2000 (5) TMI 446 - AT - Customs

Summary

Issues Involved:
1. Legality of the search and seizure of foreign and Indian currency.
2. Applicability of Sections 111, 112, and 121 of the Customs Act.
3. Validity of the appellant's statement and its retraction.
4. Imposition of penalty on the appellant.

Issue-wise Detailed Analysis:

1. Legality of the Search and Seizure:
The case began with a search on 24-7-1991 by DRI officers at two shops in Mumbai, resulting in the seizure of foreign currency equivalent to Rs. 14,71,948.50 and Indian currency amounting to Rs. 2,50,000/-. The search was conducted based on specific information that the shops were dealing in smuggled gold. The foreign currency was seized under the Customs Act and FERA, while Indian currency was seized from individuals present in the shops. Statements were recorded under Section 108 of the Customs Act. The seized foreign currency was deposited in the Reserve Bank of India, and the appellant was penalized under Sections 112(a) and (b) of the Customs Act.

2. Applicability of Sections 111, 112, and 121 of the Customs Act:
The appellant argued that Section 111(d) of the Customs Act did not apply to him as the foreign currency was not seized from his shop. He also contended that there was no evidence linking the seized amount to the sale proceeds of smuggled gold. The appellant claimed that only Section 121 could apply since the foreign currency was converted into rupees before the show-cause notice. The adjudicating authority, however, applied Sections 111 and 121, concluding that the seized currency was indeed the sale proceeds of smuggled gold.

3. Validity of the Appellant's Statement and its Retraction:
The appellant retracted his statement the next day, claiming it was not voluntary and was obtained under duress. The statement recorded after 8:00 p.m. was contested as involuntary, referencing rulings such as 1991 (55) E.L.T. 580 and 1999 (108) E.L.T. 260, which emphasize that statements recorded late at night or early in the morning should be considered involuntary, especially when retracted. Cross-examination of panchas and the seizing officer revealed inconsistencies, but the adjudicating authority upheld the statement, citing the appellant's presence and control over the premises where the currency was found.

4. Imposition of Penalty on the Appellant:
The lower authorities imposed a penalty of Rs. 50,000/- on the appellant under Sections 112(a) and (b) of the Customs Act, based on the intelligence received and the appellant's statement. However, the tribunal found that the evidence was insufficient to support the penalty. The retracted statement, lack of corroborative evidence, and the absence of key individuals like Mohammed Ali and Ramesh Jain weakened the department's case. The tribunal concluded that the penalty could not be sustained solely based on the appellant's retracted statement and the uncorroborated intelligence.

Conclusion:
The tribunal set aside the impugned order regarding the imposition of the penalty on the appellant, allowing the appeal with consequential relief according to law. The judgment highlighted the importance of corroborative evidence and the validity of retracted statements in customs cases.