2023 (12) TMI 492 - HC - Customs

Smuggling - Gold Bullion - procedure contemplated under Section 108 of the Customs Act, 1962 not followed - retraction of statements of petitioner - violation of principles of natural justice - HELD THAT - When the petitioners case is verified with reference to the available material on record, it creates prima facie suspicion on the version projected by the petitioners. Further, the investigation is in the nascent stage and not yet completed. In these circumstances, it is not apposite to rush to the conclusion that the statements of the petitioners 2 to 5 were recorded by the authorities by applying threat or coercion. This aspect and the truth or falsity of petitioners case can be determined only after completion of investigation and when the matter is taken up for trial by the concerned court. It is not considered apt to order release of the seized gold to the petitioners. Thus, at the outset, there are no merits in the case of petitioners. The Writ Petition is dismissed, however with an observation that respondent authorities shall proceed with investigation and complete the same without being influenced by our observation in this order.

Summary

Issues Involved:
1. Legality of the seizure of re-melted Indian origin gold.
2. Compliance with Section 108 of the Customs Act, 1962.
3. Validity of statements obtained from petitioners 2 to 5.
4. Request for interim release of seized gold.

Summary:

Issue 1: Legality of the seizure of re-melted Indian origin gold.
The petitioners contended that the seizure of gold by the customs officials was illegal, arbitrary, and violative of the principles of natural justice. They claimed that the gold was of Indian origin, purchased from M/s. SRR Traders, Chennai, and transported with valid invoices. The respondents argued that the petitioners failed to produce any documents of purchase, such as invoices or delivery challans, during the interception, suggesting that the gold was smuggled. The court noted several suspicious circumstances, including the newness of M/s. SRR Traders' business and the inconsistency in the shape and size of the seized gold compared to the invoices.

Issue 2: Compliance with Section 108 of the Customs Act, 1962.
The petitioners alleged that the customs officials did not follow the procedure prescribed under Section 108 of the Customs Act, 1962, while recording their statements. They claimed that their signatures were obtained on computerized statements by coercion without revealing the contents. The respondents countered that the statements were obtained voluntarily in the presence of mediators, and there was no violation of Section 108. The court emphasized that the inquiry under Section 108 is deemed a judicial proceeding, and the statements made are material pieces of evidence. The court found no cogent material to support the petitioners' claim of coercion.

Issue 3: Validity of statements obtained from petitioners 2 to 5.
The petitioners argued that their statements were obtained under coercion and without informing them of the contents. The court observed that the petitioners did not take immediate legal action to contest the statements and only addressed letters to the customs officials after a significant delay. The court found the petitioners' conduct suspicious and noted inconsistencies in their version of events, including the delayed response and lack of supporting documents for the alleged credit transaction.

Issue 4: Request for interim release of seized gold.
The petitioners sought an interim direction to release the seized gold pending the disposal of the writ petition. The court, considering the ongoing investigation and the suspicious circumstances surrounding the case, declined to order the release of the seized gold. The court held that the truth or falsity of the petitioners' case could only be determined after the completion of the investigation and trial.

Conclusion:
The court dismissed the writ petition, finding no merits in the petitioners' case. The court directed the respondent authorities to proceed with the investigation and complete it without being influenced by the observations in the order. No costs were awarded, and any pending interlocutory applications were closed.