2002 (5) TMI 766 - HC - Customs

Summary

Issues Involved:
1. Confiscation of Indian Currency under Section 121 of the Customs Act.
2. Imposition of penalty of Rs. 1,00,000/- on the petitioner.
3. Validity of statements recorded under coercion and duress.
4. Establishment of nexus between seized currency and smuggled gold bars.
5. Procedural lapses and evidentiary value of statements.

Detailed Analysis:

1. Confiscation of Indian Currency under Section 121 of the Customs Act:

The primary issue was whether the Indian Currency of Rs. 12,60,610/- was liable to be confiscated under Section 121 of the Customs Act. The court found that the respondents failed to establish a direct nexus between the seized currency and the smuggled gold bars. The court noted that the conditions necessary for establishing such a case include proving a sale of smuggled goods by a person with knowledge of their smuggled origin and establishing the identity of the seller and purchaser. The court referenced *Ramchandra v. CC, 1992 (60) E.L.T. 277 (Tribunal)*, emphasizing the need for concrete evidence. The court concluded that the evidence on record did not support the Revenue's claim that the currency was the sale proceeds of smuggled gold.

2. Imposition of Penalty of Rs. 1,00,000/- on the Petitioner:

The court examined the imposition of a penalty of Rs. 1,00,000/- on the petitioner by the Commissioner of Customs and upheld by the Appellate Tribunal. The court found that the penalty was imposed based on the assumption that the petitioner sold the gold bars to Shri Prem Prakash. However, the court noted discrepancies in the evidence, including the lack of direct proof connecting the petitioner to the sale of smuggled gold. Consequently, the court deemed the penalty unjustified and ordered its cancellation.

3. Validity of Statements Recorded Under Coercion and Duress:

The petitioner argued that the statements recorded during the post-seizure investigation were obtained under threat and coercion. The court observed that the statements were retracted in sworn affidavits before a Magistrate, and the caretaker of the petitioner's residence also filed a complaint alleging duress. The court highlighted that these retractions and complaints were not adequately considered by the respondents. The court referenced a decision reported in *1995 (80) E.L.T. 762 (Bom.)*, which emphasized the loss of evidentiary value of statements obtained under prolonged detention beyond 24 hours.

4. Establishment of Nexus Between Seized Currency and Smuggled Gold Bars:

The court scrutinized the evidence presented by the Revenue to establish a connection between the seized currency and the smuggled gold bars. The court found inconsistencies in the statements and the actual amount seized, noting that the alleged sale proceeds (Rs. 12,60,000/-) did not match the amount recovered (Rs. 12,60,610/-). The court also noted that the petitioner provided an explanation for the seized currency, claiming it was the sale proceeds of rice and grocery sales, which was not properly examined by the respondents.

5. Procedural Lapses and Evidentiary Value of Statements:

The court identified procedural lapses in the detention and recording of statements of the co-accused persons. The court noted that the co-accused were in custody from 18-1-1995 but were shown as arrested only on 20-1-1995, which violated procedural standards and affected the evidentiary value of their statements. The court also questioned the reliance on the statement of a non-impleaded party, Shri Bimal Roy, which was not admissible under Section 138B of the Customs Act.

Conclusion:

The court concluded that the Indian Currency of Rs. 12,60,610/- seized from the petitioner was his personal property and was illegally confiscated without justification. The court quashed the entire proceedings against the petitioner and directed the respondents to refund the seized amount along with Rs. 50,000/- pre-deposited by the petitioner. However, the court did not interfere with the confiscation of the gold bars and penalties imposed on the other co-accused persons. The reference case was closed and disposed of with no order as to costs.