2017 (6) TMI 146 - AT - Customs

Smuggling - gold biscuit of foreign origin - Held that - in the case of Jai Narain Verma v. Collector of Customs, New Delhi 1994 (2) TMI 171 - CEGAT, NEW DELHI , held that gold biscuits seized by Police and then handed over to the Customs Authorities, the burden of proof to establish involvement of the appellant, in the offence, lies on the department. It has already been observed that the Police officers implicated the appellants on the basis of the accused s own statement. The case was handed over to the Customs Authorities after about one month. There is no explanation given by the Police and/or enquired by the Customs Authorities for such delay. It is well settled that a person cannot be penalized merely on the basis of a circumstantial evidence and assumption and presumption and ignoring the provisions of law. Both the appellants in their interrogatory statements before the Customs officers had disclosed that they know each other. But there is no material available on record that the relationship between the appellants would establish the involvement in the alleged offence - the penalties imposed on the appellants are set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Legality of the confiscation of the gold biscuit.
2. Validity of the penalties imposed on the appellants.
3. Credibility of the statements recorded by the Police and Customs authorities.
4. Delay in handing over the seized goods to Customs authorities.
5. Burden of proof and adherence to legal procedures.

Issue-wise Detailed Analysis:

1. Legality of the confiscation of the gold biscuit:
The gold biscuit of foreign origin was recovered from a bus and alleged to be in the possession of appellant No.1. The confiscation was based on the initial statement given by appellant No.1 to the Police, which was later retracted. The Customs authorities seized the gold biscuit after it was handed over by the Police. The Tribunal found that the confiscation was not legally sustainable as the Customs authorities did not investigate the delay in handing over the goods and relied solely on the retracted statement.

2. Validity of the penalties imposed on the appellants:
Penalties of ?15,00,000/- each were imposed on both appellants under section 112(i) of the Customs Act, 1962. The Tribunal noted that the penalties were based on circumstantial evidence and the initial statement given to the Police, which was retracted. The Tribunal held that the penalties were not justified as the evidence was insufficient and the retracted statements were not properly investigated.

3. Credibility of the statements recorded by the Police and Customs authorities:
The initial statement by appellant No.1 to the Police was retracted in subsequent statements given to the Customs authorities while in jail custody. The Tribunal emphasized that the retracted statements should not be discarded without proper investigation. The Tribunal also noted that the Customs authorities did not find any material evidence to support the initial statement and relied solely on it, which was not sufficient for imposing penalties.

4. Delay in handing over the seized goods to Customs authorities:
The Police took more than two weeks to hand over the seized gold to the Customs authorities, despite the order from the Chief Judicial Magistrate. The Tribunal pointed out that no enquiry was conducted regarding this delay, which raised doubts about the handling of the case. The delay was a significant factor that undermined the legality of the subsequent actions taken by the Customs authorities.

5. Burden of proof and adherence to legal procedures:
The Tribunal referred to several precedents, including the case of Jai Narain Verma v. Collector of Customs, which established that the burden of proof lies on the department to establish the involvement of the appellant in the offence. The Tribunal found that the Customs authorities failed to discharge this burden as they did not produce sufficient evidence apart from the retracted statement. The Tribunal also highlighted that the confessional statement recorded by the Police under duress and coercion is inadmissible under section 25 of the Evidence Act.

Conclusion:
The Tribunal set aside the penalties imposed on the appellants, stating that the evidence was insufficient and the legal procedures were not properly followed. The appeals filed by the appellants were allowed, and the penalties were deemed unjustified based on the overall facts and circumstances of the case. The judgment emphasized the importance of thorough investigation and adherence to legal procedures in cases of confiscation and penalties under the Customs Act.