TaxTMI 
TaxTMI 
2008 (5) TMI 251
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.... the passenger was wearing two wrist watches on each of his wrists and had concealed something in the socks worn by him. Thus, independent panch witnesses were called and before them the passenger admitted of having concealed the wrist watches. The personal search of the passenger resulted in the recovery of 13 watches 6 out of these 13 watches, were recovered from the bundles concealed inside the socks worn, 3 from the pockets of the coat/jacket worn by him and four were worn on wrists. The passenger under the escort of officers and panch witnesses was taken to the office of the Air Intelligence Unit for detailed examination of his baggage and further investigation. The said 13 watches of Cartier/Jaeger-Le Coultre were seized by the officers under the reasonable belief that the same were liable to confiscation under the provisions of Customs Act, 1962. Two mobile phones were also recovered and seized as the passenger had stated that the same were purchased in Dubai. The officers had further taken over 48 Guarantee cards of 'Baume & Mercier' wrist watches recovered from the baggage of the said passenger for investigation purpose. The passenger had replied in the presence of panch w....
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....t the seized goods were not concealed but kept in his black bag; that he did not declare the goods on gate pass because before he could write that, the officers intercepted him and took over his gate pass and passport. The passenger, however, could not tell the name of the officer to whom he had approached for declaration at Red counter nor he could give the description or no. of the counter. He refused to answer any more questions and did not even put his signatures at the end of the statement despite the fact that the same was recorded by him in his own handwriting. 1.7 In his affidavit dated 29-6-2004, the passenger had reiterated his contentions made in his earlier letter and statement. He also intimated that the affirmations made by him in the said affidavit be treated as statement given under Section 108 of the Customs Act, 1962. 1.8 However, in his subsequent statement dated 30-6-2004 his stand was different. He changed his stand to the effect that he was an employee with M/s. Khalba Computers and being representative of that firm normally took the watches on behalf of his employer for delivering them to their clients. He further stated that his company had no business in ....
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....witnesses on 16-9-2004, however, revealed that the descriptions of the watches mentioned in the said two bills did not match with the descriptions of the seized watches. 1.12 In their statements dated 1-9-2004, both the panch witnesses viz., S/Shri Atul Suresh Shedge and Suresh Kumar Essacki, stated that they had seen the recovery of watches, concealed on person of the passenger Ikram Nisar Chand, near the Exit Gate. They had also seen recovery of two mobile phones. The said items were seized by the customs officers in their presence. They further stated that the said passenger caused injuries upon himself with broken glass pieces and as he was bleeding profusely he was taken to the hospital by the officers for treatment. They, therefore, affirmed that they were witness to the proceedings for seizure and for which the panchnama was correctly drawn 1.13 Scrutiny of the passport indicated that the passenger had made 19 visits abroad from Jan, 2004 to June, 2004. Scrutiny of the air ticket taken over from the passenger revealed that it was purchased from M/s. Cozy Travels, Mumbai. Partner of Cozy Travels, Shri Rajesh Punjabi had submitted invoices for 11 such tickets issued between ....
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....ements on the issues. Similarly, Abedulla Kadiwala also did not appear before the department despite the fact that he was issued summons to appear on 17-9-2004, 24-9-2004, 1-10-2004 and 8-10-2004. 1.19 The facts, therefore, indicated that Shri Ikram Nisar Chand had attempted to smuggle the seized goods in India, which was evident from his option for clearance though green channel, the manner of concealment of goods and no declaration made on the Customs Gate Pass. His various representations and statements claiming that the goods were for transshipment purpose were devoid of merit as the same were found neither convincing nor factual. 1.20 In terms of para 2.20 of the Foreign Trade Policy, a passenger was allowed to import only bona fide household goods and personal effects in his baggage. Import of goods of commercial nature in personal baggage was not allowed. Further, in terms of provisions of Section 7 of Foreign Trade (Development and Regulation) Act, 1992, no import could take place without a valid Import Export Code unless exempted. Exemption from Code was permitted in terms of Para 3 of the Foreign Trade (Exemption from application of rules in certain cases) Rules, 1993, ....
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....edulla had stated in his statement dated 14-12-2004 that Shri Abedulla Kadiwalla met him around two and half years back and introduced himself as a watch dealer in Mumbai and probably gave his visiting card showing the name of his shop as 'World of Watches' mentioning that he (Abedulla) was interested in dealership of 'Baume & Mercier' watches for which Sahni was a dealer in India; that sometime in 2003, he (Sahni) had visited the shop of Shri Kadiwala in Santacruz, Mumbai, when Shri Kadiwala was also in the said shop and that whenever he (Sahni) called on phone Nos. 9821728532, 9821340236, 9892530027 and 971506958413 (Dubai). Shri Kadiwala himself answered the phone. The enquiries with the service providers had revealed that the said Indian telephone numbers were registered in the name of Shri Ikram Chand in India. 2.4 Abedulla Kadiwala had stated in his statement dated 19-12-2004, when he was intercepted at the Airport while smuggling out Indian/Foreign currency, that he did not remember whether he was travelling often with Shri Ikram Chand; that he did not deal in Foreign or Indian wrist watches in any manner in India; that he knew Shri Mukhtar who stayed in Madanpura; that he ....
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....t appeared that Shjri Mukhar Gojaria also misused the premises of M/s. Swiss Gallery to sell the wrist watches smuggled by the said Abedulla Kadiwala and Ikram Nisar Chand besides using the shop named "Watches of the World" at Santacruz, Mumbai, started in partnership with the said Abedulla Kadiwala. The wrist watches seized from the shop premises of M/s. Swiss Gallery, Mumbai, appeared to have been smuggled by the duo of Ikram Chand and Abedulla Kadiwala. 2.9 Watches were the goods notified under Section 123 of the Customs Ad, 1962, and the burden of proof that the watches under seizure were not smuggled in, lied on the person from whom the said watches were seized. Neither the owner nor the manager of M/s. Swiss Gallery could produce any documents showing legal procurement of the said watches. Therefore, it was prima facie evident that the watches under seizure had been smuggled into the country and cleared clandestinely without payment of duty. Ikram Nisar Chand and Abedulla Kadiwala were found involved in the smuggling of watches and therefore the circumstances discussed earlier, clearly indicated that the watches under seizure were out of the watches smuggled in by the said t....
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....r the entire period till he was shifted to Govt. Hospital from Airport on the fateful day i.e. 5-6-2004. Also they could not have remained present at all as they were not in possession of any I written permission from the watch-dog agency (C.I.S.F.) which monitors the entire Airport, including the entry to Customs areas even by the Customs officers on duty. 3.2 On behalf of Abedulla Kadiwala, it was submitted that: (i) While conducting the investigations in any smuggling case it was not wrong on the part of the investigating officers to question or interrogate any suspect person/s, but it was certainly wrong and absolutely illegal on the part of the investigating officers to infer the involvement of such suspect persons in spite of recording an exculpatory statement from them, not finding from them any incriminating thing or material connected with the case during the conduct of search of house etc. of such suspect person, more importantly when such a person was even not implicated by the main accused or by any other person interrogated in connection with the booked case. (ii) There was no cogent material against him and it was admitted by the investigating authorities that ther....
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....an expert. The rest one of Rado brand was procured from M/s. Swatch Group India, who are the importers as well as authorized distributors of the same in India, under proper documents. However, in the invoice, M/s. Swatch Group India had mistakenly mentioned the said watch as being a gents watch while the sale to them was of a ladies model. The department could verify this fact from M/s. Swatch Group, India. These watches were, therefore, not liable to confiscation. (ii) He had known Ikram Chand only for a year. Ikram Chand stayed in the same area where he resided and they used to meet at the time of prayers in the local mosque. Apart from that he had no connection with him and neither he nor the said shop ever had any business dealing with him of any nature whatsoever. (iii) He had known Abedulla Kadiwalla as a friend for around 7/8 years. They had started a partnership in the name of M/s. AM Trading located at Santacruz and started the retail outlet by the name of 'World of Watches'. The said firm dealt only in wrist watches of Indian Origin and there were no dealings whatsoever of foreign made wrist watches at all. Apart from the said partnership with Kadiwalla, he had no furth....
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....pert. The fake watches are indigenously made. (iii) Regarding allegation of dealing of smuggled watches by the said shop, he submitted that that there was no dealings of any nature whatsoever between him and/or the said shop and Shri Chand and Shri Abedulla. The allegations were made solely on the basis of the statements of Shri Mukhtar with regard to his relationship with the other two gentlemen. Even Shri Abedulla had nowhere stated having dealt with him or his shop. Thus the allegations based upon only the alleged relationship between Shri Mukhtar, in his personal capacity, and Shri Chand and Shri Abedulla could not be a reason to allege that either he and/or the said shop were concerned in dealing in smuggled wrist watches of foreign origin. (iv) The proceedings against them might be dropped and the seized seven watches returned to them. 4. Adjudicating authority held that: (i) The seizure panchanama dated 5-6-04: mentioned about all the happenings in details and it clearly brought out that Ikram Chanel had admitted the concealment of wrist watches in presence of independent witnesses. The said watches were recovered in presence of panchas. Regarding two mobile phones, the ....
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....use was that before declaring the same, the officers in plain clothes took his gate-pass and passport; to correct himself more, the passenger filed the affidavit dated 29-6-04 wherein he stated that he had reached the counter, he had stated his case, the uniformed officer accepted his version and was going to issue the detention receipt and meanwhile the plain clothes men stopped the uniformed officer. It was, however not stated by him as to why the gate pass was blank even after he had reached the counter and how the officer, according to him, accepted his version and was going to issue the detention receipt without the basic declaration of the passenger as required u/s. 77 of the Customs Act, 1962. (iv) The second story in his defence started with the say that he was the owner of M/s. Khalba Computers and his business was Import-Export of computer parts, mobile phones, wrist watches and crystal items. He had further claimed that he was sending his money through banking channels into India by which the Govt. of India was getting foreign exchange. Subsequently, he dropped that role and claimed that he was a paid employee of said company. Regarding, his claim that he was sending mo....
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....vided by his employers. But the examination of the air-ticket taken over from Ikram Nisar Chand revealed that it was booked through a travel agency named M/s. Cozy Travels, Mumbai. Statement of Shri Rajesh Punjabi, partner of M/s. Cozy Travels was recorded on 10-9-04 under the provisions of Section 108 of the Customs Act, 1962, wherein he inter alia stated that they had issued the tickets to the person named Shri Ikram Nisar Chand and also submitted the details of such tickets issued to him from 3-1-04 to 21-5-04, he stated that the tickets were personally booked by Shri Ikram Nisar Chand against cash payment; that another person named Shri Abedulla Kadiwala also used to visit his office along with Shri Ikram Nisar Chand for air tickets for the same flight sectors; that the tickets were collected either by 'Kadiwala' or 'Chand' against the cash payment. This evidence totally demolished the defence raised oy Ikram Nisar Chand about his illogical journey to Singapore via Dubai. Moreover, it also revealed that the tickets were not purchased by the company but by Ikram Nisar Chand himself in complicity with Abedulla Kadiwala, the noticee No. (viii) The department had compared and re-....
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....e No. 9821728532 and 9821340236 were obtained from the service providers. It was revealed that all these three phone numbers were in the name of Ikram Nisar Chand. Further, it was also revealed that those numbers were being called by at least two watch dealers to contact either Shri Ikram Nisar Chand or Abedulla Kadiwala. Those watch dealers were identified as M/s. Swiss Gallery, Mumbai and M/s. Jot Impex, New Delhi. During the statements, Mukhtar Ghojaria of Swiss Gallery was repeatedly asked about his relation with Shri Ikram Nisar Chand and Abedulla Kadiwala, but he maintained that he knew both these persons, but he denied that he had any business relations with them. He also admitted that he had met Shri Ikram Nisar Chand and Kadiwalla in Dubai, but only casually. Shri Gurinder Singh Sahni, Director of M/s. Jot Impex, New Delhi, in his statement recorded on 11-10-04 under the provisions of Section 108 of the Customs Act, 1962 had stated that he was a dealer in Baume & Mercier and Jaeger-Le-Coultre wrist watches and that he knew Abedulla Kadiwala and confirmed his phone numbers as 9821728532, 9821340236 and 9892530027. It was also revealed in the course of investigation that Shr....
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.... of which 12 assorted watches were meant for transshipment to Singapore during his journey a few days later and were to be delivered by him to a customer there. Since the appellant was not carrying any dutiable goods for local clearance and the wrist watches were meant for transshipment, logically the column in the customs gate pass requiring the passengers to fill the total value of the dutiable goods was left blank. The appellant on arrival approached the red channel and declared the goods to the proper officer for temporary detention. In between the conversation, the AIU officers interfered and dissuaded the officer at red channel to accept the request of appellant for temporary detention and took over the matter and foisted a false case against him with recordings of the fabricated and doctored incidents, which culminated in the absolute confiscation of the goods along with imposition of personal penalty of Rs. 2 lakhs on the appellant. (ii) While deciding the case, the adjudicating authority has not granted purposeful personal hearing to the appellant which dissuaded the appellant from presenting his case effectively to prove his innocence. When it was established by the defe....
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....ry, which falls flat in light of the records of Cooper Hospital and the statement recorded by the police officers from the appellant in Cooper Hospital on 5-6-2004. (c) The alleged par also records that the appellant, after being taken away to Cooper Hospital, was questioned about his Air Ticket. This is not possible because the panchnama itself narrates that after shifting of the passenger to Cooper Hospital, the remaining proceedings were conducted and concluded in the absence of the passenger. (d) The panch witnesses cannot, in absence of a valid permission from the security agency, enter the secured area and actually see the recovery. Therefore, a bald assertion by the panchas and the seizing officers that the panchas witnessed the recovery proceedings in the restricted area cannot be accepted without verification of the documentary evidence allowing them to remain present in the said restricted area. (v) In all the representations and statements, the appellant has not deviated from the fact of having declared his goods and wanting to carry the goods onwards for transshipment and not for home consumption. (vi) Even in the alleged seizure panchnama, the panch witnesses were ....
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....elled against him in both the show cause notices and the adjudication order be set aside. He may be allowed to transship the goods seized from him. 7. In their appeals, Shri Mukhtar Ahmed Gojaria and Shri Aftab Patel have re-urged the points that they had submitted before the adjudicating authority. They have assailed the order of adjudicating authority on the ground that despite submitting the fact that the 6 watches were indigenously made replicas, no effort was made to get those watches examined from the experts. They, therefore, submitted that the order was passed with applying proper mind. 8. In the appeal of Shri Abedulla Kadiwala, the points agitated are the same as agitated before the adjudicating authority. He has also stressed on the point of legitimacy of issuance of second show cause notice for seizure effected at the shop of M/s. Swiss Gallery under the same file number and after a passage of six months of the first show cause notice. 9. The SDR defended the order of the adjudicating authority on the grounds that the adjudicating authority has passed a fair and reasoned order discussing each of the fact as well as the defence of the noticee in detail and on merit. ....
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.... 12. With regard to seizure panchnama, the main plank of appeal is that the panchnama is a false document as the Cooper hospital records state that the passenger was admitted in the said hospital at 10 am on the same day while the panchnama indicates that the panch witnesses were called at 9.50 am and thereafter the recovery was made from the passenger. We, however, find that the records of the Cooper hospital clearly show that the appellant was admitted at 2.00 pm. Even the appellant has himself stated in his statement dated 12-7-2004, recorded under Section 108 of the Customs Act, 1962, that he was admitted to the Cooper hospital in the afternoon of 5-6-2004. Therefore, this argument along with all the pleas made on this basis, is unfounded. 13. Another argument advanced by the appellant is that the panch wit nesses were used in one more case and hence they are professional panchas. The appellant also maintained that the panchnama was not drawn on the spot and hence the panchnama cannot be treated as corroborative evidence and anything stated in the panchnama cannot be considered as a statement recorded under Section 108 of the Customs Act, 1962. Reliance on the decisions of the....
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.... 1974 SC 1024, at page 1026 (para 5), the Supreme Court has observed: 'in a recent case to which one us was party (Som Prakash v. State of Delhi) AIR 1974 SC 989, this Court has held wt police officials cannot be discarded in a trap case merely because they are police officials nor can any other witness be rejected because on some other occasion they have been witnesses for the prosecution in the past. Basically, the court has to view the evidence in the light of probabilities and the intrinsic credibility of those who testify. Moreover, it is not the case of the appellant that the panch witnesses have animosity or bore grudge against him. We, therefore, do not find any force in these arguments. 14. More arguments are put forth on lack of reasonable and meaningful opportunity given to defend the case as the cross-examination was interrupted by the adjudicating authority. We, however, find that the lower authorities had furnished copies of all the documents and the pieces of evidence gathered by them during the course of investigation along with the charges in the form of show cause to the appellants. It is not the case of the appellant that any material was suppressed, which was u....
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....the officers were along with them. We observe here an interesting point that the passenger has himself alleged in his representations that he was taken by the officers to the 1st floor office. Therefore; the moot point to observe is as to how the passenger, who also did not possess any security pass, entered into that area. Obviously, they all were taken to that place by the Air Intelligence Officers, as stated by the panch witness. We do not find anything unusual h it that they all were taken to the sensitive area by officers, without sending any written requisition for the security passes because it was not a situation that some senior official visit was to take place, for which the entry passes were to be obtained from the security office situated away from the airport building. It was an instance of infringement of law and for which the proceedings were to be initiated promptly and completed expedititously. We are of the view that in the sensitive areas like airports and ports, all law enforcing agencies work in cohesion and the officers know each other personally as they all work in the same area. We cannot visualize a situation that the officers, who are given highly sensitiv....
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.... may refer here to his statement dated 12-7-2004) that during the four days in hospital he did not sign any papers given by the Customs as he was not fully well. 16. On reading the panchnama, the statements of the panch witnesses given under Section 108 of the Customs Act, 1962, and the cross-examination of one of the panch witnesses, we find that there is no inconsistency or flaw in the version of the witnesses and hence they are reliable. We have also held in the preceding paras that their evidence cannot be discarded by labelling them as professional witnesses. The panchnama and the statements of the panchas can, therefore, certainly be acted upon, which the adjudicating authority has also done, while deciding the issue. The panchnama as well as the recorded evidence of panch witnesses show that when they were called, the appellant was standing near the Exit Gate along with his bag and baggage and in their presence admitted to having concealed thirteen wrist watches on his person. These watches were then recovered from his person on personal search carried out in the presence of the panchas. The presence of the appellant at the Exit Gate, along with his bag and baggage, itself ....
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.... dropped the role of the owner and switched over to the version that he was merely an employee and the goods belonged to the company. We, however, find that the company, has never agitated before the lower authorities for non-issuance of the show cause notice to them. The company has also not agitated before us against the passing of adjudication order without making them a party. And Ikram Chand submits bills of the company stating them to be of the watches seized and the description of the watches do not exactly tally with the watches actually seized from his possession. Contradictions are galore and we do not think that we should repeat them especially when the adjudicating authority has discussed them in detail in his order and there is no serious challenge or submission from the appellant against these findings of the adjudicating authority. 18. We are not ready to accept the arguments of Ikram Chand and Abedulla Kadiwala that the officers gave severe beating to Ikram Chand in the arrival hall. It is not the case of Abedulla Kadiwala that he saw the officers beating Ikram Chand in some closed room. It is inconceivable that the officers will beat a well dressed passenger in th....
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.... direct evidence. Under such circumstances, Abedulla Kadiwala is very much an accomplice of Ikram Chand in smuggling of the wrist watches and the exculpatory statement given by him or Ikram Nisar Chand or any other person will not be of any help to them in view of the other pieces of evidence brought on record and discussed by us earlier. 19. Regarding the submission that the authorities could not have issued second show cause notice under the same file no., we find that there was prima facie material on record, which appeared to reveal that the persons concerned in two cases were common, they were in constant touch with each another, their field of activities and business was the same and they still lied before the department during investigation. Moreover, when the first show cause notice was issued whatever material evidence was gathered, the same was relied upon in that notice. It is obvious that when some new evidence had come to the fore interconnecting both the cases and where the second case was the off shoot of the first one, there would be two show cause notices having some common material and the decision can be a composite one as both the cases have considerable bearin....
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....Nisar Chand and Abedulla Kadiwala is upheld. 23. Regarding the appeals of Shri Aftab Patel and Shri Mukhtar Umar Gojaria, we find that it was submitted by the appellants before the adjudicating authority that except one Rado watch, the rest of six seized watches were not genuine but locally made replicas and the same could be got tested from an expert. The same point is again agitated before us. We find that before passing the order, the adjudicating authority has not taken any opinion of the experts to get a conclusive idea whether the claim of the noticees was genuine or not. We also think that unless an enquiry is caused and opinion of the expert is brought on record, it will not be proper to give any finding on that. We, therefore, set aside the part of the order confiscating the said six wrist watches seized from the premises of M/s. Swiss Gallery and imposing penalties on Shri Aftab Patel and Shri Mukhtar Ahmed Gojaria. We remand the case back to the adjudicating Commissioner for the limited purpose of deciding the confiscability of the said six watches and penal liabilities on Shri Aftab Patel and Shri Mukhtar Umar Gujaria only after obtaining the opinion of the experts on ....