TaxTMI 
TaxTMI 
2019 (9) TMI 1308
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..... Rs. 6.00 Cr. U/S 112 of the Customs Act, 1962 Rs. 6.00 Cr. U/S 114 2. C/70218/2019 M/s Mahesh Kumar Moolchand Kothari Rs. 9.00 Lakhs U/S 112 3. C/70318/2019 Commissioner of Customs, Noida V/s M/s Vee Ess Jewellers Pvt. Ltd. -NA- 4. C/70321/2019 Mohd Irfan Munshi Rs. 60.00 Lakhs U/S 112 5. C/70351/2019 Mukesh Mahesh Kumar Kothhari Rs. 60,000/- U/S 112 6. C/70352/2019 Bharat Jamnadas Jagda Rs. 8.00 Lakhs U/S 112 Rs. 8.00 Lakhs U/S 114 7. C/70354/2019 Jaison Simon Panakkal Rs. 60.00 Lakhs U/S 112 8. C/70055/2019 Mahesh and Co. Pte. Ltd., Singapore Rs. 15.00 Cr. U/S 114AA Rs. 6.50 Lakhs U/s 112 Rs. 6.50 Lakhs U/s 114 9. C/70056/2019 Shri Mahesh Kumar of M/s Mahesh & Co. Pte. Ltd. Rs. 15.00 Cr. U/S 114AA Rs. 6.50 Lakhs U/s 112 Rs. 6.50 Lakhs U/s 114 10. C/70495/2019 Shri Rajesh Ratanlal Pacheria Rs. 5.00 Lakhs U/S 112 2. Though no confiscation of any seized jewellery stands made in respect of the present appellants but to appreciate the factual background, the facts are being adverted to in brief. The Directorate of Revenue Intelligence (hereinafter referred to as DRI) r....
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.... to inasmuch as the said M/s Vee Ess Jeweller and M/s Ajit Exports have not challenged the present impugned order. As such, the facts relatable to the present appellants are only being dealt with. 3. By entertaining a view that the imported jewellery was being disposed of by the said two SEZ units in Indian domestic market and the export obligation was fulfilled by procuring the other jewellery manufactured in India, further investigations were undertaken by the Revenue. Various jewellery outlets in India were investigated, who were believed to be aiding and abetting M/s Vee Ess Jewellers and M/s Ajit Export in disposal of the imported gold jewellery. 4. Before the fact of each and every case involved in the present appeal are adverted to, it may not be out of place to mention that the jewellery seized from the office of said SEZ units was proposed to be confiscated and customs duty against SEZ units was proposed to be confirmed along with imposition of penalty upon them by way of issuance of separate show cause notice which resulted in passing of an order by the Commissioner of Customs Air Cargo, Exports new customs house IGI Air Port, New Delhi by a separate Order-in-Original d....
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....ewellery in Dubai and importing the same through SEZ route was also recorded on 07 July, 2009 and 22 April, 2009. He deposed that he visited the shop of M/s Deepu Jewellers in Dubai whom he knew through a local friend in India and purchased Jewellery worth Rs. 38 lakhs. Shri Kishore Bhai Dhakan agreed to arrange to export the said jewellery from Dubai to Mumbai on credit basis and the same was received by him in India through one Shri Bhavik Khothari. He also gave details of one of the two visits to Dubai and purchases of the jewellery. The statements of Shri Kiran Kumar Sanghvi, Shri Hemant Kothari, Shri Ramesh Kothari, Shir Suresh B Rathore, Shri Devilal Sohan Lal Jain were also recorded who according to the Revenue were the persons purchasing gold jewellery in Dubai and receiving the same through SEZ route giving bill of purchase of jewellery in Dubai and importing the same through SEZ routes. During the course of further investigations, statements of various persons were recorded including the Authorized Representatives of the Dubai Based and Singapore based jewellers who had exported the goods to the said two SEZ units. 6. During the course of further investigations, statemen....
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....he invoices and shipping bills as gold jewellery under the procedure of self-declaration and self-certification. The allegations against the present appellant is that they, through their Director Shri Bharat Jamnadas Jagda delivered locally manufactured jewellery to the said two SEZ units who further exported the same under the garb of remanufactured imported jewellery. The Revenue's allegations are based upon the fax messages sent from the fax machine of M/s Shakti Jewellers Pvt. Ltd. and found in the file of the said two SEZ units. Based on the said two messages and notings made on the file viz-a-viz 'All BH goods' and 'All Bharat goods', 'All Goods of Bharat' it is believed by the Revenue that the goods described in the fax messages were locally made jewellery which was delivered by the M/s Shakti Jewellers Pvt. Ltd. to the said two SEZ units who exported the same by mis-declaring the same to fulfil the export obligation. As such it has been held that Shri Bharat Jamnadas Jadga of Shri Shakti Jewellers Pvt. Ltd. facilitated the fraudulent fulfillment of export to SEZ by way of supplying Indian made gold jewellery to the said two units. It is seen that the premises of M/s Shakti....
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....consent. As such, the findings of the Authorities below that the present appellant has aided and abetted the said two SEZ units in the fraudulent activities are not based upon any evidences. 10. After going through the impugned order and after hearing the learned Authorized Representative who reiterated the reasoning of the Adjudicating Authority for imposition of penalty upon the present appellant, we note that the Adjudicating Authority has not dealt with the penal liability of the M/s Shakti Jewellers Pvt. Ltd. Apart from the reference to the fax messages recovered from the premises of the SEZ units, there is factually no evidences on record to show that M/s Shakti Jewellers Pvt. Ltd., in any way, were connected with fraudulent activity if any of the said two SEZ units. These fax messages have been held relatable to M/s Shakti Jewellers Pvt. Ltd. only on the ground that the same were sent through their fax number. Apart from the fact that Shri Bharat Jamnadas Jagda, Director of M/s Shakti Jewellers Pvt. Ltd. has explained in his statement recorded during the investigation that he has not sent the said fax messages and the same might have been sent by any other person, we note t....
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....HARAT JAMNADAS JAGDA 11. Shri Bharat Jamnadas Jagda is Director of M/s Shakti Jewellers Pvt. Ltd. and is Proprietor of M/s Omkar Jewellers. The penalties stands imposed upon him to the extent of Rs. 8.00/- lakhs each under Section 112 as also under Section 114 of the Customs Act as director of M/s Shakti Jewellers and Proprietor of M/s Omkar Jewellers. As we have already observed that M/s Shakti Jewellers Pvt. Ltd. was only supplying jewellery to the two SEZ units and in the absence of any knowledge on their part as regards the use of the said supplied jewellery, no penalty can be imposed upon them. For the same reason penalties imposed upon Shir Bharat Jamnadas Jagda as Director of M/s Shakti Jewelers is not called for. It is further seen that Shri Bharat Jamnadas Jagda also owns a proprietary firm M/s Omkar Jewelers. The role attributed by the Revenue to Shri Bharat Jamnadas Jagda is that he used to receive gold jewellery from Shri Komal Jain and Shri Ajit Singh of the two SEZ units M/s Vee Ess Jewellers Pvt. Ltd. & M/s Ajit Exports for further delivery of the same to the various persons. It stands contended before us that even if the said allegations are accepted to be true th....
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....cannot be upheld. Otherwise also we find that there is virtually no evidence against Shri Bharat Jamnadas Jagda indicating any knowledge on his part as regards the supply of the jewellery from SEZ units to various customers knowing or having reasons to belief that the same stands illegally diverted by SEZ units to domestic market. In the absence of the same, we are of the view that imposition of penalties upon him is neither justified nor warranted and accordingly, the same are set aside. We further observe that the seized and confiscated Indian Currency of Rs. 36 lakhs is required to be refunded to him. MAHESH & CO. PTE.LTD. & SHRI MAHESH KUMAR 13. M/s Mahesh & Co. Pte. Ltd., Singapore is a company incorporated under the laws of Singapore and is engaged in the export/import of gold jewellery. The said appellant had supplied gold jewellery to two SEZ units viz. M/s Ajit Exports and M/s Vee Ess Jewellers Pvt. Ltd., under the cover of invoices as also the customs documents for the purpose of carrying out finishing, plating and remaking etc. of the same. As per the appellant full commercial value of the jewellery was declared in the invoice issued by them. The said jewellery sent....
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....sed to the appellant indicated that they are not in a position to undertake the job work and as such would not be taking any action for clearance of the same. On receipt of the said communication and to ensure that the consignee has abandoned the goods, the appellant sent the shipment documents to State Bank of India, Noida who clarified that the documents can be released only to M/s Vee Ess Jewellers Pvt. Ltd. on their accepting the bill of exchange. Accordingly, the documents were returned to the appellant. As the consigne did not take the release of the said jewellery and the appellant continued to be the unpaid owner of the goods, they approached the Revenue for release of the same. 16. As the Revenue was not releasing the goods, the appellant filed writ petition before the Hon'ble High Court of Delhi who vide their order dated 04 October, 2010 directed the Commissioner of Customs to hear the appellant and to dispose of their representation accordingly. The Commissioner of Customs vide his order dated 31 March, 2011 held that the goods are not liable to confiscation as no bill of entry stands filed and there is no violation of any provisions of the Customs Act but the consign....
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....nt gold jewellery and sometimes scrap etc. was being exported back. There is no evidence as to how the value of the gold jewellery sent by M/s Mahesh & Co. were being compensated to them. In the absence of any other evidence, except the untested statements, the Revenue's allegations cannot be upheld against the said appellant. As held by precedent decisions of various High Courts (to whom we shall be referring to in the succeeding paragraphs) statement by itself, though may be a leading investigating tool for further collection of evidences, cannot be held to be the evidence themselves and requires further corroboration from independent sources. The recording of the inculpatory statement during the course of investigation can be on account of numbers of factors involving threat of arrest, pressure, cohersive action or any other lurement etc. Prosecution cannot build its case upon sole testimony of co-noticees statement without their being any independent corroboration especially when the said deponents have neither been cross-examined nor examination-in-chief stands conducted by the Adjudicating Authority. As the case law on the said issue of cross-examination and examination in ch....
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....investigation. 21. Apart from the fact that there is virtually no evidence to impose penalty upon the appellant under Section 112 and 114 of the Customs Act, which deals with the import and export of the goods only as also under Section 114AA of the Act knowingly giving false declaration, we find that the appellant being a company incorporated under Singapore laws and having no permanent establishment in India and having no place of business in India cannot be penalised under the provisions of Customs Act which is extended to whole of India only in terms of Section 1(2) of the Customs Act, 1962 and does not have territorial jurisdiction over the world beyond India. The Adjudicating Authority has nowhere explained as how he has jurisdiction over a company located in Singapore and incorporated under the laws of Singapore. Reference can be made to the following decisions :- (i) Relax Saftey Industries V/s Commissioner of Customs, Mumbai reported in 2002 (144) E.L.T. 652. (ii) Narendra Lodaya V/s Commissioner of Customs, Nhava Sheva reported in 2017 (348) E.L.T. 168. (iii) Guru Electronics Singapore Pte. Ltd. V/s Commr. of Cus., Bangalore, reported in 2009 (240) E.L.T. 56. 22. ....
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.... units. Shri Mukesh Kumar Moolchand Kothari is proprietor of M/s Orbit Gold and jewellery recovered from his premises resulted in passing of a separate order which order was appealed against by M/s Orbit Gold before the Tribunal and Tribunal vide its Final Order No.C/A/51307-51315/2016-CU[DB] dated 27 April, 2016 has held that the duties having been deposited along with interest and 25% of penalties the imposition of balance penalties upon the said M/s Orbit Gold is not justified. Inasmuch as the proceedings have been held to be concluded in the earlier set of proceedings, the imposition of penalty vide the present impugned order cannot be upheld. The same are accordingly set aside and their appeals are allowed. MOHD. IRFAN MUNSHI, SHRI JAISON SIMON PANAKKAL & SHRI RAJESH RATANLAL PACHERIA 26. Penalties to the extent of Rs. 60 Lakhs stands imposed upon Mohd. Irfan Munshi & Shri Jaison Simon Panakkal respectively and of Rs. 5.00 lakhs stands imposed upon Shri Rajesh Ratanlal Pacheria under Section 112 of the Customs Act. All the three appellants are employees of one M/s Damasy Retail Jewelers Pvt. Ltd., Malad (West), Mumbai. Whereas Shri Jaison Simon Panakkal is the country head ....
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....o SEZ units. In the absence of the same, we hold that imposition of penalties upon them has been in a mechanical manner and without appreciating the facts as also the evidences available on record. Apart from reproducing the statements in the impugned order, the Adjudicating Authority has not discussed the role of each and every noticee, in the light of the evidences and have not come to findings of invocation of penal action, which stands abruptly imposed without discussing their liability. We find no justifiable reason to impose penalties upon the said employees. The same are accordingly set aside and their appeals are allowed with consequential relief. 27. At this stage we may refer to certain precedent decisions on the issue of the findings of clandestine activities based upon the statements of various deponents, who have not been allowed cross-examination The Hon'ble Supreme Court in the case of Andaman Timber Industries v. Commissioner of C.Ex., Kolkata-II reported as MANU/SC/1250/2015, while dealing with the cross-examination of the witnesses observed that not allowing the assessee the cross-examination of witnesses is a serious flaw which makes the order nullity inasmuch a....
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....nation of the witnesses which is required in terms of the provisions of section 9D of the Central Excise Act, but the examination-in-chief of the witnesses is also required ot be done as held by the Hon'ble Punjab & Haryana High Court in the case of Ambica International v. Union of India. The Hon'ble High Court held that the provisions of section 9D of the Central Excise Act are required to be scrupulously followed in adjudication proceedings as the same is done in proceedings relating to prosecution. The evidentiary value of the statement, in so far as proving the truth contents thereof is concerned, is completely lost unless and until the case falls within the parameters of section 9D and otherwise it has to be held that adjudicating authority has relied on irrelevant material. If the procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded that the Revenue has given up the said witnesses so that the reliance by the Commissioner on said statement has to be regarded as mis-guided and the statements have to be eschewed from consideration as they would not be relevant for providing the truth of the content thereof. The p....
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....penalty under the said Sections must have knowledge or reasons to belief that the goods in which he is dealing are liable to confiscation. According to the Revenue, the appellants herein have dealt with goods which the two SEZs have imported and subsequently exported. Even if the Revenue's allegations are accepted to be true, the appellants would be liable to penalty only if they had knowledge about the tainted character of the goods. The onus to prove that the appellant had such knowledge is on the Revenue, required to be discharged by sufficient and positive evidences. In the present case we find that there is not even an iota of evidence except the so called statements which had already been held to be not equal to the evidences, to prove that the appellant have knowledge about the said fact. As such, we are reaffirmed in our decisions of non-imposition of penalty upon the said appellants. 30. We further note that as per the findings of the Adjudicating Authority, the two SEZ units were importing the brand new jewellery in the guise of old jewellery for the purpose of remaking, re-polishing etc of the same and then exporting the gold bars or gold jewellery locally procured by t....