2001 (2) TMI 688 - AT - Customs

Summary

Issues Involved:
1. Surveillance and seizure of gold bars by DRI officers.
2. Statements and evidence collected under Section 108 of the Customs Act.
3. Legal provisions under the Foreign Exchange Regulation Act, Customs Act, and Gold Control Act.
4. Confiscation and penalties imposed.
5. Defense arguments and procedural fairness.
6. Cross-examination of witnesses and production of log book.

Detailed Analysis:

1. Surveillance and Seizure of Gold Bars by DRI Officers:
The DRI officers, based on intelligence, maintained surveillance on an Air India aircraft arriving from Muscat. They observed the appellant's suspicious movements and subsequently intercepted him. The appellant attempted to flee but was apprehended, leading to the discovery of two wet cloth packets containing 120 gold bars in a toilet. The appellant admitted to removing the gold from the aircraft. Personal searches yielded keys, documents, and Rs. 12,000/- in currency.

2. Statements and Evidence Collected under Section 108 of the Customs Act:
Statements were recorded from the appellant and others, including M.K. Chawda, A.C. Jain, A.V. Ingale, and A.J. Mehta. The appellant was remanded to judicial custody and detained under COFEPOSA. Statements from Amir Seth Khan and Aziz Shehad Khan were also recorded. The appellant's statement detailed his involvement in smuggling gold, his contact with Mohan, and the method used to remove and deliver the gold.

3. Legal Provisions under the Foreign Exchange Regulation Act, Customs Act, and Gold Control Act:
The importation of gold without RBI's permission is prohibited under Section 13(1) of the Foreign Exchange Regulation Act. The gold was liable to confiscation under Section 111(d) of the Customs Act and Section 71(1) of the Gold Control Act. The cloth packages and the car used for transport were also subject to confiscation under relevant sections of these Acts. The burden of proof that the gold was not smuggled lay on the appellant.

4. Confiscation and Penalties Imposed:
The adjudicating authority ordered the absolute confiscation of 120 gold bars, two cloth packets, a pant, a leather belt, and a Fiat car. A penalty of Rs. 5 lakhs each was imposed on the appellant under Section 112 of the Customs Act and Section 74 of the Gold Control Act. Penalties of Rs. 2 lakhs each were imposed on Abdul Khan and Sattar Ansari. The cash amount of Rs. 12,000/- recovered from the appellant was adjusted against the penalty.

5. Defense Arguments and Procedural Fairness:
The appellant argued that the evidence, including the panchnama and statements, was contradictory. He questioned the absence of green muddy stains on the gold and his pant, the non-production of the log book, and the denial of cross-examination of witnesses. The appellant contended that the proceedings were biased and prejudicial, violating his right to a fair trial under Article 21 of the Constitution. He also challenged the feasibility of carrying 14 kgs of gold in his pant pockets.

6. Cross-Examination of Witnesses and Production of Log Book:
The appellant's request for cross-examination of witnesses and production of the log book was denied by the adjudicating authority on insufficient grounds. The log book was crucial to establish whether the appellant had entered the aircraft. The denial of cross-examination and the non-production of the log book deprived the appellant of a fair opportunity to defend himself.

Conclusion:
The Tribunal found that the denial of cross-examination and the non-production of the log book were significant procedural lapses. The matter was remanded to the adjudicating authority to permit the cross-examination of witnesses and the production of the log book. The adjudicating authority was directed to complete the process within a reasonable time and adjudicate afresh, considering the appellant's ongoing departmental proceedings and prosecution.

Order:
The appeal was allowed, the impugned order was set aside, and the matter was remanded back to the adjudicating authority. The authority was instructed to permit the cross-examination of specified witnesses, issue necessary processes, and produce the relevant log book. Both sides were to be given an opportunity to submit their cases before a fresh adjudication.