AI Drafter 
TaxTMI 
TaxTMI 
2020 (3) TMI 1010
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....ge and were seized under reasonable belief that the same were liable for confiscation; the seizure was dealt in separate proceedings. Office and godown premises of M/s Balaji Pharma Chem, belonging to Shri Manish Bavishi, were searched; Certain documents/records, a laptop computer and stock of 85 sealed packets of 1 kg each (approx.) bulk drugs 'Miglitol' and 1 sealed packet of 1 kg of 'Ethynal Estradiol', totally valued at Rs. 50 Laks were seized. 2.1. Shri Manish Bavishi , in his statement on 20.02.2007, deposed that he used to import Pharmaceutical Bulk Drugs (PBD) from China; in April 2006, his FDA licence was cancelled due to sale of Ketamine to traders; he also imported some consignments directly and then sold on High Sea Sale basis to M/s Palam Pharma, whose director Mr. Parag Bhavsar is his friend; he used to procure some pharmaceutical high value bulk drugs like Mifepristone, Misoprostol, Miglitol, Vitamin B12, etc. through air passengers sent by him to Hong Kong for the said purpose, in groups; he recruited/formed a group of 16 to 17 passengers who used to travel to Hong Kong/Bangkok in groups of four, six or eight passengers at a time and made arrangement for booking ....
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....6, 8 or 10 passengers for Bangkok and Hong Kong through Colombo. (iv). Shri Tajdin Nazarali Charania stated on 27.02.2007 that he travelled along with the passengers/carriers of Shri Manish Bavishi to Hong Kong and Bangkok; he had made more than 15-16 trips with Shri Bhavishi and others; he gave a detailed account of smuggling of the pharma drugs through passengers. (v). Shri Kamlesh J Balani, the ex-partner of M/s Reliable Agency stated on 28.02.2007 that M/s Reliable Agency and M/s Premier Trading Agency were established in the name of Rajesh Doshi and Vijayendra Jadav who were employed with him; they had issued challans and tax invoices showing sale of pharmaceutical bulk drugs but no goods had been transacted; they had issued some tax invoices of M/s Reliable Agencies and M/s Premium Trading Company showing sale of various pharmaceutical bulk drugs to M/s Palam Pharma, to show legitimate acquisition by Shri Manish Bavishi; amount received in cheques was returned in cash for a discount. Shri Rajesh Sheth, partner of M/s Reliable Agency stated on 23.03.2007, confirmed the statement of Shri Balani. Shri Sandeep Gandhi of M/s Globe Pharma, stated on 11.09.2007 tha....
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.... do 25,00,000/- 25,00,000/- Hetero Labs Ltd C/623/2010 do 25,00,000/- 25,00,000/- Hetero Drugs Ltd. C/624/2010 do 25,00,000/- 25,00,000/- Palam Pharma C/551/2010 do 25,00,000/- 25,00,000/- Appeals No C/594/2010 and C/633/2010 3. Learned Counsel for Shri Manish Bhavishi submits a synopsis of events and submits that no Customs duty was demanded in the Show Cause Notice or confirmed in the OIO in respect of seized goods; absence of demand of Customs duty cast serious doubt on the theory of DRI that the seized goods were smuggled into India; no evidence indicating source of goods/ smuggling of goods seized at MacLeod's Pharmaceuticals and/or supplied to Hetero Drugs Ltd/Hetero Labs Ltd is established; many pharma companies though referred in paras 72 are not made party to the proceedings; the names of M/s Hetero Labs Ltd and M/s MacLeod's Pharmaceuticals are missing in discussion; allegation of smuggling is based on retracted statement (retracted before magistrate on 21.02.2007) of the Appellant and Tajdin Charania; Tajdin Charania in his statement dated 20.02.2007 only referred to smuggling of consignment of pharma drugs which was found in ....
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....relied upon documents and inspection of original documents vide letter dated 12.10.2007; Vide letters dated 18.10.2007 and 23.11.2007, the Appellant requested copies of documents seized from his office; DRI vide letter dated 18.12.2007, informed that documents can be provided only on completion of investigation; as per Section 110 (4) of the Customs Act, 1962, person from whose custody any documents are seized shall be entitled to make copies thereof or take extracts therefrom in the presence of an officer of customs; vide Order dated 24.01.2008 the Hon'ble Bombay High Court gave direction to provide documents; DRI vide letters dated 12.02.2008 & 15.02.2008 certified copies of some documents were provided to the Appellants. Counsel submits that Personal hearing was fixed given on 20.01.2009, 0.02.2009 and 16.02.2010; however, after change of adjudicating authority, only one hearing on 16.02.2010 was granted by the new adjudicating authority; as per Section 122A of Customs Act, 1962 minimum three hearings have to be granted by the adjudicating authority; inspection of original documents completed only on 17.02.2009; hence, any hearing given before this date is not in line with disch....
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....irm; statements of Manish Bhavishi, Parag Bhavsar and co-noticees and the person who brought the smuggled goods do not reveal that Parag Bhavsar, director of M/s. Palam Pharma Pvt Ltd was aware of the smuggling activities of Shri Manish Bavishi; the documents recovered in this case do not connect the appellant with smuggling; statement of the appellant on 22-2-2997, only reveals that he is concerned only with sale and purchase of goods domestically in legal manner; each transaction done by the firm is through cheques payments and not by cash; there was no ulterior motive of appellant in the said purchase and sale of bulk drugs, and by this act appellant cannot be charged for any abatement; appellant believed Shri the Manish Bhavishi and there was no mens rea and ulterior motive on his part; reply to the show cause notice was filed and the questions of law was raised that penalties can be imposed on any person if he is anyway concerned with the confiscated goods; commissioner did not consider the same. Learned commissioner erred in arriving at the conclusion that the appellant earned huge amount of profit; the appellant has not earned any profit. Appeals No C/623/2010 (M/s Hetero....
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.... (vii). CC (Import & General), New Delhi Vs Buhariwal Logistics 2016 (332) ELT 278 (Del.) (ix). Gokul Textiles Vs CC, Chennai 2007 (218) ELT 299 (Tri-Chenai). (x). Metro Marine Services Pvt Ltd Vs CC, Kandla 2008 (223) ELT 227 (Tri- Chennai). Appeal No C/614/2010 (Shri Rajesh Seth) 6. Learned Counsel for the appellants submits in the entire Notice there is no allegation that the Appellants had any role to play in the alleged illegal imports; there are no findings in the impugned Order that the Appellants were in any way concerned with the alleged illegal imports; still the Adjudicating Authority proceeded to impose penalty; allegation against the appellants is that they have issued the invoices at the behest of one "Mr. Bhavishi without actually receiving or selling any goods. He submits that the Appellants never dealt with the impugned goods in any manner whatsoever; as detailed in para 13 (ii) of the SCN, goods were directly sent to M/s. Palam Pharma by Mr. Bavishi and the Appellants had no role to play in actual delivery; in absence of any findings contrary to the above no penalty can be imposed on the Appellants under Section 112(b) of the Customs....
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....his statement dated 20.02.2007, revealed modus operandi adopted by him showing as to how he used to recruit and send carriers abroad; from whom he used to book the air tickets; how his person at Hong Kong used to purchase PBD and hand over to these carriers/passengers; how he used to reimburse the price of PBD. Shri Bavishi accepted that he had supplied the smuggled PBD to end users like Hetero Drugs Ltd under the cover of invoice of M/s Palam Pharma Pvt. Ltd., who backed these sales by the invoices issued by M/s Reliable Agencies/Global Pharma; invoices of Reliable Agencies & Globe Pharma etc were obtained from Mr Kamlesh Bhalani and Mr Rajubhai (Rajesh Sheth) for a consideration of 2% commission; he revealed addresses of his office and godown where 85 Kgs of such bulk drugs were seized; consequent to above disclosure, statements of Shri Parag Parasar Proprietor of Sadhana Travels Services, on 22.02.2007, of Tajdin Nazarali Charania on 27.02.2007, of Kamlesh Balani on 28.02.2007 and of Rajesh Sheth dated 9.4.2207 were recorded; all these persons corroborated the revelations by Shri Bavishi. Learned AR submits that there are a number of case laws wherein it was held that retracted ....
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....appellants could not disporove the same; they have rendered the goods liable for seizure and themselves liable for penalty. 7.2. Countering the allegation those principles of natural justice were violated, Shri Ramesh Kumar submits that Shri Manish Bavishi filed a WP No.498/2008 for direction to the DRI for providing documents to him; Hon'ble Bombay High Court vide order dated 24.1.2008 directed the DRI to make available the copies of documents; according DRI letter dated 25.1.2008, Shri Bavishi was asked him to approach their office for taking copies of all documents seized from his office; he did not take the same; again DRI vide 2nd letter on 31.01.2008 asked Shri Bavishi to approach their office take copies which are ready; said communication also mentions the name of the officer along with phone numbers of senior officers; Shri Bavishi did not turn up; DRI has issued 3rd letter on 7.2.2008, 4th letter on 15.02.2008, 5th letter on 16.5.2008 and 6th letter on 29.05.2008 requesting Shri Bavishi to approach their office to carry out inspection of desired documents; ultimately, he as examined the documents in the presence of his advocate, as acknowledged by him in his letter dat....
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....nt and co-accused have corroborated and further evidence in the form of Invoices issued in this regard are available, burden then shifts to the accused to prove his counter; He submits that it was held in, CC Madras Vs D Bhoormull 1983(13) ELT 1546 (SC) and Shah Guman Mal Vs State of Andhra Pradesh 1983(13) ELT 1631 (SC), that the department is not required to prove its case with mathematical precision; demonstrable degree is nothing more than a prudent man's estimate as to the probabilities of the case. 8. Learned AR, reacting to the submissions on behalf of Shri Parag Bhavsar, Director of M/s Palam Pharma, submits that it has come out from the statement dated 22.2.2007 of Shri Parag Bhavsar that when he asked Shri Bavishi about M/s Reliable Agencies, he was told that this firm is known to Bavishi and he would get 3% commission on invoice value; After getting 3% commission, Shri Parag Bhavsar closed his eyes and had not bothered to know about the procurement of those PBDs, documents related to import or any other related documents for which he had issued invoices to end users of those smuggled PBDs; the argument that they have not earned any profit has no substance as Shri Para....
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....tion 112(b), the words "reasons to believe" indicate the existence of reasonable grounds; in this case there exists basic ingredient regarding knowledge of nature of goods by these firms; therefore imposition of penalty is justified. 11. On hearing the rival contentions, we find that the issues that requires consideration in the case are as to whether (i). 77 Kgs are 'Miglitol', 8 Kgs are 'Mifepristone' and 1 Kg of 'Ethynal Estradiol' seized at the premises of ware house of Shri Manish Bavishi on 20.2.2007, and 4 kg of Meropenem seized at the premises of M/s MacLeod's' are liable for confiscation under Section 111(d) and 111(l) of the Customs Act, 1962 read with provisions of the Drugs & Cosmetics Act, 1940; and (ii). sale proceeds amounting Rs. 2,96,47,100 deposited by end users was liable for confiscation under Section 121 of the Customs Act being the sale proceed of smuggled goods; and (iii). different appellants as above have rendered themselves to pay penalty under Section 112(a) and/or 112(b) of Customs, Act, 1962. 12. The issue raised by the appellants, as regards the seizure is concerned, in these cases is that the department has not proved ....
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....tion with the accepted smuggling by Shri Bavishi and others leads to the only conclusion that the goods were smuggled. It is being argued that the goods are not notified goods. It is not the case of the department either that the goods are notified. Customs officers are not expected to seize only notified goods. They are duty bound to check smuggling of other goods. It is also argued that Customs authorities are not empowered to take action against violations under Drugs and Cosmetics Act, 1940 and that there are other agencies for the same. We are afraid such an argument would make the function of customs department redundant as most or all of the goods imported/smuggled would fall under one authority or the other. A harmonious construction would necessitate understanding that the roles of customs officers and others are complementary in nature. When the goods are moved across the international borders, it is the duty of customs officers to take action and when it relates to any activity within the country concerned departments can take action. The action taken by customs may not necessarily preclude action if any to be taken by the respective agency. At the time of seizure, there....
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....In grave cases like forgery, fraud, conspiracy, misappropriation, etc. seldom direct evidence would be available. Only the circumstantial evidence would furnish the proof...... There must be evidence direct or circumstantial to deduce necessary inferences in proof of the facts in issue. There can be no inferences unless there are objective facts, direct or circumstantial from which to infer the other fact which it is sought to establish........ The standard of proof is not proof beyond reasonable doubt 'but' the preponderance of probabilities tending to draw an inference that the fact must be more probable. Standard of proof cannot be put in a strait jacket formula. No mathematical formula could be laid on degree of proof. The probative value could be gauged from facts and circumstances in a given case. The standard of proof is the same both in civil cases and domestic enquiries." Under the circumstances, we find that the standard of proof in a case like this would obviously different from other cases. When Shri Bavishi himself has agreed about the smuggling activity in general and was corroborated by others and when they could not produce any evidence of legal procurem....
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....ng authority, only one hearing on 16.02.2010 was granted by the new adjudicating authority; as per Section 122A of Customs Act, 1962 minimum three hearings have to be granted by the adjudicating authority; inspection of original documents completed only on 17.02.2009; hence, any hearing given before this date is not in line with discharge of principles of natural justice; the appellants vide letters dated 17.01.2009, 17.2.2009 and 15.02.2010, requested for postponement of hearing; however, no further opportunity of hearing granted to him on the grounds for not allowing fresh hearing as mentioned; reply filed on 15.02.2010 vide letter dated 12.02.2010 was not considered by the learned adjudicating authority; request for cross examination, although made in reply to the Show cause Notice, it was not allowed. The learned AR submits that ample opportunities were provided to Shri Manish Bavishi, but he always tried to delay the issue without any sufficient reasons; Hon'ble Bombay High Court directed DRI to make available records within one-week time; the appellant took eight (8) months' time to inspect and collect the documents; as the appellant was using tactics to delay, the adjudicati....
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..... In such a case, the departmental officers cannot play in to their hands of the appellants in procrastination of the proceedings. We find that legal remedies under the act cannot be allowed to be misused by the people who have indulged in smuggling activities by which they have not only put the public health and Revenue at peril. That would be travesty of justice. We find that sufficient opportunities of hearing have been given by the adjudicating authority. 18. Learned counsel of Shri Manish Bavishi that cross-examination of Shri Parag Bhavsar, Director of M/s Palam Pharmaceutical Pvt Ltd, Kamlesh Bhalani& Rajesh Seth of M/s Reliable Agency and Sandeep Gandhi of M/s Globe Pharma was not allowed to him is also violation of Principle of Natural Justice. We find that the persons asked for cross-examination are co-accused in the subject case. Further, what was confessed by Shri Manish Bavishi in his statement dated 20.02.2007 was corroborated by all the persons involved. Therefore, we find that the adjudicating authority came to a conclusion that the cross examination would have not served any purpose and nothing new would have emerged out of such cross-examination. We find that A....
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....e falls, the broad resemblance to another case is not at all decisive." Therefore, we are of the view that each case needs to be decided on the basis of evidence available in that case. It is also well-settled position of law that any decision of a judicial forum is strictly applicable only to the facts of the case discussed therein. We find that the cases submitted by the appellants are on different set of facts. 20. Coming to the seizure of 4 kg of 'Meropenem' at MacLeod's' Pharmaceuticals, Andheri (East), Mumbai, we find that enquiries revealed that these PBD which were sold by M/s Palam Pharma on the strength of invoice issued by M/s Reliable Agency and M/s Premier Trading Agency. It has come out that they had purchased 4 kg of 'Meropenem' from M/s Palam Pharma Pvt Ltd. The 4 Kg of Meropenem was sold by Palam Pharma on the strength of invoice of M/s Reliable Agency. Shri Parag Bhavsar, Director of M/s Palam Pharma, in his statement on 22.02.2007 accepted that he did not know owner of M/s Reliable Agencies but he used to deal only with Shri Manish Bavishi; he was told that Reliable Agencies was a firm known to Shri Bavishi and there was nothing to worry about; no bulk drug....
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.... 484500.00 193 09.01.07 4855200.00 36 01.07.06 21100.00 During the course of the search at the office of Kamlesh Bhalani and Shri Rajesh Seth, the documents retrieved from the data of the computer copies of 123 invoices issued by M/s Reliable Agency to Palam Pharma Pvt Ltd. Some of these invoices are on record and corresponding invoices are also taken from the records of M/s Palam Pharma. These two invoices match w.r.t description of the goods, quantity, Batch No., manufacturing date & Expiry date. In view of the discussion above, we find that these good too are to be treated as smuggled and hence liable for confiscation under Section 111(d) & (l) of the Customs Act, 1962.As the goods are not available for confiscation, confiscation of sale proceeds is required to be upheld in terms of Section 121 of the Customs, Act, 1962. 22. Appellants have also raised the issue that no duty has been demanded on the seized goods. We find that this is not a case of legal import of goods. The question of duty does not arise when goods are confiscated absolutely. Only when the goods are allowed to be redeemed, such goods shall be cleared on payment of duty in addition to t....
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....50/2010 and C/551/2010 by Shri Parag Bhavasar and M/s Pharma Labs) we find that though they have issued invoices in their names to M/s Hetero labs and M/s Hetero drugs for a discount, it has not been established that they were in the knowledge that the goods were smuggled goods. Shri Bhavsar has stated that Shri Manish Bhavishi has told them that M/s Reliable Agency were genuine and there was nothing to worry and that goods would be directly dispatched; he was not aware of the fact the license of his firm was misused by Manish Bavishi for importing smuggled goods in the name of his firm. We find from the statements of Manish Bhavishi, Parag Bhavsar and others do not reveal that Parag Bhavsar, director of M/s. Palam Pharma Pvt Ltd was aware of the smuggling activities of Shri Manish Bavishi. Other than the above, nothing has come on record to show that they have knowledge that they are dealing in smuggled goods. We also find that whereas, the statements of the concerned persons talk about profit earned by them to be about 2-3 %, learned Commissioner finds that they have earned huge profit. We find that commissioner has not given any evidence to that effect. We find that nothing has ....
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....ven deposited the sums payable to M/s Palam Pharma (or Shri Bavishi) with the investigation. We find that they have proved their bona fides. We find that Ld. Commissioner while deciding not to impose penalty on Macleod's' observed that nothing is brought on record by the investigation to implicate them in the modus operandi set up by Manish Bavishi and his associates; merely because they were in urgent need of said material, they followed the advice given by their loan licensee and procured the bulk drugs which are still lying and seized; except being in possession of the impugned bulk drugs, there is nothing on record that they had knowingly placed orders for the same with Manish Bavishi; much more evidence ought to have been culled out so as to hold them liable for any penalty. We find that all these ingredients are available with Hetero Labs and Hetero Drugs. The only difference being that the drugs have been utilised. If the investigation started some time before material would have been available with them. It is on record that some material was lying in work in progress. There is nothing on record to show that they had the knowledge that the goods were smuggled. Therefore, we....