IN THE HIGH COURT OF JUDICATURE AT PATNA MA No.629 of 2007 COMMISSIONER OF CUSTOMS, central Revenue Building, Birchand Patel Path, Patna-800001 ….Responden-Appellant . Versus SRI RAM NATH SAH, son of Late Kishun Sah, Block Road, P.O. & P.S. Raxaul, District-East Champaran. …Appellant-Respondent With MA No.630 of 2007 COMMISSIONER OF CUSTOMS, central Revenue Building, Birchand Patel Path, Patna-800001 ….Respondent-Appellant Versus SRI DEVKI NANDAN PRASAD @DARKI Nandan Prasad, son of Late Brahmdev Prasad, Block Road, P.O. & P.S.Raxaul, District- East Champaran. ….Appellant-Respondent For the Appellant Mr. Rakesh Kumar Singh (CGC) For the respondents Mr. Birju Prasad ----------- 04. 18.05.2010 Heard Mr. Rakesh Kumar Singh for the appellants, and Mr. Birju Prasad for the respondents. 2. Both the appeals under the provisions of section 130 of the Customs Act,1962(hereinafter referred to as the „Act‟), arise out of a common order dated 21.05.2007, passed by the learned Technical Member of Customs, Excise and Service Tax Appellate Tribunal, East Zonal Branch, Kolkatta, in Appeal No.CSM-139,140/2005, whereby the two appeals preferred by the respondents herein have been allowed, the order of adjudication and confiscation of the gold bars of foreign origin recovered from the possession of one Krishna Kumar, acting as a carrier of Devki Nandan Prasad @ Darki Nandan Prasad(respondent in M.A.No.630 of 2007), has been - 2 - set aside. 3. A brief statement of facts essential for disposal of the appeals may be indicated. On 22.9.1994, the appellants had received intelligence report that the respondents were engaged in smuggling of gold bars of foreign origin from across Indo-Nepal border. The aforesaid suspected person, namely, Krishna Kumar, was intercepted while he was in the queue at Muzaffarpur railway station to purchase railway ticket to travel to Jamshedpur. His statement (Annexure-1) in terms of section 107 of the Act was recorded on the same day. He confessed to have secreted five gold bars of foreign origin in his rectum. He was a professional carrier, and confessed to have specialized in such smuggling activities in this manner. He further confessed that he was acting as a carrier for Ram Nath Sah and Devki Nandan Prasad, the respondents herein, who are jewellers at Jamshedpur. The interrogatory statement of Krishna Kumar in terms of section 108 of the Act was recorded on 23.9.1994(Annexure-2). He gave graphic description of the mode and manner in which he had been operating, and confessed his guilt. This was followed by show- cause notice dated 6.3.1995 (Annexure-5), in terms of section 124 of the Act to the two respondents. They had shown cause, but refused to turn up for their statements under section 108 of the Act. On a consideration of the materials on record, the Joint Commissioner of Customs, Patna, passed the order on 31.01.2005 (Annexure-6), in terms of section 122 of the Act, whereby he found Krishna Kumar as well as the two respondents herein of smuggling goods, and - 3 - confiscated the gold bars. The learned Joint Commissioner also imposed personal penalty of Rs.5000/- on Krishna Kumar, and Rs.10, 000/- each on the two respondents herein, in terms of section 112 of the Act. The two respondents preferred their separate appeals which have been rejected by the learned Commissioner (Appeals), Customs & Central Excise, by a common order dated 23.9.2005(Annexure-7). They preferred separate appeals before the learned Tribunal, which have been allowed by a common order and impugned herein. Hence these two appeals by the Department. 4. While assailing the validity of the impugned order, learned counsel for the appellants submits that the learned Tribunal has grievously erred in setting aside the order of adjudication, and the appellate order. His submission is that the learned Tribunal has completely failed to appreciate the sweep of sections 107 and 108 of the Act. He relies on the following two judgments of the Supreme Court: (i) (1997) 1 SCC 508 (Surjeet Singh Chhabra vs. Union of India) (ii) (1997) 3 SCC 721(K.I. Pavunny vs. Assistant Collector (HQ.), Central Excise Collectorate, Cochin) 5. Learned counsel for the respondents has supported the order of the learned Tribunal. He relies on the judgment of the present Bench handed down on 10.04.2009, whereby the following two appeals, i.e., Miscellaneous Appeal No. 632 of 2007, and Miscellaneous Appeal No.635 of 2007(Commissioner of Customs, Patna vs. Sri Jaynath Shah), have been dismissed. He further - 4 - submits that the Department‟s appeal has been rejected by the Supreme Court by a common order dated 11.10.2010, passed in SLP (C) No.14151 of 2009, and SLP(C) No.14152 of 2009. 6. We have perused the materials on record and considered the submissions of learned counsel for the parties. The scope, extent, and sweep of sections 107 and 108 of the Act have been the subject-matter of authoritative pronouncements of the Supreme Court in its various judgments. We content ourselves by noticing the judgment of the Supreme court in K.I.Pavunny (Supra), paragraph 26 of which is reproduced hereinbelow: “26. In Naresh J. Sukhawani v. Union of India a two-Judge Bench (to which one of us, K. Ramaswamy, J., was a member) had held in para 4 that the statement recorded under Section 108 of the Act forms a substantive evidence inculpating the petitioner therein with the contravention of the provisions of the Customs Act as he had attempted to export foreign exchange out of India. The statement made by another person inculpating the petitioner therein could be used against him as substantive evidence. Of course, the proceedings therein were for confiscation of the contraband. In Surjeet Singh Chhabra v. Union of India decided by a two-Judge Bench to which one of us, K. Ramaswamy, J., was a member the petitioner made a confession under Section 108. The proceedings on the basis thereof were taken for confiscation of the goods. He filed a writ petition to summon the panch(mediator) witnesses for cross-examination contending that reliance on the statements of those witnesses without opportunity to cross-examine them, was violative of the principle of natural justice. The High Court had dismissed the writ petition. In that context, it was held that his retracted confession within six days from the date of confession was not before a police officer. The Customs Officers are not police officers. Therefore, it was held that “the confession, though retracted, is an admission and binds the petitioner. So there is no need to call panch witnesses for examination and cross-examination by the petitioner”. As noted, the object of the Act is to - 5 - prevent large-scale smuggling of precious metals and other dutiable goods and to facilitate detection and confiscation of smuggled goods into, or out of the country. The contraventions and offences under the Act are committed in an organized manner under absolute secrecy. They are while-collar crimes upsetting the economy of the country. Detection and confiscation of the smuggled goods are aimed to check the escapement and avoidance of customs duty and to prevent perpetration thereof. In an appropriate case when the authority thought it expedient to have the contraveners prosecuted under Section 135 etc. separate procedure of filing a complaint has been provided under the Act. By necessary implication, resort to the investigation under Chapter XII of the Code stands excluded unless during the course of the same transaction, the offences punishable under the IPC like Section 120-B etc. are involved. Generally, the evidence in support of the violation of the provisions of the Act consists in the statement given or recorded under Section 108, the recovery panchnama (mediator‟s report) and the oral evidence of the witnesses in proof of recovery and in connection therewith. This Court, therefore, in evaluating the evidence for proof of the offences committed under the Act has consistently been adopting the consideration in the light of the object which the Act seeks to achieve.” It is evident on the authoritative pronouncements of the Supreme Court that the confessional statements in terms of section 108 of the Act is substantive evidence, and can be relied upon to pass orders of confiscation and penalty under the provisions of the Act. 7. The only point for consideration, therefore, in the present case is whether or not the statements made by Krishna Kumar, the carrier in the present case, had made statements in terms of sections 107 and 108 of the Act, were genuine & bona fide confessional statement or not untrammelled by undue influence or the like. The learned Joint Commissioner as well as the learned Appellate - 6 - Authority have discussed this aspect of the matter in detail and have come to definite findings of facts that while Krishna Kumar was in queue at the Muzaffarpur railway station for purchase of ticket for Jamshedpur, he had orally confessed that he was secreting five gold bars of foreign origin in his rectum. This was followed by his statements under section 107 of the Act, recorded on 22.9.1994(Annexure-1) Thereafter, the interrogatory statements of Krishna Kumar under section 108 of the Act was recorded on 23.9.1994 (Annexure-2). On a plain reading of the two statements, we are left in no doubt that it was a free and frank confession by Krishna Kumar that he had been acting as a carrier for gold bars from Nepal for the two respondents herein by secreting the same in his rectum. He also explained the manner in which he used to conceal the things in his body. He gave graphic description, and also the manner in which he used to take out the object from his body. He had in fact taken out the five gold bars in the presence of the Customs Authority. We are thus convinced that the statements of Krishna Kumar in terms of section 107 and section 108 were pure and genuine confessional statements implicating himself, as well as the two respondents herein. The same is substantive evidence and can be used against Krishna Kumar as well as the two respondents herein. 8. The authorities had issued notices to the two respondents herein to record their statements in terms of section 108 of the Act which they failed to avail of. We have thus no doubt that the confessional statements of Krishna Kumar in terms of sections 107 - 7 - and 108 of the Act are substantive evidence, supported by Panchnama as well as the seizure memo, that they are guilty of smuggling gold bars from across the border. Therefore, these cases are covered by the provisions of section 123 of the Act. Section 123 of the Act is reproduced hereinbelow: “123. Burden of proof in certain cases.—(1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be- (a) in a case where such seizure is made from the possession of any person,- (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.] (2) This section shall apply to gold [and manufactures thereof] watches, and any other class of goods which the Central Government may by notification in the Official Gazette, specify.” In other words, the burden of proof was on the respondents herein to prove that the gold bars in question were not smuggled goods. As stated hereinabove, adequate opportunity was afforded to them to set up their defence which they failed to avail of. In such a situation, the rigorous procedure prescribed by section 103 of the Act is completely obviated. 9. We must notice the judgment/order dated 10.04.2009, passed by the present Bench in M.A.No.632 of 2007, and analogous M.A.No.635 of 2007, whereby the two appeals were dismissed and relied on by learned counsel for the respondents. That was also an - 8 - identical case where the respondent therein was secreting gold bars within his rectum. We had dismissed the appeal on the ground that it called for the rigorous procedure of X-ray of the body in terms of section 103 of the Act. Learned counsel for the respondents has failed to notice the distinguishing feature between that case and the present ones. We have clearly observed in paragraph 4 of that order that “…We are not satisfied that there was an effective admission by the noticee…” That makes the whole difference in approach and applicability of the relevant provisions of the Act in two cases. That was a case where the provisions of section 103 were attracted. On the other hand, in the present case, in view of the reliable confessional statements made by Krishna Kumar and discussed hereinabove, applicability of the provisions of section 103 is wholly obviated. 10. Before we part with the records, we must observe that the Tribunal has in a perfunctory manner exercised its quasi-judicial function and allowed the appeals of the two respondents herein. Such vital matters dealing with smuggling of goods cannot be disposed of by the perfunctory manner and short order as the Tribunal has ventured to do. The Tribunal has failed to notice the relevant provisions of the Act, namely, sections 103, 107, 108 & 123 of the Act, and the leading judgments of the Supreme Court. We are constrained to make these observations because we find from our judicial experience that the Customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkatta, has been regularly handing down such short, cryptic, & perfunctory orders - 9 - which amount to abdication of judicial duties and functions. 11. In the result, the appeals are allowed, the order dated 21.05.2007, passed by the learned Tribunal is hereby set aside. The order of the learned appellate authority is hereby restored. hr ( S. K. Katriar ) ( Kishore K. Mandal )