuits were further dealt with by the said Sri Agarwal. He submits that there is no whisper of evidence or allegation in this regard.
3. The learned DR cites the decision in the case of A. Nazimutheen Haja Mohideen v. CCE as reported in 1988 (35) ELT 519(T) which lays down that delays in retracting statements should not be accepted.He submits that the second statement dated 26.6.86 of Sri Agarwal was retracted only at the time of personal hearing stage, after a long delay. He also submits that the statement of Sri Surana was on 12.07.86 was only resiled on 4.9.86, after a period of two months and in view of the above cited case law, these retractions should not be considered. He further submits that the story of the appellant that he received these currencies from one Sri Pasari at Akola was not found to be correct and on investigation as no such person has been existed at that location. Therefore, the appellant has not explained the source of acquisition of large sums of money. He also refers to various contradictions in the defence of the appellant, as is noted in the Order-in-Original. He, therefore, submits that there is no infirmity in the order impugned.
4. Countering this, the learned advocate submits that the initial burden is on the department to show that this currency represented sale proceeds of smuggled goods and he submits that in case evidence is not clearly pointing against the appellant, then the benefit of doubt would definitely lies in favour of the appellant. In this connection, he cites the Tribunal’s Final Order No. 2549/98 dated 9.12.98 in appeal No. C/91/91, wherein tests for violation of Section 121 of the Customs Act have been laid down and the benefit of doubt extended to the appellants.
5. I have carefully considered the rival submissions and records of the case. I find that for considering whether Indian currency has sale proceeds of alleged 25 foreign mark gold biscuits, four tests as laid down in the case of Ramchandra v. CC as are to be considered and these are as follows:
(i) there must be a sale;
(ii) the sale must be of smuggled goods;
(iii) the sale must be by a person having knowledge or reason to believe that the goods were of smuggled origin; and
(iv) the seller and purchaser and the quantity of the gold must be established by the Customs authorities.
Before the facts on evidences are applied to this decision, the acceptability of the evidence is also to be considered. In this respect, I find that no reliance can be placed on the mahazar under which the Indian currency was seized for the simple reason that in his cross-examination the only witness available for deposition during the original proceedings namely Sri Satyanarayana has said that he was not present during the entire duration of mahazar and was asked to sign the same which later in his own house. This deposition during the cross-examination has not been effectively met by the department, whereas, on the other hand, in the cross-examination of Sri Surana in whose residence the mahazar was effected, he has also deposed clearly that mahazar was drawn without physical presence of either of the two witnesses in his residence. I find that this has not been off set by any deposition by the second panch witness who was not available for cross-examination. Therefore, I find that this establishes serious lacuna in the reliability of the mahazar itself and the said mahazar cannot be taken as reliable evidence. The main evidence relied upon by the department is the statement of Sri Agarwal, who is the alleged purchaser of the 25 smuggled gold biscuits. Though in his statement dated 21.7.86, he has admitted the allegations of the department, yet within eight days thereof in a deposition sworn before the Magistrate, he has totally resiled from the aforesaid statement. It is no doubt true that in a second statement recorded on 26.8.86, almost a month later, the department has again obtained inculpatory evidence against the appellants.This statement may hold good as it was not retracted immediately but only at the personal hearing stage. Therefore, the issue to be decided and considered by me is the reliability of the second statement dated 26.8.86, in view of the earlier statement having been resiled before the Magistrate on 29.7.86. In this connection, I also find that in para 7 of the Order-in-Original regarding cross-examination of said Sri Agarwal, wherein he has denied even knowing the appellant earlier and that the circumstances of getting to know him have been indicated therein. He has denied any purchase of gold biscuits. Therefore, the net sum of these evidences on record is that there are two evidences which are in favour of the appellants and one against him. The two evidences in favour of the appellant are that the resiling of the statement dated 12.7.86 before the Magistrate on 4.9.86 as well as the denial containing cross-examination of Sri Agarwal in para 7 of the Order-in-Original. As against this, the second statement dated 26.8.86 is supporting the department. In this behalf, I find that there is substantial force in the learned advocate’s arguments that when the evidence heavily relied upon by the department is contradictory in nature, then the benefit of doubt is available to the appellant. Particularly, such burden of proof under Section 121 of the Customs Act basically lies on the department. I find that when in two instances the witness Sri Agarwal has given effect to depositions which are different from his statement dated 26.8.86, then the statement of 26.8.86 looses fair amount of its value. I also find that there was no seizure of the foreign marked gold alleged to have been involved in the transaction as also no evidence has been led to show that the alleged purchaser of the gold Sri Agarwal was habitually in dealing in gold at all. There has also been no follow up vis-a-vis at happened to the 25 gold biscuits alleged to have been sold to Sri Agarwal who has denied himself on the fact that whether he has purchased the gold or not as discussed above.
6. The learned DR has rightly pointed out that the appellant has not been able to show conclusively as what was the source of these sums acquired by him and as in investigation no person by name of Pasari was shown to be available at Akola. However, I find that though this introduces a serious question mark vis-a-vis the source of Indian currency, this by itself does not show that Indian currency pertain to sale proceeds of smuggled goods. At the best, I can say that there is no credible explanation as to how the appellants came into possession of this huge amount of money.
7. Applying the said evidences as noted above to the tests laid down by the Tribunal in the case of Ramchandra, I find that the department has not been able to prove that there was a sale of goods in this case, inasmuch as that Sri Agarwal has given contradictory statements as noted above. Secondly, there is also no evidence to show that sale was of smuggled goods for the same reasons. Thirdly, the fact that the sale must be by a person having knowledge or reason to believe that the goods were of smuggled origin has also been not established because the appellant has denied any such sale and the recipient has given contradictory statement. Therefore, the department has not been able to go beyond this stage that either of the two persons had the knowledge of the goods were smuggled origin. Similarly, the seller and buyer as well as the quantity of the gold has not been clearly established by the Customs authorities, inasmuch as that the seller totally denies the sale and the purchaser gives contradictory depositions as noted above and the quantity of the gold has also not been established by any other evidence.
Therefore, I find these tests mentioned in the decision of Ratnchandra (supra) would not be satisfied with respect to the Indian currency seized.
8. Since the department has not been able to conclusively prove that the Indian currency and the seizure arose as a result of sale proceeds of smuggled goods of foreign origin, in view of the aforesaid analysis, I find that the benefit of doubt must be in favour of the appellant.
9. In these circumstances, I set aside the order impugned and allow the appeal with consequential relief as per law. I note, while doing so, that in Final Order No. 2549/98 dated 9.12.98, this Tribunal had in view of the unsatisfactory evidence to the contrary afforded such a benefit of doubt to that appellant also.