TaxTMI 
TaxTMI 
2023 (1) TMI 1000
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1st petitioner - M/s ib Track Solutions Private Limited ('Company' for short), a Company registered under the Companies Act, 1956 is associated with procuring and supplying of e-seals with Radio Frequency Identification ('RFID') technology for exporters from India. The 2nd petitioner is the Director of the 1st petitioner/Company. The 1st petitioner/Company claims to have procured unique technology which was the first of its kind for the purpose of exporting cargo with tamperproof seals. The said seals were made to maintain highest level of safety and security. The seals were manufactured by M/s Leghorn Group SRL, Italy and the Company is the authorized distributor of the said seals and the seals are claimed to have been certified by the International Standard Organization (ISO) as high-grade e-seal for containers and M/s Leghorn Group is said to be the pioneer in the field of manufacture and supply of e-seals across the world. RFID is an automatic identification mechanism which is attached to a container and can be accurately read by a handheld device that is operated by a Customs Officer at the relevant port gate. 4. The Union Government intended to implement electronic sealing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....72 of 2019 comes to be registered on 16-07-2019 for offences punishable under Sections 66C and 72A of the Information Technology Act, 2000 and Sections 406, 420 and 34 of the IPC. The Company and the Director/2nd petitioner are arrayed as accused Nos. 1 and 2. 7. The allegation in the complaint was that the Company was one of the vendors of RFID e-seals. On verification it was discovered that e-seals supplied by the Company were passing customs clearances even when it was not in a locked condition. It was further alleged that e-seals were tampered regularly and they were being scanned at a distance of few meters without being in locked condition and e-mails of the Company indicated that they had switched off the tampering alerts that led the containers with tampered seals also to get exported. On these facts, it was alleged that the Company had intentionally submitted the reports which had serious ramification on the economy and security of the nation. 8. It appears that accused No.3, as the Managing Director of the Company, had approached this Court calling in question the aforementioned FIR in Criminal Petition No.8197 of 2019. A co-ordinate Bench of this Court by its order dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... He would submit that it is a matter of investigation. 10.2. The learned Central Government Standing Counsel would contend that steps are being taken to file necessary application to recall the order passed by the co-ordinate Bench. As per the records, the DRI had not even been notified before rendering the judgment by the co-ordinate Bench. He would further emphasize that revenue loss is one among the possibilities arising out tampering of seals, but the major concern is the risk to the national security as maritime containers need to be secure and locked to prevent pilferage and tampering of the goods while on its way to its destination. Seal integrity, according to the learned counsel, is so essential to ensure that contraband goods - arms, ammunition and drugs - are not crossing the borders. 11. I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record. 12. The afore-narrated facts are not in dispute and are therefore, not reiterated. The Company was in-charge of manufacture of RFID e-seals and tampering alert was in the control of the Company in which the 2nd petitioner is the Director. It becomes ger....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g was implemented on 28-08-2017 for containers by exporters under self-sealing procedure prescribed. Clauses of the circular which are germane are extracted hereunder for the purpose of quick reference and they read as under: "4. Application, Record Keeping and Data Retrieval System: (a) It is clarified that the information sought from the exporter in para-9 (vii) of the circular 26/2017 - Customs shall now be read as - * IEC (Importer Exporter Code) * Shipping Bill Number * Shipping Bill Date * e-seal number * Date of sealing * Time of sealing * Destination Customs Station for export. * Container Number. * Trailer - Truck Number. It is further clarified that the information need not be mounted "in the electronic seal" but tagged to the seal using a 'web/mobile application' to be provided by the vendor of the RFID seals. Data once uploaded by the exporter should not be capable of being overwritten or edited. (b) All vendors will be required to transmit information in para (a) above to RMD and the respective destination ports/ICDs of export declared by the exporter. The arrangements for transmission of data may be worked out in consultation with the RMD and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g sales. Where the certification is found to comply with the requirements of the ISO standard, the names of such vendors shall be put up on the Board's website (www.cbee.gov.in) for ease of reference of the trade and field formations, as soon as they are received. 3.2. The vendors shall also produce a contract or communication between the vendor and manufacturer, to serve as a link document and undertake that the seals for which ISO certifications are submitted are the same seals pressed into service. 3.3.Any time a vendor changes his manufacturer-supplier, he shall provide the documentation referred in para-3 of circular 36/2017-Customs to the CBEC, before offering the seals for sale. 3.4. Certifications have also been sought regarding the type/specification of the web-hosted application. While each vendor may develop and design their own web-enabled application, the data elements prescribed under para-4 (a) of Circular 36/2017Customs have to be incorporated. For the purposes of consistency in process of communication with the customs station and the RMD, each vendor shall provide information as specified in para-4(b) of Circular 36/2917-Customs to the department by email in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed till further orders. In addition to the above mentioned two vendors, M/s Leghorn Group, Italy is also supplying RFID e-seals to M/s Perfect RFID Technologies Ltd. 5. In view of the above, you are directed not to sell RFID e-seals procured from M/s Leghorn Group, Italy to the exporters till further orders and recall the sold but not used RFID e-seals immediately from the exporters to whom it has been sold." (Emphasis supplied) The communication was clear that the DRI has critically examined RFID e-seals supplied by M/s Leghorn Group, Italy and they have been found to be compromising in security requirements and was a serious issue and therefore, stopped all seals made by M/s Leghorn Group. Later, the crime come to be registered and a search is made in the office of the Company and at the time the seals are seized and were sent to their examination where it was found that since March 2018 the testing commenced and approximately 832 seals of the Company were faulty. The tamper status of the seals was covered up as the tamper alarm had been switched off. 13. Statements of the 2nd petitioner/accused No.2 and one Sri.Arjun Gorur were recorded by the Investigating Officer. The sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tifications or about such tampered eseals not coming to the knowhow of the Customs? Ans.18: The Customs Department does not know about this fact since we had switched off the Tamper alert Notifications. Further, we had not informed the Customs Department or anyone else in the Government or anyone else, about such switching off of Tamper alert Notifications or about such tampered e-seals not coming to the knowhow of the Customs. Q.19: From the above, it appears that consignments with eseals, shown as not tampered have been exported out of India, but the e-seals were actually tampered as per your records, during this period. Please confirm. Ans.19: The e-seals were tampered as per our records but they were shown as not tampered as per Customs records, and such consignments have been exported out of India during the period from June 2018 to October, 2018. Q.20: Who took the decision of switching off of the Tamper alert Notifications on your known? Ans.20: Our entire Board of Directors are aware of this decision and it was a decision by the Board. Q.21: Is there any written communication between you and the Customs Department or any other Department about such turning off o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etitioners that the 2nd petitioner has got nothing to do with the issue pales into insignificance. If all the members of the Board - Directors, Managing Director and every other member - were aware of the deliberate switching off tampering signals, it cannot be said that the Company alone is responsible. The Directors or the Managing Director, as the case would be, were also responsible for their acts and the entire Board was aware of what has happened. 14. Such containers passing muster without getting scanned through the customs can result in a catastrophic effect to the security of the nation. Security could be economic, defence or even narcotic. What passes through the container if not detected can definitely pose a serious threat to any of these to the nation. The answers given by the 2nd petitioner would shock the conscience of the Court, at what he says that "they did it in their business interest". Such business houses generating vested interest of business cannot be permitted to 'sacrifice the interest of the nation', as the security of the nation and its interest, economic or otherwise, is paramount in comparison to any vested interest of any business house in the nation....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... required to be considered and whether a cognizable offence is disclosed or not is required to be considered. However, thereafter when the statements are recorded, evidence is collected and the charge-sheet is filed after conclusion of the investigation/inquiry the matter stands on different footing and the Court is required to consider the material/evidence collected during the investigation. Even at this stage also, as observed and held by this Court in a catena of decisions, the High Court is not required to go into the merits of the allegations and/or enter into the merits of the case as if the High Court is exercising the appellate jurisdiction and/or conducting the trial. As held by this Court in Dineshbhai Chandubhai Patel [Dineshbhai Chandubhai Patel v. State of Gujarat, (2018) 3 SCC 104 : (2018) 1 SCC (Cri) 683] in order to examine as to whether factual contents of FIR disclose any cognizable offence or not, the High Court cannot act like the investigating agency nor can exercise the powers like an appellate court. It is further observed and held that that question is required to be examined keeping in view, the contents of FIR and prima facie material, if any, requiring n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a Gupta, Rs 25 lakhs was paid and the possession was transferred to her itself is seriously disputed. It is required to be noted that in the registered agreement to sell dated 2710-2010, the sale consideration is stated to be Rs 25 lakhs and with no reference to payment of Rs 25 lakhs to Ms Munni Devi and no reference to handing over the possession. However, in the joint notarised affidavit of the same date i.e. 27-10-2010 sale consideration is stated to be Rs 35 lakhs out of which Rs 25 lakhs is alleged to have been paid and there is a reference to transfer of possession to Accused 2. Whether Rs 25 lakhs has been paid or not the accused have to establish during the trial, because the accused are relying upon the said document and payment of Rs 25 lakhs as mentioned in the joint notarised affidavit dated 27-10-2010. It is also required to be considered that the first agreement to sell in which Rs 25 lakhs is stated to be sale consideration and there is reference to the payment of Rs 10 lakhs by cheques. It is a registered document. The aforesaid are all triable issues/allegations which are required to be considered at the time of trial. The High Court has failed to notice and/or co....