1991 (9) TMI 211 - AT - Customs

Summary

Issues Involved:
1. Jurisdiction of Customs Authorities under the Foreign Exchange Regulation Act (FERA) and the Customs Act.
2. Confiscation of Indian currency and Bangladesh Taka.
3. Imposition of penalties under Section 112 of the Customs Act.
4. Validity of evidence and statements, including retracted confessions.

Detailed Analysis:

1. Jurisdiction of Customs Authorities under FERA and the Customs Act:
The primary contention by the appellants was that the Customs authorities lacked jurisdiction to deal with offenses under the Foreign Exchange Regulation Act (FERA). However, the tribunal rejected this argument, stating that under Section 121 of the Customs Act, 1962, the sale proceeds of smuggled goods are liable to confiscation. The tribunal emphasized that currency is included in the definition of goods under the Customs Act. Therefore, if Bangladesh Taka were smuggled into India and exchanged for Indian currency, both the currency and the sale proceeds are liable for confiscation under the Customs Act.

2. Confiscation of Indian Currency and Bangladesh Taka:
The tribunal examined whether the Indian currency found in possession of the appellants was the sale proceeds of smuggled Bangladesh Taka. The adjudicating authority had confiscated Rs. 40,000/- and 400 Bangladesh Taka from Kiran Chandra Sarkar, and Rs. 45,000/- from Provash Chandra Dey, based on the statements of co-accused Babul Banik. However, the tribunal found that the retracted confession of Babul Banik, without independent corroborative evidence, was insufficient to establish that the Indian currency represented the sale proceeds of smuggled Bangladesh Taka. The tribunal noted that the burden of proof lay on the department to show that the currency was indeed the sale proceeds of smuggled goods, which the department failed to do.

3. Imposition of Penalties under Section 112 of the Customs Act:
The tribunal also set aside the penalties imposed under Section 112 of the Customs Act. The adjudicating authority had imposed personal penalties of Rs. 1,000/- each on both appellants. The tribunal held that there was no substantive evidence to prove that the Indian currency found with the appellants was linked to smuggled Bangladesh Taka. Therefore, the imposition of penalties was not justified.

4. Validity of Evidence and Statements, Including Retracted Confessions:
The tribunal scrutinized the validity of the evidence presented, particularly the retracted confession of Babul Banik. It was noted that the confession of a co-accused, especially when retracted, cannot be the sole basis for a conviction unless corroborated by independent evidence. The tribunal found that the department did not provide any independent evidence to support the claim that the Indian currency was the sale proceeds of smuggled Bangladesh Taka. The tribunal also highlighted inconsistencies in the statements provided by the appellants and their alleged involvement in the exchange of currency, which further weakened the department's case.

Conclusion:
The tribunal allowed the appeals of both Kiran Chandra Sarkar and Provash Chandra Dey, setting aside the confiscation of Indian currency and Bangladesh Taka, as well as the penalties imposed under Section 112 of the Customs Act. The tribunal emphasized the lack of substantive evidence and the improper reliance on retracted confessions, reinforcing the principle that suspicion, however strong, is no substitute for proof.