2019 (2) TMI 465 - HC - Customs

Confiscation - penalty - illegal import of Gold - appellant has not been able to discharge burden of proof as enshrined under Section 123 of the Act, 1962. Held that - In the present case entire prosecution is based on the confessional statement given by Shakil Ahmad Khan before the Customs Officers under Section 108 of the Customs Act 1962. Shakil Ahmad Khan subsequently retracted his statement and denied his involvement in movement and/or smuggling of said gold. He further stated that on 27.11.2013 he was going to Lucknow for the treatment of his wife Mrs. Tajni Begum. At Ramnagar Railway Crossing, the Customs Officers checked the bus and asked every passenger about a black packet. The officers asked about his profession, when he told that he is a gold artisan, the Officer dragged him, alleging that the gold belongs to him - there is no other material for imposition of the penalty apart from confessional statement of Shakil Ahmad Khan. In the present case the order passed under Section 111 and 112 of the Customs Act by the Commissioner Customs (P), Lucknow on 05.08.2014 and the said order records the entire proceedings conducted during the investigation. A perusal of the aforesaid order would indicate that no efforts were made by the appellants to prove that the confessional statements were made voluntarily. No Customs Officer or any independent witness was examined by the said authority which could prove that the said confessional statement was taken voluntarily and could be used as a substantial piece of evidence against the respondents. A confessional statement of a co-accused cannot by itself be taken as a substantive piece of evidence against another co-accused and can at best be used or utilized in order to lend assurance to the Court. In the absence of any substantive evidence it would be inappropriate to base the conviction of the appellant purely on the statements of co-accused - In the present case the CESTAT has rightly concluded that a confiscation and penalty order was passed solely on the retracted statement of the appellant Mr. Shakil Ahmad Khan and father of the appellant Mr. Mridul Agarwal and further these persons were not examined in the adjudication proceedings and therefore, the confiscation, penalty order has been passed only on the basis of such confessional statement is contrary to settled legal position and was clearly illegal, arbitrary and liable to be set-aside. No substantial question of law raises in these appeals - appeal dismissed.

Summary

Issues Involved:
1. Validity of CESTAT's decision to set aside the Order-in-Original.
2. Admissibility and impact of retracted statements on the liability of the noticees.

Issue-Wise Detailed Analysis:

1. Validity of CESTAT's Decision to Set Aside the Order-in-Original:

The appeals were filed under Section 130 of the Customs Act, 1962, challenging the Tribunal's decision to set aside the confiscation and penalty orders. The Tribunal had dismissed the orders on the grounds that the appellant failed to discharge the burden of proof under Section 123 of the Act, 1962, and directed the confiscated gold to be redeemable upon payment of duty and a redemption fine of ?5,00,000.

The Tribunal observed that gold is not a prohibited item and can be imported upon payment of duty. The customs officers had seized the gold on suspicion of smuggling without actual evidence. The case relied heavily on retracted statements of the appellant and another individual, which were not admissible under Section 138B of the Customs Act. The Tribunal emphasized that these statements were not corroborated by independent witnesses or other substantial evidence, making the imposition of penalties unsustainable.

The High Court examined whether the Tribunal's decision contradicted the Supreme Court's ruling in Commissioner of Customs, Madras Vs. D. Bhoormull. The Supreme Court had held that in smuggling cases, the burden of proof could shift to the accused if the prosecution provided slight evidence. However, in this case, the High Court found no other material evidence apart from the retracted statements, distinguishing it from Bhoormull's case.

The High Court referenced Noor Aga Vs. State of Punjab, where the Supreme Court held that retracted confessional statements could be relied upon only if made voluntarily. The burden of proving voluntariness lies with the prosecution. The High Court noted that no efforts were made to prove the voluntariness of the statements, and no independent witnesses were examined.

2. Admissibility and Impact of Retracted Statements:

The High Court reviewed the confessional statements and subsequent retractions. Shakil Ahmad Khan had initially confessed to carrying smuggled gold but later retracted, claiming coercion. The statements of other individuals involved were similarly retracted, and they denied any involvement in smuggling.

The High Court cited Surinder Kumar Khanna Vs. Intelligence Officer Directorate of Revenue Intelligence, which emphasized that a co-accused's confession could not be the sole basis for conviction without corroborative evidence. The Tribunal had rightly concluded that the penalty and confiscation orders were based solely on retracted statements without corroborative evidence, making them legally unsound.

The High Court affirmed the Tribunal's judgment, stating that the appellants failed to present a substantial question of law. The appeals were dismissed, upholding the Tribunal's decision to set aside the confiscation and penalty orders.

Conclusion:

The High Court upheld the Tribunal's decision, emphasizing the lack of corroborative evidence and the inadmissibility of retracted statements without proving voluntariness. The appeals were dismissed, affirming the Tribunal's judgment.