2011 (8) TMI 579 - AT - Customs

Tribunal upholds confiscation of foreign currencies in Customs Act case

The Tribunal upheld the confiscation of foreign currencies under Section 111(d) of the Customs Act, amounting to Indian Rs.44,27,500, seized from an ... Confiscation for attempted export of foreign exchange without permission of the Reserve Bank of India (FERA restriction read with Customs Act) - Evidentiary value of statements recorded under Section 108 of the Customs Act - Independence of adjudication under FERA and Customs Act; non binding effect of ED adjudication on Customs proceedings - Authenticity and evidentiary value of post arrest documentary evidence (sale note) - Imposition of penalty for rendering goods liable to confiscation under the Customs ActIndependence of adjudication under FERA and Customs Act; non binding effect of ED adjudication on Customs proceedings - Whether the Order in Original of the Deputy Director of Enforcement under FERA was binding on the Commissioner of Customs and precluded confiscation/penalty proceedings under the Customs Act. - HELD THAT: - The Tribunal held that proceedings under FERA (for contravention of Section 8(1) adjudicated under Section 51/50 of FERA) and proceedings under the Customs Act (for attempted export in breach of restrictions imposed by Section 13(2) of FERA deemed to be imposed under Section 11 of the Customs Act by Section 67) occupy mutually exclusive domains. Contraventions cognizable under Section 13 are expressly excluded from the penal provision under Section 50 of FERA; the ED's adjudication therefore did not determine the separate question of attempted export actionable under the Customs Act. The Customs Department had no statutory locus to appeal under Section 52 of FERA and the ED itself acknowledged that Customs was not in a position to prefer such an appeal. Consequently the Dy. Director's order under FERA did not bind the Commissioner of Customs or prevent independent adjudication and confiscation under the Customs Act. [Paras 16]Order of the Dy. Director of Enforcement under FERA is not binding on the Commissioner of Customs and does not preclude confiscation/penalty proceedings under the Customs Act.Evidentiary value of statements recorded under Section 108 of the Customs Act - Whether the confessional/inculpatory statements of the appellants recorded under Section 108 were voluntary and admissible, or were validly retracted. - HELD THAT: - The Tribunal examined the circumstances of recording, subsequent retractions, medical notes and the manner of retraction. It found that (a) the appellants failed to prove that the statements were extorted by force, coercion, threats or assault; (b) the retractions were made before the Judicial Magistrate and not before the officer who recorded the statements as required for effective retraction in this context; (c) medical reports did not corroborate the appellants' allegations of assault by customs officers; and (d) no material or witness was produced to establish coercion. On this basis the Tribunal rejected the retractions and held that the statements retained evidentiary value and corroborated the Revenue's case concerning the scheme to effect illegal export. [Paras 17]The confessional statements under Section 108 were not shown to be involuntary; the retractions were rejected and the statements retained evidentiary value.Authenticity and evidentiary value of post arrest documentary evidence (sale note) - Whether the sale note produced by the appellant established lawful acquisition of the seized foreign currency abroad and entitled him to its release. - HELD THAT: - The Tribunal found there was no reliable evidence that the sale note was produced to Customs on arrival or that it was recovered during search; the seizure panchanama contained no mention of such a document. The sale note lacked sufficient identification particulars tying it to the appellant, did not account for all currencies seized, and there was no evidence that the issuing exchange was an authorised dealer. The initial burden to prove authenticity and that the document was carried from Dubai lay on the appellant and was not discharged. The Tribunal therefore held the sale note to be of no evidentiary value and concluded it could be a fabricated document. [Paras 17]The sale note is of no evidentiary value and does not establish lawful acquisition or import of the seized foreign currency.Confiscation for attempted export of foreign exchange without permission of the Reserve Bank of India (FERA restriction read with Customs Act) - Imposition of penalty for rendering goods liable to confiscation under the Customs Act - Whether the seized foreign currency was liable to confiscation under the Customs Act and whether penalties on the appellants were justified. - HELD THAT: - The Tribunal held that the seizure intercepted a transfer of possession in the customs area where the Customs officer (Roy) handed the pouch to the passenger (Akhtar) to facilitate obtaining a Currency Declaration Form and subsequent illegal export without RBI permission. The appellants' confessional statements corroborated this scheme and were reinforced by admission of an earlier similar transaction (CDF No.001056 dated 22.12.1995). Given the failure of the appellants to prove lawful acquisition/import and the rejection of ret ractions and the sale note, the Tribunal concluded the currency was being rendered liable to export contrary to the prohibition under Section 13(2) of FERA (deemed imported into the Customs Act by Section 67) and thus attracted confiscation under Section 113(d) (and was lawfully confiscated although Section 111(d) was invoked). The appellants' collusion and misuse of official position justified imposition of penalties under the Customs Act; the Tribunal declined to reduce the quantum. [Paras 17]Seized foreign currency is liable to confiscation; penalties on the appellants are justified and not liable to be reduced.Final Conclusion: The Tribunal dismissed the appeals, upholding the confiscation of the seized foreign currency as an attempted illegal export in collusion with a Customs officer and sustaining the penalties imposed on the appellants; the ED's favourable adjudication under FERA and the sale note submitted by the appellant were held to be immaterial to and insufficient against the independent Customs adjudication. Issues Involved:1. Confiscation of foreign currencies under Section 111(d) of the Customs Act.2. Imposition of personal penalties under Section 112 of the Customs Act.3. Validity of self-incriminating statements and their retraction.4. Jurisdiction and binding nature of the Enforcement Directorate's (ED) order.5. Authenticity and evidentiary value of the sale note dated 7.1.1996.6. Evaluation of evidence and procedural propriety.Detailed Analysis:1. Confiscation of Foreign Currencies:The case involved the confiscation of foreign currencies equivalent to Indian Rs.44,27,500/- under Section 111(d) of the Customs Act. The foreign currencies were seized from an individual (Akhtar) at Sahar International Airport upon his arrival from Dubai. The Customs authorities believed that the currencies were acquired illegally and brought into the Customs area to obtain a Foreign Currency Declaration Form (CDF) fraudulently for subsequent export. The adjudicating authority ordered absolute confiscation of the currencies under Section 111(d) and imposed penalties under Section 112. The Tribunal upheld the confiscation under Section 113(d) of the Customs Act, noting that any breach of Section 13(2) of the FERA is deemed a breach of Section 11 of the Customs Act, thus justifying the confiscation.2. Imposition of Personal Penalties:Penalties were imposed on the appellants under Section 112 of the Customs Act. The Tribunal found that the appellants colluded in the Customs area for the prospective illegal export of foreign currency without RBI permission, rendering the currency liable to confiscation under Section 113(d). The Tribunal upheld the penalties, emphasizing the serious nature of the economic offense and the misuse of official position by one of the appellants (Roy).3. Validity of Self-Incriminating Statements and Retraction:The appellants retracted their self-incriminating statements given under Section 108 of the Customs Act, alleging coercion, threats, and assault by Customs officers. The Tribunal examined the retractions and found inconsistencies and lack of credible evidence to support the claims of coercion. Medical reports did not corroborate the allegations of assault by Customs officers. The Tribunal held that the statements were not validly retracted and had evidentiary value.4. Jurisdiction and Binding Nature of the ED's Order:The appellants argued that the Customs authorities were bound by the ED's order, which found the currencies legally acquired abroad. The Tribunal rejected this argument, stating that the ED's proceedings under the FERA and the Customs proceedings under the Customs Act operated in different fields and had mutually exclusive domains. The Customs authorities were not bound by the ED's order, and the Customs Department did not have the locus standi to appeal against the ED's order under Section 52 of the FERA.5. Authenticity and Evidentiary Value of the Sale Note:The appellants produced a sale note dated 7.1.1996 from a Dubai exchange to establish the legal acquisition of the foreign currencies. The Tribunal found no reliable evidence that the sale note was brought from abroad and produced before the Customs authorities. The sale note did not contain necessary identification particulars and was not mentioned in the seizure panchanama. The Tribunal held that the sale note was likely fabricated and had no evidentiary value.6. Evaluation of Evidence and Procedural Propriety:The Tribunal evaluated the evidence, including the statements of the appellants, the seizure panchanama, and the alleged sale note. It found that the appellants failed to discharge the burden of proof to establish the lawful acquisition and import of the foreign currencies. The Tribunal upheld the confiscation and penalties, emphasizing the need for deterrent punishment for economic offenses. The Tribunal also addressed the procedural propriety, noting that the non-mention of Section 113(d) in the show-cause notice or the impugned order did not invalidate the confiscation, as the cause of action was clearly brought out.