2024 (2) TMI 378 - AT - Customs

Revenue fails to prove foreign origin gold smuggling without corroborative evidence under Section 112(b)

Mr. Pintu Verma @ Mukesh Verma, Deepu Verma, Rinku Verma, Girish Chandra, and Rakesh Kumar Versus Commissioner of Customs, Lucknow

CESTAT Allahabad allowed appeals against penalties imposed under Section 112(b) of Customs Act, 1962 for alleged smuggling of foreign origin gold bars. ... Imposition of penalty under Section 112(b) of the Customs Act, 1962 - Smuggling - Gold bars of foreign origin - illegally imported goods - Burden to prove foreign origin of gold - no corroborative evidences - HELD THAT:- While the Revenue has initiated the present proceedings against the Appellants on the basis of recovery of confiscated gold bars from Shri Rakesh Kumar and Shri Girish Chandra, both the said persons have disputed the said recovery. As per them, the subject gold bars were not recovered from them and they were falsely implicated in the matter. The two Appellants were therefore disputing the correctness of the Panchnama dated 30.03.2019. Law in this regard is well settled that Panchnama is merely a record of what the panch sees and the only use to which the panchnama can be put is that when the panchas go into the witness box, the panchnama can be used as a contemporary record to refresh his memory. Once the two Appellants disputed the fact of recovery of confiscated gold bars from them and also disputed the panchnama dated 30.03.2019, the panch witnesses were required to be offered for cross-examination so that the truth of the contents of the panchnama and the recovery made from the two Appellants could have been established - In the present case, though the opportunity to cross-examine the two panch witnesses was allowed but the said panch witnesses never appeared for cross-examination. In this view of the matter, it would not be safe to conclude regarding recovery of confiscated gold bars from the two Appellants only on the basis of panchnama, without corroborating the contents of the same with some other evidences. There is also no allegation in the show cause notice on the basis of call record details that the location of Shri Rakesh Kumar and Shri Girish Chandra was in Kolkata anytime during the period from 28.03.2019 to 30.03.2019. Further, as rightly pointed out by the Ld. counsel for the Appellants, the call record details is also in respect of some other phone numbers, the reference of which is not coming from the recorded statements or the enquiry made and have been straightaway referred to in the show cause notice. Thus, no concrete evidence is forthcoming in favour of the revenue on the basis of call record details. The Revenue has also not got the confiscated gold bars tested by touchstone method to test the purity of the confiscated gold bars. In these circumstances, the initial burden to prove foreign origin of subject gold bars has not been established - The entire case of the Revenue appears to be based on assumptions and presumptions and the same cannot take place of substantive evidence and accordingly, it cannot be held that the Appellants have in any manner dealt with the goods liable to confiscation under Section 111 of the Customs Act and consequently they cannot be subjected to penalty. Since the initial burden of proving the alleged illegal importation of gold bars of foreign origin has not been discharged by the Revenue and no corroborative evidence has been brought on record to support the case made out against Shri Girish Chandra and Shri Rakesh Kumar, the proceedings against the Verma Brothers also cannot sustain - Appeal allowed. Issues Involved:1. Legitimacy of the recovery of gold bars.2. Validity of confessional statements.3. Adequacy of evidence linking appellants to smuggling activities.4. Applicability of penalties under Section 112(b) of the Customs Act.Summary:1. Legitimacy of the Recovery of Gold Bars:The primary issue was whether the gold bars were legitimately recovered from the appellants, Rakesh Kumar and Girish Chandra. The appellants disputed the recovery, claiming false implication and disputing the contents of the Panchnama dated 30.03.2019. The court referenced the case of Mohanlal Bababhai v. Emperor, stating that a Panchnama is merely a record of what a panch sees and cannot be used as evidence without cross-examination of the panch witnesses. Since the panch witnesses were not offered for cross-examination, the court concluded that it would not be safe to rely solely on the Panchnama for the recovery claim.2. Validity of Confessional Statements:The appellants retracted their confessional statements, alleging they were made under duress while in judicial custody. The court cited the Supreme Court's ruling in Vinod Solanki v. Union of India, emphasizing that statements recorded under duress cannot be used as evidence. The court found that the Adjudicating Authority failed to ascertain whether there was any duress or coercion in the recording of the statements, making it unsafe to rely on these statements for penalizing the appellants.3. Adequacy of Evidence Linking Appellants to Smuggling Activities:The Revenue relied on call record details to show that the appellants were in constant touch with each other and a person named Shri Pradeep Ji of Kolkata. However, the court found that the call records did not prove the foreign origin of the gold bars, illegal import, or the appellants' involvement in smuggling. The court noted the absence of concrete evidence such as travel details, source of cash, and ownership of the motorcycle found at the scene, deeming the evidence insufficient to link the appellants to the smuggling activities.4. Applicability of Penalties under Section 112(b) of the Customs Act:The court held that penalties under Section 112(b) of the Customs Act could only be imposed if the illegal import of goods was proven, which the Revenue failed to establish in this case. The court emphasized that the initial burden of proving the foreign origin of the gold bars was not met, and thus, the penalties under Section 112(b) could not be imposed. Consequently, the penalties on the appellants were set aside.Conclusion:The court allowed all the appeals, granting consequential relief to the appellants, as the Revenue's case was based on assumptions and lacked substantive evidence to establish the appellants' involvement in the alleged smuggling of gold bars.