1998 (7) TMI 290 - AT - Customs

Issues Involved:
1. Legality of the retracted statements.
2. Validity of the Panchnama and the evidence gathered.
3. Confiscation of foreign currency and scooter under the Customs Act.
4. Allegations of dealing in contraband gold and foreign currency.
5. Procedural lapses and denial of cross-examination.
6. Applicability of Sections 111(d), 112B(1), 115, and 121 of the Customs Act.

Detailed Analysis:

1. Legality of the Retracted Statements:
The appellant argued that the case rested on retracted statements recorded during the night, which were involuntary. The judgment referenced 1991 (55) E.L.T. 580, where statements recorded late at night or early morning were considered involuntary and unreliable, especially when retracted. The appellant retracted his statement on the same day, and the court found no corroboration for the retracted statement. Thus, the retraction diluted the statement's effect under Section 108 of the Customs Act.

2. Validity of the Panchnama and the Evidence Gathered:
The Panchnama dated 5-8-1991 was scrutinized, revealing that it was typed and included both Customs Act and FERA violations. The appellant's counsel argued that the cross-examination of panchas and officers was denied, and the signatures of the panchas were questionable. The court noted that one panch was a watchman whose affidavit was not filed, and the signatures did not appear to be of educated individuals. The court found that the evidence gathered was not adequately supported by independent witnesses.

3. Confiscation of Foreign Currency and Scooter under the Customs Act:
The Additional Collector of Customs ordered the confiscation of US $33,000 under Sections 111(d) and 121 of the Customs Act and the scooter under Section 115, with a redemption fine. The appellant challenged the confiscation, arguing that carrying 385 notes in a pocket was improbable and that the confiscation of the scooter was unjustified. The court found that the department failed to establish that the currency was the sale proceeds of smuggled goods, as required under Section 121. The confiscation of the scooter was also deemed improper.

4. Allegations of Dealing in Contraband Gold and Foreign Currency:
The department alleged that the appellant dealt in contraband gold and foreign currency, receiving gold from foreign nationals and selling it for foreign currency. However, the court found that the department did not establish this aspect of the case. No gold was seized, and the department failed to prove that the gold was smuggled. The court noted that the appellant was running an electronics store, not a goldsmith or gold dealer, and there were no instances of dealing with other customers.

5. Procedural Lapses and Denial of Cross-Examination:
The appellant argued that he was denied the opportunity to cross-examine panch witnesses and officers. The court found that the department did not address the appellant's request for cross-examination, which was a significant procedural lapse. The appellant also contended that he was falsely implicated, deprived of food and water, and coerced into signing the statement under threat of COFEPOSA.

6. Applicability of Sections 111(d), 112B(1), 115, and 121 of the Customs Act:
The court examined the applicability of Sections 111(d), 112B(1), 115, and 121 of the Customs Act. It found that the department did not establish the sale of smuggled goods or the identity of the buyer and seller, as required under Section 121. The ruling cited in 1992 (60) E.L.T. 277 supported the appellant's case, as no gold was seized, and the smuggling was not established. The court concluded that the appellant did not have knowledge or reason to believe that the goods were of smuggled origin.

Conclusion:
The court found sufficient and satisfactory grounds to set aside the orders of the lower authorities. The appeal was allowed, and the orders against the appellant were set aside, granting consequential relief according to law.

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