[Order per : P.G. Chacko, Member (J)]. - These appeals are directed against the Commissioner’s order absolutely confiscating foreign currencies equivalent to Indian Rs. 44,27,500/- under Section 111(d) of the Customs Act and imposing personal penalties under Section 112 of the Act on the appellants. The impugned order was passed in adjudication of a show-cause notice dated 28-6-1996 issued by the department under Section 124 of the Customs Act.
2. Assorted foreign currencies (US Dollars 50,000/-, Saudi Riyals 1,00,000/- and UAE Dirhams 2,00,000/-) were seized from Shri Shaikh Mohammed Akhtar at Sahar International Airport after his arrival from Dubai on 8-1-1996 by flight No. CX-750. As per the seizure panchanama, Akhtar was waiting near the State Bank of India (SBI) counter adjacent to the Station Duty Officer’s room after his arrival from abroad. Shri Siddharth Shankar Roy, a Customs officer in uniform, approached Akhtar and signalled him to the adjacent SDO’s room, whereupon Akhtar followed the officer. In the SDO’s room, S.S. Roy handed over a pouch to Akhtar. At this time, Assistant Commissioner Shri S.S. Kulkarni and Intelligence Officers Shri A.K. Upadhyay and others of Air Intelligence Unit (AIU) of Customs intercepted Akhtar and Roy and questioned them in the SDO’s room, whereupon Akhtar stated that the said pouch containing foreign currencies was received by him from S.S. Roy. It was stated by S.S. Roy that the pouch containing foreign currencies was carried by him in a briefcase and the same was handed over to the passenger (Akhtar). The passenger also stated that he did not bring any foreign currency from abroad. His Indian Passport No. T089987 issued at Dubai and his travel documents were recovered from Customs counter No. 14, Arrival Hall. Subsequently, the brown ‘OMEGA’ pouch, which was recovered from Akhtar while he was receiving it from S.S. Roy, was opened by the Assistant Commissioner and other officers of Customs and the foreign currencies were recovered : US Dollars 50,000/-, UAE Dirhams 2,00,000/- and Saudi Riyals 1,00,000/-. The particulars of the currency notes were noted down in annexures to the panchanama. The personal baggage of the passenger was also brought from counter No. 14 and examined by the Customs officers and the items contained therein were listed in another annexure to the panchanama. The briefcase (Echolac Zipper), which was used by S.S. Roy for carrying the pouch containing foreign currencies, was also examined and certain documents contained therein were recovered and listed in another annexure to the panchanama. Personal search of Akhtar and Roy was also conducted but nothing incriminating was found. The foreign currencies were then seized in the belief that the same had been acquired illegally and brought inside the Customs area for the purpose of obtaining Foreign Currency Declaration Form fraudulently and exporting the currencies subsequently and therefore the currencies were liable to confiscation under the provisions of the Customs Act, 1962 read with the provisions of the Foreign Exchange Regulation Act, 1973. The pouch and the briefcase which were used for packing/carrying the currencies were also seized. Other formalities incidental to the seizure of the goods were completed, all in the presence of two independent witnesses, one Shri Ajay Kumar Pratap Hate and one Shri Cadigam Miranda. The panchanama proceedings lasted for three and a quarter hours (5.15 am to 8.30 am) on 8-1-1996.
3. Akhtar, in his statement recorded on 8-1-1996 under Section 108 of the Customs Act, stated that, on 24-12-1995, he had gone to Dubai from Mumbai by an Emirates flight and returned on 8-1-1996 by flight No. CX-750; that, after emigration clearance, he went to the Conveyor Belt to collect his checked-in baggage; that he had been told at Dubai by one Mr. Abdul to go for customs clearance to a white-uniformed officer with trimmed beard and more than six feet tall; that Abdul told him that the customs officer would identify him and wave at him; that Abdul also told him to wave back to the Customs officer and then go to that officer’s counter; that, after spotting the officer at counter No. 14, he collected his baggage from the Conveyor Belt and walked to that counter; that, on the way, one Customs officer who was channeling the arrival passengers to different counters asked him to go to counter No. 15 but the officer at counter No. 14 took his passport and told him to wait behind his counter; that, after 5-10 minutes, the Customs officer at Counter No. 14 directed him to come with his baggage to baggage- screening machine located near the Superintendent’s room of Module-I; that he did as directed; that, after screening the baggage, the said Customs officer, who displayed his name (Siddharth Shankar Roy) on his name plate, asked him to wait near SBI’s counter near SDO’s room of Module-I; that accordingly he left the baggage trolley near counter No. 14 and went to wait near SDO’s room as instructed by S.S. Roy; that, after some time, S.S. Roy signalled him to follow him to the SDO’s room; that, when he went to the SDO’s room with S.S. Roy, he saw a lady Customs officer in white uniform seated in the outer portion of the room; that S.S. Roy went to the inner portion of the SDO’s room; that he also accompanied him; that S.S. Roy opened his ‘Echolac Zipper’ briefcase and took out a brown-coloured pouch and handed it over to him; that, the moment he took the pouch, a few plain-clothes persons entered the SDO’s room and walked up to them; that one person who introduced himself as Assistant Commissioner of Customs asked S.S. Roy as to what was in the pouch which he had handed over to Akhtar, whereupon Roy started pleading for pardon; that they took the pouch from his (Akhtar’s) hand and asked him what it contained; that he told the Customs officers in the presence of the panchas that the pouch contained foreign currencies and the same was just given to him by Customs officer S.S. Roy for declaring it at the Customs counter to obtain a Currency Declaration Form fraudulently for exporting the same currency subsequently to Dubai; that examination of the pouch resulted in the recovery of US Dollars 50,000/-, UAE Dirhams 2 lakhs and Saudi Riyals 1 lakh equivalent to Indian Rs. 44,27,500/- and the same were seized; and that his checked-in baggage, on examination, was found to contain goods valued at Rs. 14,520/- (CIF) and Rs. 29,040/- (market value). He further stated that he was to get Rs. 5,000/- from Abdul of Dubai for undertaking this job; that he was not related to Abdul but he had met him on a few occasions and, during one such occasion, Abdul had offered him this job after learning that he was desperately in need of money; that he was to keep the foreign currencies received from S.S. Roy with himself at his residence and take it back to Dubai within 2-3 days by making use of the Currency Declaration Form and hand it over to Abdul; that he did not know from whom Roy had taken the foreign currencies; and that the currencies did not belong to him (Akhtar). He also stated that he had travelled eight times between Dubai and India in 1995 and could successfully collect foreign currency worth Rs. 45 to 50 lakhs (approx.) and Currency Declaration Form dated 22-12-1995 from the same officer, S.S. Roy, and subsequently take out the currency to Dubai on 24-12-1995.
4. A statement of S.S. Roy was also recorded under Section 108 of the Customs Act on 8-1-1996, wherein he stated that, on 7-1-1996, he was posted at counter No. 14 of Module-I Arrival Baggage Hall from 2200 hours of 7-1-1996 to 0800 hours of 8-1-1996; that around 0430 hours, one passenger who arrived by flight No. CX-750 came to his counter; that after the screening of his baggage, he along with the passenger went inside the SDO’s room and handed over a pouch containing foreign currencies to the passenger as instructed by one Musa Mustafa; that the said Musa had given him the pouch outside the arrival hall of Module-I when he (Roy) was entering the baggage hall to join duty on 7-1-1996; that the description of the said passenger had been obtained when he took over the pouch from the said Musa; that he carried the said pouch containing foreign currencies in his ‘Echolac’ briefcase to the Baggage Hall and kept the baggage next to the sofa lying inside the room adjacent to SDO’s cabin; that as soon as he handed over the said pouch to the said passenger, they were intercepted by Shri S.S. Kulkarni, Assistant Commissioner on duty and some other officers who had accompanied him along with two panchas; that he had admitted to the Assistant Commissioner in the presence of other officers and the panchas that he had handed over the said pouch, which was given by Musa and contained foreign currencies, to the said passenger for obtaining Currency Declaration Form; that the pouch was examined and the foreign currencies recovered under a panchanama; that nobody had introduced him to the said Musa but Musa had seen him at airport and knew that he was a Customs officer; that Musa had approached him some time back to clear his carriers coming from abroad, for monetary consideration; that the consideration depended on the nature of the goods; that the passenger to whom he had to hand over the currencies would identify him and come to his counter and ask for the currencies; that he (Roy) was to give him a Currency Declaration Form after counting the currencies at counter No. 14 as per the instructions of the said Musa; that Musa was to pay him Rs. 30,000/- for this job; and that Musa had not approached him for similar purpose in the past. When confronted with Akhtar’s statement regarding earlier instance of export of foreign currency to Dubai on the strength of Currency Declaration Form issued by S.S. Roy, he stated : “I do not recollect it now”. However, when confronted with Currency Declaration Form No. 001056 dated 22-12-1995 issued by him under his signature to the same passenger, Shaikh Mohd. Akhtar, S.S. Roy admitted the fact in his further statement dated 9-1-1996 recorded under Section 108 of the Customs Act. In another part of the same statement, however, he denied it.
5. The residential premises of Akhtar and Roy were searched on 8-1-1996 and the documents found there were seized under Panchanamas. Akhtar and Roy identified each other in the Confrontation Panchanama drawn on 9-1-1996 and put their respective signatures and admitted in the presence of panchas their respective roles of receiver and giver of illegal foreign currencies.
6. Akhtar and Roy were arrested and produced on 9-1-1996 before the ACMM who remanded them to judicial custody and, in due course, released them on bail. In their bail applications dated 9-1-1996, Akhtar and Roy retracted their respective confessional statements given earlier under Section 108 of the Customs Act to AIU officers. Akhtar, in his bail application, submitted that the confession had been extorted against his will by subjecting him to force, coercion, pressure, threats and assault. Annexed to his bail application was a copy of ‘sale note’ No. 011490 dated 7-1-1996 issued to ‘SHEIKH MOHAMMED AKHTAR’ by ‘AHMED AL HUSSAIN EXCHANGE EST., Dubai’. The applicant submitted that the foreign currencies seized by Customs had been legally acquired by him from Dubai as per the ‘sale note’; that, on his arrival at Bombay airport from Dubai on 8-1-1996, he went to the Customs counter for declaring the above currencies in Currency Declaration Form; that he also produced the above ‘sale note’ before the officer at the counter; that the officer returned it to him after inspection; that the officer refused to accept the sale note as proof of legal acquisition of the currencies; that when he (applicant) was taken home to witness search of his residential premises on the same day, he handed over the sale note to his father to avoid its destruction by the intelligence officers. S.S. Roy, in his bail application, submitted that his confession had been extorted through threats of detention under COFEPOSA and of suspension from service. The retractions of Akhtar and Roy were challenged by the Assistant Commissioner of Customs in his replies filed in the court of ACMM on 15-1-1996.
7. Pager No. 102704 was recovered from the briefcase of S.S. Roy and its print-out was taken by AIU, which revealed that the pager belonged to one Shaikh Asif Ali, whose statement under Section 108 was recorded on 15-3-1996, wherein Asif Ali stated that Roy used to contact one Mr. Musa and one Mr. Ismail with the above pager and that these three persons were dealing in foreign exchange. Asif Ali’s statement contained some more incriminating particulars about Roy. It also incriminated Akhtar. However, Asif Ali retracted his statement before Special Metropolitan Magistrate on 16-3-1996. This retraction was also challenged by the Assistant Commissioner of Customs in a letter dated 1-5-1996.
8. A statement of Shaikh Mohammed Sharif, father of Akhtar, was recorded under Section 108 on 24-5-1996, wherein he stated that his residence was searched in his presence by AIU officers on 8-1-1996 under a search warrant; that his son Akhtar was not present during the search; that none of his family members was aware of his arrival from Dubai on 8-1-1996 and hence none had gone to the airport to receive him; that they came to know of his arrival and of his apprehension by Customs only through the officers who came for the search; that it was only on 9-1-1996 at the CMM’s court that he (Sharif) met his son Akhtar; and that, on that occasion, he did not receive from his son anything other than some used clothes, some chocolates, ‘Pepsi’ and some loose foreign currency. This statement dated 24-5-1996 was retracted in an affidavit filed by Shaikh Mohd. Sharif in ACMM’s court on 27-5-1996. His wife also filed a supporting affidavit. Akhtar also filed in the court an application dated 27-5-1996 for taking his parents’ affidavits on record. Mohd. Sharifs retraction was challenged and the allegations in both the affidavits and the accused’s application dated 27-5-1996 were denied by the Assistant Commissioner in his reply dated 10-6-1996 filed in the court. Shri O.A. D’Souza, Superintendent of Customs (AIU), who was targeted by Akhtar in his application dated 27-5-1996 and by his parents in their affidavits, filed in the court a separate reply on 10-6-1996 denying the charges levelled against him.
9. Akhtar was released on bail as per order dated 17-6-1996 of the Additional Chief Metropolitan Magistrate (ACMM) subject to condition that he should appear before AIU on 21-6-1996. Though, on 21-6-1996, he appeared at AIU office, he refused to write his statement in his own handwriting. (This refusal was recorded in a Panchanama). Therefore, his statement dated 21-6-1996 under Section 108 of the Customs Act was scribed by an officer of Customs in the presence of one of the panchas. In this statement, he stated that he had been to Dubai for nine years and had made eight trips to India in 1995. During those visits, he had imported 5 kgs. of gold and 100 kgs. of silver and cleared them on payment of duty. The gold and silver did not belong to him and the same were delivered to persons in Ahmedabad and Delhi respectively for monetary consideration of Rs. 25,000/-. When a photocopy of ‘Sale Note’ which he produced in the Chief Metropolitan Magistrate’s Court on 9-1-1996 was shown to him and it was pointed out that, as per the Sale Note, he had converted US Dollars and Saudi Riyals into UAE Dirhams, he replied that he had nothing to say about it and did not know how it happened. Though he was summoned again to give further statement on 28-6-1996, he refused to give any further statement. This refusal was also recorded in a Panchanama.
10. Akhtar filed in the court yet another retraction dated 24-6-1996 vis-à-vis his statement dated 21-6-1996 recorded under Section 108 of the Customs Act. This retraction was also challenged in a reply dated 25-6-1996 filed in the court by the Assistant Commissioner of Customs.
11. Based on the evidence gathered by AIU, a show-cause notice was issued on 28-6-1996 to Siddharth Shankar Roy, Shaikh Mohammed Akhtar and others under Section 124 of the Customs Act for confiscating the foreign currencies under Section 111(d) of the Act and imposing penalties under Section 112 of the Act.
12. S.M. Akhtar and S.S. Roy replied to the show-cause notice through their advocates’ letters dated 2-9-1996 wherein lists of witnesses to be cross-examined were also furnished. Further written submissions were also filed with the adjudicating authority through counsel on 24-1-2002 after cross-examination of certain witnesses including Ajay Kumar Hate (panch witness in ‘seizure panchanama’ dated 8-1-1996), Ivan Vaz (panch witness in ‘confrontation panchanama’ dated 9-1-1996), A.A. Raikar (SDO), K.Y. Mehta (ACO) and Shaikh Mohd. Sharif (father of S.M. Akhtar). Personal hearing was also held by the adjudicating authority. The gist of the contentions of both the parties was (a) that the sale note dated 7-1-1996 of Ahmed Al Hussain Exchange Est., Dubai established legal acquisition abroad of the foreign currencies by Akhtar, (b) that this evidence was not rebutted by the Customs authorities, (c) that these authorities failed to prove the allegation that Roy had illegally acquired the currencies in India and handed over the same to Akhtar on the latter’s arrival at Mumbai airport from Dubai to enable him to obtain a Currency Declaration Form for the purpose of illegal export of the currencies, (d) that all the allegations raised in the show-cause notice against Akhtar and Roy stood ‘nullified’ by order No. 64/2001/624 dated 9-11-2001 passed by the Deputy Director of Enforcement, Ministry of Finance, Government of India, who absolved both Akhtar and Roy from the alleged contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 by holding that the currencies had been legally acquired abroad by Akhtar, and (e) that the initial self-incriminating statements of Akhtar and Roy recorded under Section 108 of the Customs Act were not voluntary and true and the same were validly retracted. The learned Commissioner of Customs rejected these contentions and held the seized currencies liable to confiscation and both the above persons liable to penalty. Hence these appeals.
13. Heard. The learned counsel for the appellants submitted/argued as follows :-
(i) Only the Enforcement Directorate (ED) had the jurisdiction, under the Foreign Exchange Regulation Act, 1973 (FERA), to enquire and determine whether the foreign currency had been legally acquired or not. Before/without determination by the proper officer of ED that the currency had been illegally acquired, the Customs authorities should not have even seized the currency in the belief that it had been illegally acquired and brought into the customs area. As it was beyond the jurisdiction of the Commissioner of Customs to determine the above question (whether the foreign currency had been illegally acquired or not), his office referred the case to the ED for appropriate proceedings under Section 51 of the FERA. A copy of the order dated 9-11-2001 passed by the Deputy Director of ED holding that the currency had been legally acquired abroad was produced before the Commissioner on 24-1-2002. The Customs authorities did not file any appeal against the said order under Section 52 of the FERA. Therefore it was not open to the Commissioner of Customs to hold that the seized foreign currency had been illegally acquired. The Commissioner ought to have released the currency to Akhtar in the light of the findings of the Deputy Director of ED inasmuch as the said findings had attained finality and were binding on the Commissioner.
(ii) As the foreign currency had been legally acquired overseas by Akhtar as found by the Deputy Director of ED, there was no requirement of any general or special permission of the Reserve Bank of India (RBI) for him to take the currency out of India and, therefore, there was no violation of Section 13(2) of the FERA and, for that matter, no violation of Section 11 of the Customs Act warranting its confiscation under the Customs Act.
(iii) The Commissioner should not have brushed aside the findings of the Deputy Director of ED on the ground that the ED did not conduct independent investigations or consider the evidentiary value of the statements given by Akhtar and Roy under Section 108 of the Customs Act. On such grounds, at best, the Customs authorities could have preferred an appeal against the Deputy Director’s order to the Appellate Board under Section 52 of the FERA. Without such appeal, the Commissioner could only have released the seized currency in view of the said order.
(iv) Akhtar had resisted the seizure of foreign currency on the strength of the sale note dated 7-1-1996 issued to him by Exchange at Dubai, but the Customs authorities refused to receive the document as proof of licit acquisition of the currency. The sale note was subsequently produced before the ACMM in support of his bail application. No attempt was made by the department to extend its investigations to Dubai for ascertaining the authenticity of the sale note and the correctness of its contents. Therefore adverse inference is liable to be drawn against the department vis-à-vis Akhtar’s claim to have legally acquired the currency abroad under the above sale note. In any case, the sale note was relied on by the FERA adjudicating authority to find legal acquisition of the foreign currency by Akhtar and such finding was not appealed against by the Customs authorities.
(v) The appellants’ statements dated 8-1-1996 under Section 108 of the Customs Act were extorted by the officers of AIU by use of force, coercion, pressure, threats and assault and hence not voluntary or true, and the same were retracted by the appellants when produced in the ACMM’s court on 9-1-1996. Even before his production in the court, Roy complained in writing to the Assistant Commissioner (AIU) that he had been manhandled by one Shri A.K. Singh, ACO in the presence of other officers of AIU around midnight of 8/9-1-1996. Akhtar produced the sale note dated 7-1-1996 and claimed the seized foreign currency in the court while retracting his statement dated 8-1-1996. As the self- incriminating statements of the appellants recorded under Section 108 of the Customs Act were sought to be used as evidence against them in the proceedings before the ACMM, the Magistrate’s court was the appropriate forum for the appellants to retract those statements. Copies of the retractions were also served on the Customs officer who represented the department in the criminal case. That the appellants were physically assaulted to give self-incriminating statements is evident from medical reports and other records of the ACMM’s court. For all these reasons, the said statements should be held to have been validly retracted. Once so retracted, the statements ought to be corroborated in material particulars so as to be used as evidence against the appellants. But no corroborative evidence was brought forth in the show-cause notice to prove the facts averred in the retracted statements. Therefore the appellants’ statements recorded under Section 108 of the Customs Act in this case have no evidentiary value.
(vi) The department failed to gather any evidence from Musa Mustafa who allegedly handed over the foreign currency to S.S. Roy with instructions to hand it over to the passenger coming from Dubai for declaring it to the Customs with intent to take it out of India later. Shaikh Asif Ali who had, in his statements under Section 108 of the Customs Act, referred to contacts between Roy and Musa and their dealings in foreign exchange, retracted the statement before a magistrate. The department could not establish that Roy had illegally acquired possession of the foreign currency in India. Per contra, Akhtar produced documentary evidence in the form of sale note of a Dubai Exchange showing licit acquisition, by him overseas, of the currency.
(vii) The impugned order was passed without proper application of mind to the evidence adduced by the appellants. The sale note was not appreciated as evidence of lawful acquisition, by Akhtar, of the foreign currency abroad. The retractions of the appellants were not duly considered. The reports of the Chief Medical Officer of the prison on the appellants’ bodily injuries, were filed with their replies to the show-cause notice but the same were ignored. The affidavits of Akhtar’s parents were not taken into account, nor was the deposition in cross-examination of Akhtar’s father or the panch witness Ajay Kumar Hate considered by the adjudicating authority. The order of the Deputy Director of ED was lightly interpreted as one merely exonerating the appellants rather than as one deciding on the crucial question whether the foreign currency had been lawfully acquired or not. The impugned order is fraught with non- application of mind to relevant pieces of evidence.
(viii) The confiscation of the foreign currency and the penalties on the appellants are liable to be set aside on a proper appreciation of the evidence available on record.
14. The learned JCDR submitted/argued as follows :-
(i) The facts admitted by the appellants in the voluntary statements given on 8/9-1-1996 under Section 108 of the Customs Act regarding the foreign currency clearly indicated their involvement in a transaction which, if not intercepted, would have progressed to accomplishment of a premeditated hawala deal. Akhtar, when intercepted by AIU officers after his arrival at Sahar airport from Dubai on 8-1-1996, was collecting the foreign currency from S.S. Roy in the customs area of the airport to declare it at Roy’s customs counter and get a CDF issued by Roy so that he (Akhtar) could take the currency out of India later in violation of FERA provisions. Akhtar was attempting illegal export of the currency. No evidence of its acquisition from any authorized dealer in foreign exchange or of its lawful import into India was produced by him to the Customs authorities, nor did he make any valid retraction of his confessional statement by proving that the statement had been extorted by AIU by use of force, pressure, threats or other means of intimidation. The facts admitted by him under Section 108 of the Customs Act were corroborated by S.S. Roy in his own confessional statement under the same provision of law. There is no valid retraction of Roy’s statement either. He also could not prove his allegation that the AIU had extorted a self-incriminating statement from him by force, threats, assault etc. In the circumstances, the confiscation of the foreign currency and the imposition of penalties on the appellants are liable to be sustained on the sole basis of their voluntary/confessional statements given under Section 108 of the Customs Act. [Surjeet Singh Chhabra v. UOI - (S.C.) and K.I. Pavunny v. Asst. Collector - (S.C.) relied on].
(ii) S.S. Roy also admitted that he had done the same thing with Akhtar on his arrival from Dubai on 22-12-1995 also. He admitted having issued CDF No. 001056 to Akhtar, having given foreign currency to him for declaration and also having certified, in the CDF, importation of the currency for the purpose of its subsequent exportation without RBI’s permission. Akhtar corroborated this statement of Roy. [Copy of CDF No. 001056 dated 22-12-1995 in the name of Shaikh Mohd. Akhtar (Passport No. T-089987) showing details of Saudi Riyals, US Dollars, Omani Riyals, Pounds, UAE Dirhams and Bahrain Dinars declared by him and showing certification by the Customs officer, produced by JCDR]. Akhtar also admitted that he had taken these currencies with him subsequently to Dubai on the strength of the above CDF. Thus the antecedents of the appellants also would go to support the present case of the department.
(iii) The ‘retractions’ claimed by the appellants are invalid for more reasons than one. Firstly, the reason stated by the appellants why their statements under Section 108 of the Customs Act were not voluntary or true has not been established by them. Their allegation that those statements had been extorted by use of force, pressure, threats, assaults etc. has not been proved. The ACMM did not find any visible injuries on the person of any of the appellants (the accused) while denying them bail on 9-1-1996 and granting jail custody till 15-1-1996 vide Order dated 9-1-1996 of the ACMM in remand application No. 1 of 1996 [copy produced by JCDR]. The results of the medical examination of the accused ordered by the ACMM failed to show that they were assaulted or otherwise physically injured by the officers of customs. The medical reports dated 15-1-1996 of the Chief Medical Officer, Bombay Central Prison Hospital in respect of both the accused (appellants) clearly indicated that both of them had complained of “body pain due to assault by the police outside the jail”. [Copies of both the medical reports produced by JCDR]. None of the accused complained of any body pain due to assault by any officer of customs. Therefore, the allegation of the appellants that they were physically assaulted by officers of customs to extort self-incriminating statements under Section 108 of the Customs Act is baseless. Secondly, even in his bail application dated 9-1-1996 before the ACMM, the allegation raised by S.S. Roy against the officers of Customs was only that his confessional statement had been extorted by the officers by threats of COFEPOSA detention and suspension from service. Roy in his bail application did not level the charge of assault. Thus the reason stated by S.S. Roy before the Judicial Magistrate to show that his statements under Section 108 of the Customs Act are involuntary and untrue is inconsistent with the submissions made for the very same purpose in his reply to the show-cause notice. Thirdly, though, in his letter dated 9-1-1996 to the Asst. Commissioner (AIU), S.S. Roy complained that he had been badly beaten and manhandled by one Shri A.K. Singh, Asst. Commissioner (AIU) in the presence of certain other officers of AIU in the night of 8/9-1-1996 and though Shri A.K. Singh denied this allegation in his letter dated 12-1-1996 addressed to the Asst. Commissioner of Customs (AIU), the appellant has not chosen to cross-examine Shri A.K. Singh to prove his point. None of the witnesses to the alleged incident was also examined by, or on behalf of, the appellant (Roy). Fourthly, S.S. Roy, in his letter dated 9-1-1996 addressed to the Asst. Commissioner (AIU), did not make any attempt to retract his self- incriminating statement dated 8-1-1996. Retraction was made before the ACMM only. The similar retraction of Akhtar was also made before the ACMM only. Neither of them made any retraction of confessional statement, before the proper officer of customs who had recorded such statement under Section 108 of the Custom Act. On similar grounds, the retraction, by Shaik Asif Ali, of his statement incriminating S.S. Roy is also invalid. [Tribunal’s decision in Zaki Ishrati v. CCE, Kanpur - (Tri.-Del.) relied on by JCDR.] Lastly, no document was produced by Akhtar, on his arrival from Dubai, to the officers of AIU as proof of lawful import of foreign currency into India. No such documentary evidence is available on record to corroborate the facts pleaded by the appellants before the criminal court while retracting their self-incriminating statements given to the AIU under Section 108 of the Customs Act. For all these reasons, the retractions of the appellants and others in this case are liable to be rejected.
(iv) The ‘sale note’ referred to by the appellants was never produced before the officers of AIU. Had it been produced by Akhtar at the time of seizure of foreign currency, it would have been mentioned in the seizure panchanama dated 8-1-1996. That the officers of AIU refused to accept the sale note produced by Akhtar is a concocted story. There was no sale note either in the baggage or on the person of Akhtar. [ANNEXURE D to seizure panchnama dated 8-1-1996 referred to by JCDR] Any ‘sale note’ was not recovered from the residential premises of Akhtar searched by officers of AIU on 8-1-1996 under search warrant issued by the Asst. Commissioner of Customs (AIU). Had any such document been recovered from Akhtar’s residence, it would have found mention in the relevant panchanama. That Akhtar’s residence was searched in his presence and that he had handed over the sale note to his father for safe custody is also a concocted story. The panchanama drawn at his residence on 8-1-1996 does not indicate his presence at all, nor is there anything in the panchanama to indicate that Akhtar’s father produced the sale note to the officers of AIU. There was no such ‘sale note’ in existence till one was produced by Akhtar for the first time with his bail application before the ACMM on 9-1-1996. The sale note produced by him before the Judicial Magistrate is only a fabricated document. Had it been genuine, it would have shown Akhtar’s passport number and full address for easy identification. The name ‘SHAIKH MOHD. AKHTAR’ only was shown without passport number, address or other particulars for identification in the sale note produced before the Judicial Magistrate. There is no reliable evidence on record to connect the above ‘sale note’ with the appellant in appeal No. C/568/2002 as there can be more than one person with the same name ‘SHAIKH MOHD. AKHTAR’. The appellant in C/568/2002 cannot claim the sale note without establishing such connection. Moreover, the sale note in question does not cover UAE Dirhams 2 lakhs seized by AIU under panchanama dated 8-1-1996. It is also pertinent to note that no sale note was referred to by Akhtar in his statement dated 8-1-1996 and that, even in his statement dated 21-6-1996, Akhtar could not explain the entries contained in the sale note. On the other hand, Akhtar’s self-incriminating statement dated 8-1-1996 regarding earlier illegal export of foreign currency on 24-12-1995 to Dubai was reconfirmed in his subsequent statement dated 21-6-1996 given under Section 108 of the Customs Act. Moreover, in his statement dated 21-6-1996, Akhtar did not rely on any ‘sale note’ though this statement was recorded long after he produced the sale note before the ACMM in support of his bail application. It is also significant to note that there was no mention of any sale note in the bail application filed by S.S. Roy, nor in his subsequent statement dated 6-5-1996 under Section 108 of the Customs Act. For all these reasons, the sale note dated 7-1-1996 produced by Akhtar before the Judicial Magistrate is liable to be rejected as a document fabricated by him to escape punishment under the Customs Act, the FERA etc. There is no reliable evidence whatsoever to support the claim of the appellants that the seized foreign currency had been lawfully acquired abroad and imported into India for the purpose of subsequent re-export.
(v) Section 13(2) of the FERA, 1973 prohibited export of foreign exchange (other than foreign exchange obtained from an authorized dealer or from a money changer) out of India without general or special permission of the RBI or written permission of a person authorized in this behalf by the RBI. Under Section 67 of the FERA, 1973, any restriction imposed by or under Section 13 of the Act should be deemed to have been imposed under Section 11 of the Customs Act and all the provisions of this Act shall have effect accordingly. In the instant case, the foreign currencies seized by the AIU were not covered by any general or special permission of the RBI or any written permission of any authorized person by the RBI and therefore the currencies were liable to confiscation for violation of Section 11 of the Customs Act read with Section 67 of the FERA, 1973 and the persons concerned were liable to penalty for having rendered the currencies liable to confiscation. It is on this basis that the show-cause notice was issued by the Asst. Commissioner of Customs (AIU) under Section 124 of the Customs Act. On the other hand, the show-cause notice of the Dy. Director of ED was issued and adjudicated under Section 51 of the FERA, 1973 for a different purpose. That show-cause notice alleged contravention, by Akhtar and Roy, of the provisions of Section 8(1) of the FERA, 1973 and accordingly proposed to impose penalties on them under Section 50 of the said Act. Under Section 8(1) of the FERA, no person other than an authorized dealer shall in India, and no person resident in India other than an authorized dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to, or exchange with, any person not being an authorized dealer, any foreign exchange, except with the previous general or special permission of the RBI. Violation of this law was alleged in the show-cause notice issued by the Dy. Director of ED and, in adjudication of this show-cause notice, the Dy. Director of ED passed Order-in-Original dated 9-11-2001 which has been relied on by the appellants in the present case. Obviously, the proceedings of the ED under the FERA and the proceedings of the Customs department under the Customs Act were initiated and concluded independently for different purposes and therefore the order passed by the Dy. Director of ED cannot have any effect on the adjudication proceedings under the Customs Act. In other words, the Customs authorities are not bound by the order passed by the Dy. Director of ED under the provisions of FERA. The jurisdiction of the ED to proceed against the appellants for violation of Section 8(1) of the FERA cannot take away the jurisdiction of the Customs authorities to proceed against them independently for violation of Section 11 of the Customs Act read with Section 13(2) of the FERA, 1973. The FERA, 1973 and the Customs Act, 1962 operated in different fields and therefore the dropping of proceedings under the former Act is no bar to imposition of penalty under the latter Act. [Reliance placed on (1) P.V. Mohammad Barmay Sons v. Director of Enforcement - (S.C.); (2) Mohd. Ali Jabiullah v. A.K. Maurya - (Del.) the SLP filed against which was dismissed by the Supreme Court vide (S.C.); (3) Annapurna Yarn Fabrics v. CC (Port), Kolkata - (Tri.-Kol.), the Civil Appeal filed against which was dismissed by the Supreme Court vide (S.C.); (4) Mehta Trading House Pvt. Ltd. v. CC, Mumbai - (Tri.-Mumbai)]. Though the order passed by the Dy. Director of ED was appealable to the Appellate Board (constituted under sub-section (1) of Section 52 of the FERA, 1973) under sub-section (2) of Section 52 of the said Act, the Customs Department or any officer thereof did not fall within the ambit of “any person” referred to in sub-section (2) of Section 52 and hence did not have locus standi to prefer any appeal under the said sub-section to the Appellate Board against the order of the Dy. Director of ED. Hence the argument of the ld. Counsel that the order of the Dy. Director of ED is binding on the Customs authorities as no appeal was filed against the order is not tenable. As a matter of fact, the Dy. Director of ED himself has since acknowledged the fact that the Customs Department does not come in the picture with regard to filing of appeal against Order-in-Original dated 9-11-2001. [Copy of letter dated 7-10-2010 of the Dy. Director of ED to the Commissioner of Customs (AIU) produced by JCDR; this letter states (a) that the adjudication order dated 9-11-2001 was accepted by the Directorate of Enforcement, (b) that the Customs Department does not come in picture with regard to filing of appeal against the said order and (c) that any copy of the said order was not forwarded to the Customs Department.] [Reliance also placed on the Tribunal’s Larger Bench decision in Subhash Projects & Marketing Ltd. v. CC, Cochin - (Tri.-LB)] wherein an association of domestic manufacturers was held to be not ‘aggrieved party’ and their application for intervention was dismissed]. Therefore the Customs Department was unconcerned with the outcome of the adjudication proceedings under the FERA.
(vi) The confessional statements of the appellants under Section 108 of the Customs Act, which were not validly retracted, are enough to establish that the seized foreign currency was not legally acquired abroad and imported into India by Akhtar but illegally acquired in India with the help of S.S. Roy for the purpose of subsequent exportation to Dubai without the permission of the RBI. The circumstantial evidence in this case is also in support of the facts admitted by the appellants under Section 108 of the Customs Act. In any case, the confiscation of the currency and the penalization of the appellants are liable to be sustained on a preponderance of probability in favour of the Revenue. The record of cross-examination of witnesses in this case cannot be said to have improved the case of the appellants in any significant or decisive manner. In the absence of evidence to show that the foreign currency in question was acquired from authorized dealer in foreign exchange, its confiscation is justifiable. [CC (Prev.), West Bengal v. Amit Kumar Saha - (Cal.); Amit Kumar Saha v. Commissioner - (Tri.-Kolkata); the SLP filed by Amit Kumar Saha against Calcutta High Court’s order was dismissed by the Supreme Court as per order reading : “We see no reason to interfere with the order of the High Court. The Special Leave Petition is dismissed” vide Amit Kumar Saha v. Commissioner - (S.C.)]
(vii) The Commissioner’s order is liable to be sustained for the aforesaid reasons.
15. In his rejoinder, the ld. Counsel for the appellants submitted as follows :-
(i) The Commissioner of Customs himself found that no investigation has been done in respect of the sale note. The show-cause notice had not alleged that the sale note was fabricated. The Department cannot expect this Tribunal to construe the document in a manner different from the way the Commissioner construed it. In the absence of investigation by AIU in respect of the sale note, this Tribunal has to draw adverse inference against the Department and to accept the sale note as proof of lawful acquisition of the foreign currency by Akhtar abroad. When Akhtar produced the sale note evidencing sale, by an exchange in Dubai to him, of 1 lakh Saudi Riyals, 50,000 US $ worth 2,81,350 UAE Dirhams, the burden shifted to the Customs authorities to challenge its authenticity and genuineness. The authorities, however, chose not to investigate the matter. Having failed to discharge the burden of proof, the Department cannot be permitted to question the evidentiary value of the sale note. Musa Mustafa who could not even be traced by the AIU remains a fictitious person and the Department has failed to prove that the foreign currency was brought by Roy into the Customs area from outside the airport. As the signatures of Akhtar and Roy are not to be seen in the confrontation panchanama, it cannot be reckoned as evidence in favour of the Revenue. Shaikh Asif Ali’s statement dated 15-3-1996 was taken by the AIU coercively on the day of his wedding only to justify the existence of Musa who could not be traced.
16. We have given careful consideration to the submissions and arguments. At the outset, for valid reasons, we have to reject the ld. Counsel’s proposition that the Customs authorities are bound by the order passed by the Dy. Director of ED. The reasons are summonsed below :-
(a) The proposal in the show-cause notice dated 20-1-2000 of the Dy. Director of ED was to impose penalties on the appellants under Section 50 of the FERA, 1973 for their alleged violation of Section 8(1) of the Act. The two provisions of the Act read as follows :-
Section 8(1) of the FERA, 1973
Except with the previous general or special permission of the Reserve Bank, no person other than an authorized dealer shall in India, and no person resident in India other than an authorized dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to or exchange with, any person not being an authorized dealer, any foreign exchange :
Provided that nothing in this sub-section shall apply to any purchase or sale of foreign currency effected in India between any person and a money-changer.
Section 50 of the FERA, 1973
50. If any person contravenes any of the provisions of this Act other than section 13, clause (a) of sub-section (1) of section 18, section 18A and clause (a) of sub-section (1) of section 19] or of any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in any such contravention or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement specially empowered in this behalf by order of the Central Government (in either case hereinafter referred to as the adjudicating officer).
On the other hand, the show-cause notice dated 28-6-1996 issued by the Asst. Commissioner of Customs (AIU) under Section 124 of the Customs Act had proposed to confiscate the foreign currency under Section 111(d) of the Customs Act and to impose penalties on the appellants under Section 113 of the Act on the ground that they had violated Section 11 of the Act read with Section 13(2) of the FERA, 1973. This show-cause notice also invoked Section 67 of the FERA, 1973. The essential provisions are reproduced below :-
Section 13(2) of the FERA, 1973
No person shall, except with the general or special permission of the Reserve Bank or the written permission of a person authorised in this behalf by the Reserve Bank, take or send out of India any Indian currency or foreign exchange other than foreign exchange obtained by him from an authorised dealer or from a money-changer.
Section 67 of the FERA, 1973
The restrictions imposed by or under section 13, clause (a) of sub-section (1) of section 18, section 18A and clause (a) of sub-section (1) of section 19 shall be deemed to have been imposed under Section 11 of the Customs Act, 1962, and all the provisions of that Act shall have effect accordingly.
As per Section 67 ibid, any restriction imposed by or under Section 13 of the Act shall be deemed to have been imposed under Section 11 of the Customs Act. A conjoint reading of Section 13(2) of the FERA, 1973 and Section 11 of the Customs Act, 1962 would indicate that export of foreign exchange (other than foreign exchange obtained from an authorized dealer or from a money-changer) from India without the general or special permission of the RBI or the written permission of a person authorized in this behalf by the RBI would be a direct breach of the restriction laid down under Section 13(2) of the FERA and would also be deemed to be breach of restriction laid down under Section 11 of the Customs Act. It is not in dispute that “goods” includes currency also. Therefore, any breach of restrictions imposed by or under Section 13 of the FERA is, by virtue of Section 67 of the Act, actionable as a breach of Section 11 of the Customs Act.
On the contrary, as it appears from the text of Section 50 of the FERA, contraventions of Section 13 and a few other provisions of the FERA were excluded from the ambit of proceedings envisaged under Section 50 of the Act. In other words, any breach of restriction laid down under Section 13 was not actionable under Section 50 of the FERA. Any contravention of Section 8(1) of the FERA was certainly actionable under Section 50 of the Act. It was on this basis that the Dy. Director of ED issued show-cause notice dated 20-1-2000 to the appellants for imposing penalties on them under Section 50 on the ground of violation of Section 8(1) of the FERA. A proposal to impose any penalty under Section 112 of the Customs Act for breach of Section 13(2) of the FERA read with Section 11 of the Customs Act would remain outside the scope of Section 50 of the FERA and, for that matter, outside the scope of the show-cause notice issued by the Dy. Director of ED. On the other hand, indisputably, the proposal fell very much within the scope of the show-cause notice issued by the Asst. Commissioner of Customs (AIU) under Section 124 of the Customs Act. Thus the scope of the show-cause notice issued by the ED and that of the show-cause notice issued by the Customs department were exclusive to each other. It would follow that the Order-in- Original passed by the Dy. Director of ED under Section 51 of the FERA and the Order-in-Original passed by the Commissioner of Customs in adjudication of the relevant show-cause notice under Section 124 of the Act would occupy mutually exclusive domains. Hence there is no merit in the ld. Counsel’s contention that the order passed by the Dy. Director of ED is binding on the Commissioner of Customs and that the latter ought to have simply relied on the decision of the former.
(b) Section 8(1) of the FERA embodied certain restrictions on dealing in foreign exchange. Accordingly, except with the prior (general or special) permission of the RBI, no person other than an authorized dealer shall, in India, purchase or otherwise acquire or borrow any foreign exchange from any person not being an authorized dealer; similarly no person other than an authorized dealer shall, in India, sell or otherwise transfer or lend any foreign exchange to any person not being an authorized dealer; no person other than an authorized dealer shall, in India, exchange any foreign exchange with any person not being an authorized dealer; no person resident in India other than an authorized dealer shall outside India purchase or otherwise acquire or borrow foreign exchange from any person not being an authorized dealer; similarly no person resident in India other than an authorized dealer shall, outside India, exchange any foreign exchange with any person not being an authorized dealer. These restrictions are in respect of transactions involving foreign exchange in India or outside India. The transactions involving foreign exchange, referred to in Section 13 of the FERA, stand on an entirely different footing. Sub-section (1) of Section 13 authorised the Central Government to impose certain restrictions on import of foreign exchange and Indian currency into India. Sub-section (2) imposed certain restrictions on export of foreign exchange (other than foreign exchange obtained from an authorized dealer or from a money-changer) and Indian currency out of India. The scope of enquiry by the Customs Department was to find out whether the appellants had attempted to export foreign currency from India without general or special permission of the RBI or written permission of a person authorized by the RBI. The enquiry contemplated by the Department was in relation to a suspected attempt to export foreign currency from India. The scope of enquiry by the ED was to find out whether the foreign currency had been lawfully acquired within the same country and not to find out whether it had been lawfully imported into India or whether it was attempted to be illegally exported from India. From this angle also, it is evident that the show-cause notices issued by the ED and the Customs Department under different statutes purported to achieve different and mutually exclusive purposes. If that be so, it cannot be gainsaid that the order passed by the Dy. Director of ED has no bearing on the proceedings initiated by the Customs Department against the appellants.
(c) In the case of P.V. Mohammad Barmay Sons (supra), the appellant challenged a penalty imposed on them under the FERA on the ground that certain parallel proceedings initiated against them under the Customs Act for the self-same contravention had been dropped. The Hon’ble Supreme Court held that the mere fact that the penalty proceedings against them under the Customs Act for evasion of duty had ended in favour of the appellant did not take away the jurisdiction of the Enforcement authorities under the FERA to impose penalty on them inasmuch as the two acts operated in different fields. In the case of Annapurna Yarn Fabrics (supra), the Department had alleged against the appellant overvaluation of export goods for undue benefit of DEEC Scheme. The goods were confiscated u/s 113 of the Customs Act, which was challenged mainly on the ground that parallel proceedings against the appellant for over invoicing the exports under the FERA had been dropped. This Tribunal held that the dropping of the proceedings initiated under the FERA did not have any bearing on the impugned proceedings taken under the Customs Act. It was held that, as the offence alleged under the Customs Act stood established, confiscation of the goods u/s 113 and penalty u/s 114 would follow, unaffected by the dropping of proceedings under a different statute (FERA). We note that the Civil Appeal filed by the party against the Tribunal’s decision was dismissed by the Apex Court with the result that the view taken by this Tribunal in Annapurna Yarn Fabrics case regarding the effect of FERA proceedings on proceedings taken under the Customs Act received the Apex Court’s stamp of approval. The case law cited by the learned JCDR squarely supports his point.
(d) The question whether the Customs department could have challenged the order of the Dy. Director of ED under the provisions of the FERA was also agitated before us. We have examined the relevant provisions of the FERA and have found that, against the adjudication order passed u/s 51 of the Act, any ‘aggrieved person’ could prefer an appeal under sub-section (2) of Section 52 of the Act to the Appellate Board constituted under sub-section (1) of this Section. Sub-section (2) of the said Section 52, without the provisos thereto, reads as follows :-
Any person aggrieved by such order may, on payment of such fee as may be prescribed and after depositing the sum imposed by way of penalty under section 50 and within forty-five days from the date on which the order is served on the person committing the contravention, prefer an appeal to the Appellate Board :
It is clear from the above provision that any appeal thereunder could be filed only after depositing the amount of penalty imposed u/s 50 of the Act (the Appellate Board had the discretion to dispense with this deposit conditionally or unconditionally under the second proviso to sub-section (2) of Section 52). Obviously, the person on whom a penalty has been imposed u/s 50 of the Act is the “person aggrieved” by the adjudication order passed u/s 51 of the Act and he is the person entitled to prefer appeal to the Appellate Board under sub-section (2) of Section 52 of the Act. The Appellate Board was also empowered under sub-section (4) of Section 52 of the Act to call for the records of the adjudication proceedings, on its own motion or otherwise, and examine the legality, propriety or correctness of the adjudication order. Apparently, this provision provided a remedy for the ED against any adverse order of adjudication passed under Section 51 of the FERA. We have not found anything u/s 52 of the FERA enabling the Customs Department to prefer any appeal to the Appellate Board against an adjudication order passed u/s 51 of the Act. Ld. Counsel’s arguments to the contra are without any legal basis and hence unacceptable. The ED itself has understood and acknowledged the legal position correctly vide letter dated 7-10-2010 of the Dy. Director of ED addressed to the Commissioner of Customs. This letter states inter alia that “The Customs Department does not come in picture with regard to filing of appeal before the Hon’ble appellate Tribunal for Foreign Exchange, New Delhi against the adjudication order”. This letter also indicates that no copy of Order-in-Original dated 9-11-2001 was forwarded by the ED to the Customs Department even though the proceedings under the FERA against the appellants had been initiated on the basis of materials supplied by the Customs Department. From the results of investigations conducted by the AIU of the Customs Department, it appeared to them that the appellants had dealt with foreign currency in violation of certain provisions of the FERA, whereupon, as part of the much-needed interdepartmental co-ordination, the evidentiary materials gathered by the AIU were forwarded to the ED for their guidance. By no stretch of imagination can it be said that, by reason of the above steps taken by the Customs Department, the results of FERA proceedings against the appellants should be accepted by the Customs Department or that the Customs Department should have filed an appeal under Section 52 of the FERA against the adjudication order passed in favour of Akhtar and Roy under Section 51 of the FERA.
17. The substantive question arising for consideration is whether the foreign currency seized from the appellants by the AIU on 8-1-1996 is liable to confiscation under the Customs Act.
17.1 The show-cause notice issued by the Asst. Commissioner of Customs (AIU) proposed to confiscate the currency under the said provision of law and to impose penalties on the appellants u/s 112 of the Customs Act. The adjudicating authority ordered absolute confiscation of the currency u/s 111(d) of the Customs Act and imposed penalties on the appellants u/s 112 of the Act. The proposal in the show-cause notice for confiscation of the seized foreign currency was based on alleged violation of the restriction/prohibition imposed u/s 11 of the Customs Act read with Section 13(2) of the FERA. As we have already noted, Section 13(2) of the FERA imposed certain restrictions on export of foreign exchange other than foreign exchange obtained from an authorized dealer or a money-changer. Accordingly, no person could export such foreign exchange out of India without a general or special permission of the RBI or a written permission of a person authorized in this behalf by the RBI. By virtue of Section 67 of the FERA, such restriction imposed u/s 13 should also be deemed to have been imposed u/s 11 of the Customs Act and all the provisions of the Customs Act should have effect accordingly. It is not in dispute that such restriction on export of goods would amount to a ‘prohibition’ for the purposes of Section 113 of the Customs Act. Any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force, shall be liable to confiscation u/s 113(d) of the Customs Act. If it is found that the foreign currency in question was attempted to be exported contrary to the prohibition imposed by or under Section 11 of the Customs Act or Section 13(2) of the FERA, 1973 by any or both of the appellants, the currency would certainly attract Section 113(d) of the Customs Act and accordingly it would be liable to confiscation. That Section 111(d) of the Customs Act was invoked instead of Section 113(d) of the Act in the show- cause notice and in the impugned order will not, in our view, be fatal to the Revenue inasmuch as the cause of action for the Customs Department to confiscate the currency was clearly brought out in the show-cause notice as attempt to export the currency out of India in violation of the prohibition imposed u/s 13(2) of the FERA, which was, by virtue of Section 67 of the FERA, deemed to be prohibition imposed u/s 11 of the Customs Act. It was held by the Apex Court in the case of Roche Products Ltd. v. Collector of Customs [ (S.C.)] cited by the ld. JCDR that, when an authority had power to do a certain act and in exercise of such power he did the same but with reference to wrong provision of law, that would be a mere irregularity and would not vitiate such act or action. Again, it was held by the Apex Court in the case of J.K. Steel Ltd. v. UOI [1978 (2) E.L.T. J355 (S.C.)] cited by the ld. JCDR that, “if the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercised under a different power does not vitiate the exercise of the power in question”. In that case, the demand notice was issued u/r 9(2) of the Central Excise Rules, 1944. Both the Asst. Collector and the Collector of Central Excise sustained the demand of duty under the said provision of law. When the Collector’s order was challenged before the Government, the latter treated the demand as one under Rule 10. In further appeal, the assessee questioned this change of rule. It was in that context that the Hon’ble Supreme Court rendered the above ruling. In the case of Collector of Central Excise, Calcutta v. Pradyumna Steel Ltd. [ (S.C.)] relied on by the ld. JCDR, the Apex Court held that mention of wrong provision of law when the power exercised was available under a different provision was itself not sufficient to invalidate the exercise of that power. Thus there is a line of decisions in support of the view taken by us with regard to the provision of law invoked in the show-cause notice and the impugned order for confiscation of the foreign currency. Therefore, the non-mention of Section 113(d) of the Customs Act in the show-cause notice or in the impugned order would not per se invalidate the confiscation of the foreign currency ordered on the ground of violation of prohibition imposed u/s 13(2) of the FERA, 1973/Section 11 of the Customs Act, 1962. In any case, neither of the appellants has challenged the confiscation on the ground of wrong provision of law having been invoked, nor has their counsel argued to this effect.
17.2 The case of the Revenue is that the foreign currency in question was collected by S.S. Roy from one Musa Mustafa outside the Customs area of Sahar airport and, as instructed by the latter, Roy brought the currency into the Customs arrival hall and handed it over to Akhtar on 8-1-1996 to enable him to obtain a Currency Declaration Form (CDF) for the purpose of taking the currency out of the country later without RBI’s permission. We find that Akhtar clearly admitted in his statement u/s 108 of the Customs Act that he had been instructed by one Abdul of Dubai to receive the foreign currency from Roy and then declare it at his Customs counter and obtain a CDF and bring the currency out of India later and hand it over to him (Abdul) in Dubai. S.S. Roy in his statement dated 8-1-1996 u/s 108 of the Customs Act clearly admitted that he had collected the currency from Musa Mustafa outside the Customs area and handed it over to Akhtar in the Customs area when they were intercepted by the officers of AIU. He also admitted that he issued a CDF to Akhtar to enable him to declare the currency at the Customs counter so that he (Akhtar) could take the currency out of the country later. The statements of Akhtar and Roy corroborated each other. In his statement, Akhtar also stated that he had taken foreign currency on an earlier occasion also to Dubai on the strength of a CDF issued by S.S. Roy. This currency was also stated to have been delivered to Akhtar by Roy. S.S. Roy in his second statement dated 9-1-1996 u/s 108 of the Customs Act admitted that he issued CDF No. 001056 dated 22-12-1995 to Akhtar in respect of foreign currencies viz. Saudi Riyals 1 lakh, US $ 54,000/-, Omani Riyals 14,300/-, Pound Sterling 12,800/- UAE Dirhams 11000/- and Bahrain Dinars 1360/-. However, Roy, in his second statement, denied that the currencies covered by the above CDF dated 22-12-1995 had been handed over to him by Musa Mustafa for handing over to Akhtar for the purpose of obtaining the CDF.
The inculpatory statements of both Akhtar and Roy were retracted before the ACMM for the purpose of obtaining bail. Both of them alleged in the court that their inculpatory statements had been extorted by the AIU officers by force, coercion, threat etc. The ld. Magistrate rejected their bail applications and sent them to jail. As ordered by the Magistrate, the jail Medical Officer examined Akhtar and Roy and submitted reports. Before this Tribunal, both the appellants have relied on the medical reports in support of their allegation that they had been physically assaulted by the AIU officers. We have perused these documents and have found that the notings in these medical reports do not support the above allegation of the appellants. The Medical Officer reported that both Akhtar and Roy complained of body pain due to assault by the police. Therefore, in our view, nothing contained in the medical reports can be relied on by the appellants to contend that they had been physically assaulted by officers of Customs for extorting self- incriminating statements.
As rightly held by this Tribunal in Zaki Ishratis case, retraction of a confessional statement should be addressed to the same officer to whom the confessional statement was given u/s 108 of the Customs Act. In this case, the retraction was made before the Judicial Magistrate and not before the concerned officer of Customs (AIU). Moreover, though the officer of Customs who was alleged to have beaten/manhandled the appellants challenged their retractions before the ACMM, he was not cross-examined by any of the appellants.
The learned Counsel has heavily relied on a letter dated 9-1-1996 submitted by S.S. Roy to the Asst. Commissioner of Customs (AIU). It was argued that this letter retracted the confessional statement given earlier by Roy u/s 108 of the Customs Act. We have perused this letter also and have found that this letter only stated that Roy had been TDadly beaten and manhandled’ by one A.K. Singh, Asst. Commissioner (AIU) in the presence of certain other officers of Customs in the midnight of 8/9-1-1996. This letter did not complain that any self-incriminating statement had been extorted from Roy by the said Shri A.K. Singh. Before the Judicial Magistrate, the complaint of Roy was that he was “threatened with COFEPOSA detention and suspension from service”. He did not complain of any physical assault. Nevertheless, in the present appeals, the appellants have alleged that they were forced, coerced, threatened and assaulted to give self-incriminating statements u/s 108 of the Customs Act. Thus S.S. Roy’s is an incoherent story as regards the reason for retraction.
As held by the Hon’ble Supreme Court in K.P. Pavunnys case, it has certainly to be examined as to whether the statements dated 8-1-1996 of Akhtar and Roy and the statement dated 9-1-1996 of Roy were extorted by the AIU officers by force, coercion, threat and/or assault. We have undertaken this exercise, and we find that the appellants have not been able to establish that the said statements were extorted from them by the officers of AIU by threat, coercion, force or assault. The submissions made by them before the Judicial Magistrate and those made before this Tribunal in this regard are inconsistent and incoherent. The Medical Reports relied on by the appellants also do not support their allegation that they were assaulted by any officer of Customs. The medical reports, on the other hand, refer to ‘assault by the police’. Yet another material relied on by the appellants in support of their retraction is the ‘sale note’ dated 7-1-1996. We shall deal with this document separately. For the present, we observe that this document does not support the retraction of inculpatory statements of the appellants inasmuch as the authenticity of this document and the truth of its contents are yet to be established. For all these reasons, we agree with the ld. Commissioner who rightly rejected the retractions.
17.3 As regards the ‘sale note’, we find that there is no reliable evidence on record to show that this document was brought from abroad and produced by Akhtar before the officers of AIU on his arrival from Dubai on 8-1-1996. The seizure panchanama dated 8-1-1996 does not contain mention of this document. It is not the case of the appellants that this panchanama is incomplete in any material particulars. Had any sale note been produced by Akhtar on his arrival from abroad, a mention of it would have been made in the panchanama. Personal search of the appellants also did not yield any sale note. The case of Akhtar is that he produced the sale note before the officers of AIU but the same was not accepted. The sale note was allegedly returned to Akhtar who allegedly took it out and handed it over to his father at his residence when the residential premises were searched by the AIU officers on 8-1-1996. This story is also unbelievable inasmuch as (a) Akhtar’s father himself stated under Section 108 of the Customs Act that his son was not present during the course of search of their residential premises and that he met his son for the first time after his arrival from Dubai only in ACMM’s court on 9-1-1996, (b) there is no evidence of AIU having allowed Akhtar to witness their search of his residence on 8-11996 or to meet his father on that day, (c) Akhtar’s alleged presence is not reflected in the panchanama drawn by AIU at his residence on 8-1-1996, and (d) no sale note was recovered from there as indicated by the non-mention of any such document in the said panchanama.
We have also perused the text of the affidavit filed by Akhtar’s father on 27-5-1996 retracting his statement dated 24-5-1996 given to AIU under Section 108 of the Customs Act. In this affidavit, Shaikh Mohammed Sharif stated that officers of Customs had come to his residence with his son on 8-1-1996 and that his son handed over to him a receipt dated 7-1-1996 showing purchase of foreign currency in Dubai. Sharif further stated that, as per his instructions, the said receipt was produced before the Court. A copy of the receipt was claimed to have been returned to him. Sharif further stated that one copy of the receipt had also been furnished to the officer of Customs who was present in Court. Sharif further stated that, on 24-5-1996, three officers of Customs came to his residence and took him, his wife and his son to the office of AIU and that an officer by name D’Souza compelled him to make a statement to the effect that, on 8-1-1996, his son was not present at the time of search of his residential premises by the officers of AIU and that he (Sharif) did not receive any receipt covering purchase of foreign currency, from his son on the said date. Sharif further stated that when he refused to give such statement, Mr. D’Souza himself wrote a statement and forced him (Sharif) to put his signature against his will by threatening to arrest his wife. He stated that the statement taken from him on 24-5-1996 was involuntary and untrue. This retraction by Akhtar’s father was also challenged by AIU of Customs by filing a reply before the ACMM on 10-6-1996. We have found valid reasons to hold that the retraction dated 27-5-1996 of Shaikh Mohammed Sharif also is bereft of bona fides. The statement dated 24-5-1996 was never retracted before the officer who recorded it. There are other reasons too. Firstly, if in fact his son Akhtar had also come to his residence on 8-1-1996 and handed over the above document to him (father), the latter would have mentioned and/or produced it to the officers of AIU who came to search the residential premises. In that event, the officers would have recovered the document and mentioned it in the panchanama dated 8-1-1996 drawn at the residence. There is no mention of the aforesaid receipt/sale note in the said panchanama. Secondly, in the normal course, Customs would not let an offender go free till he is produced before a Judicial Magistrate. His father’s affidavit dated 27-5-1996 does not disclose any exceptional reason as to why he (Akhtar) was allowed to meet his family at his residence in between the time of his interception at the airport and the time of his production before the Judicial Magistrate. Thirdly, if it was the case of Sharif that he and his wife were compelled by the officers of Customs to accompany them to the office of AIU on 24-5-1996, it was open to him to take the assistance of a lawyer like the advocate who appeared for his son (Akhtar) in the court of ACMM on 8-1-1996. Lastly, apart from the bald statements contained in the affidavit dated 27-5-1996, there is no evidence of Sharif having been threatened or pressurised by D’Souza to sign the statement dated 24-5-1996. Significantly, Sharif did not complain of any threat or pressure against the officer even when he was “cross-examined” by advocate on 23-10-1997. The officer of AIU who filed reply dated 10-6-1996 challenging Sharif’s retraction was not cross-examined by, or on behalf of, Akhtar, nor was even D’Souza cross-examined by, or on behalf of, Akhtar to prove his point. Apart from all these, there is no specific mention of any sale note or receipt dated 7-1-1996 in the record of “cross-examination” of Sharif who has spoken of only “some receipts”. Therefore, Sharif’s statement dated 24-5-1996 under Section 108 of the Customs Act has not been validly retracted.
The very document under consideration viz : sale note dated 7-1-1996 is yet to be brought out of the shadow of doubt regarding its authenticity. As rightly pointed out by the learned JCDR, it does not disclose the necessary particulars for identification of the person to whom it was issued. Mere mention of the name SHEIKH MOHAMMED AKHTAR, without passport number and other necessary particulars for identification, is not enough to establish a nexus between the document and the appellant in appeal No. C/568/2002. The sale note purportedly issued by AHMED AL HUSSAIN EXCHANGE EST. (Dubai) does not indicate whether the said exchange is an authorised dealer in foreign exchange satisfying the requirements of the FERA, 1973. Though the sale note shows exchange of Saudi Riyals 1,00,000/- and US $ 50,000/- with UAE Dirhams 2,81,350/-, it does not account for UAE Dirhams 2,00,000/- recovered from Akhtar at Sahar airport by the AIU on 8-1-1996. All these apart, there is no evidence of Akhtar having carried the sale note with him from UAE to India by flight No. CX-750 dated 8-1-1996 or of having produced it at the Air Customs counter at Mumbai on his arrival, nor is there any proof of Akhtar having produced it to AIU officers upon his interception by them. These circumstances would lend support to the department’s claim that the document is only a fabricated evidence.
The burden was on Akhtar to establish its authenticity and the truth of its contents. This burden of proof was not discharged by him. Then, in our view, it is without rhyme or reason to say that the sale note should be accepted as proof of his lawful acquisition of the foreign currency in the absence of any investigation by the department overseas into the source of the document. The initial burden was on Akhtar to prove that the sale note had been issued to him by an authorised dealer in foreign exchange abroad on 7-1-1996 and that he had brought the document with him into India by Flight No. CX-750 (Dubai to Mumbai) on 8-1-1996. Only when this burden is discharged by him can one say that the Customs department should investigate abroad into the source of the document and gather evidence to establish that it is a fabricated document. Akhtar failed to discharge his initial burden of proof and hence he cannot bank on any lack of investigations by the Customs department abroad.
The view taken by the Dy. Director of ED with regard to the sale note without conducting any investigations in India or abroad is not binding on the Customs authorities for reasons which we have already recorded and, therefore, nothing contained in the order passed by the Dy. Director of ED under the FERA, 1973 can be relied on by the appellants to sanctify the document which is an apparently fabricated piece of evidence.
For all the aforesaid reasons, we hold that the sale note produced by Akhtar is of no evidentiary value in this case.
17.4 The seized foreign currency is, undisputedly, goods of foreign origin which was seized by AIU after intercepting its transfer of possession by S.S. Roy to Akhtar in the Customs area of Sahar airport on 8-1-1996. The burden shifted to the persons from whom the foreign currency was recovered, to prove that the currency was lawfully acquired abroad and imported to India. Both the appellants failed to discharge this burden. On the other hand, they clearly admitted their guilt under Section 108 of the Customs Act. Therefore, it is not open to them to challenge the seizure and confiscation of the currency.
17.5 We have already held that the facts admitted by the appellants under Section 108 of the Customs Act, were not validly retracted. The so-called ‘sale note’ was fabricated and hence of no evidentiary value. The admission by Akhtar and S.S. Roy of earlier export of foreign currencies from India to Dubai on the strength of CDF No. 1056 dated 22-12-1995 lends great support to the present case of the department as it adds to the preponderance of probability in this case in favour of the department. Accordingly it is held that the seized foreign currency was illegally acquired by S.S. Roy in India and was handing it over to Akhtar when they were intercepted by the officers of AIU on 8-1-1996. Roy was doing so to enable Akhtar to declare the foreign currency to himself (Roy qua officer of Customs) at the airport as if the currency had been brought from Dubai. The purpose of transaction was to ensure that Akhtar obtained a CDF for the purpose of subsequent export of the foreign currency to Dubai. The entire scheme has come out cogently through the statements given by the appellants under Section 108 of the Customs Act. The “retractions” and the “sale note” stand rejected. The ED’s proceedings have no impact. The Revenue’s case stands established. The attempt of Akhtar to export foreign currency in violation of Section 13(2) of the FERA 1973/Section 11 of the Customs Act, 1962 in collusion with S.S. Roy invited action under Section 113(d) of the Customs Act. We are of the view that the facts and circumstances of the case did not warrant any grant of option for redemption of the currency. In this context, it is advantageous to refer to Amit Kumar Sahas case where the Tribunal, pursuant to the High Court’s decision on a Reference Application, upheld the absolute confiscation of certain foreign currency in the absence of evidence of its acquisition from authorized dealer in foreign exchange. The confiscation of the currency by the Commissioner in the present case has to be sustained under Section 113(d) of the Act for reasons already recorded by us. It is ordered accordingly.
17.6 The department has established beyond reasonable doubt that the appellants colluded with each other in the Customs area of Sahar airport on 8-1-1996 for the prospective export of the foreign currency without any permission of the Reserve Bank of India. Their conduct rendered the foreign currency liable to confiscation under Section 113(d). Therefore the appellants are liable for penalty under Section 114 of the Act. This penalty, in our view, cannot be resisted on the ground that Section 114 was not invoked in the show- cause notice or in the impugned order. Non-mention of Section 114 or mention of a wrong provision of law cannot be fatal to the Revenue inasmuch as the show-cause notice and the impugned order have brought out a clear case for imposing penalties on the appellants on the ground that they rendered the foreign currency liable to confiscation.
17.7 The offence committed by the appellants is of serious nature as it has a deleterious effect on the country’s economy. The law of the land seeks to punish such economic offences in a deterrent manner. The role played by S.S. Roy by misusing his official position to the detriment of public interest is particularly deplorable. The man who knew the law and whose function it was to ensure compliance with the law chose overtly to help a layman violate it. In our view, therefore, the quanta of penalties imposed on the appellants are not liable to be reduced.
18. Both the appeals are dismissed.
(Pronounced in Court on 30-8-2011)
section 13, clause (a) of sub-section (1) of section 18, section 18A and clause (a) of sub-section (1) of section 19
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