TaxTMI 
TaxTMI 
2016 (4) TMI 141
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.... for hearing, the other two appeals of the co-appellants were also called for regular hearing. 2. The relevant facts of the case, in brief, are that M/s Eurro Exports, Prop. Shri Rameshwar Sharma, (hereinafter referred to as the exporter) cleared 5 (five) consignments from their factory at Jaipur for export through Mundra port. The exporter filed 5 Shipping Bills Nos. 7656093 dt.25.9.2013, 7615545 dt.23.9.2013, 7628969 dt.24.9.2013, 7616229 dt.23.9.2013 and 7630622 dt.24.9.2013, declaring the goods Indian Polished Granite Slabs in respect of Shipping Bill dt.25.09.2013 and in other Shipping Bill Albeta Marble Slabs, through their Customs House Clearing Agency (CHA). Acting upon the intelligence, on 28.09.2013, the officers of the Directorate of Revenue Intelligence (DRI) called back the 5 containers attempted to be exported and examined the goods in presence of two independent witnesses, under Panchnama dt. 28.9.2013. It was found that the said 5 containers contained 93.31 MT of Marble Slab and all the containers except Shipping Bill dt.25.09.2013, also stuffed with total quantity of 14.25 MT of Red Sanders logs. During the course of investigation, it was found that the ex....
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....ts filed these appeals before this Tribunal. 4. The appeals were heard at length on 9th, 10th, 11th and today i.e. 12th February, 2016. Shri Pradeep Jain with Shri Ashish Batra, learned Advocates are appearing on behalf of Shri Rameshwar Sharma and Shri Suresh Sharma. Shri Hardik Modh, Ld Advocate is appearing on behalf of Shri Anil Gadodia. 5. The learned Advocates on behalf of Shri Rameshwar Sharma and Shri Ashish Batra, submit that the Adjudicating Authority rightly dropped the penalty after examination of the records thoroughly. He submits that the exporter is a well reputed firm for export of the Marble slabs since last 13 years with unblemished records and obtained certificates from various authorities for performance and transparent records. In the present case, the appellants cleared the Marble Slabs from their factory in 5 containers procured from the Freight Forward Agency. As per the long standing practice, the Marble Slabs were loaded in the containers and cleared from the factory in buffer containers without sealing the same. The appellant had no knowledge of the alleged loading of Red Sanders in the containers. There is no evidence that the appellants had loaded....
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.... any other persons had not stated that the appellant had loaded Red Sanders in the containers and made such goods available to M/s Euro Exports. It is observed by the Commissioner (Appeals) that it is not the case of the Department that the appellant was actually involved in clearing the goods from Jaipur or in export such goods. He particularly drew the attention of the Bench to Para 13.3 and 13.4 (last three lines) of the impugned order. None of the ingredients to invoke Section 114 AA of the Act 1962 is available against the appellant. Even, the words "causes to be made" in Section 114AA has to be direct or indirect nexus with the export of goods. In the present case, there is no evidence that the appellants were involved in illegal export of goods. The Commissioner (Appeals) observed that the entire case was made out on the basis of statements, which were retracted. So, it has no evidentiary value. He relied upon the decision of the Hon'ble Supreme Court in the case of Vinod Solanki Vs UOI - 2009 (233) ELT 157 (SC), Shafeek P. K. Vs CC, Cochin - 2015 (325) ELT 199 and A. Tajudeen Vs UOI - 2015 (317) ELT 177 (SC). He further submits that statements of co-accused as relied upon. ....
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....ord that the DRI officers detected five containers loaded with Red Sanders and the exporter filed the shipping bills mis-declaring as "Marble Slabs". Thus, that the goods are liable to confiscation under various clauses of the Section 113 of the Act, 1962. Accordingly, imposition of penalties under Section 114 and Section 114 AA of the Act are warranted. 11. He submits that the exporter had not denied the preparation of the shipping bills and ownership of the seized goods. It is submitted that there is no evidence that the Customs Officers at Port ever examined export of goods. It is submitted that even the statements were retracted, it would not loose the evidentiary value as per Section 138 B of the Customs Act 1962, as the statements were voluntary nature and corroborated with the circumstantial evidence. He drew the attention of the Bench to the Para 13.4 of the impugned order, where the Commissioner (Appeals) discussed circumstantial evidence in detail. The retraction of the statements was replied by the DRI Officers immediately. He also relied upon the decision of the Hon'ble Supreme Court in the case of Vinod Solanki (Supra) as the retraction of the statement is not suffi....
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....nd had any role in booking of container, stuffing of the containers, transportation of containers at the port, appointment of CHA, declaration before the customs etc. It is the matter on record that he was also not named by the CHA or any clearing persons. Further, it has not been brought on record any evidence which shows the involvement of Shri Anil Gadodia in relation of smuggling of the Red Sanders wood. 127. It is the matter of fact on record that statement of Anil Gadodia was retracted at the first available opportunity. It is also found that Anil Gadodia was neither a proprietor of partner or anything to do with M/s Eurro Exports or their business. It is fact that Anil Gadodia has not been made as an exporter but what has been alleged is that he had supplied the material namely red sander which in fact had been attempted to be exported out of India. And, further earlier also he had supplied such material. As per the defence pleaded by Anil Gadodia in his reply, he has pleaded that no act u/s 50 & 51 of the Customs Act, can be attributed to the applicant and in the absentia of such act penalty cannot be imposed. Similarly, it has been argued that he has been dealing ....
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....h were retracted subsequently. The relevant portion of the findings of the Commissioner (Appeals) in respect of imposition of penalty on the Appellant are reproduced below:- "13.3 As regards the finding that Shri Anil Gadodia was not named by the CHA or any clearing persons, I find that Shri Gadodia arranged for red sanders and made such goods available to M/s Eurro Exports. Even in the Show Cause Notice, it is not the case of the Department that Shri Anil Gadodia was actually involved in clearing the goods from Jaipur or in export of such goods because the case against him is engaged himself in an organized crime of smuggling of Red Sanders to Mr.Lin of China with the help and association of other syndicate members Shri Mayur Ranjan, Shri Yodying, Shri Rameshwar Sharma & others and it was Shri Rameshwar Sharma who was exporting such offending goods in the guise of marbles for monetary consideration with help and aid of this supplier. The transporters, CHA and such other agencies were arranged by Shri Rameshwar Sharma/Suresh Sharma and therefore the CHA or any clearing persons not naming Shri Anil Gadodia is not an evidence on which the Adjudicating authority can give him ....
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..... It is true that a retracted statement has to be taken with a pinch of salt and it cannot be relied upon as a conclusive evidence against the person who made such statement, but the facts of this case are very different. In addition to the statements of all the persons when the smuggling racket was admitted by all of Shri Rameshwar Sharma, Shri Anil Gadodia, Shri Mayur Ranjan, Shri Suresh Sharma, Shri Yodying etc, there are other evidences and circumstances also which lend credibility to the admissions of these persons made before the investigating officers under Section 108 of the Customs Act. The other attending circumstances are just ignored by the Adjudicating authority." 17. We find that the Commissioner (Appeals) heavily relied upon the statements of Shri Anil Gadodia, the Appellant herein, recorded on 28.09.2013 and 29.09.2013 and the Appellant was arrested immediately. By letter dt.30.09.2013, the Appellant informed the Additional Director General, D.R.I. that he was taken in custody by the D.R.I. officers from Four Point Hotel at Jaipur on early morning of 28.09.2013 and he was kept in unauthorized custody and on 29.09.2013 evening, he was arrested. It was also stated ....
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....t is also observed that the retraction is nothing but an afterthought. We are unable to accept such conduct of the investigating officers. It is well settled that the investigating officer cannot act as an Adjudicating authority. The investigating officer holds a pivotal roll. He is to find truth and not necessarily to rope in the noticee by any means. It is not his duty to fill in any gap in the enquiry proceedings and anyhow give a finding in favour of the Department. The investigator has to proceed to gather evidence by way of seized records, depositions, ascertain the facts of the case, and thereafter the charges are to be framed. Investigating officer must maintain his impartiality and the decision making process is in the domain of the Adjudicating authority. We find that after recording the statements of the Appellant, who was arrested and in Central Jail, Jaipur, the investigating officer had decided that the retraction is an afterthought and had not taken any further statement and proceeded on the basis of the statement of co-accused. In the case of Tejwal Dyestuff Industries Vs CCE Ahmedabad -2007 (216) ELT 310 (Tri-Ahmd), the Tribunal observed that confessional statement....
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.... statement. We find that the Appellant retracted the statements from Jail. It is the duty of the investigating officer to enquire thoroughly who has loaded the Red Sander in the container. The Appellants claimed their innocence in the alleged offence and it is the duty of the investigating officer to establish the truth. So, the findings of the Commissioner (Appeals) cannot be sustained. 20. The Hon'ble Supreme Court in the case of Vinod Solanki (supra), held that mere retraction of confession may not be sufficient to make the confessional statement irrelevant for the purpose of the proceedings in a criminal or quasi-criminal case, but there cannot be any doubt whatsoever that the Court is obligated to take into consideration the pros and cons of both the confession and retraction made by the accused. The issue is what would be effect of a retracted statement for the purpose of levy of penalty under Section FEMA, 1973. In that case, on or about 25-10-1994, the office premises of the appellant was searched. Recovery of Indian currency amounting to Rs. 2,65,000/- was made. He was thereafter detained. On the next two succeeding dates, i.e., on 26-10-1994 and 27-10-1994, he alle....
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....ce of evidence to record a finding of guilt but it is another thing to say that such a finding is arrived at only on the basis of such confession although retracted at a later stage. 36. Appellant is said to have been arrested on 27-10-1994; he was produced before the learned Chief Metropolitan Magistrate on 28-10-1994. He retracted his confession and categorically stated the manner in which such confession was purported to have been obtained. According to him, he had no connection with any alleged import transactions, opening of bank accounts, or floating of company by name of M/s. Sun Enterprises, export control, Bill of Entry and other documents or alleged remittances. He stated that confessions were not only untrue but also involuntary." 21. The Commissioner (Appeals) proceeded on the basis of call data and details were brought on record by the D.R.I. officers. Further, the statement of co-accused Shri Mayur Ranjan implicated the Appellant. Furthermore, the Appellant was having permit or licence for trading of Red Sanders and the huge stock was found unaccounted in godown. The learned Advocate submits that as revealed from the Panchnama that stock register was lying....
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.... considered and found to be satisfactory. The difference in the approach which the court has to adopt in dealing with these two types of evidence is thus clear, well understood and well established. It, however, appears that in Ram Prakash case, some observations have been made which do not seem to recognize the distinction between the evidence of an accomplice and the statements contained in the confession made by an accused person. "An examination of the reported decisions of the various High Courts in India", said Imam, J., who spoke for the Court in that case, "indicates that the preponderance of opinion is in favour of the view that the retracted confession of an accused person may be taken into consideration against a co-accused by virtue of the provisions of Section 30 of the Act, its value was extremely weak and there could be no conviction without the fullest and strongest corroboration on material particulars". The last portion of this observation has been interpreted by the High Courts in the present case as supporting the view that like the evidence of an accomplice, a confessional statement of a co-accused person can be acted upon if it is corroborated in material part....
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....ment which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods." The expressions "causes to be made" if read with "in the transaction of any business for the purposes of the Act, shall be liable to a penalty not exceeding five times the value of the goods" in Section 114AA of the Act, 1962 make it clear that if a person knowingly or intentionally causes false and incorrect material in the transaction of any business, penalty would be not exceeding five times of the value of goods. So, the words causes to be made would have some nexus with the transaction of the goods of any business. In the present case, we find that there is no material available that the Appellant was involved in preparation of documents or signed by him relevant to export of goods. The Appellant is a licence holder for storage and selling of Red Sander within the Country. Commissioner (Appeals) also observed that the Appellant was not actually involved in clearing of the goods from Jaipur or in export of goods. There is no material available that the Appellant had supplied ....
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....and had not been entered electronically or manually for export. Further, the trading of Red Sander in India is neither restricted nor prohibited. In fact, various Government agencies are selling Red Sander wood through auction. After considering the above findings of the Commissioner (Appeals) in that case, we do not find any force in the findings of the Commissioner (Appeals) in the present case. So, imposition of penalty on the Appellant cannot be sustained. Re: Appeal No.C/10181/2016-DB and C/10182/2016-DB (Shri Rameshwar Sharma and Shri Suresh Sharma): 26. In the case of Shri Rameshwar Sharma, the Commissioner (Appeals) imposed penalty of Rs. 50 lakhs each under Sections 114 and 114AA of Customs Act, 1962 separately. In the case of Shri Suresh Sharma, the Commissioner (Appeals) imposed penalty of Rs. 2.50 lakhs each under Sections 114 and 114AA of Customs Act, 1962 separately. In both the cases, the Adjudicating authority dropped the penal proceedings against the Appellant. 27. Shri Rameshwar Sharma, is the Proprietor of M/s Eurro Exports. On 28.09.2013, the officers of the Directorate of Revenue Intelligence (DRI) examined the 5 containers at Mundra Container Freig....
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....t is further observed that the export firm was not concerned with the recovery of 14.25 MTs of Red Sander. They are not responsible for the quantity of Red Sander found in said container meant for export of Marble Slab. The findings of the Adjudicating authority are reproduced below:- "118. From the facts narrated above, the investigation agency could not establish or show any evidence whatsoever against the noticee that he has dealt or has kept the wooden logs of Red Sander in his consignments which are seized at the port. From the series of events, it is clear that the goods were beyond the control of the noticee and at the time when the goods were received in the Customs Area and were checked by the Customs authority and confirmed about the contents as declared that is marble slabs and therefore, subsequent recovery of wooden logs, could only lead one conclusion that same were incorporated and substituted after the buffer containers were handed over to the CFS. 119. It is also matter of record that the Applicant have never came to the Port as per the investigation as he was apprehended in Jaipur itself on 28th September, 2013 when the container was recovered at....
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....racted by these persons and DRI investigating officer have promptly replied to those persons, why their retraction was not believable. The Commissioner (Appeals) held that the Adjudicating authority has not given the due weightage to the statements of the Appellants and the co-appellants and others, because the statements recorded initially gives the details of how all the transactions were agreed and carried out by them. 30. The learned Advocates Shri Pradip Jain and Shri Ashish Batra argued the matter at length. It is submitted that M/s Eurro Export is a reputed export firm and earned huge foreign exchange by exporting the Marble Slabs. They are holding un-blemished record till date. The loading of the Red Sanders in the export container was without their knowledge as evident from the record and circumstantial evidences. It is submitted that the DRI officers immediately searched their business premises on 28.09.2013 and no incriminating documents was found. The CHA and the transporter had not mentioned their names for loading of the goods. It is submitted the entire case was made out on the basis of statements of co-accused, which were retracted and has no evidentiary value as....
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....hment of the containers at their factory and at the port, is without any substance. We have noted that the Customs officers had not verified the containers. The only submission of the learned Advocate is that a practice of the exporter to deliver the goods in buffer container. In our considered view, if the Appellant cleared the export materials without sealing the containers, the burden of proof heavily lies with them that the offending goods were not loaded by them. In the present case, the Appellants failed to prove that the offending goods were not loaded by them. In this context, we find from the impugned order that Shri Mangi Lal Lohiti, Proprietor of M/s Lahoti Impex and Director of M/s Indo Sino Impex P. Ltd, in his statement dt.09.10.2013 recorded under Section 108 of Customs Act, 1962 stated that Shri Rameshwar Sharma used to come with transport on which partly filled containers were loaded and in these partly loaded containers, he himself used to get the goods stuffed in the containers with the help of crane and labour, that the crane and labour were also arranged by Shri Rameshwar Sharma..; in addition the partly stuffed goods wre packed in wooden boxes with lassing and....