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Dated: 22.02.2025

CESTAT Allahabad Rejects Gold Smuggling Penalty based on Confession Found Involuntary

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad, overturned a penalty imposed on Shri Swami Dayal Soni for alleged gold smuggling. The tribunal ruled that his confession was involuntary and obtained under duress, leading to the reversal of the gold confiscation and penalties.

Background of the Case:

• Shri Swami Dayal Soni was intercepted on 14.02.2022 by officers of the Directorate of Revenue Intelligence (DRI), Varanasi Zonal Unit at Varanasi Railway Station based on specific intelligence.
• He was found in possession of six gold biscuits of foreign origin (total weight: 699.240 grams, value: ₹35,66,154) concealed in a waist belt.
• The gold had markings such as “SUISSE, 10 TOLAS, FINE GOLD, 999.9”, indicating foreign origin.
• Upon inquiry, he admitted in his statement under Section 108 of the Customs Act, 1962 that the gold was smuggled from Bangladesh via Malda and that he had no legal documents for it.

Customs Authority’s Actions:

• The gold was seized and absolutely confiscated under Sections 111(b), (d), and (p) of the Customs Act, 1962.
• His waist belt and other concealment materials were confiscated under Section 118 of the Act.
• He was arrested and later granted bail.
• A penalty of ₹2,00,000 was imposed on him, along with penalties on other individuals involved in the case.
• His appeal before the Commissioner (Appeals), Customs, CGST & Central Excise, Lucknow, was dismissed, prompting his appeal to CESTAT, Allahabad.

Appellant’s Arguments:

• The confession statement recorded on 14.02.2022 and 15.02.2022 was taken under duress and should not be relied upon.
• Apart from the statement, no other evidence existed to prove the gold was smuggled.
• He provided documents showing the gold was purchased legally in Bombay, but authorities did not verify them.
• The entire proceedings were flawed as his statement was allegedly dictated by officials, recorded late at night (from 9:00 PM to 2:00 AM), and he was pressured to sign it.
• Copies of panchnama and other records were not provided to him until a High Court order on 17.05.2022 directed authorities to do so.

CESTAT Ruling:

• The tribunal rejected the confession as it was recorded under duress and lacked voluntariness.
• The authorities failed to provide independent evidence proving that the gold was of foreign origin.
• The tribunal cited Supreme Court judgments emphasizing that confessions under Section 108 must be voluntary to be admissible. Citations: The Assistant Collector of Central Excise, Rajamundry (Petitioner) Vs Duncan Agro Industries Ltd. & Ors (Respondent)
• In the case K.I. Pavunny vs Asstt. Collector (HQ) Central Excise Collectorate, Cochin (1997 (90) ELT 241 SC), the Hon’ble Supreme Court held- “Confessional statement of accused, if found to be voluntary, can form the sole basis for conviction. If retracted, Court is required to examine whether it was obtainedby threat, duress or promise and whether the confession is truthful. If found to be voluntary and truthful, inculpatory portion of retracted confession could be relied upon to base conviction.” In the case-Illias vs Collector of Customs, Madras [1983(13) ELT 1487(SC)], another Constitution Bench had held that- “Even though the Customs officers have been invested with many of the powers which an officer in charge of a police station exercises while investigating a cognizable offence, they do not, thereby, become police officers within the meaning of Section 25 of the Evidence Act and so the confessional statements made by the accused persons to Customs officials would be admissible in evidence against them.”
• Further, in the case of Assistant Collector of Central Excise, Rajamundry vs Duncan Agro Industries Ltd. & Ors. [2000(7) SCC 53], referring to Section 108 of the Customs Act, the Apex Court observed- “The inculpatory statement made by any person under Section 108 is to non- police personnel and hence it has no tinge of inadmissibility in evidence if it was made when the person concerned was not then in police custody. Nonetheless the caution contained in law is that such a statement should be scrutinized by the court in the same manner as confession made by an accused person to any non-police personnel.”
• The confiscation of gold and penalties imposed on the appellant were set aside.
• The appeal was allowed, ruling that the customs department failed to prove smuggling beyond the forced confession.

Final Verdict:

The CESTAT (Allahabad Bench) ruled in favor of Shri Swami Dayal Soni, stating that his confession was involuntary and no independent evidence supported the smuggling allegation. The gold confiscation and penalties were revoked, providing full relief to the appellant.

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Source: CESTAT, Allahabad

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