Gobinda Das Vs Commissioner of Customs (Preventive), Kolkata (CESTAT Kolkata)
Summary: The CESTAT Kolkata, in Gobinda Das Vs Commissioner of Customs (Preventive), Kolkata, set aside a penalty of ₹4,08,60,120 imposed under Section 112(b) of the Customs Act, 1962 in connection with alleged gold smuggling. The Tribunal held that the appellant’s involvement could not be established solely through the uncorroborated statement of another accused. It further found that the adjudicating authority had not complied with the mandatory evidentiary requirements under Section 138B of the Customs Act, 1962, which are comparable to Section 9D of the Central Excise Act, 1944.
The proceedings originated from a Directorate of Revenue Intelligence operation on 2 April 2017, when officers recovered 120 gold biscuits from Bishnupada Dey. Further investigation resulted in the seizure of gold weighing 13,993.2 grams, valued at ₹4,08,60,120, from his residence. Dey stated that a person known as Gobinda Babu had engaged him to transport smuggled gold from Basirhat to Kolkata for remuneration of ₹1,000 per ten biscuits. He also claimed that the gold was to be delivered to Ratan Kumar Saha on Gobinda Babu’s instructions.
The investigation revealed significant evidentiary gaps. The mobile number allegedly used by Gobinda Babu was registered in the name of Soumyadeep Talapatra, who denied obtaining the connection or knowing Gobinda Das. Similarly, the number attributed to Ratan Kumar Saha was registered in the name of Somnath Mullick, who denied any connection with Saha. Searches of Dey’s residence and business premises yielded no additional incriminating material. In a subsequent statement recorded on 14 July 2017, Dey did not mention the appellant.
In a separate investigation involving the seizure of 140 gold biscuits, officers searched the premises of G.D. Gold House and recovered Indian currency amounting to ₹43,12,280, suspected to represent proceeds of smuggled gold. The Department inferred that the proprietor, Gobinda Das, was the same person whom Dey had called Gobinda Babu. On this basis, and principally relying upon Dey’s statement, the adjudicating authority imposed a penalty equal to the value of the seized gold.
The appellant argued that the Department had failed to establish any direct connection between him and the seized gold. No independent evidence showed that he had engaged Dey, issued instructions to transport gold or arranged delivery to Saha. The appellant maintained that non-appearance in response to summons could not independently establish guilt. He relied upon judicial precedents holding that a co-accused’s confession is weak evidence and cannot, without independent corroboration, sustain penal consequences against another person.
The appellant also contended that the adjudicating authority had failed to examine the maker of the relied-upon statement before admitting it in evidence. Referring to G-Tech Industries Vs Union of India and Prakash Raghunath Autade Vs Union of India, he submitted that the statutory procedure for admitting statements must precede any reliance upon their contents and the consequential opportunity for cross-examination.
The Department defended the adjudication order and relied on decisions permitting consideration of statements recorded under the Customs Act. However, the Tribunal distinguished those authorities because the relevant cases involved additional corroborative evidence, different procedural circumstances or confessions made by the accused themselves. In contrast, the present proceedings contained no independent material reliably connecting the appellant with Dey’s activities or the particular seizure.
On examination of the record, the Tribunal held that the alleged connection through the mobile number was unsupported because the registered subscriber denied any relationship with the appellant. The identification of Gobinda Babu as Gobinda Das, proprietor of G.D. Gold House, was likewise an inference rather than an established fact. The Tribunal observed that Dey could have identified the appellant as the proprietor of G.D. Gold House had he actually possessed that knowledge, but his statement did not do so.
Regarding admissibility, the Tribunal held that Section 138B required the adjudicating authority to follow the prescribed procedure before relying upon the statement. The person making the statement had not been examined during adjudication, and the appellant had not been given an opportunity to cross-examine him. Consequently, the statement lacked evidentiary value for the purpose for which it had been relied upon. The absence of independent corroboration further undermined the Department’s case.
Accordingly, the Tribunal concluded that the findings recorded against Gobinda Das in paragraphs 38.25.1 to 38.25.6 and 38.29 of the Order-in-Original were unsupported by corroborative evidence. It set aside the entire penalty of ₹4,08,60,120 and allowed the appeal. The ruling reinforces the need for reliable independent evidence and compliance with statutory safeguards before imposing penalties based on statements recorded during customs investigations.
Cases Discussed
1. Haricharan Kurmi Vs State of Bihar (Supreme Court) — AIR 1964 SC 1184. Cited for the limited evidentiary value of a co-accused’s confession.
2. S. Mohanalal (CESTAT Madras) — 1987 (29) ELT 63 (Tri.-Madras). Cited against imposing penalties solely on the basis of a third-party statement.
3. Naresh J. Sukhawani Vs Union of India (Supreme Court) — 1996 (83) ELT 258 (SC). Distinguished because the statement was supported by other evidence.
4. K.I. Pavunny Vs Assistant Collector, Headquarters, Central Excise Collectorate, Cochin (Supreme Court) — 1997 (90) ELT 241 (SC). Distinguished because it concerned the accused’s own confession.
5. Jahed Mondal Vs Commissioner of Customs (Preventive), West Bengal (CESTAT Kolkata) — 2002 (149) ELT 319. Cited against penalties founded on uncorroborated co-accused statements.
6. Anisur Rahaman Vs Commissioner of Customs (Preventive), West Bengal (CESTAT Kolkata) — 2003 (160) ELT 816. Cited regarding the insufficiency of non-appearance in response to summons.
7. Narayan Das Vs Commissioner of Customs, Patna (CESTAT Kolkata) — 2004 (178) ELT 554. Relied upon regarding independent corroboration under Section 112(b).
8. Mohtesham Mohd. Ismail Vs Special Director, Enforcement Directorate (Supreme Court) — 2007 (220) ELT 3. Cited regarding the evidentiary limitations of co-accused confessions.
9. Prakash Kumar Vs State of Gujarat (Supreme Court) — (2007) 4 SCC 266. Cited concerning the weak evidentiary character of a co-accused’s confession.
10. Assistant Collector of Customs Vs Amrik Singh (Punjab and Haryana High Court) — 2014 (301) ELT 170. Cited on the requirement for corroboration of statements recorded under Section 108.
11. Praveen Kumar Saraogi Vs Union of India (Allahabad High Court) — 2014 (299) ELT 151. Distinguished as involving criminal proceedings and bail-related relief.
12. K.P. Abdul Majeed Vs Commissioner of Customs, Cochin (Kerala High Court) — 2014 (309) ELT 671. Distinguished because corroborative statements from other persons were available.
13. G-Tech Industries Vs Union of India (Punjab and Haryana High Court) — 2016 (339) ELT 209. Applied concerning the mandatory procedure for admission of witness statements.
14. Flemingo DFS Pvt. Ltd. Vs Commissioner of Customs, Visakhapatnam (CESTAT Hyderabad) — 2018 (363) ELT 450. Cited regarding statements not examined during adjudication.
15. Surinder Kumar Khanna Vs Intelligence Officer, DRI (Supreme Court) — 2018 (362) ELT 935. Cited concerning the insufficiency of uncorroborated co-accused confessions.
16. Sourav Goyal (CESTAT Delhi) — 2020 (373) ELT 676. Cited concerning penalties founded on statements of co-noticees.
17. Prakash Raghunath Autade Vs Union of India (Bombay High Court) — 2022 (380) ELT 264. Applied regarding the stage at which cross-examination arises in adjudication proceedings.
FULL TEXT OF THE ORDER OF CESTAT KOLKATA
Briefly stated facts of the case are that on 02.04.2017, Officers of the DRI recovered 120 Pcs. of Gold Biscuits from the possession of Shri Bishnupada Dey and subsequently gold weighing 13993.2 gms valued at Rs. 4,08,60,120/- was seized from his house. Shri Dey could not produce any licit document in support of possession carrying, transporting or dealing with the said gold biscuits. His statement was recorded on 02.04.2017 wherein he inter alia had taken the name of Shri Gobinda Babu (The Appellant) of Barasat whom he came across in February 2017 at Burrabazar when he came there in connection with his cloth business and requested him to provide some means to earn extra money. Shri.Gobinda Babu offered him the work of carrying smuggled gold from Basirhat to Kolkata against payment of Rs.1000/- for carrying 10 Pcs. Of Gold Biscuits per trip . Since he was coming to Kolkata every week in connection with his own business, he agreed and started carrying smuggled gold from middle of March 2017 and intimated the same to Gobinda Babu in his Mobile No. 8276875110. Shri Dey did not know the proper home address or office address of Gobinda Babu but he knew that Gobinda Babu had an Office in Sonapatti at Burrabazar and his home was at Barasat. Regarding the 120 pcs of gold seized, he stated that he was to handover the said gold to one Sri Ratan Kumar Saha who was introduced to him by Shri.Gobinda Babu . Shri Dey was carrying the gold biscuit at the instruction of Gobinda Babu to deliver the same to Shri Ratan Kumar Saha, whose Mobile Number was 9073804239.
2. On 03.04.2017, Shri Dey was arrested . On 07.04.2017, his house was searched but nothing incriminating was found. The search of his shop premises also did not yield anything incriminating. On 14.07.2017, he had given statement again but he did not say anything about the Appellant.
3. Further, investigation was made in respect of Shri Ratan Kumar Saha but he was not found in his address. From the subscriber details, the phone number stated to have been used by Shri Ratan Kumar Saha was found to be registered in the name of Somnath Mullick, who was a daily labourer and he never took any mobile connection bearing number 9073804239 and he did not know any person named Sri Ratan Kumar Saha. Further, from the subscriber details of mobile number 8276875110 stated to be used by Gobinda Babu, it was found that the same was registered in the name of Soumyadeep Talapatra, who denied taking any such mobile connection and also stated that he did not know any person named Gobinda Babu or Gobinda Das in Barasat Area . In another case booked on 22.04.2017, 140 Pcs. of Gold Biscuits were recovered and in the course of follow up action of the said case, the shop premises, G.D. Gold House at 3rd Floor of Nalini Seth Road, Kolkata, was searched and Indian Currency of Rs.43,12,280/-, believed to be the sale proceeds of smuggled gold, were recovered and seized. It was inferred that Shri Gobinda Babu mentioned by Shri Bishnupada Dey and the Proprietor of G.D. Gold House, Sri Gobinda Das were one and the same person. Shri Gobinda Das (Appellant) was summoned but he did not appear.
4. The Appellant along with others were issued with a Show Cause Notice vide DRI F. No. DRI/KZU/AS/ENQ-23/2017/3390 dated 26.09.2017. An Order-in-Original dated 11.01.2019 was issued by the Principal Commissioner of Customs confiscating the gold seized. He also imposed penalty of Rs.4,08,60,120/-under section 112(b) of the Customs Act, 1962 on both Gobinda Babu and Ratan Kumar Saha. The Appellant is before us against the imposition of penalty in the impugned order.
5. The Appellant stated that findings in respect of his role are detailed in Paras- 38.25.1 to 38.25.6 and para 38.29 of the Order-in-Iriginal. The findings contained therein are based on assumption and presumption and on the basis of uncorroborated statement of co-accused. Without any evidence, the involvement of the Appellant has been inferred solely on the basis of the statement of the co-accused, which cannot be relied upon in the absence of independent corroborative evidence. Reliance has been placed on some decisions in the Order-in-Original, which are not applicable in the present case, as they are factually different. There is no evidence that the Appellant offered the work of carrying smuggled gold to Shri Bishnupada Dey. The alleged admission of Shri Bishnupada Dey is of no consequence in this case in the absence of any corroborative evidence. The non-appearance of the Appellant in response to summons cannot be a ground for alleging commission of any offence, more-particularly when the summons were responded and reply given. There is no scope for inferring that the Appellant was actively involved in smuggling of gold at any point of time. Therefore, the finding in the Order-in-Original against the Appellant in Paras 38.25.1 to 38.25.6 and para 38.29 are erroneous and without any evidence. Since the findings are based only on the statement of the co-accused, without any independent, corroborative evidence, the Order passed by the Adjudicating Authority imposing penalty on the Appellant solely on the basis of the statement of the co-accused cannot be sustainable in law.
6. In support of their claim, the appellant relied upon the following decisions:
i) Mohtesham Mohd. Ismail Vs. Special Director, Enforcement Directorate- 2007(220)ELT 3 (SC) .
That a confession of a co-accused person cannot be treated as substantive evidence and can be pressed into service only when the Court is inclined to accept other evidence and feels the necessity of seeking for an assurance in support of the conclusion deducible therefrom. A confession purported to have been made before an authority would require a closure scrutiny. It is therefore, now well settled that the Court must seek corroboration of the purported confession from independent sources.
ii) Prakash Kumar Vs. State of Gujarat- (2007) 4 SCC 266 .
The confession of co-accused by itself is not sufficient to hold the other accused guilty. It has been held repeatedly by this Court that the confession of a co-accused is a fragile and feeble type of evidence and it could only be used to support the other evidences, if any, adduced by the prosecution.
iii) Assistant Collector of Customs Vs. Amrik Singh 2014 (301) ELT 170 (P&H) .
The question arises whether the admission of co-accused under Section 108 of the Customs Act can be basis of conviction of other co-accused. The Ld. Trial Court has rightly held that statement of co-accused under Section 108 of the act against the co-accused with a weak type of evidence and conviction of co-accused cannot be based on the uncorroborated statement of co-accused.
iv) Anisur Rahaman Vs. Commissioner of Customs (Prev.) West Bengal 2003 (160) ELT 816 (Tri-Kolkata).
Non-appearance before DRI Officer in response to summons is not a ground for holding that the appellant is guilty-The entire case is based upon the statement of the Driver which is in the nature of uncorroborated statement of a co-accused and cannot be made the sole-basis for penalizing the appellant.
v) Jahed Mondal Vs. Commissioner of Customs (Prev.), West Bengal- 2002 (149) ELT 319 (Tri.-Kol.) Para 8 & 11.).
Penalty has been imposed upon Shri Jahed Mondal based upon the statement of Bablu Biswas who was intercepted by the Customs Officer from whose possession one gold biscuit has been recovered. Penalty cannot be imposed on the basis of confession of co-accused unless corroborated by other evidences. Non-appearance in response to Summons cannot be a factor or criteria in determining the guilty conduct of the appellant.
vi) Narayan Das Vs. Commissioner of Customs, Patna- 2004 (178) ELT 554 (Tri.-Kolkata) Para-6.
Mere inculpatory statement of the co-acused about the purchase of gold from the appellant cannot be the basis of imposing penalty under Section 112(b) of the Customs Act, 1962 in the absence of any other corroborative evidence.
7. The Appellant further submits that the statement of the co-accused in this case cannot be considered as relevant in view of non-compliance of the mandate under Section 138B of the Customs Act, 1962 by the Adjudicating Authority which is pari materia with Section 9D of the Central Excise Act, 1944. In the case of Flemingo DFS Pvt. Ltd., Vs. Commissioner of Customs, Visakhapatnam reported in 2018 (363) ELT 450 (Tri-Hyderabad), it has been held that if Revenue chooses not to examine any person in the adjudication proceedings, it amounts to giving up that witness and such statement cannot be considered relevant. Since the co-accused person whose statement has been relied upon in this case was not examined in adjudication proceedings, his statement could not have been considered relevant against the Appellant. Reliance was placed in the case of Haricharan Kurmi reported in AIR 1964 SC 1184, wherein it was held that even otherwise the statement of co-accused can only be considered for corroboration of any tangible evidence and in the instant case, there is no tangible evidence to seek corroboration from statement of co-accused.
8. The appellant submits that Adjudicating Authority should have first examined the person whose statements have been relied upon to form an opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence. This was mandatory. The statement of any person cannot be relied upon directly as has been held by the Hon.ble High Court in the case of G-Tech Industries – Vs. Union of India– 2016 (339) ELT 209 (P&H). In the said decision the rationale behind the mandate contained in Section 9D of the Central Excise Act, 138B of the Customs Act, 1962 has been mentioned as below:
“Para 15- The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D (1) mandates that the evidence of the witness has to be recorded before the Adjudicating Authority, as in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned.”
9. The appellant submits that the Adjudicating Authority, therefore, should follow the procedure to rely on the statement as relevant for proving the truth of the contents of the statement, to admit the statement in evidence. In this case, the said mandate has not been followed and hence the statement of the co-accused in this case cannot be said to be voluntary and his statement also cannot be said to be true and correct and shall not be taken as evidence.
10. The appellant submits that after examination by the Adjudicating Authority the question of cross-examination would arise as has been held in Prakash Raghunath Autade- Vs. Union of India – 2022 (380) ELT 264 (Bom.).
11. The appellant further relied upon the decision of the Tribunal in the case of S. Mohanalal reported in 1987 (29) ELT 63 (Tri-Madras) wherein the Tribunal held that “it will be unfair to fasten the appellant with penal consequences merely on the basis of a statement recorded from a third party to the effect that Gold Pellets under seizure were eventually intended to deliver to the Appellant. In the case of Sourav Goyal reported in 2020 (373) ELT 676 (Tri.-Del.), it was held by the Tribunal that the statement of the co-noticees unless corroborated by any independent evidence do not constitute the legal evidence and there is no justification for imposition of penalty on the Appellant.
12. In the present case, the Appellant submits that only on the basis of the statement of the co-accused inference has been made about his involvement in the smuggling and penalty was imposed. The appellant relied on the decision in the case of Surinder Kumar Khanna- Vs. Intelligence Officer, DRI- 2018 (362) ELT 935 (SC) on the facts identical with the facts of the Appellant’s case wherein the Hon’ble Apex Court has held as under:
Para-14 – “In the present case it is accepted that apart from the aforesaid statements of co-accused there is no material suggesting involvement of the appellant in the crime in question. We are thus left with only one piece of material that is the confessional statements of the co-accused as stated above. On the touchstone of law laid down by this Court such a confessional statement of a co-accused cannot by itself be taken as a substantive piece of evidence against another co-accused and can at best be used or utilized in order to lend assurance to the Court. In the absence of any substantive evidence it would be inappropriate to base the conviction of the appellant purely on the statements of co-accused. The Appellant is therefore entitled to be acquitted of the charges leveled against him.”
13. The Departmental Representative reiterated the findings of the Adjudicating Authority in paras 38.25.1 to 38.25.6 and para 38.29 to establish the role of the Appellant in the seizure and subsequent confiscation of the gold biscuits. He relied upon the decisions cited by the Adjudicating Authority in the para 38.25.1 of the O-i-O in support of his argument that the statement of a co-accused can be relied upon and it is an admissible evidence.
14. Heard both sides and perused the evidences available on record.
15. We find that the entire case of the Revenue has been built on the basis of the statement of the co-accused. The adjudicating Authority has given his findings about the role of the Appellant in paras 38.25.1 to 38.25.6 and para 38.29. For the sake of ready reference the relevant paras are reproduced below.
“38.25.1. I have perused the reply of Shri Gobinda Das to the instant Show Cause Notice. I find that Shri Bishnupada Dey had on interception confessed on 02.04.2017 tht he was offired the work of carrying smuggled gold in lieu of monetary remuneration by Gobindababu @ Gobinda Das. I find that Bishnupada Dey had at the ouset admitted the role of Gobindababu i.e. Gobinda Das in the gold smuggling operations. I find that Bishnupada Dey taking the name of Gobindababu i.e. Gobinda Das without any hesitation and also furnishing a detailed picture of the activities of Gobindababu i.e. Gobinda Das clearly establishes that Gobinda Das was involved as a key person in this smuggling case and thus it is evident that Gobinda Das is a key person in the smuggling syndicate. In this context I rely on the order of the Hon’ble High Court of Kerala in case of K.P. Abdul Majeed Vs. Commissioner of Customs, Cochin in RC No. 1 of 2010, decided on 03.07.2014, reported in 2014 (309) ELT 67 (Ker.) wherein, inter-alia, it is stated that “the confessional statement of co-accused can be treated as evidence, provided that sufficient materials are available to corroborate the same”. I also rely on the order of the Hon’ble High Court at Allahabad in the case of Praveen Dumar Saraogi Vs. Vs. Union of India, Application No. 1471 of 1998, decided on 09.05.2013, reported in 2014 (299) ELT 151 (All.) wherein inter-alia it is stated that “Statement of co-accused recorded under Section 108 of the Customs Act, 1962 can be used against accused of a case When there is admission on part of co-accused, the same can be read against co-accused-complaint not liable to be quashed Section 135 of Customs Act, 1962, “Further reliance is placed on the order of the Hon’ble Supreme Court of India in the case of Naresh J. Sukhawani Vs. Union of India, SLP [C] No. 23708 of 1995, decided on 06.11.1995 wherein, inter-alia, it is stated that “Statement of co-accused whether usable without other corroborative evidence-Attempt to export foreign exchange out of India- Carrier naming Shri Subhash Dudani who had given such foreign exchange to him for delivery at Hong Kong- Statement of Shri Dudani under Section 108 of the Customs Act, 1962 named Shri Sukhawani who had given the foreign exchange to him-Statement of co-accused Shir Dudani can be used as a substantive evidence connecting the petitioner with contravention of illegal export of foreign exchange-Section 30 of the Evidence Act, Section 161 of the Criminal Procedure Code, 1973.” Thus, in view of the said observation I find that the evidence furnished by Shri Bushnupada Dey to be credible and reliable. Further, I find that the defense that the mobile telephone used by Gobinda Das was registered in the name of another person, it is usual practice of persons engaged in clandestine activities like smuggling of gold. I find Gobinda Das has used this ploy to evade the investigating agencies and also evade the legal consequences of being involved in such nefarious activities. In view of the aforesaid, the defense by Shri Gobinda Das @ Gobindababu that the mobile Number 8276875110 belonged to another person and thus the Call Details cannot be attributed to him is liable to be rejected outright.
38.25.6. In view of the aforesaid, I find that the defense submitted by Shri Gobinda das @ Gobindababu, is at Variance with the facts of the case, the admissions of Shri Bishnupada Dey in Course of his statements recorded under Section 108 of the Customs Act, 1962, which has specified the role of Shri Gobinda Das @ Gobindababu in the smuggling operations and is thus liable to be rejected outright.
38.29.I find Shri Gobinda Das @ Gobindababu has played a prominent role in the smuggling of subject gold from Bangladesh and its delivery at Kolkata/Dumdum. It is indisputable that Shri Gobinda Das @ Gobindababu had engagned Shri Bishnupada Dey to carry the smuggled gold from Bisirhat to Kolkata in return flro monetary consideration. It is admitted that Shri Gobinda Das had introduced Shri Ratan Kumar Saha to Shri Bishnupada Dey and it is evident that he instructed Shri Dey to deliver the smuggled gold biscuits to Shri Saha. Summon was issued to Shri Gobinda Das @ Gobindababu for his appearance before the investigating officer but he did not honour the same. If Shri Gobinda Das was innocent of the charges of being involved in gold smuggling and not associated with such activity, then he could have without any inhibition appeared before the Investigating Officer and proven his inncocence. However, his abstaining himself during investigation and ignoring the Summon issued to him, proves that he was a key nam in the gold smuggling syndicate and actively colluded in such activities. I find Shri Gobinda Das @ Gobindababu has knowingly, consciously and actively involved himself in smuggling of gold of foreign origin which he knew or had reasons to believe were liable to confiscation under Section 111 (b) and Section 111 (d) of the Customs At, 1962, Shri Gobinda Das @ Gobindababu is thus liable to penalty under Section 112 (b) of the Customs Act, 1962. Held so. ….”
17. From the above findings, we observe that Bishnupada Dey, the co.accused in this case only implicated the Appellant. There is no evidence available on record to establish that the Appellant has asked Bishnupada Dey to carry the gold. The connection between the Appellant and Bishnupada Dey was a phone number. Mr. Dey was told to call the Appellant in the phone number 8276875110. On verification, the phone number was found to be registered in the name of Soumyadeep Talapatra. So, on the basis of these evidences alone it cannot be concluded that Mr. Dey was carrying the gold for the Appellant.
18. Next evidence relied upon by Revenue is that in another case 140 pieces of gold was seized from G.D.Gold House in Burrabazar, whose proprietor was one Mr.Gobinda Das. It was inferred that the Gobinda Babu mentioned by Mr. Dey and the Gobinda Das proprietor of G.D.Gold House were one and the same. This inference is not supported by any evidence. If both are one and the same Mr. Dey could have easily mentioned Gobind Babu as the proprietor of G.D.Gold House, in his statement. In his statement Mr. Dey has stated that he knows that Gobinda Babu has an office in Sonapatti at Burrabazar. When he knows details of that extent he could have easily referred him as the proprietor of G.D.Gold House. Hence, we find that the inference by the Revenue the Gobinda Babu referred by Mr. Dey and Gobinda Das, Proprietor of G.D.Gold House are one and the same is without any supporting evidence.
19. Revenue has mainly relied upon the statement of Mr Dey to implicate the Appellant in this case. They have relied upon some decisions in the Order-in-Original to support their claim that the statement of the co-accused is an admissible evidence. We have examined the decisions cited by the Adjudicating Authority and our observation about the relevancy of those cases in the present case is as below:
19.1 The First decision relied upon by the Revenue is Paraveen Kumar Saraogi Vs. Union of India reported in 2014 (299) ELT 151 (All.). The said decision was relating to granting of bail in a case of a complaint under Section 135 of the Customs Act, 1962 and subsequent application for quashing of bail under Section 482 of the Criminal Procedure Code. This is not a case similar to the present case on hand and hence, the said decision has no application in the Appellant’s case.
19.2. The second decision relied upon by the Revenue is Naresh J. Sukhawani- Vs. Union of India reported in 1996 (83) ELT 258 (S.C.). In this case, the statement of co-accused was supported by other evidences like photographs and other intrinsic material as mentioned in paragraph 3 of the said decision and hence, the said decision is distinguishable on the facts of the case since in the case of the Appellant, there is no other evidence available to implicate the Appellant in the seizure of the gold. Such observation was also made by this Tribunal in the case of Narayan Das –Vs. Commissioner of Customs, Patna reported in 2004 (178) ELT 554 (Tri.-Kol.) and hence the decision of Naresh J. Sukhawani is distinguished.
19.3. The third decision relied upon by the Revenue is K.P. Abdul Majeed Vs. Commissioner of Customs, Cochin reported in 2014 (309) ELT 671 (Ker.). The facts of the case in the said decision, is also different since there were other evidences of 17 persons as mentioned in Paragraphs 2, 9 & 14 of the said order. Several persons have spoken about the involvement of the petitioner in the smuggling activity. The said judgment also mentioned that confessional statement of co-accused can be treated as evidence provided sufficient materials are available to corroborate the same. In the case of the appellant there is only one statement and no other corroborative evidence. The said judgment has no relevance in the facts and circumstances of the Appellant’s case.
19.4. The fourth decision relied upon by the Revenue is K.I. Pavunny Vs. Assistant Collector, Headquarter, Central Excise Collectorate, Cochin reported in 1997 (9) ELT 241 (S.C.). This decision is in respect of the confession of the accused himself and not by co-accused. The said decision also repeatedly speaks about the requirement of corroborative evidence by holding that the Rule of Practice & Prudence requires that confession should be corroborated by independent evidence. In the case of Appellant, there is no confession by the Appellant. Hence, the said judgment of K.I. Pavunny has no application in the facts and circumstances of the Appellant’s case. The said decision was also delivered in a Criminal Appeal.
20. We find that the Appellant relied on various decisions of High Courts and Tribunals as discussed in paras 6, Supra. From the decisions cited in the above said para we find that the statement of a co-accused is a weak evidence. Without any corroborative evidence, the statement of the co-accused alone is not sufficient to implicate the Appellant, as has been done in this case.
21. The Appellant raised the issue of relevancy of statements relied upon by the Adjudicating Authority. They have referred sections 138 B of Customs Act 1962 and section 9D of Central Excise Act,1944, which are pari materia to each other. The contention of the Appellant is that the Adjudicating Authority has not followed the procedure prescribed in the said sections before relying on the said statement of the co-accused in this case and hence any conclusion arrived at on the basis of that statement is legally not tenable. For the sake of ready reference the said sections are reproduced below:
22. 138B. Relevancy of statements under certain circumstances,
(I) A statement made and signed by a person before any Gazetted Officer of customs during the course of any inquiry or proceeding under this act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains,-
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances, of the case, the court considers unreasonable ; or
(b) When the person who made the statement is examined as a witness in the case before the court and the court is of opinion the, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
(2) The provisions of sub-section (1) shall so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a court.].
23. 9D. Relevancy of statements under certain circumstances,
(i) A statement made and signed by a person before any Central Excise Officer of a gazette rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains.-
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable: or
(b) when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
(2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this act, other a proceeding before a court, as they apply in relation t a proceeding before a court.
24. The Appellant relied upon the decision of the Hon’ble Punjab and Haryana High Court in the case of G-Tech Industries Vs UOI 2016(339)ELT 209 (P & H ),wherein it has been held that the Adjudicating Authority should first examine the person whose statement is to be relied upon to form an opinion whether the statement is to be admitted as an evidence. After that if that statement is to be admitted, then an opportunity is to be given for cross examination. The gist of the order cited above is reproduced below.
“Evidence – Statement before Central Excise Officer – Stage of relevance comes after admission of statement in accordance with procedure prescribed in Section 9D(1)(b) of Central Excise Act, 1944 – Rigour of this procedure is exempted only when handicaps referred in Section 9D(1)(a) ibid apply – Hence, adjudicating authority cannot straightaway rely on such statement unless and until he can legitimately invoke Section 9D(1)(a) ibid – In all other cases, to rely on for proving truth of contents of statement, he has to first admit statement in evidence in accordance with Section 9D(1)(b) ibid, for which he has to summon person who had made statement, examine him as witness before him in adjudication proceeding, and arrive at opinion that statement should be admitted in interests of justice – Only thereafter, question of offering witness to assessee for cross-examination can arise. – Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. [paras 16, 17, 18, 19]
Evidence – Statement before Central Excise Officer – Relevancy of – Procedure prescribed in Section 9D(1) of Central Excise Act, 1944 – It has to be followed in adjudication proceedings as well in criminal proceedings relating to prosecution – In absence of circumstances specified therein, evidentiary value of statement is lost and truth of facts therein has to be proved by evidence other than statement itself – It becomes irrelevant statement, reliance on which is vitiated in law and on facts. [paras 7, 8, 9]
Evidence – Statement before Central Excise Officer – Discretion exercised by adjudicating officer under Section 9D of Central Excise Act, 1944 to admit statement can be challenged in appeal and writ proceedings – Hence, to invoke Section 9D(1)(a) ibid, adjudicating authority has to pass reasoned and speaking order, which is amenable to challenge by assessee. [para 12]
Evidence – Statement before Central Excise Officer – Reliance without invoking Section 9D(1) of Central Excise Act, 1944 to find that attendance of makers of statements could not be obtained for any of reasons contemplated therein – It is violation of mandatory requirement of section which vitiated adjudication order – On facts, directions given that if Revenue intended to rely on statement, they would apply to adjudicating officer to summon him, have his examination-in-chief and give copy thereof to assessee to cross-examine them. [paras 22, 23, 24]
Evidence – Statement before Central Excise Officer – Procedure prescribed in Section 9D(1)(b) of Central Excise Act, 1944 – Use of ‘shall’ indicates that it is mandatory to follow it – Rationale for this is that statement before Gazetted Central Excise officer has every chance of having been recorded under coercion or compulsion. [paras 14, 15]
Evidence – Statements – Recorded behind back of assessee – They cannot be relied upon, in adjudication proceedings, without allowing assessee opportunity to test it by cross-examining makers of said statements. [para 24]
22. The Appellant also referred the decision of the Hon.ble Bombay High Court in the case of Prakash Raghunatha Autade VsUOI 2022 (380) ELT 264 (BOM), the gist of the decision is reproduced below.
Adjudication – Show cause notice – Witnesses – Cross-examination of – Natural justice – Stage prior to issuance of show cause notice cannot be regarded as an inquiry or proceeding as contemplated in Section 9D of Central Excise Act, 1944 – Therefore, any statement recorded prior to issuance of such show cause notice not a statement recorded in course of inquiry or proceeding and no right accrues in favour of noticee to insist on cross-examination of witnesses, whose statements have been recorded and referred to in show cause notice, even prior to a reply thereto being submitted – Question of cross-examination of witnesses would arise only after statements of witnesses are recorded by relevant authority in course of adjudication proceedings. [para 12]”
25. We find that section 9D is pari materia to Section 138 B of Customs Act 1962 and hence the ratio of the above said decision squarely applicable to this case as well . In this case, the adjudicating Authority has not examined the person who has given the statement which has been relied upon to implicate the Appellent. Also, no opportunity of cross examination given to the Appellant to question the basis on which the co accused has implicated the Appellant in this case. When the procedure set out in Section 138 B is not followed, the statement of the co accused has no evidentiary value. Also, in this case the statement of the co accused has not been corroborated by any other evidence. In view of the decisions discussed in para 6 above, the Appellant cannot be penalized based on the statement of the co-accused alone.
26. In view of the above discussion, we hold that the findings in the impugned order in paras 38.25.1 to 38.25.6 and 38.29, against the Appellant are not supported by any corroborative evidence and hence not sustainable. Accordingly, we hold that the penalty imposed against the Appellant is not sustainable and set aside the same. The appeal filed by the Appellant is allowed.
(Pronounced in the open court on…12th May, 2023…)
