2011 (9) TMI 968 - HC - Customs

Smuggling of gold - confiscation - penalty - The appellant had shown cause wherein he had in substance stated that he was a mere carrier of contraband gold handed over to him at Raxaul by somebody, which in turn had to be handed over to another person at Benaras - section 108 of the CA - Held that - It has been held that the statements under section 108 of the Act are in the nature of substantive evidence, and culpability of the concerned persons can be based on the same - the department was able to discharge its primary onus by recording the appellant s voluntary statement u/s 107 of the Act, read with the appellant s statement under section 108 of the Act which is in the nature of substantive evidence, with which the onus passed on to the appellant in terms of section 123 of the Act. The appellant has not in the least discharged the onus of proof on him. He admitted recovery of the contraband goods from his person on 20.8.2000. He made different statements at different stages of the proceedings. His defence that it was purchased from Dhan Cholia Sons, Delhi, has been found to be false leading to the irresistible conclusion that it was contraband goods, having been smuggled from a country of third origin - appeal dismissed - decided against appellant.

Issues Involved:
1. Legality of the statements recorded under Sections 107 and 108 of the Customs Act.
2. Confiscation of gold and imposition of penalty.
3. Burden of proof regarding the contraband nature of the goods.
4. Admissibility and evidentiary value of retracted confessional statements.
5. Consistency of the appellant's statements and their implications.

Detailed Analysis:

1. Legality of the Statements Recorded Under Sections 107 and 108 of the Customs Act:
The appellant's statements under Sections 107 and 108 of the Customs Act were central to the case. The appellant contended that these statements were taken under duress. However, the court noted that statements under Section 108 are substantive evidence. The Supreme Court's judgments in Naresh J Sukhwani v. Union of India and K I Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, Cochin, were cited to affirm that such statements are admissible and can form the basis for establishing culpability.

2. Confiscation of Gold and Imposition of Penalty:
The Joint Commissioner of Customs ordered the absolute confiscation of the seized gold under Section 111(d) and adhesive tapes under Section 119 of the Customs Act. Additionally, a penalty of Rs. 40,000 was imposed under Section 112. This order was upheld by the Commissioner (Appeals) and the Customs, Excise, and Service Tax Appellate Tribunal. The court observed that the appellant admitted to carrying the gold, which was found concealed in his socks, and no one else claimed ownership of the gold, leading to the conclusion that the appellant was the owner and had smuggled it.

3. Burden of Proof Regarding the Contraband Nature of the Goods:
The court emphasized that the burden of proof, as per Section 123 of the Customs Act, lies on the appellant to prove that the goods are not smuggled. The appellant failed to discharge this burden. The court noted that the appellant's defense, claiming the gold was purchased from Dhan Cholia Sons, was found to be false. Consequently, the department's primary onus was considered discharged, shifting the burden to the appellant, who did not meet it.

4. Admissibility and Evidentiary Value of Retracted Confessional Statements:
The appellant's retracted statements were scrutinized. The court referenced the Supreme Court's rulings in Ramesh Chandra v. State of West Bengal and K I Pavunny v. Assistant Collector (HQ), which establish that retracted confessional statements under Section 108 are admissible. The court noted that the appellant's retraction was delayed by seven months, diminishing its credibility. The statements were thus deemed substantive evidence.

5. Consistency of the Appellant's Statements and Their Implications:
The appellant made conflicting statements at different stages. Initially, he claimed the gold belonged to Rajeshwar Giri, but later stated it belonged to Prabhu Nath Singh and was purchased from Dhan Cholia Sons. The court found these contradictions significant and indicative of the appellant's culpability. The consistency in admitting the possession of gold and the false claims about its origin led to the conclusion that the gold was smuggled.

Conclusion:
The court dismissed the appeal, upholding the orders of confiscation and penalty. The appellant's statements under duress claim were rejected, and the burden of proof was deemed unmet. The legal principles regarding the admissibility of statements under Sections 107 and 108 of the Customs Act were reaffirmed, and the appellant's inconsistent defenses were found unconvincing. The appeal was dismissed without any order as to costs.

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