1994 (7) TMI 151 - AT - Central Excise

Issues Involved:
1. Illegal export of hashish and charas.
2. Seizure of Rs. 1 Lac Indian currency and contraband goods.
3. Voluntariness of statements made by Capt. H.A. Ansari.
4. Validity of the show cause notice.
5. Adherence to principles of natural justice.
6. Imposition of penalties under uninvoked sections.

Issue-wise Detailed Analysis:

1. Illegal Export of Hashish and Charas:
The Department alleged that the appellants were involved in the illegal export of hashish and charas concealed in wooden and brass handicrafts to various parties in America and Canada. According to the Department, Capt. H.A. Ansari admitted in his statements that he was engaged in smuggling charas and hashish. The statements detailed the modus operandi and implicated other individuals, including Sh. M.C. Goel, who were involved in the conspiracy. The Department also cited corroborative evidence from Canadian authorities who intercepted consignments containing hashish. The judgment noted that there was no reason to disbelieve the evidence from Canadian Customs and that the statements contained detailed information beyond the imagination of local Customs Officers.

2. Seizure of Rs. 1 Lac Indian Currency and Contraband Goods:
The Customs and Excise Officers raided Capt. H.A. Ansari's premises and seized Rs. 1 Lac Indian currency and contraband goods valued at Rs. 53,250/-. The Department claimed that the seized currency was the sale proceeds of smuggled goods. However, the judgment observed that the show cause notice was issued after the prescribed period without proper extension, making the seizure time-barred. Consequently, the seized goods, including currency, were ordered to be returned to Capt. Ansari.

3. Voluntariness of Statements Made by Capt. H.A. Ansari:
The Advocate for Capt. H.A. Ansari contended that his statements were not voluntary and were extracted under duress. The judgment acknowledged this contention but noted that the statements contained a wealth of information corroborated by evidence from Canadian authorities. The judgment emphasized that the statements could not be lightly disregarded, especially since they were relied upon in both adjudication and prosecution proceedings.

4. Validity of the Show Cause Notice:
The judgment highlighted several deficiencies in the show cause notice. It noted that the notice was issued after the prescribed period without granting a hearing, making it improper. The notice also failed to specify relevant sections of the Customs Act, particularly Section 114, which deals with penalties for improper export. The judgment criticized the careless drafting of the notice, which resulted in confusion and lack of clarity regarding the charges.

5. Adherence to Principles of Natural Justice:
The judgment observed that the principles of natural justice were not followed. The appellants were not given an opportunity to cross-examine the investigating officers, and the adjudicating authority extended the time for issuing the show cause notice without notice or hearing. The judgment emphasized that the entire case, including investigation and adjudication, suffered from non-application of mind and procedural lapses.

6. Imposition of Penalties Under Uninvoked Sections:
The judgment noted that penalties were imposed under sections that were not invoked in the show cause notice. Capt. Ansari was penalized under Section 114 of the Customs Act, which was not mentioned in the notice. Similarly, Sh. Goel was not asked to show cause with reference to any specific section but was penalized nonetheless. The judgment set aside the penalties imposed under uninvoked sections, emphasizing that no penalty could be imposed under provisions not cited in the show cause notice.

Conclusion:
The judgment upheld the penalty imposed on Capt. Ansari under Section 112 of the Customs Act but set aside penalties imposed under uninvoked provisions, including Section 114. The seized goods, including currency, were ordered to be returned due to the improper extension of time for issuing the show cause notice. The judgment criticized the procedural lapses and lack of adherence to principles of natural justice, highlighting the need for careful and precise drafting of show cause notices.

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