TaxTMI 
TaxTMI 
2016 (3) TMI 657
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....ting upon a specific intelligence that S.L.N. Overseas Traders ['SLN'] in Udupi District, was indulging in fraudulent export of garments to Dubai through New Mangalore Port and was availing ineligible duty-free import benefits under DFIA Scheme by exporting cheap quality ladies midi made of assorted low grade textile materials, in the guise of ladies midi made of cotton/polyester corduroy by mis-declaring GSM of the fabric for importing more quantity of input (corduroy fabric) duty free, than otherwise admissible under the DFIA Scheme. Live export consignments entered for exports vide three shipping bills were seized in June 2009 and it was noticed that SLN had exported under DFIA scrips, 21 shipments (vide 50 Shipping Bills) of garments with total declared FOB value of US$ 3,461,952, equivalent to Rs. 16,07,44,035/- during the period from August 2007 to May 2009 through New Mangalore Port to Jebel Ali / Dubai. On post-export basis, the scrips were transferred. The fraudulently obtained Scrips thus permitted duty free import of inputs (corduroy fabric) of total CIF value of US$ 2,969,769, equivalent to Rs. 13,65,32,196/-. The Show Cause Notice alleges the actual value of the export....
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.... Hussain and the Appellant herein sent money through SLN account towards their business transactions which he handled, as narrated by him. 3.4 In a file seized by DRI from the premises of SLN, an email dated 21.02.2009 was recovered in which the said Shri Suresh Prabhu wrote to his shipping agent in Dubai asking for a Companys name to raise Bill of Lading for shipment of garments. Name of the consignee was, in reply, provided by the shipping agent in Dubai, who also informed that for the said purpose, AED 500 + AED 250 for license (Total AED 750) was to be paid. Name of the appellant do not find any mention in this documentary evidence. 3.5 There is no dispute on the fact that the appellant herein was in UAE during the relevant period and also during the investigations. His statements could not be recorded during the investigations, which culminated with issuance of a Show Cause Notice bearing DRI F.No. S/IV/14/2009(MRU) dated 02.11.2010. However, he had made communications to DRI from Dubai claiming that he was not concerned in any manner with the exports of SLN. There is no dispute that in the same case a preventive detention order under COFEPOSA Act, 1974 was also issued ....
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....ation / cross examination of witnesses, final reply will be submitted. It was requested that no orders be passed without affording the Appellant a reasonable opportunity to be heard after the examination of witnesses. In light of the allegations, the Counsel also contended that the provisions of Customs Act, 1962 are not applicable to the appellant's case as the Customs Act is extended only to whole of India and not beyond that, and the appellant at the time of export was based in Dubai and imported the goods in Dubai only; and that even thereafter he was not in India. Thus, as per the Counsel even if all the allegations were assumed as correct for the sake of arguments, Customs Act, 1962 had no applicability qua him. The counsel for the appellant while relying upon the provisions of Section 138B(2) of the Customs Act, 1962 requested that the witnesses may please be summoned and examined under advance intimation to them / the appellant so that in case the statement is considered relevant and admitted in evidence, the witness can be cross examined. The Counsel also stated that the appellant offers himself for examination before the adjudicating authority. With the above, the cou....
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....n the said circumstances, the reliance was placed on confessions of co-accused to penalize the appellant. He relied upon the judgment of the Constitution Bench of the Honble Supreme Court in Haricharan Kurmi v. State of Bihar AIR 1964 SC 1184. 4.3 He thus submitted that in absence of any material evidence against the Appellant, no reliance could have been placed on the statements of co-accused. The appellant was penalized on the basis of uncorroborated statements of co-accused, without any independent material evidence against the Appellant, and on the basis of conjectures and suspicions. Neither the show cause notice, nor the impugned Order tries to establish any link of the Appellant to the entities who either received the exported goods and/or paid for them. The Appellant has no link to the said exports and none was sought to be established by the department. He submitted that the reference to admission of import by the appellant was erroneous, as the appellant always denied his link with exports of SLN, and same was only an argument without admission of the allegation in light of section 1 of Customs Act, 1962 and the extent of jurisdiction thereunder. The department ....
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....han has also been penalized inter alia on the basis of independent evidence against him. 6.2 On careful perusal of the show cause notice issued to the appellant, it is evident that reference is made to interception of live export consignment of SLN, of ladies garments vide three shipping bills during June 2009, and same modus operandi is alleged in respect of past exports by SLN vide 21 shipments (50 shipping bills) of total inflated declared value 16,07,44,035/- in misuse of DFIA scheme. Market value was ascertained and test reports were also obtained. Details from their bankers UCO Bank, Mangalore were also obtained. 6.3 The Bank records as per para 8.3.1 of the Show Cause Notice revealed that from October, 2007 onwards, SLN had received foreign inward remittances from- (i) Abdulla Ahmed Electronics, Dubai, (ii) KGN Electronics LLC, Dubai, (iii) Mohammed Hanif Chaffar, Dubai, and (iv) Through Money Exchanges. It is not the case of the department that the appellant is either partner or shareholder of any of the entities from whom the remittances have been received. There is no documentary evidence on record to establish that the remitta....
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.... were actually the employees of M/s. East West Tourist Corporation of Shri Feroze Khan. The records further reveal that the foreign exchange amount so received under the cover of exports made were transferred appropriately by M/s. SLN Overseas Traders to Sri. Feroze Khan, the Proprietor of M/s. East West Tourist Corporation. Huge cash amounts were also seized from possession of Shri Feroze Khan. No such material evidence is available against the present appellant. There is a reference to investigations by Enforcement Directorate, but it is not the case of the department either in the show cause notice, or even till date that said investigation of Enforcement Directorate revealed any incriminating evidence against the appellant herein. 6.7 In his retracted confessions, co-accused Shri Feroze Khan also alleged that after withdrawing / collecting the amount from accounts of SLN, he used to keep his commission and to distribute the remaining to the persons recommended inter alia by one Shri Jaffar from Dubai. He further stated on being asked about the said Abdulla Ahmed Electronics that on a particular occasion, he was present when there was a conversation between the said Shri Sure....
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.... of investigation the Appellant had written a number of letters and provided material to show as to how the Appellant was not concerned or involved in the matter. There has been failure to give weightage to the same." "(N) THAT, the Respondent has failed to notice that the Appellant had nothing to do with SLN Overseas in the matter of exports legally or illegally. Any action would have to be restricted to SLN Overseas only." In view of the above, we are convinced that the appellant has not admitted importation of goods in Dubai, but has only made an argument without any admission to show that invocation of penal provision was beyond territorial jurisdiction for any act of omission or commission allegedly done abroad. 6.10 It is seen that the Constitution Bench of the Hon'ble Supreme Court in Haricharan Kurmi v. State of Bihar - AIR 1964 SC 1184, was pleased to settle the law regarding confessions of co-accused with the following observations- "The result, therefore, is that in dealing with a case against an accused person, the court cannot start with the confession of a co-accused person; it must begin with other evidence adduced by the prosecution and....
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....hatever documentary evidence are collected by the department, they do not conclusively link the appellant with the alleged offence. Confessions of the two co-accused, which we have carefully seen, cannot be taken as sufficient evidence to sustain the charge as levelled against the appellant. The email recovered shows involvement of a shipping agent in Dubai as observed in earlier paragraphs, however, the said shipping agent has not been made an accused. We cannot uphold the invocation of penal provisions only on the basis of such uncorroborated confessions of the co-accused. No link of the Appellant to the entities who either received the exported goods and/or paid for them has been established. The Appellant has not been found involved in procurement, export or any other activity connected with the exports of SLN. Whether or not the appellant is cousin brother of Feroze Khan is wholly immaterial, in absence of any tangible material against the appellant. There is also no tangible evidence of any compensatory payment either by SLN or by Feroze Khan, to the appellant. 8. We are thus convinced that the department has failed to discharge its burden to prove the offence against the ....