2015 (11) TMI 550 - AT - Customs

Tribunal upholds Rs. 10,00,000 penalty for purchasing diverted diamonds

Deepak Kothari Versus Commissioner of Customs (CSI Airport), Mumbai

The Tribunal upheld the penalty of Rs. 10,00,000/- imposed on the appellant under Section 112(a) of the Customs Act, 1962 for purchasing diamonds ... SEEPZ - allegation of Clandestine clearance of duty free goods, a large quantity of diamonds, gold etc. in the domestic market instead of exporting - Contravention of the provisions of Notification 177/94-Cus. - Penalty u/s 112(a) - Held that:- the clandestine clearance and purchase of the diamonds was happening even before August 1999 and Ms. Bengali in her statement has indicated how this was being done and the fact that the diamonds would be taken out from the safe, weighed and thereafter the details of the diamond, weighment etc. will be communicated to the present appellant on fax and the diamonds will be handed over to Shri Bhupendra Kapadia who would take further action to ensure that these are clandestinely taken out of the SEEPZ area and thereafter transported to the present appellant s office. In my view, it is very important to note that these 18 printouts for whatever worth these may be, were shown to the present appellant while recording his statement and even that time he gave vague answer to that and simply stated that these printouts indicate the detail of the export, consignee etc. From the various evidences which have been discussed in detail by the adjudicating authority in para 3.11, I have absolutely no doubt whatsoever in my mind that the appellant was actively involved in almost throughout two years and a very substantial quantity of diamonds which have been clandestinely cleared by the unit located in SEEPZ were purchased by him. He was aware of the fact that these diamonds have been imported by a SEEPZ unit and as per the law vide Notification No.177/94-Cus. as also EXIM Policy, these are not permitted to be sold in the domestic market and if sold in violation of the Notification and the provisions of EXIM Policy which would make such goods liable to confiscation and hence penalty on the appellant besides the main importer. Under the circumstances, I do not find any reason to interfere with the impugned order. I also find that the then value of the diamonds covered by the 18 printouts itself is more than ₹ 7 crores. Similar purchase of clandestinely cleared diamonds was being done by the present appellant even for the earlier period for which the quantity and value details could not be found out in the investigation. Keeping in view the over all facts, the penalty of ₹ 10 lakhs cannot be considered on the higher side. - impugned order is upheld - Decided against assessee. Issues Involved:1. Imposition of penalty under Section 112(a) of the Customs Act, 1962.2. Alleged clandestine diversion of diamonds and precious metals.3. Reliability and availability of evidence, specifically 18 computer printouts.4. Credibility of statements made by various individuals involved.Issue-wise Detailed Analysis:1. Imposition of Penalty under Section 112(a) of the Customs Act, 1962:The appeal and stay application were filed against the imposition of a penalty of Rs. 10,00,000/- on the appellant under Section 112(a) of the Customs Act, 1962. The penalty was imposed because the appellant was found to have purchased diamonds clandestinely diverted from SEEPZ, thereby violating Notification No. 177/94-Cus. and the EXIM Policy. The Tribunal upheld the penalty, stating that the appellant was actively involved in the clandestine purchase of diamonds over a period of two years.2. Alleged Clandestine Diversion of Diamonds and Precious Metals:The Revenue's case began with an investigation into M/s. Neelkamal Jewellery Exports Ltd., a unit in SEEPZ, which was importing diamonds and precious metals duty-free for manufacturing export goods. It was found that the unit had diverted a large quantity of these materials into the domestic market. The investigation revealed that the appellant had purchased these clandestinely diverted diamonds. Statements from various individuals, including the director of Neelkamal Jewellery Exports Ltd., confirmed the appellant's involvement in these transactions.3. Reliability and Availability of Evidence, Specifically 18 Computer Printouts:The appellant's counsel argued that the 18 documents mentioned in Ms. Bengali's statement were not provided to the appellant, which hindered their ability to make submissions. The Tribunal noted that these printouts were not listed in the relied-upon documents and were not available with the department despite efforts to locate them. However, the Tribunal found that the absence of these documents was not fatal to the case, as the clandestine activities were corroborated by other evidence and statements.4. Credibility of Statements Made by Various Individuals Involved:The appellant's counsel contended that the statements of Shri Bhupendra Kapadia were unreliable due to variations. However, the Tribunal found no contradictions in the statements concerning the appellant and deemed them reliable. The Tribunal also noted that Ms. Bengali's statements were consistent and supported by other evidence. The appellant had the opportunity to cross-examine Ms. Bengali but did not do so, which led the Tribunal to accept her statements as true and correct. Additionally, the confrontational panchnama confirmed the appellant's involvement in the transactions.Conclusion:The Tribunal upheld the penalty imposed on the appellant, concluding that the appellant was actively involved in purchasing clandestinely diverted diamonds from SEEPZ. The Tribunal dismissed the appeal, stating that the penalty amount was justified given the substantial quantity and value of the diamonds involved.