1985 (7) TMI 116 - HC - Customs

Summary

Issues Involved:
1. Legality of the penalty imposed u/s 112 of the Customs Act.
2. Admissibility and acceptability of statements made by co-accused.
3. Compliance with principles of natural justice.
4. Applicability of Section 138B and Section 139 of the Customs Act.

Summary:

1. Legality of the Penalty Imposed u/s 112 of the Customs Act:
The appellant was penalized with a fine of one lakh rupees u/s 112 of the Customs Act based on the recovery of foreign fabrics from premises not belonging to him but to other individuals. The Additional Collector of Customs imposed the penalty relying on statements by other parties involved, which implicated the appellant. The Central Board of Excise and Customs and the Government upheld this decision, stating that the testimony of co-accused persons was spontaneous and reliable, and thus sufficient to impose the penalty.

2. Admissibility and Acceptability of Statements Made by Co-Accused:
The appellant contended that the statements made by co-accused, which were later retracted, could not be used as substantive evidence against him. The Supreme Court's precedents were cited, emphasizing that retracted confessions of co-accused cannot be the sole basis for conviction unless corroborated by other independent evidence. The court found that the statements made by co-accused were not affirmed during the enquiry and were denied by their makers, thus losing their evidentiary value.

3. Compliance with Principles of Natural Justice:
The court highlighted that adjudication proceedings under the Customs Act must adhere to the principles of natural justice. A statement made behind the back of the accused cannot be used against him unless it is put to him and he is given an opportunity to rebut it. In this case, the statements were not affirmed by their makers during the enquiry, and the oral evidence did not support the department's case. Therefore, there was no legal evidence to substantiate the charges against the appellant.

4. Applicability of Section 138B and Section 139 of the Customs Act:
The court examined the relevance of Section 138B, which allows statements made before a gazetted officer of customs to be used as evidence under certain conditions. However, these conditions were not met in this case, as the original statements were not produced and admitted in evidence during the enquiry. The court concluded that Section 138B was not applicable, and the statements did not constitute relevant evidence.

Conclusion:
The court quashed the orders (Exts. P6, P9, and P10) and set aside the judgment of the learned single Judge, allowing the appeal and the writ petition. The penalty imposed on the appellant was found to be unsupported by legal evidence, and the reliance on retracted statements of co-accused without corroboration was deemed insufficient to establish guilt.