TaxTMI 
TaxTMI 
2009 (5) TMI 1024
X X X X Extracts X X X X
X X X X Extracts X X X X
....f a person resident outside India. Additional written submission is filed by the appellant on 06.04.2009 which is taken on record. The appellant has made payment of Rs. 20,00,000/- towards pre-deposit of penalty amount in compliance of the order of this Tribunal where presently this appeal is taken up for final disposal on merits. 3. We have heard elaborate arguments from Ld. Senior Counsel, Shri Sidharth Luthra on behalf of the appellant and Shri A.C. Singh, DLA for the respondent and gone through the record, relevant law and judicial pronouncements carefully. The investigations in this case were initiated by the Enforcement Officers on receiving a reliable information on 16.12.1991 that Punjabhai Shah alias Mangal Bhai (a) Babu Bhai and his nephew. Jayanti P. Shah were indulging in making compensatory payments in India on instructions of a person residing in Kenya and London. The search for the residential and shop premises belonging to Punhabhai Shah was conducted on 17.12.1991 which resulted in recovery of the Indian Currency of Rs. 53,85,000/- & Rs. 4,45,000/-from his residence and business premises respectively along with the documents pertaining to compensatory payment. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was receiving and making payments in India on instructions of a person residing abroad and he was indulged in havala business. He admitted that the seized Indian Currency of Rs. 4,45,000/- was also received through havala and did not pertain to their hardware business. When asked as to how he knew that his uncle Punjabhai Shah was indulged in havala business who stated that his uncle was getting instructions from abroad on telephone before him regarding the amount received and paid in India and was distributing the money to different persons. 7. The appellant was made a party to Show Cause Notice-II along with Punjabhai Shah for aiding and abetting him for contravention of the provisions of section 9(1)(b) & (c) r/w section 64(2) of the FER Act for receiving payments totalling to Rs. 35,60,65,000/- in India on instructions of a person residing abroad and making payment totalling to Rs. 34,82,69,000/- to various persons in India on instructions of a person residing abroad. He was held guilty for the said charge and being aggrieved this appeal has been preferred by the appellant to set aside the impugned order. 8. Shri Sidharth Luthra, Learned Senior Counsel argued on behalf o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....91 who was arrested and threatened by the Enforcement Officers for giving inculpatory statements. Punjabhai H. Shah was the patient of diabetes, High BP and heart ailment who ultimately expired on 15.08.1998 of heart failure. Punjabhai H. Shah was co-accused and accomplice and his statement could not be relied upon in the absence of corroboration from any independent evidence. Reliance is placed by Ld. Advocate on the ruling of Hari Charan Kurmi and Jogia Hajam v. State of Bihar 1964 (6) SCR 623; Haroon Haji Abdulla v. State of Maharashtra 1968(2) SCR 641, Prakash Kr. v. State of Gujarat [2007] 4 SCC 266 para 6, Noor Aga v. State of Punjab and Anr 2008(9) Scale 681. It is also argued that when the appellant was interrogated several others such as Punjabhai, Vijay Bajaria, Surendra Mehta and Deepak Kedia were also interrogated by the Enforcement Officers and all these persons also made complaint before Addl. C.M.M. when they were produced before him about being beaten, slapped mercilessly in order to obtain confession. The treatment meted out to other persons in his presence created fear complex in his mind who made confession to get aware from the rigour of the officers. 10. Lea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Indian currency in India on instructions of a person resident outside India for better appreciation of legal position which is provided as under: Section 9. Restrictions on payments.-(1) Save as may be provided in, and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Reserve Bank, no person in, or resident in, India shall- ..... (b) receive, otherwise than through an authorised dealer, any payment by order or on behalf of any person resident outside India; Explanation.-For the purposes of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised dealer) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised dealer; ..... (d) make any payment to, or for the credit of, any person by-order or on behalf of any person resident outside India; ..... 14. Thus as per statutory sche....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilar to powers vested on officers under the Customs Act. Nothing new has been submitted which can persuade us to take a different view." 15. It is established from evidence on record that the appellant, Jayanti P. Shah was the nephew of Punjabhai H. Shan who was assisting him in his business conducted in the name of the firm, M/s. Punjabhai Hansraj & Company. It was the partnership firm of Panjabhai H. Shah and his brother, Premjibhai Shah. Premjibhai Shah was the partner in the said firm who was elderly and was leading a retired life. The appellant, Jayanti P. Shah was his son who was looking after the business of hardware of the said firm along with Punjabhai R. Shah. 16. Punjabhai H. Shah admitted in his statemen: that he was indulged in receiving and making payments on instructions from abroad and he received payments totalling to Rs. 34.82,69,000/- in India on instructions of Kantibhai Shah, Khim Chandaria and Kanji Hirji Shah, Bharat Bhai Shah and John Bhai of Nairobi, Kenya during the period from 1988 to December, 1991 and made payments totalling to Rs. 34,82,69,000/- to various persons in India on instructions from abroad. He admitted that he retained commission total....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould not explain the entries other than those belonging to his relatives. 19. Thus close association of the appellant, Jayanti P Shah is established with Punjabhai H. Shah in havala transactions particularly when his father, Premji Bhai Shall was also the partner of the firm, M/s. Punjabhai Hansraj & Company along with his uncle, Punjabhai H. Shah. It is argued by Ld. Senior Counsel on behalf of the appellant that the impugned order was based on the confessional statement of the appellant which were involuntary obtained under threat and were retracted subsequently and were not corroborated by independent evidence. The appellant has produced the copy of the remand order of the Magistrate, A.C.M.M. dated 19.12.1991 in support of his case, the relevant portion of the order is produced given below: Accused No. 2 (appellant, Jayanti P. Shah), 3 and 4 have also made allegation of ill treatment against the Enforcement Officers and their statements arc recorded by me in open court in the presence of their respective Advocates. Accused No. 3 appears to be suffering from tine disease but they arc in fit condition and doing business also. Therefore, they are not entitled for the b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssion, be it a Magistrate or some other statutory functionary at the pre-trial stage, must address himself to the issue whether the accused has come forward to make the confession in an atmosphere free from fear, duress or hope of some advantage or reward induced by the persons in authority. Recognizing the stark reality of the accuse being enveloped in a state of fear and panic, anxiety and despair while in police custody, the Evidence Act has excluded the admissibility of a confession made to the police officer. 22. The retraction of admissional statement by itself, without any evidence of threat and coercion, is not acceptable. The bald allegations are required to be supported by a little evidence so that burden can be shifted to the opposite side for leading proof otherwise. In this regard reference can be made to K.T.M.S. Mohd. v. UOI [1992] 3 SCC 178 Hon'ble Supreme Court made following observations:- "We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Customs authori....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reat. The sequence of events described by recovery of substantial amount of money along with documents from Punjabhai provide a corroboration to the admissional statement which otherwise cannot be termed as having been made under threat and coercion. The bald assertion of threat and coercion is difficult to believe. The bald assertion cannot be taken too seriously unless a little evidence is produced leading to probability of threat and coercion whereafter the burden of proving other way round can be shifted to Directorate of Enforcement. There is no law which forbids acceptance of a voluntary and true admissional statement if the same is later retracted on bald assertion of threat and coercion. In this regard, judgment in K.I. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, Cochin, [1997] 3 SCC 721 where the Hon'ble Supreme Court observed as follows:- "It would thus be seen that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. Practice and prudence re-quire that the court could examine the evidence adduced by the prosecution to f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his appeal. 27. The appellant has been arraigned as abettor for having abetted Punja Bhai for having unauthorisedly received Indian Currency to the tune of Rs. 35,60,65,000/- in India and making payment totalling to Rs. 34,82,69,000/- to various persons in India on instructions of a person resident outside India without the permission of RBI. Punja Bhai was the front person where close association between them proved their nexus in the commission of contraventions. The active complicity is the gist of offence of abetment. It will be appropriate here to throw light on the definition of the word abetment to better appreciate the legal position in this regard. The term 'abetment' has not been defined in the FER Act. What would constitute abetment is contained in section 107 of the Indian Penal Code, which reads thus: 107, Abetment of a thing.-A person abets the doing of a thing, who- First, Instigates any person to do that thing; or Secondly.-Engages with one or more other person or persons, in any conspiracy for the doing of that thing, if an act or illegal omission lakes place in pursuance of that conspiracy, and in order to the doing of that thing; o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce in the commission of organized crime. In our considered opinion, any communication or association which has no nexus with the commission of organized crime would not come within the purview thereof. It must mean assistance to organised crime or organised crime syndicate or to a person involved in either of them. It, however, includes (a) communication or (b) association with any person with the actual knowledge or (c) having reason to believe that such person is engaged in assisting in any manner, an organised crime syndicate. ... Such communication or association to the person must be with the actual knowledge or having reason to believe that he is engaged in assisting in any manner an organised crime syndicate. Thus, the offence under section 3(2) of MCOCA must have a direct nexus with the offence committed by an organised crime syndicate. Such abetment of commission of offence must be by way of accessories before the commission of an offence. An offence may be committed by a public servant by reason of acts of omission and commission which would amount to tampering with the investigation or to help an accused. Such an act would make him an accessory after the commission of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rking substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof; often it is nothing more than a prudent man's estimate as to the probabilities of the case. 31. The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered -- to use the word of Lord Mansfield in Blatch v. Archar [[1774] 1 Cowp 63 at p. 65] "according to the proof which it was in the power of one side to prove, and in the power of the other to have contradicted". 32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the persons concerned in it. However, this does not mean that the special or peculiar knowledge of the person....