2024 (7) TMI 1413 - HC - Customs

Complaint case quashed after CESTAT exoneration on foreign currency violations deemed final and conclusive

Pawan Kant Versus Directorate of Revenue Intelligence

The Delhi HC quashed a complaint case and summoning order against a petitioner regarding foreign currency violations. The court found that CESTAT's ... Seeking quashing of complaint case as well as the summoning order - owner and beneficial owner of the foreign currency - whether the exoneration of the petitioner was on technical grounds or based upon merits? - HELD THAT:- The refusal of the Supreme Court as well as by Division Bench of this Court to interfere in the order passed by the CESTAT was after due consideration of the facts. A plain reading of the order passed by CESTAT leads to an irresistible conclusion that the decision by CESTAT, thereby exonerating the petitioner, is not on technical grounds but a conclusion based upon merits. The entire proceedings clearly show that the aforesaid adjudication had attained finality, and it had been determined that the petitioner was not the ‘beneficial owner’ of the foreign currency/exchange and could not be held liable. Further, insofar as the aspect of the petitioner being considered a beneficial owner is concerned, it must be noted that HMC (of which the petitioner was the Executive Chairman) and SEMPL are two distinct entities, and as recorded in the order passed by the Additional Commissioner of Customs, SEMPL was one of the independent, specialist third party service provider which provided certain services and raised invoices qua the same, which were duly paid by HMC. There existed no agent-principal or master-servant relation between SEMPL & HMC, and all transactions between them were on arms-length basis, duly audited by the statutory auditors of HMC. Considering the aforesaid aspect as well as the categorical admission by the petitioner that he was unaware that Mr. Bali was carrying such foreign exchange and that he used to manage the personal expense from his own cards, it cannot be said that the said foreign exchange was being carried on his behalf. Thus, the conditions as regards being a ‘beneficial owner’ have not been satisfied qua the petitioner in the present case. The petitioner not being the ‘beneficial owner’ as well as the fact that the subject complaint has been filed based upon the same facts as have been conclusively determined by the learned CESTAT, this Court finds that the continuation of the subject complaint would be nothing but an abuse of the process of law. The complaint case as well as summoning order is quashed - petition allowed. Issues Involved:1. Quashing of complaint case and summoning order.2. Determination of the 'beneficial owner' of the seized foreign currency.3. Validity of continuation of criminal proceedings post-exoneration in adjudicatory proceedings.Issue-wise Detailed Analysis:1. Quashing of Complaint Case and Summoning Order:The petitioner sought quashing of the complaint case and the summoning order dated 01.07.2023. The complaint was filed under Section 482 Cr.P.C. read with Article 227 of the Constitution of India. The petitioner argued that the complaint and summoning order were based on the same facts that had already been adjudicated and resolved in his favor by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), and subsequently upheld by higher courts, including the Supreme Court.2. Determination of the 'Beneficial Owner' of the Seized Foreign Currency:The petitioner, an Executive Chairman of Hero MotoCorp (HMC), was traveling for business purposes when his travel assistant, Mr. Amit Bali, was caught with undeclared foreign currency. The petitioner denied ownership of the currency, stating he was unaware of Mr. Bali carrying it. The adjudication proceedings initially dropped the charges against the petitioner, concluding that Salt Experience and Management Pvt. Ltd. (SEMPL) was the owner of the currency, not the petitioner. The appellate authority, however, reversed this decision, identifying the petitioner as the 'beneficial owner' under Section 2(3A) of the Customs Act, leading to a penalty. This was again overturned by CESTAT, which held that the petitioner could not be treated as the 'beneficial owner.'3. Validity of Continuation of Criminal Proceedings Post-Exoneration in Adjudicatory Proceedings:The petitioner contended that the prosecution and complaint could not continue as per Clause 15.9.2 of the Customs Manual, 2023, since the adjudication proceedings had exonerated him on merits. The respondent argued that criminal proceedings could continue even after exoneration in adjudicatory proceedings, depending on the nature of the findings. The court noted that the adjudication had conclusively determined that the petitioner was not the 'beneficial owner,' and the exoneration was based on merits, not technical grounds. Therefore, the continuation of criminal proceedings was deemed untenable.Conclusion:The court found that the complaint and summoning order were based on the same facts already adjudicated in favor of the petitioner. The CESTAT had conclusively determined that the petitioner was not the 'beneficial owner' of the seized currency, and this decision had attained finality. The court held that continuing the criminal proceedings would be an abuse of the process of law. Consequently, the petition was allowed, the complaint case was quashed, and the summoning order was set aside.