TaxTMI 
TaxTMI 
2022 (9) TMI 916
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....esh Savaliya whereby it was found to him carrying 9 brown packets in the presence of panchas under panchanama dtd. 04.06.2019. The officers opened the packet and found the same contained 47 gold bars. The officers seized the said gold under Seizure memo dated 04.06.2019. Statement of Shri Jignesh Savaliya was recorded wherein he stated that the said gold bars were given to him by a person named Shri Lokesh Sharma and he was supposed to hand over the same to Shri Rutugna Trivedi outside the Airport terminal. The officers further carried out the investigation and the evidences in the form of statements of persons involved in smuggling of gold, documents recovered after searches carried out at various locations, documents recovered and retrieved from the Mobile phones of various persons involved in smuggling of gold, data storage devices recovered from the residence of Ms. Nita C Parmar and also the email recovered from account of Shri Jignesh Savaliya and Shri Jitendra Rokad reveal that a Gold smuggling racket was orchestrated and operated by Shri Rutunga Trivedi, his wife Smt. Hina Rutunga Trivediand their employee and key associate Ms. Nita C Parmar. This smuggling activity was aid....
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.... procure Gold in Dubai and to smuggle the same into India. Thus it appears that Appellant was knowingly involved in smuggling of gold into India which he had reasons to believe the smuggle under Section 111 of the Customs Act, 1962. After following due process, the adjudicating authority vide impugned order dated 29-11-2021 confirmed the charges and demands proposed in Show Cause Notice. He imposed the penalty of Rs. 50,00,000/- under Section 112(b)(i) of the Customs Act 1962 on the appellant. Being aggrieved, the appellants preferred appeal before this Tribunal. 3. Shri Hardik Modh, Learned Counsel appearing on behalf of Appellant submit that Ld. Commissioner erred in imposing penalty on Appellant. He relied upon the statements of Shri Mehul Bhimani and Shri Jitendra Rokad recorded on 28.06.2019 and 29.06.2019. Upon perusal of these statements, nowhere it has been stated that the Appellant had knowledge about the use of the fund in smuggling of gold. Shri Jitendra Rokad in his statement dtd. 29.06.2019 stated that after deducting expenses, surplus profit was distributed among Shri Mehul Bhimani, Shri Jitendra Rokad and Shri Rutugna Trivedi on equal ratio i.e. 33% of profit each....
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....00 towards interest for the period from 2^nd September 2013 to 2nd October 2013. There is no other documents to show that the Appellant financed to Shri Rutugna Trivedi for smuggling of gold in India. During the course of recording his statement, the Appellant categorically stated that Shri Mehul Bhimani required funds in cash and therefore he arranged Rs. 1 crore for short period with interest. After one month, the amount was returned to the Appellant. Merely entry found on the document retrieved from Pen Drive of Ms. Nita Parmar, it does not mean that the Appellant financed Shri Rutugna Trivedi or any other persons for smuggling of gold into India or had knowledge about smuggling of gold into India. 3.5 He also submits that Ld. Commissioner heavily relied upon the documents retrieved from Pen Drive seized from residential premises of Ms. Nita Parmar on 26.06.2019. Basis on such documents it is held that the Appellant financed to Shri Rutugna Trivedi for smuggling of gold. The Appellant denied that he financed to Shri Rutugna Trivedi for smuggling of Gold. The Appellant is not concerned with the documents/ emails retrieved from Pen Drive seized from residential premises of Ms. ....
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....r has reason to believe are liable to confiscation under section 111, shall be liable, - (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is greater; From the perusal of above provision, it will be seen that for imposition of penalty on a person under Section 112(b), the following conditions must be satisfied. (i) The person must have acquired possession of or must be in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which are liable for confiscation under Section 111 of Customs Act, 1962. (ii) The person must have knowledge or have reason to believe that the goods acquired by him or dealt with by him in the manner as mentioned above, are liable for confiscation under Section 111 i.e. he h....
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.... remains unanswered by the Noticee. The allegation that the amount had been funded to Shri Rutugna Arvindkumar Trivedi is fortified by the fact that the expenses incurred towards interest on such amount has been reflected to the records pertaining to the activity of smuggling of gold. It is also pertinent to note that Shri Jitendrakumar Dhanjibhai Rokad and Shri Mehul Rasikbhai Bhimani were also involved in financing the activity of gold smuggling. Such circumstantial evidence is a pointer that Noticee 18 had provided funds of Rs. 1 crores to Shri Rutugna Arvindkumar Trivedi. "In the light of the above documentary evidence and discussion , I find that Noticee No. 18 has knowingly funded an amount of 1 Crore to Shri Rutugna Arvindkumar Trivedi in the activity of smuggling of gold. I have already come to the conclusion that such gold is covered under the category of prohibited goods and is liable for confiscation in terms of the provisions of Section 111 of the Customs Act, 1962 in my discussion at paras 119.20 to 119.20.8 hereinabove. Therefore, I find that Noticee No. 18 has concerned himself in selling or purchasing and dealing with any goods which he knew were liable to ....
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....ince Mehul Bhimani is my relative. I used to arrange for funds in cash to him whenever he was in need. I have given cash 2-3 times total amounting to Rs. 01 crore approx. this amount was given to them on interest. Theses amount was given to them 6-7 years back and I have not maintain date wise account for the same. Mostly this amount was given for 1-2 months and I have received back full amount alongwith interest and no amount is pending with them now. On being asked I state that I don't have any other business relations with Shri Mehul Bhimani and Shri Jitendra Rokad. Now, on being asked about one Shri Rutugna Arvindbhai Trivedi, I state that I don't know him personally, but it was informed by Shri Mehulbhi that he (Mehul Bhimani) and his friend Jitendra Rokad used to invest with him in his company Nivid & Cadillac at Dubai. On being specifically asked regarding interest rate charged by me, I state that we generally charge interest rate ranging between 18-24% per annum. Further, on being specifically asked I state that I have not dealt in gold with Shri Mehul Bhimai, Jitendra Rokad & Rutugna A Trivedi anytime. On being further asked I also state that I d....
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....acted their statements on 01.07.2019 immediately upon receipt of first opportunity which was sent through Central Jail. The Respondent acknowledged such facts regarding retraction of the statements by Shri Jitendra Rokad and Shri Mehul Bhimani. 5.8 It is also fact on record that after recording the statement of the Appellant on 03.09.2019, the investigating authority did not record statement of Shri Mehul Bhimani and Shri Jitendra Rokad to ascertain the correct facts. 5.9 Similarly, statement of and Shri Rutugna Trivedi and Ms. Nita Parmar was recorded on 14.10.2019 wherein they were not even questioned related to the sheet retrieved from the pen-drive recovered from her residence regarding sheet in dispute. 5.10 The above facts stated by the Appellant in their statement nowhere disputed by the department. From the evidence available on record and statement of Appellant it is clear that he was in normal course lending the fund. However, the activity of financing of fund has been turned by the Ld. Commissioner into direct participation in the conspiracy to smuggle gold. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge on the part of the ....
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....d gold smuggling activity. Merely because name of Appellant was appearing in printout sheet retrieved from the pen drive of Ms. Nita Parmar, that would not ipso facto make the appellant in any way privy to the commission of any offence with reference to the alleged gold smuggling activity. It will be unfair to fasten the appellant with penal consequences merely on the basis of a printout sheet recovered from the third party and statements of third party. The said printout at the most shows that Shri Rutugna Trivedi has borrowed money from the appellant, this is not under dispute. Now how that borrowed money was accounted for by borrower and use thereof is not relevant to the appellant. Moreover we also observed that during the investigation statements of Ms. Nita Parmar, Shri Mehul Bhimani, Shri Jitendra Rokad and Shri Rutugna Trivedi were recorded whereby they did not say that the Appellant also involved in alleged activity of gold smuggling or Appellant had knowledge about smuggling of gold into India or financed them for smuggling of gold. From the above-reproduced section 112(b) it can be seen that penalties can be imposed only if the individual is in knowledge of the act of....
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.... of the Central Excise Rules, 1944 and Rule 26 of Central Excise Rules, 2002. Relevant extracts of the provisions of Customs Act, 1962 Central Excise Rules, 1944 and Central Excise Rule, 2002 are reproduced hereunder:- "Section 112 Penalty for improper importation of goods etc. (a) **** (b) who acquires possession of or is in any way concerned in carrying removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 shall be liable - Rule 209A of the Central Excise Rules, 1944: "Rule 209A. Penalty for certain offences. - Any person who acquires possession of, or is any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater." Rule 26 of the Central Excise Rules, 2....
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....he issue. In the said judgment, it is held that in the given situation, if the assessee is only issuing invoices wherein there is no movement of the goods, they cannot be visited with penalty under Rule 209A." 5.15 The Larger Bench of the Tribunal in the case of Steel Tubes of India Ltd. Vs. Commissioner of Central Excise - 2007 (216) ELT 506, after referring to the decision of the Hon'ble Bombay High Court in the case of Jayantilal Thakkar and Co - 2006 (195) ELT 9 (Bom.) held that for imposition of penalty under Rule 209A of the Central Excise Rules, 1944, the person must have dealt with excisable goods with knowledge that they are liable for confiscation. 5.16 Similarly, in the case of R.C. Jain Vs. Commissioner of Central Excise and Service Tax - 2016 (334) ELT 115, the Hon'ble Tribunal held that penalty under Section 112(b) of the Customs Act cannot be imposed if the assesse has not dealt with or transported goods physically in any manner. 5.17 The Tribunal in the case of D. Ankneedu Chowdhry Vs. Commissioner of Customs - 2004 (178) ELT 578 held that "in any other manner dealing with' used in Section 112(b) of the Customs Act has to be read ejusdem generis with the pr....