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Madras High Court: Statement Made Under FERA, 1973 Is Sine Qua Non

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The Appellant was convicted for attempting illicit transportation of sandalwood, a prohibited item for export. He has filed an appeal under Section 130 of the Customs Act, 1962 challenging the correctness of the order passed by the Customs, Excise, and Service Tax Appellate Tribunal. The matter was heard and decided upon by Hon’ble Justice T. S. Sivagnanam and Justice R. N. Manjula. 

Facts of the case:

The officers of the Customs Department had conducted search operations in 1998 at a godown in Tuticorin. Three people were present at the time of the search. The Appellant K.Rahuman Sait falsely identified himself as Nathan, hailing from Trichy to avoid being detected. He had employed two other persons, viz., Selvaraj and Kalkan of Tuticorin for packing the goods. The Appellant stated that there were 476 cartons of Mangalorean Roofing Tile meant for export to Singapore. The officers opened the cartons and found sandalwood sticks and billets beneath straw packing. On examination of the godown, 419 cartons were found to contain sandalwood, and 57 cartons were found to have the Mangalore Roofing Tiles. The Appellant got to know one Dhanpal who dealt with illicit sandalwood. One day, Dhanapal informed the Appellant that he would despatch sandalwood illicitly through Tuticorin and wanted suitable persons for the said job and suggested the name of Alexander. The latter was running a company called M/s.Gilburt Overseas Shipping Company at Tuticorin. However, Alexander could not arrange for transport export of sandalwood, so the Appellant met one Maideen of Mannadi, an exporter at Chennai who mentioned the name of one Janar through his relative Mohan and made arrangements. 

The Appellant retracted his statement. The Original Authority concluded that the Appellant had played a significant role in the attempt to export sandalwood illicitly, and held that the Appellant’s retraction, vide his letters are only an afterthought and accordingly, rejected the same and levied penalty. Aggrieved by the same, the Appellant filed before the Tribunal. The Tribunal directed the appellant to pre-deposit a sum of Rs.10 Lakhs. 

The findings rendered by the Adjudicating Authority that the Appellant had contravened the provisions of Section 113 of the Act was confirmed. However, having regard to the totality of facts and circumstances of the case, including the value of the goods, which was approximate Rs.96,00,000/-, the Tribunal reduced the penalty to Rs.15,00,000/-.

Arguments before the Court:

The Counsel for the Appellant submitted that the Tribunal ought to have considered the retraction letters, the order passed by the Tribunal in the case of Janar, who had filed the shipping bill, the order of acquittal by the Criminal Court. The Counsel further submitted that the Appellant was only a worker. He had not violated any of the Act’s provisions, and the order passed by the Tribunal is arbitrary and unreasonable. He placed reliance upon various SC judgments to support his arguments about the burden of proof while taking action to confiscate goods, retraction of the appellant, and effect of a statement recorded under Section 108 of the Customs Act.

The Counsel further argued that the Adjudicating Authority failed to see that the confession, which was subsequently retracted by the Appellant, was not corroborated by other independent and cogent evidence.

The Counsel for the Respondents submitted that the Commissioner of Customs, Trichirappalli, not only took note of the statement recorded from the appellant but also took note of the belated retraction letters given in June/July 1998, examined the other evidence available, which corroborated the retracted confession and then, held that the Appellant was liable to be proceeded against. He further submitted that the Adjudicating Authority rightly held the Appellant guilty of contravening the Act’s provisions after affording the Appellant adequate opportunity. 

Court’s observations:

The Court observed that while dealing with the statement recorded under Section 40 of the Foreign Exchange Regulation Act, 1973 (FERA) the voluntary nature of any statement made either before the Customs Authorities or the Officers of Enforcement under the relevant provisions of the respective Acts is a sine qua non to act on it for any purpose. 

The Court observed that the Appellant could not place reliance upon the Tribunal’s decision in the case of Janar, the person who filed the shipping bill because the order of the Tribunal in the case of Janar was reversed by the Hon’ble Division Bench of this Court. The Adjudicating Authority is empowered to proceed independently, and there is no requirement that he has to await the outcome of the criminal proceedings. 

The Court observed that the factual matrix has been re-examined by the Tribunal, and did not find any question of law. 

Court’s order:

The Court dismissed the appeal. 

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