| SooperKanoon Citation | sooperkanoon.com/12463 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Dec-26-1997 |
| Reported in | (1999)(110)ELT631TriDel |
| Appellant | Ramesh Khatnani |
| Respondent | Collector of Customs |
2. The facts leading to the present case are that acting on secret information, premises of M/s. Ramesh Daulat Ram Khatriani were searched. The search of the business premises resulted in recovery of 8 foreign marked gold biscuits of 10 Tolas each which were found concealed in a cavity in a wooden show case fitted in the business premises. From a cavity found in a wooden Chowki lying in the business premises, 1,000 US Dollars were recovered. From the right side pocket of the pant worn by Shri Ramesh Khatnani, US Dollars 67 and Singapore Dollars 15 were recovered. Two paper slips were also recovered. Some incriminating documents were recovered and seized. Shri Ramesh Khatnani, on demand, could not produce any documentary or other evidence to legally possess, acquire and control the recovered foreign marked Gold Biscuits and foreign currencies. Therefore, the same were seized in the reasonable belief that they were liable to confiscation.
In the search of the residential premises of Shri Ramesh Khatnani, Indian currency of Rs. 11,10,000/-was recovered from a cavity in an almirah. Three jackets of white cloth were also recovered which appeared to have been used for carrying, keeping and concealing foreign marked gold biscuits from a washing machine which was kept in the bathroom. Shri Ashok Khatnani, brother of Shri Ramesh Khatnani could not produce any evidence for legal possession, custody or control of the recovered Indian currency or explain the presence of the jackets.
The same were seized in the reasonable belief that they were sale proceeds of smuggled goods and were liable to confiscation.
3. Shri Ramesh Khatnani in his statement recorded on 19-12-1993 stated that he was engaged in the business of changing mutilated currency notes; that he was also dealing with foreign marked gold biscuits and foreign currency. He admitted that 8 foreign marked gold biscuits, foreign currency and Indian currency of Rs. 11,10,000/- was recovered from his residential and business premises and partly from his pant's pocket; that the 8 foreign marked gold biscuits were purchased by him through a Dalai, Topiwala staying at Ucha Mahanaji, Delhi for Rs. 4.25 lakh; that on earlier occasions also, Shri Topiwala had sent him 7 and 5 foreign marked gold biscuits through a carrier in the last week of November, 1993 and first week of December, 1993 Shri Ramesh Khatnani also stated that he does not know the address or phone number of Shri Topiwala; that Shri Topiwala knew his telephone number; that he got Rs. 100/- per gold biscuit as profit; that the gold biscuits were disposed of in Ajmer market; that he did not have any baggage receipt for the seized gold biscuits; that the said gold biscuits were smuggled and had been acquired them illegally; that the seized foreign currencies were purchased by him 2 days back from Jaireens (pilgrims) visiting Khwaja Fair; that the foreign currencies were to be sold at Delhi. About the Indian currency recovered from his residential premises, Shri Ramesh Khatnani stated that they were sale proceeds of smuggled gold biscuits; that he did not have any account; that no entry to this effect had been made in his Bahi Khata; that he had no account of seized Indian Currency from cavity; that he used to sell foreign marked gold biscuits in retail. On the recovery of two paper slips from his pocket Shri Ramesh Khatnani said that one of the slips contained an account of Rs. 13,598/- of his shop and that the second slip contained an account of 3 gold biscuits and the figure 10 mentioned in the slip related to the commission thereof at the rate of Rs. 10/-.
4. On the incriminating documents seized, Shri Ramesh Khatnani clarified that the seized 'Jindal Note Book' and other documents contained telephone numbers of those dealing in mutilated Indian currency notes etc.; on the account Nos./Tickets mentioned in the 'Super-fine Note Book', Shri Ramesh Khatnani clarified that these pertain to the account of gold and Indian currency which account was maintained by one of his employees who had since left the service; that the 'just for you' diary contained the addresses of relatives and traders, related to his business; that the seized jackets had been used for carrying/concealing foreign marked gold biscuits.
5. Shri Ashok Khatnani in his statement recorded on 18-12-1993 stated that Indian currency of Rs. 11,10,000/- and the three jackets were recovered from the room occupied by his brother, Shri Ramesh Khatnani; that the seized Indian currency belonged to Shri Ramesh Khatnani; that the source of procurement of the Indian currency could be furnished by Shri Ramesh Khatnani. Statement of Shri Laxman Das S/o Narain Das, employee of Shri Ramesh Khatnani was also recorded on 20-12-1993 who stated that he had been working with Shri Ramesh Khatnani for the last six months on a monthly salary of Rs. 750/-. He stated that Shri Ramesh Khataani used to do the business of foreign marked gold biscuits and foreign currency for which the inner room of the business premises was used by him.
6. Shri Ramesh Khatnani was arrested on 19-12-1993 and produced before the Special Magistrate who remanded him to judicial custody.
7. Accordingly, a Show Cause Notice was issued to the appellants asking them to explain as to why the seized gold biscuits, foreign currencies, Indian currency, 3 jackets, etc. should not be confiscated and why a penalty should not be imposed. The appellants in reply to the Show Cause Notice submitted that there was no prior information available with the Department inasmuch as there is no mention of such information in the Panchnama; that there was no reason to believe at the time of search and seizure of the goods that the goods were smuggled goods; that 1,067 US Dollars and 15 Singapore Dollars were recovered from an envelope which contained the name of Shri Shankar Wadhwani; that the said envelope was kept by Shri Shankar Wadhwani with the appellant for safe keeping; that Shri Tikam Chand, one of the Panch witness was neither a goldsmith nor a gold dealer; that Shri Tikam Chand was under the influence of Customs officers and was not an independent witness as the Customs officers had made two cases against him earlier. It was argued before the lower authorities that gold biscuits and foreign currencies were not notified under Chapter IVA of the Customs Act, 1962 and, therefore, the person possessing the same was not required to keep any documentary evidence on the licit possession, storage or transportation of the same nor was he required to keep any documentary evidence for keeping foreign currency or gold; that there was no contravention of Section 7(c) and 11 of the Customs Act, 1962 read with Sections 3(1) and 3(2) of the Foreign Trade Regulation Act and Section 13 of the Foreign Exchange Regulation Act, 1972. It was argued that the gold and foreign currencies were not liable to confiscation under Section 111 of the Customs Act, 1962. It was submitted that since there was no evidence to show that the seized gold or foreign currencies were smuggled, the question of their concealment does not arise and seizure of wooden chowki was not warranted; that the jackets and documents seized were not incriminating; that the Panchnama dated 18-12-1993 did not contain the correct facts.
8. About seizure of Indian Currency, it was denied that their possession was illegal and mala fide; that there was no evidence with the Customs officers at the time of seizure that this Indian Currency was the sale proceeds of smuggled gold; that there could not be any reasonable belief at the time of seizure that the same was liable to confiscation; that there was no basis for seizing the jackets and documents; that the appellant was in the custody of Customs officers from 18-12-1993; that no summons were issued; that the purported statement under Section 108 was not a statement under Section 108 as no summons were issued; that the statement was not true and voluntary; that the statement was obtained under duress; that the statement was not recorded in the handwriting of the appellant.
9. About the statement of Shri Ashok Khatnani, it was argued by the appellants that there was nothing in the statement of Shri Ashok Khatnani to prove that the Indian currency was the sale proceeds of any smuggled gold and therefore the seizure of Indian currency was illegal.
So also were arguments adduced against seizure of documents and jackets. After careful consideration of the submissions made, 8 gold biscuits were confiscated absolutely, 1,067 US Dollars and 15 Singapore Dollars were also confiscated; Indian Currency of Rs. 11,10,000/- was confiscated; 3 jackets, wooden chowkie, the pant was also confiscated and penalty of Rs. 20,000/- was imposed on Shri Ramesh Khatnani and Rs. 10,000/- on Shri Ashok Khatnani.
10. Appearing for the Appellants, Shri K.K. Anand and Shri D.K. Rana, the ld. Advocates, submitted that Shri Ramesh Khatnani by his letter dated 20-12-1993 had retracted his statement dated 19-12-1993; that the statement was not true and voluntary; that the 8 gold biscuits with foreign markings were given by M/s. Ashish Jewellers of Delhi for making kundan sets and bangles as the appellant specialised in getting kundan sets made; that 1,067 US dollars and 15 Singapore Dollars belonged to Shri Shankar Dhamomal Wadhwani who was his friend and had given these foreign currencies for safe custody; that Indian currency was recorded in his Bahi Khata; that when Shri Shankar Dhamomal Wadhwani came to know of the seizure of foreign currencies, he filed an affidavit in the Court on 30-12-1993; that Shri Ashok Suri of M/s.
Ashish Jewellers of Delhi, who gave the gold biscuits to Ramesh Khatnani, filed an affidavit dated 27-12-1993 stating that on 21-10-1993, he received 10 foreign marked gold biscuits from one Shri K.N. Babu for making 18 bangles and 4 sets of kundan work; that on 16-12-1993,8 pieces of foreign marked gold biscuits belonging to Shri K.N. Babu were handed over to the appellant Shri Ramesh Khatnani for making 4 sets of kundan weighing 900.33 gms.
11. Shri K.K. Anand, the ld. Counsel referring to the statement of Shri Ashok Suri of M/s. Ashish Jewellers, submitted that Shri Suri had clarified the position beyond any doubt that 8 gold biscuits were given to him by one Shri K.N. Babu for making bangles and kundan sets; that the import of these goods was covered by baggage receipt in the name of Shri K.N. Babu, photocopy thereof was available with him. The ld.Counsel also submitted that the Department on verification found that the baggage receipt was genuine. The ld. Counsels submitted that there was an entry in the Stock Register of M/s. Ashish Jewellers showing that 8 gold biscuits were given to Shri Ramesh Khatnani for conversion into Jeweller as indicated above. The ld. Counsel also submitted that if Shri Ashok Suri could not read the address of Shri K.N. Babu recorded in the baggage receipt, that does not mean that the gold biscuits were not covered by the baggage receipt or were not given to him by Shri K.N. Babu. The ld. Counsel submitted that the gold biscuits under confiscation were covered by the baggage receipt which showed that they were imported legally and were acquired legally by Shri Ashok Suri of M/s. Ashish Jewellers and subsequently by Shri Ramesh Khatnani, the appellant in the instant case. They submitted that an affidavit was filed by Shri Ashok Suri of M/s. Ashish Jewellers claiming the 8 gold biscuits. It was argued that there was entry of these gold biscuits in the records of M/s. Ashish Jewellers and Shri Ramesh Khatnani; that the records also showed that M/s. Ashish Jewellers had similarly given gold to Shri Ramesh Khatnani for making kundan jewellery.
12. On the question of recovery of Indian currency of Rs. 11,10,000/-, the ld. Counsel submitted that Shri Ramesh Khatnani was an Income Tax Payer and was submitting his IT returns from time to time and that he was maintaining detailed accounts of the business transactions in respect of torn currency notes, PCO and Jewellery. The ld. Counsel submitted that his ledgers showed that he had sufficient cash balance with him and that this cash balance was shown in his IT returns for the relevant period which was submitted much before the date of seizure. He submitted that Rs. 11,10,000/- were his genuine business cash including his profit over the years; that nothing has been brought on record to prove that this was the sale proceeds of smuggled goods. He submitted that even if the statement of Shri Ramesh Khatnani recorded on 19-12-1993 is relied upon, then he had dealings with Dalai Topiwala only on 3 occasions and that in all he had received 20 gold biscuits out of which 8 gold biscuits were seized by the Customs, thus there were only 12 gold biscuits which were received from Topiwala which can at best be presumed to have been sold; that the total sale proceeds of 12 gold biscuits according to the price then prevalent could not be more than Rs. 6.375 lakh and not Rs. 11.10 Lakhs. The ld. Counsel submitted that the Department has alleged that in the rough note books, the entries pertained to gold. The ld. Counsel submitted that this at best is a presumption as no one was questioned about the entries in the Register, neither were the entries verified by any one nor was there any statement recorded from any one indicating that Shri Ramesh Khatnani was dealing in foreign marked gold biscuits except the statement of one of his employees. They submitted that the statement of the employee was retracted and that was recorded at the back of Shri Ramesh Khatnani, the appellant in this case and the witness was not offered for cross-examination. The ld. Counsels submitted that the amount found in the residential premises was the genuine cash in the business.
13. The ld. Counsel for the appellants submitted that the search was illegal inasmuch as search authorisation was issued by a Superintendent who is not so authorised under Section 105 of the Customs Act, 1962.
The ld. Counsels submitted that since the search was illegal, therefore, no action on the results of the search i.e. recovery of gold biscuits, foreign currency and Indian currency could be taken.
14. The ld. Counsel also submitted that gold and foreign currency was not notified under Chapter IV A of the Customs Act, and, therefore, the person possessing them was not required to keep any documentary evidence about legal possession, storage or transportation of the goods in the place of storage of the goods; that documents, if any, could be produced at the adjudication stage.
15. The ld. Counsel submitted that there was no prior information and, therefore, there could not be any reasonable belief and that in this view of the matter, the search was illegal and seizure consequently was also illegal. Since the seizure was illegal, therefore, the question of confiscation does not arise.
16. About seizure of the jackets, the ld. Counsels submitted that no evidence has been brought on record to prove that the jackets were made specially for concealing/carrying gold nor an expert opinion has been brought on record. The ld. Counsel submitted that the appellant was illegally kept in custody for a long time and the statement was recorded under duress; that he was tortured to such an extent that the Customs had to call for a Doctor; that the statement obtained was not voluntary nor true and was retracted as soon as an opportunity was available and, hence, cannot be treated as an independent evidence.
17. The ld. Counsel also submitted that a public notice was issued by the Import Trade Control Authorities under ITC Order No. 83/90-93, dated 29-2-1992 wherein it was specifically stated that '(d) there will be no restriction on sale of such imported gold.' The ld. Counsel also submitted that since there was no restriction on sale of the gold imported by passengers as baggage and since the gold in question was covered by the baggage receipts which was found to be genuine, therefore, the sale was legal and was accounted for properly- 18. On foreign currency, the ld. Counsels submitted that Customs have no authority to seize and confiscate foreign currency; that there was no violation of FERA; since the foreign currency was properly accounted for and, therefore, the seizure was illegal.
19. Summing up the arguments, the ld. Counsel submitted that the gold was acquired legally; that sale of gold imported as passengers baggage was permitted under the Import Trade Control Policy; that gold and foreign currencies were not notified under Chapter IV of the Customs Act, 1962 and, therefore, no documents were required to be kept for legal possession and custody of the gold. On Indian currency also, no evidence has been placed on record to prove that the Indian currency seized was the sale proceeds of smuggled gold. The ld. Counsel, therefore, submitted that looking to the facts of the case, the gold was legally acquired; that the Indian currency was properly accounted for; that the foreign currency could not be seized by the Customs and, therefore, prayed that the appeal may be allowed and the confiscated gold and Indian/foreign currency may be restored to the appellants.
19(a). The ld. Counsel also distinguished the following judgments which were relied upon and cited by the ld. SDR:Union of India v. T.R. Verma 20. Narrating the facts of the case and replying to the arguments adduced by the ld. Counsel for the Appellants, Shri P.K. Jain, the ld.SDR, submitted that though seizure was affected on 18-12-1993, however the statement of Shri Ramesh Khatnani was recorded only on 19-12-1993 on medical advice. He submitted that this is clear from the medical certificate.
21. The ld. SDR submitted that Shri Ramesh Khatnani was not arrested on 18-12-1993. but was arrested on 19-12-1993 and produced before the Special Magistrate on 20-12-1993. It was submitted that the retraction of the statement recorded on 19-12-1993 was an after-thought perhaps on legal advice. He submitted that the letter dated 20-12-1993 retracting the statement recorded on 19-12-1993 was received from Shri Ramesh Khatnani on 6-1-1994. He submits that this letter clearly shows that the retraction was not immediate, but was after considerable time and the date, 20-12-1993 is not the correct date on which this letter was written by Shri Ramesh Khatnani. He submitted that there was nothing in the Bail Application about the statement retracted and thus, the letter dated 20-12-1993 is a back dated letter.
22. On the question of the search and seizure being illegal, the ld.SDR submitted that the search was result of information. The goods were recovered from cavities where they were concealed; that foreign currency was recovered partly from a cavity in the Chowkie and partly from the pockets of the pant worn by Shri Ramesh Khatnani; that this clearly proved that the statement of Shri Wadhwani was wrong and given only to protect Shri Ramesh Khatnani. He submitted that since there was information and on the basis of that information, search authorisation was given, therefore, there was reasonable belief. This reasonable belief was confirmed by recovery of gold Biscuits and foreign currency as also Indian currency. He submitted, therefore, that reasonable belief existed at the time of search and since there was reasonable belief, therefore, the seizure was justified. The ld. DR submitted that Shri Tikam-chand, one of the witnesses to the Panchnama was not under Customs influence as was claimed by the appellants. He submitted that there was a case against him and, therefore, instead of being under Customs influence, he should have been hostile to Customs.
23. On the question of issue of search authorisation by the Superintendent, the ld. DR submitted that Notification No. 11 /70, dated 31-1-1970 authorised a Superintendent to issue search warrants in the absence of his A.C. at his headquarters. He submitted that since the Superintendent issued the Search Authorisation, it clearly meant that the A.C. was not at his headquarters on that date.
24. The ld. DR submitted that the recovery of 3 jackets also indicated that they were used for concealing/carrying large number of gold biscuits as such jackets are normally used by gold smugglers in which large consignments of gold biscuits are carried by smugglers. The ld.SDR submitted that this further lent support to the evidence that the appellants were engaged in the smuggling of gold biscuits.
25. On the question of the gold biscuits being given for conversion into Kundan jewellery and bangles, the ld. DR submitted that in the statement recorded on 19-12-1993, the appellant did not mention that these gold biscuits were given to him by M/s. Ashish Jewellers or that he was specialising in ordering kundan jewellery. The ld. DR submitted that had the gold biscuits been given to the appellant for conversion into kundan jewellery, then he should have stated this in his statement recorded on 19-12-1993. The ld. DR, therefore, submitted that conversion of the gold biscuits into kundan jewellery is a story made out subsequently.
26. On the question that on 20-12-1993 on which the retracted statement is purported to have been written, the ld. DR submitted that on 20-12-1993, the appellant was sent to judicial custody and, therefore, the letter of retraction dated 20-12-1993 should have been forwarded to the Jail Superintendent in normal course and since the letter was not sent through the normal channel, therefore, it clearly was a back-dated letter. Regarding the statement of Lax-man Das, an employee of Shri Ramesh Khatnani, the ld. SDR submitted that his statement was recorded on 20-12-1993, but the same was retracted on 28-4-1994. He submitted that this was belated retraction and, therefore, was just done to help the appellant.
27. The ld. DR submitted that the defence put forth by the appellants is full of abnormal things inasmuch as Shri K.N. Babu, instead of sending the affidavit to the Collector or to the Seizing Officers, sent the affidavit claiming ownership of the gold biscuits to the Court.
Similarly, M/s. Ashish Jewellers also sent the affidavit to the Court instead of sending it to the Seizing Officers or the Collector concerned. The ld. SDR submitted that with the letter dated 20-12-1993, the appellant did not send any documents, affidavits, baggage receipt etc. The ld. DR also referred to the observations of the Rajasthan High Court on the bail application of the appellant.
28. About the keeping for safe custody of 1,067 US Dollars and 15 Singapore Dollars, the ld. DR submitted that the entire story is far from truth inasmuch as Shri Wadhwani was having a joint account with his brother in India; that he had come to India in August, 1993 while the seizure was on 18-12-1993; that Singapore currency normally will not be carried by persons coming from Abu Dhabi; that even when currency was kept in safe custody, it should have been found at one place. The ld. SDR submitted that 1,000 US Dollars were recovered from the business premises whereas 67 US Dollars and 15 Singapore Dollars were recovered from the pant pocket of Shri Ramesh Khatnani.
29. Referring to the statement of Shri Ashok Suri of M/s. Ashish Jewellers, the ld. DR submitted that ownership of gold biscuits still vested with Shri K.N. Babu; that his baggage receipt was dated 21-10-1993; that M/s. Ashish Jewellers kept the gold between 21-10-1993 to 16-12-1993 which was not the normal trade practice inasmuch as no one keeps the gold for such a long time; that Shri Ashok Suri did not appear for 3 months; that his statement was recorded on 7-5-1994; that no claim for gold biscuits or jewellery was lodged by Shri K.N. Babu and M/s. Ashish Jewellers with the Customs authorities; that the affidavits were filed with authorities other than the seizing Customs authorities.
30. On the question of recovery of Indian currency, the ld. DR submitted that the records seized indicate that Shri Ramesh Khatnani was dealing in foreign marked gold biscuits as was observed from the private note books.
31. About the entry in Cash Book, the ld. DR submitted that the level of transactions recorded in tike cash book was very low, that only the gold transactions were of any substantial quantity; that all the transactions were about torn notes; that there was no transaction of sale or purchase of jewellery except 3; that though M/s. Ashish Jewellers had shown issue of gold biscuits to Shri Ramesh Khatnani, however, there was no issue of bill or invoice.
32. On the question of non-production of witnesses for cross-examination, the ld. DR submitted that retraction of statement and cross-examination of witnesses, if not allowed, does not amount to denial of natural justice. In support of this contention, he cited and relied upon the decision of the Hon'ble Supreme Court in the case of Surjeet Singh v. Union of India [1997 (89) E.L.T. 646]. Referring to the case of C.C.E., Madrasand Ors. v. D. Bhoormull [1983 (13) E.L.T.1546], the ld. DR submitted that the Apex Court in this case observed that the broad effect of the application of basic principles underlying Section 106 of the Evidence Act to cases under Section 167(8) of the Act is that the Department would be deemed to have discharged its burden if it adduces so much evidence, circumstantial or direct, as is sufficient, to raise a presumption in its favour with regard to the existence of the fact sought to be proved. The ld. DR submitted that under Section 123 of the Customs Act, 1962, burden of proof in certain cases where any goods to which Section 123 applies, are seized under the Act in the reasonable belief that they are smuggled goods, the burden of proof that they are not smuggled goods shall be "(a) in a case where such seizure is made from the possession of any person (i) on the person from whose possession the goods were seized and (ii) if any person other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any who claimed to be the owner of the goods so seized. (2) This section shall apply to Gold, Diamonds, Manufacturers of Gold or Diamonds and any other class of goods which the Central Government may by notification in the Official Gazette specify." 33. The ld. DR also referred to the decision of the Apex Court in the case of the State of Maharashtra v. Nativarlal Damodar Das Soni, [1983 (13) E.L.T. 1620] wherein the Apex Court held that even if the search was illegal, it will not vitiate the seizure of the articles, subsequent steps in investigations and trial and conviction of the accused. However, if the search is illegal, it can be resisted by a person whose premises are bought to be searched and the Court may be inclined to examine carefuly, the evidence regarding the seizure made at an illegal search. The ld. SDR submitted that even if the search was illegal in view of the fact that the search authorisation was issued by the Superintendent in terms of the above ruling of the .Apex Court, it will not vitiate the seizure of article and subsequent investigations.
34. In rejoinder, the ld. Counsel for appellants submitted that no reasoning has been given in the impugned order; that unwarranted influences have been drawn; that the jackets were normal jackets; that there was no allegation that the jackets were specially made; that no evidence has been brought on record to prove that the retraction letter dated 20-12-1993 could not be written on 20-12-1993; that Doctor's advice was not heeded in the Departmental Authorities and that Shri Ramesh Khatnani was kept in custody; that bail application was moved on 5-1-1994, but was rejected on 6-1-1994 that all documents including affidavits were brought on record of the Court or about 5-1-1994; that insofar as the recovery of Indian currency was concerned, the ld.Counsel submitted that IT returns, cash book, ledger etc. amply supported the contention of the appellant that Indian currency was the money in business and covered by the documents, i.e. cash book, ledger IT returns; that cash is inventory for a businessman and it was kept as such; that in cross-examination, Customs officers who seized the goods, admitted that they were not competent to carry the search. The ld.Counsel submitted that the honourable High Court in the case of Asstt.
Collector of C.E., Aurangabad v. Bharat Shankar Rao Gadewar and Anr., [1988 (33) E.L.T. 676] held that under Section 105 of the Customs Act, 1962, it is Asstt. Collector of Customs who can authorise any officer of Customs to effect the search. In the instant case, the search authority is signed by the Superintendent of Central Excise and Customs. Since the Superintendent of Central Excise and Customs had no power to authorise his subordinates to effect the search, the search was illegal.
35. On the question of decoding of entries in the private records, the ld. Counsel submitted that no evidence has been placed on record as to how the figures were decoded and the inferences were drawn that Shri Ramesh Khatnani was indulging in all transactions of smuggled foreign marked gold biscuits. He submitted that the entire case is built on presumptions and surmises without any base whatsoever. The ld. Counsel submitted that Surjit Singh's case was not applicable to the facts of the present case; that the observations of the honourable Rajasthan High Court were not relevant as they were not proved after the trial court verdict. The ld. Counsel also submitted that the appellant has been acquitted by the Trial Court. The ld. Counsel also submitted that though Shri Suri has not filed any appeal and on the facts stated, he will get the benefit and referred to the judgment of the honourable Orissa High Court in the case of Basant Bharati v. State of Orissa [1997 CLJ 2762] and also to para 6 of the judgment in AIR 1988 SC 345.
36. The ld. Counsel also submitted that in the case of R.P. Industries v. Collector of Customs [1996 (82) E.L.T. 129], this Tribunal held that documentary evidence has to be preferred as against some oral versions given before the investigating officers and that the statements recorded under Section 108 of Customs Act, 1962 should be given credence, but when inconsistent with documentary evidence recovered during the search, such documentary evidence is to be preferred.
37. Summing up his arguments, the ld. Counsel submitted that in view of the submissions made above, the impugned order may be set aside and the appeal may be allowed.
38. Heard the submissions of both sides. Perused the evidence on record and the case law cited and relied upon by both the sides. The first question is whether there was reasonable belief and what was the evidence to show that reasonable belief existed before authorising the search.
39. From the evidence placed on record, we find that in the Show Cause Notice, it is clearly stated that there was an information. We note that pursuant to this information, a search authorisation was issued by the Superintendent. Thus, there was reasonable belief that smuggled gold etc. was available in the business/residential premises of Shri Ramesh Khatnani, the appellant. We, therefore, hold that non-mention of an information report in the Panchnama does not prove that there was no information about concealment of smuggled gold or its sale proceeds.
This shows that there was information and this fact has further been stated in the Show Cause Notice. We, therefore, hold that there was reasonable belief consequent to which the search was conducted.
40. A lot of emphasis was laid that search was not authorised and illegal on the ground that a Superintendent was not competent to issue the search authorisation under Section 105 of the Customs Act, 1962. We note that the ld. DR brought to our notice Notification No. 11/70, dated 31-1-1970 wherein the Superintendent was authorised to issue a search authorisation under the conditions specified therein. We have perused the submissions made by both the sides on this count. We note that in the case of State of Maharashtra v. Natwarlal Damodar Das Soni, the Hon'ble Supreme Court held that 'even if the search was illegal, it will not vitiate seizure of articles, subsequent steps in investigation and trial and conviction of the accused. However, if the search is illegal, it can be resisted by the person whose premises are sought, to be searched and the Court may be inclined to examine carefully the evidence regarding the seizure made at an illegal search.' For coming to this conclusion, the Apex Court followed its earlier decisions [1963 Suppl. I SCR 408; AIR 1972 SC 885; AIR 1978 SC 933. We also note that the Kerala High Court in the case of Asstt. Collector of CE v. Wilfred Sebastian and Ors. [1983 (12) E.L.T. 122], following the ratio of the Apex Court's judgment mentioned above, held that 'It is well settled that illegality of search will not affect the validity of the seizure of the goods. Nor it vitiates the recovery of the articles or the subsequent trial'. Having regard to the ratio of the above decisions, we hold that even if the search was illegal, the seizure of the foreign marked gold biscuits, foreign currency and Indian currency is not vitiated and can be adjudicated upon after investigating.
41. Another point that was agitated before us was that confiscated gold biscuits were legally imported. On careful consideration of the various submissions made before us by both sides on this point, we note that the gold biscuits, according to the appellants, belonged to Shri K.N.Babu who had given them to M/s. Ashish Jewellers, who in turn, had given them to Shri Ramesh Khatnani. We note that when the seizure of the gold biscuits was effected, none of these people immediately filed affidavits claiming ownership of the gold biscuits with the seizing Customs Authorities, but preferred to do so belatedly with the Court.
We also note that no evidence has been placed on record to prove that Shri Ramesh Khatnani was specializing in making Kundan Jewellery as he himself was not a jeweller, he was not receiving such orders from others and had not undertaken any such jobs from any other jeweller or person, except in one or two cases earlier and that too only from M/s.
Ashish Jewellers, where according to records of M/s. Ashish Jewellers, some gold biscuits were given to Shri Ramesh Khatnani for conversion of the gold biscuits into Kundan Jewellery. Records of Shri Ramesh Khatnani did not show that on any other occasion, other than the two referred to above, he had undertaken the work of conversion of gold into kundan jewellery.
42. We also note that Shri Ramesh Khatnani in his statement recorded on 19-12-1993 had confessed that he was dealing in smuggled foreign marked gold biscuits. This statement of Shri Ramesh Khatnani is supported by his employee, Shri Laxman Das, though this statement has been retracted by Shri Ramesh Khatnani through his letter reported to be dated 20-12-1993, however, its receipt on 6-1-1994 casts doubt on its being written on 20-12-1993 and by Shri Laxman Das by his letter dated 28-4-1994. There is no documentary evidence to show that at the time of retraction of the statement on 20-12-1993, there were documents of legal possession of the gold and it's being accounted for in the books.
According to the admission of the appellants themselves, the documents were produced in the Court on or about 5-1-1994. We also note that there were some diaries seized which on decoding the entries made in them indicated dealings of sale and purchase of smuggled gold. Though these entries have not been explained by the maker of the entries, but these entries are to be seen and examined along with the statement dated 19-12-1993 of Shri Ramesh Khatnani and the statement of Shri Laxman Das, an employee of Shri Ramesh Khatnani. We have also examined the affidavit filed by Shri Laxman Das and find that it is nothing but an afterthought.
43. Looking to all the submissions and analysing them carefully, we find that there is sufficient evidence on record to prove that Shri Ramesh Khatnani was dealing in smuggled gold biscuits and the recovery of Indian Currency is the sale proceeds of smuggled goods. For coming to this conclusion, we have taken into consideration the submissions made by both sides and the case law cited as also the evidence available on record.
44. On the point that gold biscuits were covered by the baggage receipt produced by the appellant, we note that the baggage receipt only related to import of some gold biscuits by one Shri K.N. Babu, but the subsequent delivery of the said gold biscuits first to M/s. Ashish Jewellers and, later to Shri Ramesh Khatnani is not plausibly explained because of the time lag between the date of import of the gold biscuits, their delivery to M/s. Ashish Jewellers and then to Shri Ramesh Khatnani. This is further supported by the fact that Shri Ramesh Khatnani was not a Jeweller nor is there any evidence to show that he was an expert of kundan jewellery. The plausibility of the evidence placed before the authorities and before us was further eroded by the fact that the claim of the gold biscuits was made before the Courts and not before the Customs authorities. Looking to all the facts of the case as brought out by the rival parties in their submissions, we are inclined to believe the contentions of the Respondent and hold that the baggage receipt did not cover the confiscated gold biscuits.
45. On the question that gold biscuits were permitted to be sold by the Import/Export Trade Control Authorities, we find that no doubt sale of gold biscuits brought by passengers as their baggage can be sold under the dispensation in this regard but the person possessing it must be able to put forth a plausible and acceptable defence which, in the present case, the appellants have not been able to put forth. We, therefore, hold that the confiscated gold biscuits are not relatable to the baggage receipt.
46. On the question that in respect of gold biscuits imported as items of baggage, the evidence can be produced only after receipt of the show cause notice. We observe that gold biscuits and foreign currencies are not notified items under Chapter IVA of the Customs Act, 1962 and, therefore, the custody and possession was not required to be covered at the time of search and seizure of the goods. In the instant case, we observe that the explanation of the appellant was not satisfactory and on the contrary, the appellant had himself confessed that the gold biscuits were smuggled and foreign currencies were acquired from pilgrims who had come to Ajmer and for purposes of sale. This statement has been supported by Shri Laxman Das, an employee of the Appellant.
The places of recovery of the gold and currency also testified to the fact that the gold and currency were illegally obtained. Further, the defence put forth for acquisition of the foreign marked gold biscuits and foreign currencies was not convincing. Looking to all these circumstances, the point for explaining the position shifted to the point of recovery on search.
47. Further, we note that foreign marked gold biscuits are notified item under Section 123 of the Customs Act, 1962, which clearly shifts the burden of proof to the appellants to prove that the gold biscuits were acquired/possessed/kept legally. This burden was not discharged by the appellants which was on the appellants at the time of recovery of the foreign marked gold biscuits on search. Nor was the burden subsequently discharged by production of a baggage receipt which did not support the entire journey from import to handing over to M/s.
Ashish Jewellers and then to Shri Ramesh Khatnani, the appellant. We, therefore, hold that there was no legal infirmity either at the time of seizure of gold biscuits or in the order confiscating the gold biscuits.
48. On the question of retraction of statement and their value as evidence, we note that a lot of case law was cited by both sides on the retracted statements as well as cross-examination of witnesses whose statements were recorded. We note that Shri Ramesh Khatnani had tendered a statement on 19-12-1993. This statement is to be read along with the Panchnama and other records which were examined. We note that Shri Ramesh Khatnani could not explain the acquisition/possession of gold, foreign currencies and Indian currency at the time of recovery of the gold biscuits and foreign currencies and later on about the Indian currency. Recovery from the places and manner of their hiding and silence at the questions asked when these items were recovered indicated that Shri Ramesh Khatnani had nothing with him to show that he had legally acquired/possessed the foreign marked gold biscuits and foreign currencies. His statement corroborates the position in the Panchnama. Moreover, the dealings in smuggled gold and foreign currencies were confirmed by his employee, Shri Laxman Das. These statements are then to be analysed in the light of retraction. Shri Ramesh Khatnani had dated his retraction as sent on 20-12-1993, but it was received on 6-1-1994 in the Customs office. In case Shri Ramesh Khatnani had all the papers with him as indicated in the retraction letter, then what prevented him to so state at the time of recording the Panchnama on 18-12-1993. Thus the retraction appears to be doubtful, more so when Shri Ramesh Khatnani was sent to jail on 20-12-1993 and the retraction statement has not been sent through jail authorities. We have also seen the Doctor's certificate. Retraction statement, therefore, is an afterthought in as much as it says that all the papers were available which, only two days before, did not find any mention in the Panchnama. It was alleged by the appellants that one of the Panch witnesses was under Customs Officers' influence because some cases were booked against him. On this issue, we find that the contention is not convincing inasmuch as if some cases were booked against Shri Tikam Chand (one of the Panch witnesses), he should have been hostile instead of helping the Customs. Moreover, Shri Laxman Das had retracted his statement much later from the date it was recorded.
Belated retraction supports the view that it was an afterthought.
49. On the question of Shri Wadhwani's statement, we find that the position has been very lucidly discussed in the Order-in-Original. We find no legal or factual infirmity in that.
50. The above arguments with equal force apply to recovery of Indian currency also, Indian currency was not properly accounted for. The records were not sufficient to prove that it was not the sale proceeds of the smuggled gold. On the contrary, we find that confiscated Indian currency could not be considered as genuine business transaction. As the known profession of Shri Ramesh Khatnani was changing of torn notes, changing of torn notes do not require such a large amount of cash. Other known source of income was P.C.O. For a PCO, nobody requires so much cash nor can any one earn so much from a PCO.Specializing in Kundan Jewellery also does not support the possession of such an amount of cash inasmuch as Shri Khatnani was not an expert nor was he a jeweller. When put together, we hold that the Indian currency was the sale proceeds of the smuggled gold.51. Confiscation of foreign currencies is also challenged on the ground that Customs has no authority to confiscate the currency. We have perused the defence put forth by the appellants in regard to the U.S.Dollars and Singapore Dollars. We have also perused the allegation in the Show Cause Notice in this regard as also the findings in the Order-in-Original. We are convinced by the evidence led by both sides before us that foreign currency was liable to confiscation under Section lll(d) of the Customs Act. We, accordingly, uphold the confiscation thereof.
52. On the question of cross-examination of the Panch witnesses and Inspector Dhakar, we find from the records that cross-examination of S/Shri Harsh Bahadur, Superintendent and S.N. Sethi, Inspector was allowed. Panch witnesses witnessed the recovery of foreign marked gold biscuits, foreign currencies and Indian currency. Recovery of the goods is not denied. Hence the denial of cross-examination of Panch witnesses has not prejudiced the cause of the appellants.
53. In view of the above findings, we do not see any reason to interfere with the impugned order. Accordingly, the impugned order is upheld and the appeal is rejected.