AI Drafter 
TaxTMI 
TaxTMI 
2023 (10) TMI 324
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....anifested in first proviso to section 129A of the Act by misreading of the terms 'goods' and 'baggage' defined in the Customs Act, 1962, to arrogate its jurisdiction? 2. Whether in the facts and circumstances of the case, the Learned Tribunal has not accorded proper interpretation to the expression 'beneficial owner' defined in section 2(3A) of the Customs Act, 1962? 3. Whether in the facts and circumstances of the case, the Learned Tribunal has failed to appreciate that the ultimate beneficiary of the foreign currency would be the Respondent herein and not SEMPL, thereby failing to notice the form and substance of the transaction? 4. Whether in light of the facts and circumstances, the impugned order dated 28.03.2022 passed Learned CESTAT is unsustainable in law?" 3. The dispute itself emanates from a Show Cause Notice [SCN] dated 17 July 2019, which had been issued to M/s Salt Experience and Management Pvt. [SEMPL] Limited and various other individuals, including the respondent herein. The SCN related to the seizure of foreign currency amounting to approximately Rs. 81 lakhs which was seized from the hand baggage of one Mr. Amit Bali, an employee of ....
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.... (ii) he was not aware that Mr. Amit Bali was carrying any Foreign Currency; that he used to visit once or twice a month to foreign countries and most of the time, Mr. Amit Bali accompanied him in those foreign trips; that last time Mr. Amit Bali had accompanied him to FIFA World Cup, held in Russia; (iii) he did not have any knowledge whether Mr. Amit Bali had carried Foreign Currency in his earlier visits; that he (Mr. Munjal) carried foreign currency during his foreign visits as per the Forex Regulations of the Government of India and he usually travelled with his cards to meet out his personal expenses during his foreign visits." 7. On due consideration of the statements and other material that was gathered in the course of investigation, the Order-in-Original came to record the following conclusions: - "58.14 Mr. Amit Bali; from whose possession forex was recovered, is, by all accounts, the person from whose possession foreign exchange was seized, and who is thus primarily culpable, as discussed above. In view of the various statements recorded under S.108 of the Customs Act, 1962 of Mr. Amit Bali, Mr. Hemant Dahiya and Mr. K.R. Raman and the reply ....
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....carried foreign currency (in cash form) in accordance with law. In this regard, in reply to question 12, the Noticee No. 5 stated as under: "Question 12 Did you always carry foreign currency in cash form with you while travelling abroad. lf yes, how much foreign currency in cash was carried by you in cash and from where the same was procured? Answer 12: Yes, I always used to carry foreign currency in cash form which used to be upto USD 3000 along with some travellers' cheque and credit card. I used to get these foreign currency from my company. I am herewith submitting the details of the foreign currency issued to me by my company during the last five years." (iv) In reply to the show cause notice filed by the Noticee No. 5, it has been submitted that M/s SEMPL is an independent third party service provider and neither Noticee No. 5 nor HMC has any direct or indirect financial control / shareholding interest in M/s SEMPL. In fact, in paragraph no. 15 of the reply to the show cause notice filed by the Noticee No. 5 it has been stated as under: "...M/s SEMPL has been used by HMC as one of the specialist Indian third party service providers for the ....
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....oted, dropped all proceedings against the respondent. 9. Aggrieved by the aforesaid order, the Department is stated to have instituted an appeal. The Commissioner of Customs (Appeals) after considering the material on record and insofar as the present respondent is concerned, observed 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 of SEMPL but the same were exported from India for use and on behalf of the Respondent. The Respondent has cited the judgment of Sunil B. Naik vs. Geowave Commander 2018 (5) SCC 505 to distinguish the requirements for being a beneficial owner. However, the facts of the case cited by the Respondent a....
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....ction 114(i) of the Customs Act, 1962 are imposed on Sh. Pawan Kant Munjal, being beneficial owner." 11. As would be manifest from the above, the Appellate Authority proceeded to invoke the principles of "beneficial owner" as flowing from Section 2(3A) of the Act and consequently found the respondent liable to be penalized under Section 114(i) of the Act. It is the aforesaid findings as returned by the Appellate Authority, which constrained the respondent to approach the CESTAT. 12. CESTAT in terms of the order impugned before us has come to record the following conclusions:- "27. The aforesaid statements made under section 108 of the Customs Act give credence to the factual averments made by the appellant regarding the contractual arrangement between HMC and SEMPL and the fact that the foreign currency did not belong to the appellant and in fact belonged to SEMPL, which currency was in the possession of Amit Bali for meeting the expenses to be undertaken. It also transpires that SEMPL would raise invoices for such expenses together with its service charge and thereafter payments were made by HMC. The actual owner of the foreign currency having been identified, the c....
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....rd or the [Principal Commissioner of Customs or Commissioner of Customs], either before or after the appointed day under section 130, as it stood immediately before that day: [PROVIDED that no appeal shall lie to the Appellate Tribunal and the Appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order referred to in clause (b) if such order relates to,- (a) any goods imported or exported as baggage; (b) any goods loaded in a conveyance for importation into India, but which are not unloaded at their place of destination in India, or so much of the quantity of such goods as has not been unloaded at any such destination if goods unloaded at such destination are short of the quantity required to be unloaded at that destination; (c) payment of drawback as provided in Chapter X, and the rules made thereunder: PROVIDED FURTHER that the Appellate Tribunal may, in its discretion, refuse to admit an appeal in respect of an order referred to in clause (b) or clause (c) or clause (a) where- (i) the value of the goods confiscated without option having been given to the owner of the goods to pay a fine in lieu....
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.... Section 113(d), the objection taken to the maintainability of the appeal would not sustain. 18. That takes us to the principal question, namely of whether the Appellate Authority was justified in invoking the principles enshrined in Section 2(3A) and whether the respondent could justifiably be held to be the beneficial owner of the currency which was confiscated. 19. The CESTAT in its judgment has found on facts that the respondent was undertaking the travel by virtue of being the Chairman and Managing Director of Hero MotoCorp. Ltd [HMC] and was proceeding on an official engagement. Undisputedly, the journey in the course of which the seizure was affected was not a personal visit of the respondent but was to attend to various business meetings and events for and on behalf of HMC and which meetings and events were being managed by SEMPL. It is in the aforesaid background that the Tribunal has come to the conclusion that the respondent could not be held to be the beneficial owner of the seized currency. 20. We further note from the various statements made in the course of investigation and the facts that stood recorded in the Order-in-Original that it was not the case of t....