TaxTMI 
TaxTMI 
2019 (8) TMI 132
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....ead with Section 68(1) of the said Act. 2. The facts which were recorded in the impugned order are re-produced hereunder:- i) On receipt of information that M/s. A.G.I.O. Exports Ltd., New Delhi was receiving huge payments from special dollar Escrow account holder for exporting goods to Russia and that these payments were in fact being arranged from account holders at premium. The business premises of M/s. A.G.I.O. Exports Ltd. situated at S-533, Greater Kailash-II, New Delhi and the residential premises of its one of the directors namely Shri S.N. Surekha at B-7/62, Safdarjung Extension, New Delhi were searched on 13.03.1995 under Section 37 of Foreign Exchange Regulation Act, 1973 which resulted in seizure of certain documents and Indian currency of Rs. 1.50 lacs only. Immediately after the search on 13.03.1995 statement of Shri S.N. Surekha was recordedunder Section 40 of Foreign Exchange Regulation Act, 1973. Shri Surekha stated that he joined M/s. AGIO Exports Ltd. where there were three directors namely S/Shri K.K. Tekriwal, O.P. Aggarwal and S.N. Surekha himself; that Rajesh Chamaria and Shri K.K. Tekriwal have major shareholding in the company ....
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....explained by Shri K.K. Tekriwal. He, however, admitted to have signed the letter dated 22.04.1994 to AGM, Canara Bank, New Delhi-110019, regarding his request to remit advance payment of US$5,00,000 under contract No. AR/PNB/94/017 dated 12.04.1994 with M/s. CDBME- RUBIN (Page No. 32 of the seized file 'D'). In the said letter dated 22.04.1994, he had undertaken that probable date of shipment under contract was as per contract (i.e. 3 months from 12.04.1994) and that he would submit all the original export documents; that in the event of non-fulfillment of their obligations under the contract, in full or in part, they under-took to recredit appropriate amount to the Escrow account of M/s. CDB-ME-RUBIN with Canara Bank, New Delhi. On being further asked to explain page No. 25-30 of the file marked 'D', he stated that the same may also be explained by Shri K.K. Tekriwal. ii). Shri S.N. Surekha further stated that all the export documents of the company are being negotiated through Canara Bank, Nehru Place, New Delhi and Canara Bank, East of Kailash, New DelhI. iii). Shri K.K. Tekriwal in his statement dated 21.03.1995 and 23.03.1995 recorded under Section 40 of FERA....
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.... before the Hon'ble High Court at Calcutta seeking inter alia directions to restrain the department from interrogation him for more than 3 hours. In respect of the said Writ, Hon'ble High Court had issued necessary directions. Accordingly, statements were recorded from Mr. K.K. Tekriwal. In his statement dated 05.05.1995, taken pursuant to the directions of Hon'ble Court, Shri K.K. Tekriwal disowned the recovery of purported fax message from Shri S.N. Surekha to Shri Rajesh Verma of Moscow regarding transfer of US$. 4,50,000 from their London Office to CDB-ME-RUBIN. In the said statement dated 05.05.1995, Shri K.K. Tekriwal also referred to the affidavit dated 27.03.1995 of Shri Surekha filed with the department. ix). Based on the investigations made, a Memorandum bearing No. T-4/37-D/95 dated 12.09.1995 was issued to noticees for the contravention of Section 8(1) of FERA, 1973 for otherwise transferring US$. 4,50,000/- to the account of M/s. CDB ME RUBIN of Moscow Russia for procuring the export payments of goods in advance as the said transfer of US$. 4,50,000/- was made to a person other than the authorized dealer in foreign exchange without any special or general permi....
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.... FERA, 1973 and therefore not liable to be proceeded against under Section 50 and 51 of the said Act. xiii) Shri S.N. Surekha vide his letter dated 12th February, 1996 in reply to the Memorandum reiterated the same fact as that of the reply dated 09.02.1996 given on behalf of the company i.e. M/s. AGIO Export Ltd. and further affirmed the contents of his affidavit dated 27.03.1995. He also denied having sent any message regarding transfer of US$. 4,50,000/- to CDBME- RUBIN. He also requested to grant personal hearing. xiv). Shri O.P. Aggarwal vide his letter dated 14.02.1996 in reply to the memorandum has taken the same plea as that contained in the letter dated 09.02.1996 given by the noticee company and as such he contended that there has been no contravention of Section 8(1) of FERA, 1973. He also contended that he was a non-executive director of the company and hence was not incharge or responsible to the company for the conduct of its day to day business. He requested to drop the proceedings and also requested to grant opportunity of personal hearing in the matter. xv). In reply to the show cause notice, Shri K.K. Tekriwal vide his letter dated 19.02....
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....n 40 of the Act. The relevant part of the statement recorded i.e. question and answer are reproduced. On March 13, 1995, Shri S. N. Sureka was asked questions under Section 40 of the 1973 Act, which are, inter alia, extracted below from Page 56 of the Paper Book of the Appeal. "Q. How many Branches do the Company have? Ans. The Company Branch office at Calcutta. Mr. Tekriwal looks after that office. On Enquiry I state that we have no office at out side India... ... ... Q. Please name the Bank Accounts of the Company in and out side India? Ans. The Co. have no Bank Account out side India. However the Co. have Bank Account with Canara Bank ... ... ... Q. Do you have any Account outside India? Ans. No. Q. I am showing 32 and 31 of file "D" seized from your office today, being letters dated 22.04.94 from Agio Exports to the AGM, Canara Bank and one photocopy of Fax No. 3230006 dated 03.04.94 from you to Rajesh Verma, Moscow. Please go through these letter and explain the contents thereof? Ans. Page 32 of "D" is signed by me and about page 31 I do not know/recollect anything and may be known and explain by K.K. Tekr....
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.... CDB-ME-RUBIN of Moscow on payment "100% payment dollar Escrow Account" and that in pursuance to the said agreement, the said M/s. AGIO Exports, New Delhi received an advance payment to the extent of US Dollar 5,00,000/- from out of the account of M/s. CDB-ME-RUBIN of Moscow through Canara Bank and subsequently exported the related goods to the consignee of the said Moscow party mentioned in the said agreement. ii) AND WHEREAS, it further appears that before entering into the said agreement, the said M/s. AGIO Exports Ltd. New Delhi otherwise transferred a sum of US $ 4,50,000/- to the account of M/s. CDB-ME-RUBIN of Moscow for procuring the receipt of export payment of the goods to the extent of US Dollar 5,00,000/- purportedly exported by them to the consignee who appears to be their own associate concern in Moscow. It further appears that from investigation that the aforesaid amount of US$ 4,50,000/- was otherwise transferred by the said M/s. AGIO Exports Ltd. New Delhi through one Rajesh Verma of Moscow". 7. After the issuance of Show Cause Notice, the Appellant No. 1 filed its Written Reply dated 9th February, 1996 denying and disputing contravention of Section 8(1....
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.... this documents ? Ans. Page 31 is not marked as D. However, it can be checked from the entire file seized. I can only say that it relates to file D from the reading of the show cause notice. Q. Now look at this paper which you have identified as page No.31 of the file marked D. Is there any signature of the seizing officer or representative of the Noticee No.1 who attended the search on that day as representative of the Noticee No.1 or any of the independent search witnesses ? Ans. I identified page 31 of file marked D in the absence of original seized records and on the strength of reading SCN and photocopies of three documents placed in the file seen by me today. There is no signature on this document. It is the usual practice in Enforcement Directorate that when documents are seized contained in a file 1st and the last page of the file is signed by the witnesses and the person in whose presence the seizure was made. Q. So the last answer you have given, is it the general procedure of the Enforcement Directorate only in each file can you tell us whether this procedure in consonance with the procedure led down in Cr.P.C. ? Ans. Loose do....
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....s. It was not me. May be it was Mr. M. R. Chander or any other member of the raiding party. Q.31 Have you seen the seizure witnesses on that day in your office? Ans. No. 11. Shri M. R. Chander the Investigating Officer was thereafter crossexamined on 19th January 2005 and the extract of the relevant questions and his answer in cross examination are extracted below : "Q.53. Now I am showing you page No. 31 of the file marked "D" which has been produced today before the Ld. Adjudicating Authority. Kindly tell us when you have seen this document file marked "D" page No. 31? Ans. I do not remember now but I remember that I had asked questions relating to this document. Q.54. Kindly tell us whether the said document is original or xerox copy and whether it is signed or not signed? Ans. It is xerox or original, I cannot say but it was seized from the premises of M/s. A.G.I.O. Exports Ltd. Yes the document is unsigned. Q. 55. So you could not distinguish between original or xerox? Ans. We the officers see the contents of the documents if some contravention is suspected, we seized the documents whether it is origina....
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.... said Officers, clearly admitted that none of them have seized alleged page 31 of the file marked "D". 13. It is submitted on behalf of the appellants that the respondent has not discharge its burden by producing the original fax message which is main document. The impugned fax Message being Page 31 of seized file marked 'D'. The following points needed to be proved to sustain any alleged charge whatsoever against the appellants and in the absence of the same, the allegations are sustainable. i) Existence of telephone number from which the fax was sent and not unearthed by E.D. ii) Name and addresses of the person with whom and at whose place the fax was installed. iii) Number to which fax was sent does not and cannot exist as neither the Country Code nor the Area Code nor the correct number of recipient is printed on the fax. iv) Such purported fax machine not seized by E.D. v) Even the fax number printed on the fax message is illegible. vi) No activity Report displayed or printed when fax is sent nor such activity report seized. vii) Fax message is fabricated as there is a glaring spelling error as "Moscow" is p....
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....ing the course of hearing, we asked the counsel for the respondent to go through the record and point out the said original document. He is unable to trace it out. He says that the same is not available on record brought from the office. 18. The Appellants rely on the judgement of a Five-Judges Bench of the Hon'ble Supreme Court, which, inter alia, held in the case of Shanti Prasad Jain v. Director of Enforcement, FERA, as reported in AIR 1962 SC 1764: "35. We have reached this conclusion on a consideration of the evidence on record, without reference to any abstract doctrine as to burden of proof. But it is only right to observe, that the proceedings under the Act are quasi-criminal in character and it is the duty of the respondents as prosecutor to make out beyond all reasonable doubt that there has been a violation of the law. Vide the decision In re. H.P.C. Productions Ltd. [(1962) 2 WLR 51] cited for the appellant. The learned Attorney-General did not contest this position." 19. As far as cross examination of other witnesses are concerned, the Appellants counsel submits that there was gross violation of the principles of natural justice by the Adjudicating Au....
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....graph 7 as follows :- "...... Since many orders by different benches have been passed for the production of the fax message as well as the record, we are of the views that at this belated stage it is not open to the respondent to agitate that the papers and the record in which the said paper is stated to have been kept can not be produced on the ground that it is not relied upon document. The facts which have been argued before us must have also been argued before our Ld. predecessors or were available to the respondent. It may be significant to mention that no formal request to recall the earlier orders has been made on behalf of the respondent and since 2009 to 2014 the respondent had been seeking time for making compliance and for reasons better known to them inspection, in spite of the orders of this Tribunal was not facilitated, initially. The allegations leveled by the appellants are indicative that the respondent deliberately wanted to suppress the document and did not want to produce the record containing original document. It also appears that supply of copy of the full fax message had been withheld despite the orders of the Tribunal. " By a judgement and order....
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....mpugned interim order and any direction therein have ceased to exist. The appeal has become infructuous and is accordingly, dismissed." 26. In view of the judgement of Shanti Prasad Jain (Supra) in the proceedings under FERA are Quasi criminal in nature and in the light of Judgments delivered in the case of Maneka Gandhi v. Union of India, AIR 1978 SC 597 Paras 59 Pgs.626 & 627 and Union of India-Vs- Tulsiram Patel, (1985) 3 SCC 398 : 1985 SCC (L&S) 672 at page 470, the Hon'ble Supreme Court held that there can be no distinction between a quasi-judicial function and an administrative function for this purpose and the rules of Natural Justice shall be applicable in these cases as well. In the cases of State of Kerala-Vs- K.T. Shaduli Grocery Dealer reported in AIR 1977 SC 1627 (Vol. 64) at page 1631 para 5. "The usual mode recognized by law for proving fact is by production of evidence and evidence includes oral evidence of witnesses. The opportunity to prove the correctness or completeness of the return would, therefore, necessarily carry with it the right to examine witnesses and that would include equally the right to cross examine witnesses examined by the Sales T....
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....r the customs authorities to establish by methods known to law and in a satisfactory manner that the value of imported goods is not what the importer says it is and what that value actually is. That onus cannot be shifted to the importer. We have no doubt that all this has been said by the courts again and again, but to no avail". (e ). The judgement of the Division Bench of the High Court at Calcutta in the case of Shree Balaji Steels vs. Gontermann-Peipers (India) Ltd., reported in (2003) 114 Comp Cas 193, wherein it was held: "12. ... The only document that was produced in support of such claim of interest was a statement annexed to the winding up petition, which was unsigned, and without any authentication. Such being the state of affairs before the learned company judge we do not find any reason to hold otherwise as we find that the document annexed to the winding up petition was not at all a signed and authenticated document and, therefore, the learned company judge was fully justified in not relying on the said document and thereby refused to grant interest". (f ) The judgement in the case of Anjlus Dungdung-Vs- State of Jharkhand reported in 2005 SCC (Crl) 14....