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TMI Blog2008 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ds had taken place in the name of the said firms. He is stated to have confessed that he was responsible for remittance of the foreign exchange worth US Dollars 11,400 and US Dollars 22,830. In view of the said purported confession, he was arrested for alleged violation of the provisions of Section 8(3) and Section 9(1)(a) of the Act. We are not concerned with the rest of the statements. 4. He was produced before the learned Chief Metropolitan Magistrate, Bombay on 28.10.1994. Before the said court, he filed an application retracting his confession, stating: "That from 26-10-94 evening till today when I am being produced before this Hon'ble Court, I was illegally detained in the office of the Enforcement Directorate, and during my illegal detention my involuntary, untrue and false statements have been recorded by force, coercion, threat and coercion and also threatened to detain under COFEPOSA if I will not write the statements as per their say and hence I retract my said statements as the same are not my true and voluntary statements. I further state that Indian currency seized from me was my legitimate business money and had nothing to do with alleged FERA violation. I further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in his statements recorded u/s 40 of FERA, which to date, stand. These confessional statements are amply corroborated by the material evidence seized from him which is disclosed above. By not contesting the charges, either in reply to the Show-cause Notice or during Personal hearings fixed, these further stand uncontested and thus confirmed and admitted by the notice. 12. I have, therefore, no hesitation in confirming the charges in impugned SCN again the notice and accordingly hold him guilty of contravention of Sec. 8(3) to the extent of US $ 34,230/- in as much as he failed to utilize the said Foreign exchange for the purpose it was released to him. Further, he is also held guilty of contravention of charge u/s. 9(1)(a) for the same amount in as much he deposited it in a Foreign bank account without the General or Special exemption from the Reserve Bank of India." 8. Appellant preferred an appeal thereagainst before the Foreign Exchange Regulation and Appellate Board which on repeal of FERA stood transferred to the Appellate Tribunal for Foreign Exchange (for short, "the Tribunal") under the provisions of Foreign Exchange Management Act, 1999. The Tribunal despite noticing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods but no import took place despite the fact that the foreign exchange was remitted to Hongkong. On the basis of aforesaid discussion we are of the considered opinion that the remittance of foreign exchange was taken by the appellant for purposes of import of goods but no import of goods was made and foreign exchange was credited on the bank account of foreign national abroad where contravention of Section 8(3) and 9(1)(a) of the Foreign Exchange 1973 is clearly made out. Looking towards this situation, we are of the considered opinion that the impugned order withstands judicial scrutiny and is liable to be confirmed and upheld where the appeal is liable to be dismissed." 10. Aggrieved by and dissatisfied therewith, the appellant preferred an appeal before the High Court. Concurring with the judgment of the Tribunal, the High Court, opined: "The burden is on the person retracting the confessional statement to lead some evidence as to why the confessional statement has to be rejected. No evidence on that count was led. Coupled with the confessional statement wherein some facts were recorded which was personal to the appellant alone, there were other documentary ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.- (1)............ (2)............ (3) Where any foreign exchange is acquired by any person, other than an authorized dealer or a money-changer, for any particular purpose, or where any person has been permitted conditionally to acquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or, as the case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or the conditions cannot be complied with, the said person shall, within a period of thirty days from the date on which he comes to know that such foreign exchange cannot be so used or the conditions cannot be complied with, sell the foreign exchange to an authorized dealer or to a money-changer." 9. Restrictions on payments.- (1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Reserve Bank, no person in, or resident in, India shall- (a) make any payment to or for the credit of any person resident outside India" 14. As i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious powers upon the authorities prescribed therein. Even the salutory principles of mens rea and actus reus in a proceeding under the Act may not be held to be applicable. It is now a well settled principle that presumption of innocence as contained in Article 14(2) of the International Covenant on Civil and Political Rights is a human right although per se it may not be treated to be a fundamental right within the meaning of Article 21 of the Constitution of India. [See Article 11(1) of the Universal Declaration of Human Rights (1948) and Article 6.2 of the European Convention for the protection of Human Rights and Fundamental Freedoms (1950) and Article 14.2 of the International Covenant on Civil and Political Rights (1966)] 20. Sub-section (2) of Section 71 places the burden of proof upon an accused or a proceedee only when the foreign exchange acquired has been used for the purpose for which permission to acquire it was granted and not for mere possession thereof. The Parliament, therefore, advisedly did not make any provision placing the burden of proof on the accused/proceedee. 21. The Act, thus, does not provide for a 'reverse burden'. No presumption of commission of an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded. {See Pon Adithan v. Deputy Director, Narcotics Control Bureau, Madras [(1999) 6 SCC 1]} 23. The question came up for consideration before a Constitution Bench of this Court in Shanti Prasad Jain vs. The Director of Enforcement [(1963) 2 SCR 297], wherein, inter alia, it was held that the initial burden would be on the Department. 24. It is interesting to note that both the learned counsel have placed strong reliance upon a decision of this Court in K.T.M.S. Mohd. & Anr. Vs. Union of India [(1992) 3 SCC 178]. This Court therein made a distinction between the provisions of the FERA and the Income Tax Act, opining: "31. Leave apart, even if the officers of the Enforcement intend to take action against the deponent of a statement on the basis of his inculpatory statement which has been subsequently repudiated, the officer concerned must take both the statements together, give a finding about the nature of the repudiation and then act upon the earlier inculpatory one. If on the other hand, the officer concerned bisect the two statements and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substance. The initial burden to prove that the confession was voluntary in nature would be on the Department. The special or peculiar knowledge of the person proceeded against would not relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It may only alleviate that burden to discharge and very slight evidence may suffice. This Court in Collector of Customs, Madras & ors. Vs. D. Bhoormall [(1974) 2 SCC 544)] while examining the provisions of Sections 167(8) and 178A of the Sea Customs Act, held: "33. Another point to be noted is that the incidence, extent and nature of the burden of proof for proceedings for confiscation under the first part of the entry in the 3rd column of Clause (8) of Section 167, may not be the same as in proceedings when the imposition of the other kind of penalty under the second part of the entry is contemplated. We have already alluded to this aspect of the matter. It will be sufficient to reiterate that the penalty of confiscation is a penalty in rem which is enforced against the goods and the second kind of penalty is one in personam which is enforced against the person co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the confession was caused by any inducement, threat or promise proceeding from a person in authority, the confession is liable to be excluded from evidence. The expression 'appears' connotes that the Court need not go to the extent of holding that the threat etc. has in fact been proved. If the facts and circumstances emerging from the evidence adduced make it reasonably probable that the confession could be the result of threat, inducement or pressure, the court will refrain from acting on such confession, even if it be a confession made to a Magistrate or a person other than police officer." (emphasis supplied) 28. In Mirah Exports Pvt. Ltd. Vs. Collector of Customs [(1998) 3 SCC 292] while considering a question of undervaluation under Section 14 of the Customs Act, 1962, this Court held that the burden of proving a charge of undervaluation lies upon the revenue, stating: "13. The legal position is well settled that the burden of proving a charge of under-valuation lies upon Revenue and Revenue has to produce the necessary evidence to prove the said charge 'Ordinarily the Court should proceed on the basis that the apparent tenor of the agreements reflect the real state of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of any of the premises envisaged in Section 24 of the Evidence Act." 33. In Gulam Hussain Shaikh Chougule vs. S. Reynolds, Supdt. Of Customs, Marmgoa [(2002) 1 SCC 155], this Court refused to exercise its discretionary jurisdiction under Article 136 of the Constitution of India opining that the confession was rightly held by the High Court to be voluntary in nature. 34. A person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction. With a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession which has since been retracted, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Metropolitan Magistrate was not a bald statement. The inference that burden of proof that he had made those statements under threat and coercion was solely on the proceedee does not rest on any legal principle. The question of the appellant's failure to discharge the burden would arise only when the burden was on him. If the burden was on the revenue, it was for it to prove the said fact. The Tribunal on its independent examination of the factual matrix placed before it did not arrive at any finding that the confession being free from any threat, inducement or force could not attract the provisions of Section 24 of the Indian Evidence Act. 38. In Mohtesham Mohd. Ismail vs. Spl. Director, Enforcement Directorate & Anr. [(2007) 8 SCC 254], this Court held: "15. Apart therefrom the High Court was bound to take into consideration the factum of retraction of the confession by the appellant. It is now a well-settled principle of law that a confession of a co-accused person cannot be treated as substantive evidence and can be pressed into service only when the court is inclined to accept other evidence and feels the necessity of seeking for an assurance in support of the conclusion dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, that such arrangement was in reality made. There was no material brought on record to show that the respondents had any role to play in such matters as alleged. Even the show cause notice did not refer to any particular material to come to such a conclusion. Therefore, the Commissioner and the CEGAT were justified in holding that the respondents were entitled to the benefits. 13. We find that in the show cause notice there was nothing specific as to the role of the respondents, if any. The arrangements as alleged have not been shown to be within the knowledge or at the behest or with the connivance of the respondents. Independent arrangements were entered into by the respondents with the franchise holder (sic franchiser). On a perusal of the show cause notice the stand of the respondents clearly gets established. 14. There is no allegation of the respondents being parties to any arrangement. In any event, no material in that regard was placed on record. The show cause notice is the foundation on which the department has to build up its case. If the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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