T.P. Nambiar, Member (J)

1. The above captioned appeals arise out of a common order passed by the learned Collector of Central Excise, Patna, in order (original) No. 7-Cus/CE/87 dt. 9-10-1987 under the Customs Act, 1962, and under a common order passed by the same Collector in order No. 7-Gold/87 dt. 9-10-1987. In terms of the above said orders, the learned Collector imposed a penalty of Rs. 20,000/- each on the appellants under Section 112 of the Customs Act, 1962 and another penalty of Rs. 10,000/- each against the above captioned appellants under Section 74 of the Gold (Control) Act, 1968.

2. The orders passed under the Gold Control Act, 1968 and the Customs Act, 1962 are separately passed by the learned Collector. The facts leading to both the cases are the same arising out of the same seizure and, therefore, we propose to dispose of all the four appeals by this common order.

3. The brief facts of this case are that one Sri Murtaza Hossain of Lalbagh Dist. Darbhanga, was caught by the police of L.N. Mithila University on 7-7-1985 at about 16 hours. He was found carrying a handbag which contained 5 gold biscuits. It was registered as a case in the Police Station. Then the Central Excise Preventive Officers of Laheriasarai visited the police station on 8-7-1985 at 15 hours, and found the gold biscuit weighing 861.250 gms valuing Rs. 1,63,637 lying at the Police Station. In the course of interrogation Murtaza Hossain stated that the gold biscuits belonged jointly to S/S Ramlal Kataria and Haidar Ali, who are the appellants before us. A show cause notice was issued to all the above said persons, and thereafter they replied the same. Then the adjudication proceedings took place and the impugned order was passed as stated above both under the Customs Act, 1962, and the Gold,(Control) Act, 1968.

4. Sri K.B. Basu, learned advocate appeared for Sri Ramlal Kataria in appeal Nos. C-63/88 and G-ll/88; Sri B.N. Chattopadhyay, learned consultant appeared for the appellant Sri Haidar Ali in appeal Nos. C-62/88 and G-10/88. Sri B.B. Sarkar, learned departmental representative represented the respondent in all the cases.

5. The learned advocate, Sri Basu appearing along with Miss Debjani Sen and Sri B.N. Chattopadhyay contended before us that the statement of Murtaza Hossain is not sufficient to pin the liability on the appellants. They contended that this statement of a co-accused cannot be the sole criterion for finding the appellants guilty. It was their contention that this statement is not corroborated by any other independent evidence. They also contended that this statement of Murtaza Hossain is an unreliable statement and the fact that Murtaza Hossain is a man of no means and the appellants are having sufficient means to do the gold business are not spelt out in the show cause notice, and therefore, relying on such circumstances to find the appellants guilty is not in accordance with law. In support of their contention they relied on the following decisions :

(i) : 1987 (30) ELT 797 - Tarsem Lal Maglani

(ii) : 1987 (27) ELT 504 (Tribunal) - Seshmal M. Jain

(iii) AIR 1985 (SC) 866 - Shrishail Nageshi Parev v. State of Maharashtra,

6. The learned departmental representative, Sri B.B. Sarkar contended that Murtaza Hossain has admitted the recovery of foreign gold from his possession and the gold was imported from Nepal. He also contended that Murtaza Hossain gave a statement that he is only the carrier and S/S Ramlal Kataria and Haidar Ali are the joint owners of this gold. He also contended that the inquiries revealed that Murtaza Hossain has no financial means to have so much gold. He stated that Sri Haidar Ali deals in precious stones and had a locker No. 11015 in Bank of India at Bombay, and when it was searched on 3-10-1985, Indian currency amounting to Rs. 101 was found there. He also stated that Ramlal Kataria is a certified goldsmith and he has a big house and his financial position is sound. Therefore, he contended that the statement of Murtaza Hossain is corroborated by these factors. He stated that the reply to the show cause notice was given at a later stage.

7. We have heard rival contentions. The point that arises for our determination is, whether the statement of Murtaza hossain implicating the appellants can be relied upon to find the appellants guilty. The statement of a co-accused alone is not sufficient to fix the liability on the appellants. In the decision reported in : 1987 (30) ELT 797 cited above, the Tribunal held that the retracted statement of a co-accused which is not corroborated by any other evidence cannot be the basis to find the accused guilty. In the case reported in : 1987 (27) ELT 504 , the Tribunal held that the proceedings under the Gold (Control) Act being penal in nature, it is for the department to establish and prove by acceptable legal evidence the charge of contravention to bring home the guilt of the appellant. It was held in that case that the statement of the co-accused, Mahendra Kumar at best will raise a suspicion against the appellant Seshmal M. Jain. Sri Mahendra Kumar in that case gave a statement that the gold in question was to be delivered to the appellant, Sri Seshmal M. Jain, and the Tribunal held that this statement alone may create a suspicion and is not a substitute for evidence. In such circumstances, we are of the opinion that the statement of Murtaza Hossain alone is not sufficient to fix liability on the appellants. The same should be corroborated by some independent evidence. In the first instance the statement was given by Murtaza Hossain before the Police which is not having any evidenciary value under Section 25 of the Indian Evidence Act. While giving the statement before the Customs Officers, Murtaza Hossain did not implicate Sri Ramlal Kataria, but later on he again stated that he retracted from his statement before the Police Officer, while giving the statement to the Customs Officers by not mentioning the name of Ramlal Kataria on the ground that Sri Ramlal Kataria threatened him while they were together in the jail custody.

8. In the bail petition dated 13-7-1985 moved on behalf of Murtaza Hossain, he stated that he was a man of means. The departments inquiry revealed that he was not a man of means. It only goes to show that Murtaza Hossain is giving different versions at different times and he is not a reliable person and his statement alone cannot be the basis for finding the appellants guilty. The fact that Sri Haidar Ali is having a locker in a Bombay Bank which contained only Rs. 101/-, by no stretch of imagination, can said to be a corroborative evidence of the statement of Murtaza Hossain. So also the fact that Sri Ramlal Kataria is a goldsmith is not a corroborative evidence of the statement of Murtaza Hossain. At best, a suspicion may arise in this case, but suspicion is no substitute for proof.

9. In the decision reported in AIR 1985 (SC) 866 , their Lordships of the Supreme Court held as follows :

"We are not a little surprised that such a statement should have been made by the High Court. We wish to make it clear and this is only to repeat what is so well established that a retracted confession by an accused may form the basis of a conviction of that accused if it receives some general corroboration from other independent sources. It cannot however be the basis for convicting co-accused though it may be taken into consideration against co-accused also. It is entirely wrong to think that a confession can lead nowhere. We are sorry to find such careless statements in the judgment of a High Court".

It is thus clear that, though the statement of a co-accused can be relied on against the other accused, that alone is not sufficient to come to the conclusion that the other accused is guilty. But the statement of the co-accused may also be taken into consideration along with the other evidence. But in this case, there is no other evidence to connect the accused with the gold in question except the confessional statement of Murtaza Hossain, which is an unreliable one. Accordingly, we extend the benefit of doubt in favour of the appellants, and the penalties imposed on them both under the Customs Act, 1962 and Gold (Control) Act, 1968, are hereby set aside. We are informed that the appellants had already deposited the penalties in question. If so, the penalty deposited be refunded to them.

In the result all the appeals are allowed.