Retracted Statement under Customs Act cannot be said to be Involuntary in Absence of Examination of Court: Calcutta HC [Read Order]

In a recent case, the Calcutta High Court has held that a retracted statement under the Customs Act, 1962 cannot be said to be involuntary in the absence of examination of court. The court held that the tribunal had erroneously shifted the burden on the department, stating that the same has not been denied.

The department has questioned the correctness of the order passed by the Customs Excise and Service Tax Appellate Tribunal, Kolkata, by which the appeal filed by the respondent-assessee, Shri Rajendra Kumar Damani along with other connected appeals was allowed. The Customs Excise Services Tax Appellate Tribunal ( CESTAT ) held that the stand taken by the respondent and others was that the gold in question was made out of old jewellery purchased in cash, which fact has not been denied by the revenue for cogent reasons, and therefore the gold is not liable for confiscation.

The tribunal held that the department has failed to establish the fact that the cash recovered from the respondent and others are sale proceeds of the smuggled gold, and therefore the cash seized cannot be confiscated and no penalties are imposable. It was contended that the respondent and the other notices have retracted their statements on the ground that they were not voluntary and therefore the statement recorded under Section 108 cannot be relied on.

It was further decided by the tribunal that the statements recorded during the investigation were retracted by the respondent and the other two co-notices, and they are not admissible in the absence of corroborative evidence. The tribunal held that the currency seized from the respondent and the other two co-notices were not established by the department with corroborative evidence to show that the same were the sale proceeds of smuggled gold.

The department contended that in terms of Section 123 of the Customs Act, the burden is on the respondent, and having failed to discharge the burden, the adjudicating authority rightly ordered absolute confiscation and imposed a penalty. The assessee contended that the gold bars were made out of old gold jewellery purchased in cash.

The court noted that the onus is on the respondent and the co-noticees to establish with documents that the gold that was seized was from and out of the old gold jewellery purchased by cash. This aspect of the matter was never established by the respondent-assessee and the co-notices.

A division bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya has observed that if the tribunal was of the view that the statement recorded under Section 108 of the Customs Act, 1962 was not admissible on account of the retraction, that by itself cannot render the statement involuntary.

The court held that the tribunal had erroneously shifted the burden on the department, stating that the same has not been denied. The question of denial will come only if the onus is discharged by the respondent-assessee and the co-notices as required under Section 123 of the acts.

Without any document placed by the respondent and the co-noticees, the tribunal could not have concluded that the department did not establish the same by cogent evidence.

To Read the full text of the Order CLICK HERE

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