TaxTMI 
TaxTMI 
2022 (4) TMI 212
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....h. Amit Bali, penalty of Rs. 21,00,000/- is imposed under Section 114(i) of the Customs Act, 1962 read with Section 13 of the Foreign Exchange Management Act, 1999 on Sh. Pawan Kant Munjal, being the beneficial owner. b.) In respect of illicit export of currency equivalent to Rs. 3,72,64,700/-, details of which were found in pen drive recovered from the office of M/s SEMPL, fine of Rs. 9.25 lakhs under Section 125 of the Customs Act,1962 and penalty of Rs. 95,00,000/- under Section 114(i) of the Customs Act, 1962 are imposed on Sh. Pawan Kant Munjal, being the beneficial owner. c.) In respect of illicit export of currency equivalent to Rs. 21,35,25,172 - through travel cards issued in the name of various employees of M/s SEMPL and carried by Sh. Amit Bali, fine of Rs. 50,00,000/- under Section 125 of the Customs Act, 1962 and penalty of Rs. 5,35,00,000/- under Section 114(i) of the Customs Act, 1962 are imposed on Sh. Pawan Kant Munjal, being beneficial owner. d.) In respect of illegal export of foreign currency equivalent to Rs. 13,90,20,8971- carried by Mr. Amit Bali in past, fine of Rs. 35,00,000/- under Section 125 of the Customs Act 1962 and penalty ....
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....avel, event management and logistics services to HMC, and HMC as a consideration against the provision of such services by such third party service providers settles their invoices in INR in India. 2.7. That some of the specialist third-party service provider used by HMC in relation to travel, event management and logistics arrangements in the past are as follows: (a) M/s Showtime (b) M/s Unbound (c) M/s Salt Experience and Management Pvt. Ltd. [the SEMPL] 2.8. Appellant being the Chairman, Managing Director and CEO of HMC is required to attend several of the said the engagements / meetings, which are organized by HMC, whether within and/or outside of India. The frequency of the foreign trips are subject to the business requirements of HMC and the Appellant had travelled abroad several times during the last few years. Appellant has a dedicated secretarial team of persons, who provides assistance to the Appellant on a daily basis in organizing and scheduling the engagements of the Appellant. Appellant confirms the meeting dates and a blue-print of the meeting / events / conferences that the Appellant is required to attend for the business....
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....mployees of SEMPL, and neither HMC nor the Appellant on any occasion have provided any financial incentives / salary to the SEMPL Travel Coordinators. All payments against the services provided by SEMPL (including SEMPL Travel Coordinators) within India and / or outside of India have been made by HMC in favour of SEMPL in India in Indian Rupees either through Cheque and/or NEFT against the invoices raised by SEMPL in favour of IIMC SEMPL, being a specialist third party provider in travel, event management and logistics arrangements, is required to ensure that all payments pertaining to travel / event management / logistics arrangements within India or outside India are in full compliance with all applicable rules and regulations as applicable (including Customs Act, 1962, Foreign Exchange and Management Act). SEMPL is an independent third party service provider, as such the Appellant and/or HMC is neither obligated nor required under any law to ensure that whether or not SEMPL is in contravention of applicable laws or enquire as to how and in which manner SEMPL is settling payments of its vendors / suppliers within India or outside of India. 2.14. As per the Company's poli....
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....ount that could be carried out of India by an individual passenger without the need to declare it was recovered. It is Mr. Amit Bali who ostensibly carried forex in excess of the prescribed amount on several past occasions, and failed to declare it to customs on all occasions. xxxxxx. 58.6 It is clear that Mr. Amit Bali (Noticee No. 2) was the one required to approach customs authorities in the course of his departure for international destinations to declare any currency in excess of the prescribed amount. This he admittedly failed to do in respect of the currency seized from him. xxxxxxxx. Mr. Bali's inculpation rests heavily on recovery of forex from his possession. He might have been carrying out a business function of behalf of M/s SEMPL on the day of his interception and on all previous occasions, but he was in undeniably in possession of forex, and that makes him liable. I find his actions to be willful. xxxxxxxxxx 58.10 One can now turn to examine the rule, if any, of Mr. Pawan Kant Munjal. I might as well start with the concept of beneficial owner, which has been relied upon to implicated Mr. Pawan Kant Munjal, Noticeee No. 5. The concept is rela....
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....idence that the Noticee No. 5 or HMC exercise any financial/ shareholding interest in M/s SEMPL or exercises effective control of Noticee No. 5 in / over M/s SEMPL, Noticee No. 5 being the CEO and Chairman of HMC, to whom the service have been provided by M/s SEMPL, cannot be said to become the "beneficial owner" of M/s SEMPL in any which way." (emphasis supplied) 5. The Department filed an appeal before the Commissioner (Appeals), who by order dated 17.07.2019, modified the order passed by the Additional Commissioner and the relevant findings recorded by the Commissioner (Appeals) are as follows: "6.4 The Respondent in his defence has mainly relied upon the argument that the concept of beneficial owner does not apply in this case. In terms of Section 2(3A) of the Customs Act, 1962 beneficial owner means any person on whose behalf the goods are being imported or exported or who exercises effective control over the goods being imported or exported. From the facts of this case and statement of various persons it is clear that the Mr. Amit Bali and/or other employees of SEMPL did not carry the subject foreign currencies for their own benefit or to further the business S....
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.....S. Ananth made the following submissions: (i) The definition of 'beneficial owner'in section 2(3A) of the Customs Act covers those cases where the owner of the goods is not available and a particular act is being carried out at the behest of some other person. Thus, if the owner of goods is available, as in the present case, the concept of 'beneficial owner'cannot be applied. The Commissioner (Appeals) has, therefore, wrongly applied the concept of 'beneficial owner'in the present case and passed an order against the appellant; (ii) In the facts and circumstances of the case it is more than apparent that forex in excess of the prescribed amount was recovered from Amit Bali and in fact this finding was also recorded by the Additional Commissioner, which finding has not been disturbed by the Commissioner (Appeals); (iii) The entire case against the appellant is mischaracterization of 'beneficial owner'based on the use of the foreign exchange in the past as well as the intended use during the visit to London and Baltimore on 20.08.2018; (iv) The use of the foreign exchange including foreign currency is directly linked to the purpose for which the s....
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....Yadav, learned authorised representative appearing for the Department, however supported the impugned order passed by the Commissioner (Appeals) and made the following submissions: (i) The present appeal filed under section 129A of the Customs Act is not maintainable in view of what is stipulated in the first proviso to section 129A of the Customs Act as the issue relates to export of baggage; (ii) As per section 2(3A) of the Customs Act, the appellant was the beneficial owner of foreign currency which was meant to be used for his personal expenses while abroad as per his requirement and direction; (iii) Even in the first statement recorded on 20.08.2018 under section 108 of the Customs Act, Amit Bali had clearly stated that the seized foreign currency belonged to the appellant; (iv) The entire money which was carried by Amit Bali was to be used by the appellant mainly for his personal use; (v) SEMPL had a yearly turnover of Rs. 200 crores and between 2014 and 2018 it had business of Rs. 785.96 crores from HMC and that to without any written contract; (vi) It is a fact that the appellant was known to Hemant, (Director of SEMPL) ....
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.... importation and the time when they are cleared for home consumption, includes any owner, beneficial owner or any person holding himself out to be the importer." 15. A deeming fiction has been introduced in the concept of 'beneficial owner'as the definition seeks to cover the loop hole where the actual owner of the goods was not available but the particular act was being carried out at the behest of some other person. This would mean that when the 'owner'of the goods is available, the concept of 'beneficial owner'under the deeming fiction of section 2(3A) of the Customs Act would not be applicable. 16. The Additional Commissioner, as noticed above, in the order dated 19.11.2019 examined the concept of 'beneficial owner'and noticed that this concept was invoked because the foreign currency was not recovered from the possession of the appellant. The Additional Commissioner held, after examination of the statements recorded under section 108 of the Customs Act, that HMC was a mere recipient of the services provided by SEMPL and against such services invoices were raised by SEMPL; and when the appellant was not even aware that any cash was carried by Amit Bali, the appellant cann....
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.... Question 2:- When and where did you receive the said Currency? Answer:- I received the said Currency at my office i.e. M/s Salt Experience & Management Pvt. Ltd., Mudit Square Building, 2nd Floor, Plot No. 24, Institutional Area, Prempuri, Sector-32, Gurgaon from Sh. Hemant Dahiya, Owner of the firm on 19.08.2018. Question 4:- Who has given you the whole tour Programme of Sh. Pawan Kant Munjal? Answer: Sh. Pawan Kant Munjal has informed me one week ago on my mobile to arrange a tour programme and expenses for his coming scheduled tour. He has told me on mobile to arrange 5 days tour for London and 5 days tour for New York. Later on Sh. Hemant Dahiya has also informed me about the same telephonically. Question 5:- What was the purpose of visit of Sh. Pawan Kant Munjal to London and New York? Answer:- Sh. Pawan Kant Munjal has to attend some business meeting in London and New York. Question 6:- Did you have kept the said foreign currency in your hand baggage? Answer:- Yes, I had kept the said foreign currency in my hand baggage. Question 11:- Why this time you were carrying such a huge amount of foreign cur....
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....a to look after the expenses of Shri Pawan Kant Munjal of M/s. Here Moto Corps. But you have stated above that the seized foreign currency was given from your office? Answer 14: I state that this foreign currency was to be used for the event of M/s Hero Moto Corps to be held at Budapest thus l stated in my statement dated 20.08.2018, that this seized foreign currency belonged to Mr. P. K. Munjal of M/s Hero Moto Corps. Further, in tension took the name of Mr. Hemant Dahiya, in my statement dated 20.08.2018, that he gave me this much foreign currency instead of Mr. Girijesh Kashmira. Statement of Pawan Munjal (appellant) 20.08.2018 Question 1:- What was the purpose of your visit to London? Answer: I had meetings with some business clients at London. Then after I had the plans to visit to Baltimore for some business meetings. Question 2:- Who was travelling with you during the trip to London? Answer: Mr. Amit Bali was assisting me during my business travel to London. Question 5:- Were you aware that Mr. Amit Bali was carrying Foreign Currency? Answer: No, I was not aware about the above said fact. 27.03.2019 ....
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.... any act/statute including the Customs Act, FEMA, Income Tax Act, Companies Act etc., while executing any project abroad or in India. I further state that whatever expenses M/s SEMPL was incurring while executing the project, that were included in the bills raised to M/s HMC and M/s HMC was paying to us. In that process, in respect of the payments made by M/s. HMC to us, if there was any sort of violation of provisions of any Act that would be the responsibility of M/s HMC. Statement of K. R. Raman (Finance Head) 21.08.2018 Question 6:- What is the normal procedure for release of funds for organizing any event? Answer: Usually Client Servicing Team of our company finalizes the complete details with our clients and send Job Cost Analysis (JCA) to the finance department requesting for approval of cost and release of funds. Question 7:- Had Client Servicing Team of your company sent Job Cost Analysis (JCA) to Finance department for organizing the upcoming event at London and USA for your client M/s Hero Motocorp Limited this time? Answer: No, this time Client Servicing Teams of our company hadn't sent Job Cost Analysis (JCA) to Finance departm....
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.... Hemant Dahiya wherein he has stated that Amit Bali was issued the forex travel cards purchased in names of other employees of M/s. SEMPL, who did not even travel abroad, and that Amit Bali had used those forex travel cards to meet out the expenses of Mr. Pawan Munjal during his foreign visits, on yours and Hemant Dahia's instructions. What do you have to state in this regard? Answer 2: I have seen the statement dated 11.03.2019 of Mr. Hemant Dahiya and have put my dated signature on the same. In this regard, I state that I used to get the details of team members who were travelling for any project along with the estimated figures towards expenses from Mr. Hemant Dahiya and he used to ask me to arrange the funds in the given names. I then used to arrange the foreign exchange in the form of cash or forex travel cards through the cashier of the company by way of purchase in the given name, who were to travel, out of the funds of the company. Sometimes, these travel cards, issued in name of other employees, were also given to Mr. Amit Bali, by the cashier on my approval and this used to be in the knowledge of Mr. Hemant Dahiya also. However, I was not aware whether team m....
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....t Bali. I handed over the said foreign currency to Mr. Amit Bali in the afternoon of 18.08.2018 at the office of M/s. SEMPL. Question 15: When and how did Mr. Kumar Rajesh Raman give you instructions for handing the said foreign currency to Mr. Amit Bali? Answer 15: Mr. Kumar Rajesh Raman telephonically instructed me on my mobile no. 9582299646 from his mobile no. 9811900563 in the morning of 18.08.2018; however, I do not remember the exact time. Question 16: Were you, Mr. Amit Bali and Mr. Kumar Rajesh Raman in office throughout the day on 18.08.2018? Answer 16: I was in office till evening. Mr. Kumar Rajesh Raman was not in the office on 18.08.2018. Mr. Amit Bali came to office in the afternoon on 18.08.2018 and left the office immediately after receiving the said foreign currency amount from me. 20. The facts alleged by the appellant in the memo of appeal have to be tested in the light of the statements recorded under section 108 of the Customs Act. 21. The statement made by Amit Bali needs to be examined first. In the statement recorded on 20.08.2018, when asked whether the said recovered currency belonged to him, Amit Bali stated that ....
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.... visit of the appellant in connection with the meeting with distributors of HMC. He also stated that he had asked Amit Bali to accompany the appellant and make necessary arrangements to organise the meetings and since HMC was a top client of SEMPL, it looks after the accommodation, transportation and arrangements for the official meetings. Hemant Dahiya also stated that it was the regular practice for SEMPL staff to carry foreign currency for meeting the expenses of the client. According to Hemant Dahiya, there was an oral agreement between HMC and SEMPL for organizing events and it was the responsibility of SEMPL to ensure compliance of Acts/ Statues, including Customs Act, FEMA, Income Tax Act and Companies Act while executing the project abroad or in India. Hemant Dahiya further clarified that expenses incurred by SEMPL while executing the project were included in the Bills raised to HMC and HMC paid the amount. 24. K.R. Raman, the Finance Head of SEMPL, in his statement made on 21.08.2018 stated that on 17.08.2018 he had received a call from the Client Servicing Team regarding the request for funds to organize events for HMC abroad. He further stated that the unused currency....
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....s not arise. The Commissioner (Appeals), therefore, was not justified in reversing the finding recorded by the Additional Commissioner that the concept of 'beneficial owner'would not arise in the facts and circumstances of the case. 28. It further transpires that HMC had arranged SEMPL as the service provider for the event management outside India and it was the responsibility of SEMPL to acquire foreign exchange which was acquired by SEMPL and handed over to Amit Bali for discharge of the contractual obligation of organising and arranging meetings. The Commissioner (Appeals) has merely on conjectures and surmises assumed the liability of the appellant in relation to the export of foreign currency. 29. The foreign exchange for corporate purposes has wrongly been treated as personal expenses merely because the appellant is the Chairman and Managing Director of HMC, which had organized, through SEMPL, events and meetings as part of its marketing and promotional activities. The meetings and events would benefit SEMPL and its business and it would not be correct to hold the appellant as the 'beneficial owner'. 30. This apart, the acquisition and drawl of foreign exchange is in....
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....he quantity required to be unloaded at that destination; (c) payment of drawback as provided in Chapter X, and the rules made thereunder: Provided Further: xxxxxxxxxxx 32. A bare perusal of the aforesaid section 129A of the Customs Act indicates that an appeal shall not lie to the Tribunal if the order said to be assailed pertains to goods imported or exported as baggage. 33. Baggage has been defined under section 2(3) of the Customs Act as follows: "2(3): 'baggage'includes unaccompanied baggage but does not include motor vehicles;" 34. Goods have been defined under section 2(22) of the Customs Act as follows: "2(22): "goods" includes- (a) Vessels, aircrafts and vehicles; (b) Stores; (c) Baggage; (d) Currency and negotiable instruments; and (e) Any other kind of movable property;" 35. The issue as to whether an appeal would be maintainable or not before the Tribunal came up for examination before the Tribunal in Commissioner of Customs, Kolkata vs. Vinod KR. Shaw [2003 (154) E.L.T. 205 (Tri.- Kolkata)]. The revenue had filed an application for rectification of mistake in the final order dat....
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....separately, it would appear that the baggage includes unaccompanied baggage but does not include motor vehicles. Here, this baggage is completely different from the currency notes. Therefore, the learned Tribunal has not decided wrongly that baggage can be synonymous with the currency notes though Smt. Sarkar wants to persuade in other way. When the case proceeds on the basis of baggage it has to be understood whether the subject matter was baggage or not. The subject matter was Indian currency. We therefore uphold the decision of the learned Tribunal." 37. The Ahmedabad Bench of the Tribunal in Rajesh Kumar Ishwar Parikh vs. C.C.- Ahmedabad [Customs Appeal No. 10501 of 2019 decided on 11.12.2020] also examined this issue relating to maintainability of the appeal before the Tribunal and held that that the appeal would be maintainable. The observations are as follows: "(A) As regard the maintainability of appeal before this tribunal I find that this tribunal has considered the very issue in the following judgments:- • Shambhunath Rana vs. Commissioner of Customs, Kolkata, 2003 Taxman 1152 (Kolkata-Cestat); • Pankaj Kumar Tripathi vs. Co....