Judgment:
1. This appeal is directed against the order of Collector of Central Excise (Appeals), Madras, dated 24-7-87 confirming the order of the Additional Collector of Central Excise, Coimbotore, dated 28-6-84, imposing a penalty of Rs. 7,000/- on the appellant under Section 74 of the Gold (Control) Act, 1968, the 'Act' for short.
2. The appellant is a licensed gold dealer at Coimbatore. On 2-6-83, the Central Excise Authorities intercepted one Chidambaram at Walayar when he was travelling by a bus bound for Palghat from Coimbatore and recovered from him 74 items of gold ornaments detailed in the impugned order. The said Chidambaram informed the authorities that the ornaments belonged to the appellant herein and were being taken to one M/s.
Balakrishnan & Brothers at Calicut for sale, without any supporting documents. The authorities, therefore, seized all the ornaments in question under a mahazar. The said Chidambaram gave a statement on 2-6-83 that the ornaments under seizure belonged to the appellant but subsequently retracted the same on 5-6-83. The proceedings instituted after further investigations eventually resulted in the order of confiscation of the ornaments in question with an option to redeem the same on payment of fine in favour of the said Chidambaram. This appeal by the appellant is only in respect of the penalty under the Act.
3. Shri Ramamurthy, the learned Counsel tor the appellant at the outset contended that the entire charge against the appellant is sought to be proved on the basis of statement recorded from Chidambaram who has retracted the same. It was urged that the proceedings being penal in nature, the Department cannot sustain the charge exclusively on the basis of retracted confessional statement without any supporting evidence. The learned Counsel in support this plea placed reliance on the Division Bench judgment of the Kerala High Court in the case of Kalatra Abbas Haji v. Govt. of India, ECC Volume 6 -1985 page 21. The learned Counsel also placed reliance on the ratio of the ruling of the Division Bench Madras High Court in the case of Kalyana Raman v.Collector of Customs, Madras. It was further contended that though reliance has been placed in the impugned order on the chits recovered from the said Chidambaram and a copy of the chit was not given to the appellant at all nor was the same relied upon as a piece of evidence against the appellant in the Show Cause Notice. The impugned order was therefore assailed as violative of principles of natural justice. The learned Counsel, further contended that even assuming the chit to be true, the figures mentioned in the chit do not in any way tally with the ornaments under seizure either in terms of number of items or in terms of weight.
5. I have carefully considered the submissions made before me. The appellant has been fastened with penal liability on charges of contravention of Section 36 and 55 of the Act and the question that arises for determination is whether the evidence on record substantiates the charges. In the present case, the ornaments under seizure were recovered from the possession of one Chidambaram and the said Chidambaram has given a statement that the same belonged to the appellant. The appellant has totally disclaimed and disowned any connection with the ornaments in question and has further stated that he has not given any ornaments to the said Chidambaran. Likewise the statement of the said Chidambaram that the ornaments were being taken to M/s. Balakrishnan & Brothers was also verified by the Department during investigation by recording a statement from the said Balakrishnan who also dis-owned having placed any order for purchase of the said ornaments. Chidambaram also retracted the statement on 5-6-83.
In the entire case records, excepting the retracted statement of Chidambaram there is absolutely no evidence at all against the appellant connecting him in any way with the commission of any offence in regard to gold ornaments under seizure. In the impugned order, the lower appellate authority has adverted to the chit recovered from the said Chidambaram and taken it as the circumstance against the appellant but unfortunately the said chits have not been set out in the Show Cause Notice at all much less copy of the same given to the appellant.
When reliance is sought to be placed on a piece of documentary evidence against the appellant, it is but fair that the same should be specifically set out in the show cause notice and the appellant given a reasonable opportunity to traverse the same. Excepting the retracted statement of Chidambaram, there is no other evidence on record. The proceedings are penal in nature and penalty cannot be imposed on the basis of retracted confessional statement of the said Chidambaram without any supporting evidence. The chit also does not in any way help the Department because apart from the fact that the chits have not been specifically set out as a piece of evidence relied upon against the appellant in the show cause notice, the chits by themselves do not in any way go against the appellant. The adjudicating authority and the lower appellate authority would appear to proceed on the assumption that the writings in the chits are the writings of the appellant. There is no warrant for such a finding. The chits were not referred to the handwriting expert. Even assuming for the purpose of argument that the chits are written by the appellant, the figures mentioned in the chits do not in any way tally with the ornaments under seizure and at any rate there is no evidence to connect the chits with the ornaments under seizure. In my opinion ratio of the Division Bench ruling of the Kerala High Court referred to above would apply on all fours to the facts of the present case. The Division Bench of the Kerala High Court has held that in the absence of corroboration, retracted statement of a person cannot constitute the sole basis for finding that the charges against the appellant are proved. The Division Bench of the Madras High Court in the Kalyana Raman case referred to above has also taken the similar view. At any rate, the appellant would be entitled to the benefit of doubt in the circumstances of the case. Therefore, I hold that there is no evidence against the appellant excepting the retracted statement of one Chidambaram for which there is no supporting corroborative evidence. The chits are not proved to have been written by the appellant nor the figures mentioned therein tally with the ornaments under seizure either in terms of quantity or otherwise. I therefore, give the appellant the benefit of doubt in the circumstances and exonerate him of the charges. In the result the impugned order is set aside and the appeal allowed.