TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 864
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....locking of the vendor's code and release of the amount due to the petitioner for works executed in other contracts would be dependent on the issue of debarment of the petitioner. 3. On 28.11.2005, a contract was awarded to the petitioner for renovation at Air Training Institute of GAIL. Part of the contract was sub-contracted to M/s. Elgin Electronics. M/s. Elgin Electronics was to inter alia supply equipment for public address system. Audio-video equipment was provided by M/s. Elgin Electronics. 4. On 03.08.2006, the contract awarded to the petitioner was completed and a completion certificate was issued to the petitioner by the Engineer-in-charge engaged by GAIL. The entire contract value was Rs. 7,41,21,588.00. Out of the said contract value, the work sub-contracted and executed by M/s. Elgin Electronics was to the tune of Rs. 1 crore. 5. Post the successful completion of the contract, on 03.08.2006, there were no issues between the petitioner and GAIL. 6. On 05.07.2012, i.e., after a period of nearly six years of the completion of the contract on 03.08.2006, a show cause notice was issued by GAIL to the petitioner contending that a false completion certificate had been issu....
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....was adjourned to enable counsel for GAIL to take instructions as to whether GAIL was willing to give a fresh hearing to the petitioner and pass a fresh order. 13. Pending the above writ petition, by letter dated 03.09.2013, the reasons for passing the order dated 01.08.2013 were communicated. In the reasons supplied, vide letter dated 03.09.2013, it was stated that in the statement of the Authorized Representative of the petitioner before the Directorate of Revenue Intelligence, he had stated that the retail invoice dated 31.03.2009 (one of the incrementing material seized under the Panchnama) issued by M/s. Elgin Electronics to M/s. Gupta Bros. showing sale of 2948 mobile phones was fabricated and fake and no transaction of any goods or any amount had taken place between the petitioner and M/s. Elgin Electronics on the basis of the said invoice. Reference was drawn to the statement of Mr. Sumit Gupta of M/s. Elgin Electronics to contend that he had admitted that M/s. Elgin Electronics had supplied imported microphones for Gail project without issuance of proper invoices. It was contended that the said fake and fabricated invoice was used as a smokescreen for supply of illicit imp....
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....itioner was under investigation. It is further contended that at the time of recording of statement by the Directorate of Revenue Intelligence, the petitioner was confronted with an invoice dated 31.03.2009 for mobile phones. It is contended that no transaction took place between the petitioner and M/s. Elgin Electronics in the year 2009 and that also for mobile phone. It is contended that the only transaction that the petitioner had with M/s. Elgin Electronics was in the year 2006. 21. Further, it is contended that there was no requirement in the contract between the petitioner and GAIL whereby petitioner was required to furnish any documentation for the equipment used in the execution of the work awarded to the petitioner. It is further submitted that GAIL had duly satisfied itself with regard to the equipment used at the time of the execution of the contract and after the contract was satisfactorily concluded, a completion certificate was duly issued. No objection was raised by GAIL at the time of the execution of the contract. Once GAIL was satisfied about the due execution of the contract, the completion certificate had been issued. 22. It is contended that there is no mater....
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....ly admitted that insofar as the issue of the completion certificate of Rs. 1.27 Crores, allegedly issued by the Petitioner to M/s Elgin Electronics, is concerned, the same is inter se the petitioner and M/s. Elgin Electronics and the banning order dated 21.10.2013 has not been passed on account of the same. 28. GAIL has, thus, tried to justify the banning order solely based on the issue of the DRI investigation and the findings therein. 29. The show cause notice dated 05.07.2012 reads as under:- "Dear Sir, M/s Gupta Brothers (India), 546-A, First Floor, Hanuman Road, Chirag Delhi-110017 (Registered Office: 232, Jor Bagh, New Delhi-110003) were awarded the job of GTI Renovation against above LOA. The following wrong doings by you have been brought to our notice; 1. You have issued a false completion certificate in favour of M/s Elgin, a sub-contractor, by misrepresenting the facts therein that M/s Elgin Electronics had executed a work of Rs. 1.27 Crores which is contrary to the actual work of Rs. 1.00 Crore. The same was used and submitted by Elgin Electronics alongwith their bid in bagging contract from CPWD. This is also corroborate by the fact that, in a statement recorded ....
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....ds supply of audiovisual equipment in the contract which were claimed to be smuggled goods and which were investigated by Directorate of Revenue Intelligence. It was stated that the petitioner was guilty of abetment of smuggling and other nefarious activities prohibited by the Law. 31. Petitioner by its reply dated 10.07.2012 to the show cause notice stated as under:- "1. I Pranesh Gupta, being the authorized signatory for the works referred in your letter No-GAIL/ND/PROJ/C&P/Civil/GTI-ADM/05-167/Holiday-02 Dated 05/07/12 received on 10/07/12, confirm that I have not issued any certificate to M/s Elgin Electronics for the said amount of Rs. 1.27 Crores. And I have no cognizance of the said certificate. 2. I joined the investigation regarding M/s. Elgin Electronics with Directorate of Revenue Intelligence, being a responsible citizen of India. I was told that the matter under investigation of smuggled goods was for mobile phones. I once again confirm that no mobile phones were used for the above referred contracts. 3. We have paid the agencies the entire amount and there are no dues balances to be paid. 4. The matter should be perused with M/s. Elgin Electronics for production ....
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....t fictitious documentation submitted by M/s. Elgin Electronics towards supply of audio visual equipment which have been claimed to be smuggled goods as investigated by DRI in the statement of Sh. Pranesh Gupta of M/s. Gupta Bros.(India) recorded on 16/06/2010 by DRI, he was confronted with the retail invoice no.1510 dtd.31/03/2009 (one of the incriminating material seized under the panchnama) issued by M/s. Elgin Electronics to M/s. Gupta Bros.(India) showing sale of 2948 mobile phones valued at Rs. 63,25,305/- and also the statement of Sh. Sumit Gupta of M/s. Elgin Electronics recorded on 21/08/2009 u/s 108 of Customs Act, 1962. The said Sh. Pranesh Gupta acknowledged in his statement that the said invoice was fabricated and fake and no transaction of any goods or any amount had taken place between M/s. Gupta Bros.(India) and M/s. Elgin Electronics on the basis of aforesaid invoice and the amount of Rs. 1 Crore was paid to M/s. Elgin Electronics against the contract for installation of audio visual systems related to GAIL project. Further, in the statement of Sh. Sumit Gupta of M/s. Elgin Electronics recorded on 21.08.2009 (RUD-12) in continuation of his earlier statement -15.07.2....
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....you deceived GAIL and therefore committee fraudulent act. 3) Without prejudice to above, please also note that M/s. Elgin Electronics has admitted before DRI that they had supplied imported microphones for GAIL project at Noida on account of M/s. Gupta Bros. (India) without issuing proper invoices. It was obligatory on your part to check and verify that the said goods supplied to GAIL by M/s. Elgin Electronics has been procured by them legally. You raised the bill/invoice on GAIL for the supply of said audio visual equipment. M/s. Elgin Electronics was acting for and behalf of you and any fraudulent act or misrepresentation committed by M/s. Elgin Electronics in course of your business has an effect of such fraudulent act or misrepresentation committed by you. 4) Further, being main contractor you have failed to fulfill your obligation in terms of clause no.37.1(iii) of GCC of contract document to prevent the act of tax evasion made by your sub-contractor M/s. Elgin Electronics as established by DRI in their investigation report. 5) Please note that GAIL which is a public sector undertaking cannot do business with a party which is involved in supply of illicit imported microphon....
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.... petitioner. 38. The order of the Directorate of Revenue Intelligence dated 04.08.2011, relied on by the petitioner, inter alia, records as under:- "3. During search operations, documents, computers and laptops etc, relevant to the investigations were resumed. The goods imported by M/s Elgin Electronics and lying at the godown premises at.70, Daryaganj New Delhi-2,74, Daryaganj, New Delhi-2 and 1683/2, J.H. Building, Bhagirath Place, Dclhi-6 were detained under separate Panchnama all dated 13.07.2009 and handed over for safe custody under Supurdginama dated 13.07.2009. ***** ***** ***** 5. The goods detained vide three panchnamas, all dated 13,07.2009, as detailed in Para No. 3 above, were later on seized vide three separate seizure memos, all dated 05.01.2010, on the reasonable belief that the goods had been imported without payment of customs duty and were thus liable for confiscation under Section 111 of the Customs Act, 1962. ***** ***** ***** 7. Shri Sumit Gupta S/o Shri S.C. Gupta, Proprietor, M/s. Elgin Electronics in his statements dated 15.07.2009 & 21.08.2009 , recorded under Section 108 of the Customs Act, 1962, interalia, stated that he was fully satisfied with th....
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....lgin Electronics. Apart from this sub-contract, they had never done any other project with M/s Elgin Electronics or Shri Sumit Gupta and also they had never purchased any item including electronics or mobiles from them. He categorically stated that his firm had never paid any amount except for the audio visual systems installed in connection with GAIL project. He was confronted with a retail invoice No. 1510 dated 31.03.2009 (one of the incriminating documents at page no. 19 of file No. 4 resumed from the premises at 70, Daryaganj, Delhi-6 under panchnama dated 13.07.2009) issued by M/s Elgin Electronics to Gupta Bros. (India), 546-A, Ist Floor, Chirag Delhi, New Delhi-17 showing sale of 2948 pcs of Mobile phones valued at Rs. 63,25,305/- and the statement dated 21.08.2009 of Shri Sumit Gupta recorded under Section 108 of Customs Act, 1962. Shri Pranesh Gupta acknowledged in his statement that the impugned retail invoice was fabricated & fake and no transaction of any goods or any amount had taken place between M/s. Gupta Bros. (India) and M/s.Elgin. Electronics on the basis of the aforesaid invoice. The payment of approx. Rs. 1 crore made by his firm to M/s. Elgin Electronics was ....
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....ows:- ***** ***** ***** In view of the forgoing discussion and findings, I find no merit in the arguments given by the noticees. In view of the forgoing discussion & findings, I pass the following order. ORDER a) I order confiscation of the said PA Systems and parts and other goods seized under panchnamas dated 05.01.10 and collectively valued at Rs. 77,16,288/- under See 111(a), (b),(d) and (I) of the Customs Act, 1962, However, I allow the redemption of the same to Suresh Chand Gupta, proprietor, M/s Elgin Electronics, on payment of Rs. 20,00,000/-(Twenty Lacs only) under Section 125 of the Customs Act; 1962 , b) I impose penalty of Rs. 2,00,000/-( Rupees Two Lacs only) on Shri Suresh Chand Gupta, proprietor, M/sElgin Electronics, under Section 112(b)(ii) of the Customs Act,1962. c) I impose penalty of Rs. 2,00,000/-( Rupees Two Lacs only) on Shri Sumit Gupta, Manager, M/s Elgin Electronics, under Section 112(b)(ii) of the Customs Act, 1962. 40. The proceedings and order of Directorate of Revenue Intelligence that has formed the very basis of the impugned order dated 21.10.2013 leading to the banning of the Petitioner is based on the goods imported by M/s Elgin Electronic....
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....IL project but were with regard to the goods detained in the year 2010. The equipment supplied for GAIL project was never made subject matter of any proceedings by Directorate of Revenue Intelligence. 46. The very foundation of the Show Cause Notice, that the petitioner failed to check and point out fictitious documentation submitted by M/s Elgin towards supply of audio visual equipment in the contract, which have been claimed to be smuggled goods, which was investigated by Directorate of Revenue Intelligence and thus the petitioner is guilty of abetment of smuggling and other nefarious activities prohibited by the Law, does not exist. 47. GAIL has not referred to any documentation that was submitted by the Petitioner or M/s Elgin Electronics to GAIL, at the time of execution of the work, which has been found to be fictitious. There was no investigation done by Directorate of Revenue Intelligence with regard to the equipment used for the project of GAIL. There is no finding that the equipment used for the GAIL project is smuggled or that the petitioner is guilty of abetment of smuggling and other nefarious activities prohibited by the Law. 48. The justification given on behalf o....