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TMI Blog2011 (8) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... fiscating foreign currencies equivalent to Indian Rs.44,27,500/- under Section 111(d) of the Customs Act and imposing personal penalties under Section 112 of the Act on the appellants. The impugned order was passed in adjudication of a show-cause notice dated 28.6.1996 issued by the department under Section 124 of the Customs Act. 2. Assorted foreign currencies (US Dollars 50,000/-, Saudi Riyals 1,00,000/- and UAE Dirhams 2,00,000/-) were seized from Shri Shaikh Mohammed Akhtar at Sahar International Airport after his arrival from Dubai on 8.1.1996 by flight No.CX-750. As per the seizure panchanama, Akhtar was waiting near the State Bank of India (SBI) counter adjacent to the Station Duty Officer's room after his arrival from abroad. Shri Siddharth Shankar Roy, a Customs officer in uniform, approached Akhtar and signalled him to the adjacent SDO's room, whereupon Akhtar followed the officer. In the SDO's room, S.S. Roy handed over a pouch to Akhtar. At this time, Assistant Commissioner Shri S.S. Kulkarni and Intelligence Officers Shri A.K. Upadhyay and others of Air Intelligence Unit (AIU) of Customs intercepted Akhtar and Roy and questioned them in the SDO's room, whereupo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X-750; that, after emigration clearance, he went to the Conveyor Belt to collect his checked-in baggage; that he had been told at Dubai by one Mr. Abdul to go for customs clearance to a white-uniformed officer with trimmed beard and more than six feet tall; that Abdul told him that the customs officer would identify him and wave at him; that Abdul also told him to wave back to the Customs officer and then go to that officer's counter; that, after spotting the officer at counter No.14, he collected his baggage from the Conveyor Belt and walked to that counter; that, on the way, one Customs officer who was channeling the arrival passengers to different counters asked him to go to counter No.15 but the officer at counter No.14 took his passport and told him to wait behind his counter; that, after 5-10 minutes, the Customs officer at counter No.14 directed him to come with his baggage to baggage-screening machine located near the Superintendent's room of Module-I; that he did as directed; that, after screening the baggage, the said Customs officer, who displayed his name (Siddharth Shankar Roy) on his name plate, asked him to wait near SBI's counter near SDO's room of Module-I; that ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95 from the same officer, S.S. Roy, and subsequently take out the currency to Dubai on 24.12.1995. 4. A statement of S.S. Roy was also recorded under Section 108 of the Customs Act on 8.1.1996, wherein he stated that, on 7.1.1996, he was posted at counter No.14 of Module-I Arrival Baggage Hall from 2200 hours of 7.1.96 to 0800 hours of 8.1.96; that around 0430 hours, one passenger who arrived by flight No. CX-750 came to his counter; that after the screening of his baggage, he along with the passenger went inside the SDO's room and handed over a pouch containing foreign currencies to the passenger as instructed by one Musa Mustafa; that the said Musa had given him the pouch outside the arrival hall of Module-I when he (Roy) was entering the baggage hall to join duty on 7.1.96; that the description of the said passenger had been obtained when he took over the pouch from the said Musa; that he carried the said pouch containing foreign currencies in his 'Echolac' briefcase to the Baggage Hall and kept the baggage next to the sofa lying inside the room adjacent to SDO's cabin; that as soon as he handed over the said pouch to the said passenger, they were intercepted by Shri S.S. Kul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to AIU officers. Akhtar, in his bail application, submitted that the confession had been extorted against his will by subjecting him to force, coercion, pressure, threats and assault. Annexed to his bail application was a copy of 'sale note' No. 011490 dated 7.1.1996 issued to 'SHEIKH MOHAMMED AKHTAR' by 'AHMED AL HUSSAIN EXCHANGE EST., Dubai'. The applicant submitted that the foreign currencies seized by Customs had been legally acquired by him from Dubai as per the 'sale note'; that, on his arrival at Bombay airport from Dubai on 8.1.1996, he went to the Customs counter for declaring the above currencies in Currency Declaration Form; that he also produced the above 'sale note' before the officer at the counter; that the officer returned it to him after inspection; that the officer refused to accept the sale note as proof of legal acquisition of the currencies; that when he (applicant) was taken home to witness search of his residential premises on the same day, he handed over the sale note to his father to avoid its destruction by the intelligence officers. S.S. Roy, in his bail application, submitted that his confession had been extorted through threats of detention under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d against him. 9. Akhtar was released on bail as per order dated 17.6.1996 of the Additional Chief Metropolitan Magistrate (ACMM) subject to condition that he should appear before AIU on 21.6.1996. Though, on 21.6.1996, he appeared at AIU office, he refused to write his statement in his own handwriting. (This refusal was recorded in a Panchanama). Therefore, his statement dated 21.6.1996 under Section 108 of the Customs Act was scribed by an officer of Customs in the presence of one of the panchas. In this statement, he stated that he had been to Dubai for nine years and had made eight trips to India in 1995. During those visits, he had imported 5 kgs. of gold and 100 kgs. of silver and cleared them on payment of duty. The gold and silver did not belong to him and the same were delivered to persons in Ahmedabad and Delhi respectively for monetary consideration of Rs.25,000/-. When a photocopy of 'Sale Note' which he produced in the Chief Metropolitan Magistrate's Court on 9.1.1996 was shown to him and it was pointed out that, as per the Sale Note, he had converted US Dollars and Saudi Riyals into UAE Dirhams, he replied that he had nothing to say about it and did not know how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Akhtar, and (e) that the initial self-incriminating statements of Akhtar and Roy recorded under Section 108 of the Customs Act were not voluntary and true and the same were validly retracted. The learned Commissioner of Customs rejected these contentions and held the seized currencies liable to confiscation and both the above persons liable to penalty. Hence these appeals. 13. Heard. The learned counsel for the appellants submitted/argued as follows:- (i) Only the Enforcement Directorate (ED) had the jurisdiction, under the Foreign Exchange Regulation Act, 1973 (FERA), to enquire and determine whether the foreign currency had been legally acquired or not. Before/without determination by the proper officer of ED that the currency had been illegally acquired, the Customs authorities should not have even seized the currency in the belief that it had been illegally acquired and brought into the customs area. As it was beyond the jurisdiction of the Commissioner of Customs to determine the above question (whether the foreign currency had been illegally acquired or not), his office referred the case to the ED for appropriate proceedings under Section 51 of the FERA. A copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the foreign currency by Akhtar and such finding was not appealed against by the Customs authorities. (v) The appellants, statements dated 8.1.1996 under Section 108 of the Customs Act were extorted by the officers of AIU by use of force, coercion, pressure, threats and assault and hence not voluntary or true, and the same were retracted by the appellants when produced in the ACMM's court on 9.1.1996. Even before his production in the court, Roy complained in writing to the Assistant Commissioner (AIU) that he had been manhandled by one Shri A.K. Singh, ACO in the presence of other officers of AIU around midnight of 8/9.1.1996. Akhtar produced the sale note dated 7.1.1996 and claimed the seized foreign currency in the court while retracting his statement dated 8.1.1996. As the self-incriminating statements of the appellants recorded under Section 108 of the Customs Act were sought to be used as evidence against them in the proceedings before the ACMM, the Magistrate's court was the appropriate forum for the appellants to retract those statements. Copies of the retractions were also served on the Customs officer who represented the department in the criminal case. That the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrency and the penalties on the appellants are liable to be set aside on a proper appreciation of the evidence available on record. 14. The learned JCDR submitted/argued as follows:- (i) The facts admitted by the appellants in the voluntary statements given on 8/9.1.1996 under Section 108 of the Customs Act regarding the foreign currency clearly indicated their involvement in a transaction which, if not intercepted, would have progressed to accomplishment of a premeditated hawala deal. Akhtar, when intercepted by AIU officers after his arrival at Sahar airport from Dubai on 8.1.1996, was collecting the foreign currency from S.S. Roy in the customs area of the airport to declare it at Roy's customs counter and get a CDF issued by Roy so that he (Akhtar) could take the currency out of India later in violation of FERA provisions. Akhtar was attempting illegal export of the currency. No evidence of its acquisition from any authorized dealer in foreign exchange or of its lawful import into India was produced by him to the Customs authorities, nor did he make any valid retraction of his confessional statement by proving that the statement had been extorted by AIU by use of force, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordered by the ACMM failed to show that they were assaulted or otherwise physically injured by the officers of customs. The medical reports dated 15.1.1996 of the Chief Medical Officer, Bombay Central Prison Hospital in respect of both the accused (appellants) clearly indicated that both of them had complained of 'body pain due to assault by the police outside the jail'. [Copies of both the medical reports produced by JCDR]. None of the accused complained of any body pain due to assault by any officer of customs. Therefore, the allegation of the appellants that they were physically assaulted by officers of customs to extort self-incriminating statements under Section 108 of the Customs Act is baseless. Secondly, even in his bail application dated 9.1.1996 before the ACMM, the allegation raised by S.S. Roy against the officers of Customs was only that his confessional statement had been extorted by the officers by threats of COFEPOSA detention and suspension from service. Roy in his bail application did not level the charge of assault. Thus the reason stated by S.S. Roy before the Judicial Magistrate to show that his statements under Section 108 of the Customs Act are involuntary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered from the residential premises of Akhtar searched by officers of AIU on 8.1.1996 under search warrant issued by the Asst. Commissioner of Customs(AIU). Had any such document been recovered from Akhtar's residence, it would have found mention in the relevant panchanama. That Akhtar's residence was searched in his presence and that he had handed over the sale note to his father for safe custody is also a concocted story. The panchanama drawn at his residence on 8.1.1996 does not indicate his presence at all, nor is there anything in the panchanama to indicate that Akhtar's father produced the sale note to the officers of AIU. There was no such 'sale note' in existence till one was produced by Akhtar for the first time with his bail application before the ACMM on 9.1.1996. The sale note produced by him before the Judicial Magistrate is only a fabricated document. Had it been genuine, it would have shown Akhtar's passport number and full address for easy identification. The name 'SHAIKH MOHD. AKHTAR' only was shown without passport number, address or other particulars for identification in the sale note produced before the Judicial Magistrate. There is no reliable evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the RBI and therefore the currencies were liable to confiscation for violation of Section 11 of the Customs Act read with Section 67 of the FERA, 1973 and the persons concerned were liable to penalty for having rendered the currencies liable to confiscation. It is on this basis that the show-cause notice was issued by the Asst. Commissioner of Customs (AIU) under Section 124 of the Customs Act. On the other hand, the show-cause notice of the Dy. Director of ED was issued and adjudicated under Section 51 of the FERA, 1973 for a different purpose. That show-cause notice alleged contravention, by Akhtar and Roy, of the provisions of Section 8(1) of the FERA, 1973 and accordingly proposed to impose penalties on them under Section 50 of the said Act. Under Section 8(1) of the FERA, no person other than an authorized dealer shall in India, and no person resident in India other than an authorized dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to, or exchange with, any person not being an authorized dealer, any foreign exchange, except with the previous general or special permission of the RBI. Violation of this law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, the Dy. Director of ED himself has since acknowledged the fact that the Customs Department does not come in the picture with regard to filing of appeal against Order-in-Original dated 9.11.2001. [Copy of letter dated 7.10.2010 of the Dy. Director of ED to the Commissioner of Customs (AIU) produced by JCDR; this letter states (a) that the adjudication order dated 9.11.2001 was accepted by the Directorate of Enforcement, (b) that the Customs Department does not come in picture with regard to filing of appeal against the said order and (c) that any copy of the said order was not forwarded to the Customs Department.] [Reliance also placed on the Tribunal's Larger Bench decision in Subhash Projects Marketing Ltd. Vs. CC, Cochin 2009 (239) ELT 440 (Tri. LB)] wherein an association of domestic manufacturers was held to be not 'aggrieved party' and their application for intervention was dismissed]. Therefore the Customs Department was unconcerned with the outcome of the adjudication proceedings under the FERA. (vi) The confessional statements of the appellants under Section 108 of the Customs Act, which were not validly retracted, are enough to establish that the seized foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmitted to question the evidentiary value of the sale note. Musa Mustafa who could not even be traced by the AIU remains a fictitious person and the Department has failed to prove that the foreign currency was brought by Roy into the Customs area from outside the airport. As the signatures of Akhtar and Roy are not to be seen in the confrontation panchanama, it cannot be reckoned as evidence in favour of the Revenue. Shaikh Asif Ali's statement dated 15.3.1996 was taken by the AIU coercively on the day of his wedding only to justify the existence of Musa who could not be traced. 16. We have given careful consideration to the submissions and arguments. At the outset, for valid reasons, we have to reject the ld. Counsel's proposition that the Customs authorities are bound by the order passed by the Dy. Director of ED. The reasons are summorised below:- [a] The proposal in the show-cause notice dated 20.1.2000 of the Dy. Director of ED was to impose penalties on the appellants under Section 50 of the FERA, 1973 for their alleged violation of Section 8(1) of the Act. The two provisions of the Act read as follows:- Section 8(1) of the FERA, 1973 Except with the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act, 1962, and all the provisions of that Act shall have effect accordingly. As per Section 67 ibid, any restriction imposed by or under Section 13 of the Act shall be deemed to have been imposed under Section 11 of the Customs Act. A conjoint reading of Section 13(2) of the FERA, 1973 and Section 11 of the Customs Act, 1962 would indicate that export of foreign exchange (other than foreign exchange obtained from an authorized dealer or from a money-changer) from India without the general or special permission of the RBI or the written permission of a person authorized in this behalf by the RBI would be a direct breach of the restriction laid down under Section 13(2) of the FERA and would also be deemed to be breach of restriction laid down under Section 11 of the Customs Act. It is not in dispute that 'goods' includes currency also. Therefore, any breach of restrictions imposed by or under Section 13 of the FERA is, by virtue of Section 67 of the Act, actionable as a breach of Section 11 of the Customs Act. On the contrary, as it appears from the text of Section 50 of the FERA, contraventions of Section 13 and a few other provisions of the FERA were excluded fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase or otherwise acquire or borrow foreign exchange from any person not being an authorized dealer; similarly no person resident in India other than an authorized dealer shall, outside India, exchange any foreign exchange with any person not being an authorized dealer. These restrictions are in respect of transactions involving foreign exchange in India or outside India. The transactions involving foreign exchange, referred to in Section 13 of the FERA, stand on an entirely different footing. Sub-section (1) of Section 13 authorised the Central Government to impose certain restrictions on import of foreign exchange and Indian currency into India. Sub-section (2) imposed certain restrictions on export of foreign exchange (other than foreign exchange obtained from an authorized dealer or from a money-changer) and Indian currency out of India. The scope of enquiry by the Customs Department was to find out whether the appellants had attempted to export foreign currency from India without general or special permission of the RBI or written permission of a person authorized by the RBI. The enquiry contemplated by the Department was in relation to a suspected attempt to export foreign cur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is point. [d] The question whether the Customs department could have challenged the order of the Dy. Director of ED under the provisions of the FERA was also agitated before us. We have examined the relevant provisions of the FERA and have found that, against the adjudication order passed u/s 51 of the Act, any 'aggrieved person' could prefer an appeal under sub-section (2) of Section 52 of the Act to the Appellate Board constituted under sub-section (1) of this Section. Sub-section (2) of the said Section 52, without the provisos thereto, reads as follows:- Any person aggrieved by such order may, on payment of such fee as may be prescribed and after depositing the sum imposed by way of penalty under section 50 and within forty-five days from the date on which the order is served on the person committing the contravention, prefer an appeal to the Appellate Board: It is clear from the above provision that any appeal thereunder could be filed only after depositing the amount of penalty imposed u/s 50 of the Act (the Appellate Board had the discretion to dispense with this deposit conditionally or unconditionally under the second proviso to sub-section (2) of Section 52). O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration is whether the foreign currency seized from the appellants by the AIU on 8.1.1996 is liable to confiscation under the Customs Act. 17.1 The show-cause notice issued by the Asst. Commissioner of Customs (AIU) proposed to confiscate the currency under the said provision of law and to impose penalties on the appellants u/s 112 of the Customs Act. The adjudicating authority ordered absolute confiscation of the currency u/s 111(d) of the Customs Act and imposed penalties on the appellants u/s 112 of the Act. The proposal in the show-cause notice for confiscation of the seized foreign currency was based on alleged violation of the restriction / prohibition imposed u/s 11 of the Customs Act read with Section 13(2) of the FERA. As we have already noted, Section 13(2) of the FERA imposed certain restrictions on export of foreign exchange other than foreign exchange obtained from an authorized dealer or a money-changer. Accordingly, no person could export such foreign exchange out of India without a general or special permission of the RBI or a written permission of a person authorized in this behalf by the RBI. By virtue of Section 67 of the FERA, such restriction imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector's order was challenged before the Government, the latter treated the demand as one under Rule 10. In further appeal, the assessee questioned this change of rule. It was in that context that the Hon'ble Supreme Court rendered the above ruling. In the case of Collector of Central Excise, Calcutta Vs. Pradyumna Steel Ltd. [1996(82) ELT 441 (SC)] relied on by the ld. JCDR, the apex court held that mention of wrong provision of law when the power exercised was available under a different provision was itself not sufficient to invalidate the exercise of that power. Thus there is a line of decisions in support of the view taken by us with regard to the provision of law invoked in the show-cause notice and the impugned order for confiscation of the foreign currency. Therefore, the non-mention of Section 113(d) of the Customs Act in the show-cause notice or in the impugned order would not per se invalidate the confiscation of the foreign currency ordered on the ground of violation of prohibition imposed u/s 13(2) of the FERA, 1973 / Section 11 of the Customs Act, 1962. In any case, neither of the appellants has challenged the confiscation on the ground of wrong provision of law havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jail. As ordered by the Magistrate, the jail Medical Officer examined Akhtar and Roy and submitted reports. Before this Tribunal, both the appellants have relied on the medical reports in support of their allegation that they had been physically assaulted by the AIU officers. We have perused these documents and have found that the notings in these medical reports do not support the above allegation of the appellants. The Medical Officer reported that both Akhtar and Roy complained of body pain due to assault by the police. Therefore, in our view, nothing contained in the medical reports can be relied on by the appellants to contend that they had been physically assaulted by officers of Customs for extorting self-incriminating statements. As rightly held by this Tribunal in Zaki Ishrati's case, retraction of a confessional statement should be addressed to the same officer to whom the confessional statement was given u/s 108 of the Customs Act. In this case, the retraction was made before the Judicial Magistrate and not before the concerned officer of Customs (AIU). Moreover, though the officer of Customs who was alleged to have beaten/manhandled the appellants challenged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese reasons, we agree with the ld. Commissioner who rightly rejected the retractions. 17.3. As regards the 'sale note', we find that there is no reliable evidence on record to show that this document was brought from abroad and produced by Akhtar before the officers of AIU on his arrival from Dubai on 8.1.1996. The seizure panchanama dated 8.1.1996 does not contain mention of this document. It is not the case of the appellants that this panchanama is incomplete in any material particulars. Had any sale note been produced by Akhtar on his arrival from abroad, a mention of it would have been made in the panchanama. Personal search of the appellants also did not yield any sale note. The case of Akhtar is that he produced the sale note before the officers of AIU but the same was not accepted. The sale note was allegedly returned to Akhtar who allegedly took it out and handed it over to his father at his residence when the residential premises were searched by the AIU officers on 8.1.1996. This story is also unbelievable inasmuch as (a) Akhtar's father himself stated under Section 108 of the Customs Act that his son was not present during the course of search of their residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handed over the above document to him (father), the latter would have mentioned and/or produced it to the officers of AIU who came to search the residential premises. In that event, the officers would have recovered the document and mentioned it in the panchanama dated 8.1.1996 drawn at the residence. There is no mention of the aforesaid receipt/sale note in the said panchanama. Secondly, in the normal course, Customs would not let an offender go free till he is produced before a Judicial Magistrate. His father's affidavit dated 27.5.1996 does not disclose any exceptional reason as to why he (Akhtar) was allowed to meet his family at his residence in between the time of his interception at the airport and the time of his production before the Judicial Magistrate. Thirdly, if it was the case of Sharif that he and his wife were compelled by the officers of Customs to accompany them to the office of AIU on 24.5.1996, it was open to him to take the assistance of a lawyer like the advocate who appeared for his son (Akhtar) in the court of ACMM on 8.1.1996. Lastly, apart from the bald statements contained in the affidavit dated 27.5.1996, there is no evidence of Sharif having been threa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign currency in the absence of any investigation by the department overseas into the source of the document. The initial burden was on Akhtar to prove that the sale note had been issued to him by an authorised dealer in foreign exchange abroad on 7.1.1996 and that he had brought the document with him into India by Flight No. CX-750 (Dubai to Mumbai) on 8.1.1996. Only when this burden is discharged by him can one say that the Customs department should investigate abroad into the source of the document and gather evidence to establish that it is a fabricated document. Akhtar failed to discharge his initial burden of proof and hence he cannot bank on any lack of investigations by the Customs department abroad. The view taken by the Dy. Director of ED with regard to the sale note without conducting any investigations in India or abroad is not binding on the Customs authorities for reasons which we have already recorded and, therefore, nothing contained in the order passed by the Dy. Director of ED under the FERA, 1973 can be relied on by the appellants to sanctify the document which is an apparently fabricated piece of evidence. For all the aforesaid reasons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal, pursuant to the High Court's decision on a Reference Application, upheld the absolute confiscation of certain foreign currency in the absence of evidence of its acquisition from authorized dealer in foreign exchange. The confiscation of the currency by the Commissioner in the present case has to be sustained under Section 113(d) of the Act for reasons already recorded by us. It is ordered accordingly. 17.6 The department has established beyond reasonable doubt that the appellants colluded with each other in the Customs area of Sahar airport on 8.1.1996 for the prospective export of the foreign currency without any permission of the Reserve Bank of India. Their conduct rendered the foreign currency liable to confiscation under Section 113(d). Therefore the appellants are liable for penalty under Section 114 of the Act. This penalty, in our view, cannot be resisted on the ground that Section 114 was not invoked in the show-cause notice or in the impugned order. Non-mention of Section 114 or mention of a wrong provision of law cannot be fatal to the Revenue inasmuch as the show-cause notice and the impugned order have brought out a clear case for imposing penalties on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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