TaxTMI 
TaxTMI 
1998 (3) TMI 723
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....ring Agency. The brief facts of the case are that on specific information to the effect that contraband goods such as bearings, etc. are smuggled along with the declared item, 'Gambier' in the Container No. GSTU 4544667, the movement of the said container was monitored discreetly and necessary follow up action was taken to secure the documents and the goods. 2. Enquiries revealed that the relevant Bill of Entry No. 56720, dated 21-12-94 (I.M. No. 976/94, Line No. 397) was already filed on 21-12-94 by the Custom House Agent, M/s. Madras International Supping & Clearing Agency, 81, Linghi Chetty Street, Madras-1 on behalf of M/s. Sargam Enterprises, 53, III Main Road, Jawahar Nagar, Madras 600 082 and it was found that the Bill of Entry was already assessed to duty by the concerned assessing Group 21-12-94 and duty amount of Rs. 5,39,356/- was also paid on 22-12-94 vide Cash No. HD 1202146 even before the arrival of the vessel. It was also seen that duplicate open order was given for the examination of the cargo. The Bill of Entry was hence collected, for further investigation. SIIB officers of this Custom House also visited discreetly the addresses available in the documents....
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....led inventorisation has been taken up on 28-12-94 in the presence of independent witnesses. 7. Enquiries were made at the address given in the Bill of Entry (53, III Main Road, Jawahar Nagar, Madras 600 082) revealed that it was only a residential premises. Neither the firm nor its proprietor on record, Shri S. Somasundaram were available. Further, the address furnished was found to be a residential premises and in no way related to the importers on record. Efforts were made to locate the importers and to get their residential address. 8. Pursuant to the efforts made, a copy of the application filed by the importers with the Joint Director General of Foreign Trade, Madras for allotment of the Import Export Code No. was collected. The same was perused and it was noticed that in the said application, the office address is in agreement with the address given in the Bill of Entry. On further perusal of the application, it was found to contain the residential address as at 12, I Main Road, Jawahar Nagar, Madras-85. Enquiries made at the address revealed that the same was occupied by one M/s. North West Madras Benefit Society and not related to the importers. 9. T....
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....ri Street, Madras-3) and Shri Sanghvi's introducer Shri Sadananda Pillai (9, Subbu Chetty Street, Madras-3) were available in the bank records. On enquiries it was found that Shri S. Somasundaram, Proprietor on record of M/s. Sargam Enterprises, 53, III Main Road, Jawahar Nagar, Madras-82 was not available in the said address. The residential address furnished by Shri S. Somasundaram (12, I Main Road, Jawahar Nagar, Madras-85) was also found to be not related to the importer. Enquiries made at the premises of Shri Kamlesh M. Sanghvi, introducer of Shri S. Somasundaram located at 27, Kalappa Achari Street, Madras-3 revealed that it was an earlier address of Shri Kamlesh Sanghvi. 12. Further enquiries made at 27, Kalappa Achari Street, Madras-3, the address given in the Bank documents for Shri Kamlesh M. Sanghvi, revealed that the building is owned by Shri P.M.A. Ramadas Chetty of M/s. P.M.A. Metals and Alloys 102, Naniappan Naicken Street, Madras-3, Shri P.M.A. Ramadas Chetty vide letter dated 22-5-1995 has stated, inter alia, that he is owner of the building; that Shri Mulvantrai V. Sanghvi and his son Shri Rohit Kumar M. Sanghvi were the tenants in the II floor of the buil....
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....ncy, Madras on 28-12-1994, the Custom House Agent. Regarding the clearance of consignments imported by M/s. Sargam Enterprises, Madras, Shri Kannan stated inter alia that one Shri Gulabchand (Sanghvi) came and met him at his office in the beginning of 1993 and requested him to clear the consignments of some companies for which he would bring and give the documents; that Shri Gulabchand (Sanghvi) used to give him documents for import clearance in respect of the following firms, viz., (a) M/s. Sagar Supplies, (b) M/s. Srinivasa Agencies, (c) M/s. Manek Traders, (d) M/s. Kiran Trading and (e) M/s. Sargam Enterprises, all based at Madras; that he knew Shri Gulabchand (Sanghvi) and that he did not know the proprietors of the above firms. Regarding handling of the documents, he stated that after getting the documents from Shri Gulabchand (Sanghvi) he would get the bills assessed and used to collect the duty amount by way of Pay Order from Shri Gulabchand (Sanghvi); that as per the request of Shri Gulabchand (Sanghvi) he used to arrange for the destuffing of the containerised cargo at 83, SIDCO, Industrial Estate, Ambattur, Madras-58; that he did not know whether the said premises is owne....
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....took Shri Gulabchand for Shri Sanghvi as the features are almost the same and also because of the mental agony and tension consequent to the demise of his mother and father-in-law who expired on 19-12-1994 and 26-12-1994 respectively. Shri Kannan further sought apology for the mistake committed. He further added that only Shri Sanghvi gave the documents in respect of the subject import. To certain specific questions Shri Kannan replied stating that it was Shri Sanghvi who represented the five firms for giving documents relating to imports; that he did not know the details such as address etc., of Shri Sanghvi; that these firms are owned by Shri Ishwarlal Surana and Shri Mardia and he heard that both these persons are in Vishranthi Apartments, Vepery, Madras. Finally Shri Kannan stated that he made several attempts to contact S/Shri Sanghvi, Iswarlal Surana and Mardia and found that they are still absconding. 17. Shri D. Kannan in his further statement dated 6-1-1995 stated inter alia that Shri Sanghvi used to come to his office to deliver import documents for clearance of import goods in respect of M/s. Sargam Enterprises and other firms; that Shri Sanghvi used to contact t....
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....verify the Address given by the importer and found that the said premises is only a residential premises; that neither the said company nor Shri S. Somasundaram exist in the said premises; that he had visited the said premises along with Customs Officer and found that no such companies/persons exist in the said addresses and that he had taken steps to find out Shri Somasundaram and Shri Sanghvi of M/s. Sargam Enterprises to produce before the Department. 22. Shri D. Kannan also stated, vide his further letter dated 20-3-1995, that he along with officers of Customs visited the premises of Shri Ishwarlal Surana and Shri Raichand Mardia and found that they had left for Rajasthan 3 months back and not yet arrived and that steps taken by him to find out S/Shri Somasundaram and Sanghvi also proved futile. 23. Enquiries were made at the premises of Shri Ishwarlal C. Surana and Shri Raichand G. Mardia revealed that they were at large. Statements were recorded from Shri Dharmendra Surana, S/o Shri Ishwarlal C. Surana and Shri Manish Mardia, S/o Shri Raichand G. Mardia. Shri Dharmendra Surana in his statement dated 28-12-1994 has stated, inter alia, that he is the Managing Di....
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....a and Raichand G. Mardia were returned by the postal authorities mentioning as "not found in my delivery time". Again summons were issued on 12-5-1995 to the above said persons. However, they did not turn up. Again summons were issued on 22-5-1995. 27. Shri Raichand G. Mardia surfaced on 25-5-1995 and appeared before the Department. In his statement dated 25-5-1995 he has stated, inter alia, that he couldn't appear before the Department, as he had left for Rajasthan in the first week of January and returned only on 25-5-1995; that previously he was one of the partners in M/s. Mardia Metal Enterprises, Madras, M/s. Padmavathi Metals and Alloys (P) Ltd., that at present he is one of the partners of M/s. Decofloor at 10/10B, Ambattur Industrial Estate, Madras, which is engaged in the import of plastic scrap and processing to produce plastic granules; that Shri Ishwarlal C. Surana is the other partner of M/s. Decofloor and that he used to do import clearance through M/s. Madras International Shipping and Clearing Agency, Madras. 28. In his further statement on 26-5-1995, Shri Raichand G. Mardia has stated, inter alia, that he knows Shri Kamlesh Sanghvi; that Kamlesh San....
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....gh M/s. Madras International Shipping and Clearing Agency, Madras; that he knew Shri Kannan of M/s. Madras International Shipping and Clearing Agency, Madras for the past six to seven years and had good relationship with Shri Kannan. About his acquaintance with Shri Kamlesh Sanghvi, he told that Shri Sanghvi was staying at Jawahar Nagar, Perambur, Madras-82 and that the property at 10, 10/B, Ambattur Industrial Estate, belongs to M/s. Deco Floors, in which he himself is one of the partners, and said that the premises has been rented out to Shri Kamlesh Sanghvi. When asked about his non-appearance before the Department, despite several summons, he stated that since he left for Rajasthan in the last week of December, 1994 he could not appear. When confronted with his earlier statement wherein he stated that he had left for Rajasthan in the month of January, 1995 he admitted that he had left for Rajasthan only in the last week of December, 1994. When enquired about his relationship with Shri Raichand Mardia, he told that Shri Mardia is his business partner and his best friend. Shri Surana was informed that Shri Kannan in his statements has stated that he and Shri Raic­hand G. Mard....
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.... his signatures in the said bank documents as a token of having seen. From the above, it is very clear that Shri S. Venkatesh has represented himself as Shri S. Somasundaram and thus resorted to impersonation. 33. On comparison of the signatures appearing in the bank documents viz. specimen signature card and Account opening application and the signatures appearing on the declaration forms accompanying the Bill of Entry, on the reverse of original Bill of Lading and authorisation letter, it is very clear that the signatures made as "S. Somasundaram" are different. 34. Enquiries with Shri D. Kannan of M/s. Madras International Shipping & Clearing Agency, Custom House Agent revealed that the documents relating to the clearance of goods imported by all the five firms including M/s. Sargam Enterprises were used to be handed over by Shri Sanghvi, but he failed to disclose the address of Shri Kamlesh M. Sanghvi. According to Custom House Agent Shri Sanghvi used to handover the documents and duty amount after assessment. The Custom House Agent has identified Shri Kamlesh M. Sanghvi as representative of above firm owned by S/Shri Raichand G. Mardia and Ishwarlal C. Suran....
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....g & Clearing Agency, Madras, the Custom House Agent for clearance of an item declared to be 9.3 M.T.s (200 bags) of Gambier in container No. GSTU 4544667 was filed in the name of M/s. Sargam Enterprises, a fictitious firm. (ii) On detailed examination it was found that there were 214 bags of gambier inside the container as against the declared quantity of 200 bags. In addition to the gambier, there were bearings, worth Rs. 1,194 crores concealed along with the gambier in the gunny bags in the middle to rear portion of the container in 63 gunny bags. The bags stacked in the front portion of the container contained only gambier. This shows that but for the specific information and detailed examination, the fraud committed cannot be detected in the normal course. Thus, this is a clear case of concealment and smuggling of high value bearings in the guise of gambier. The persons, namely, S/Shri Ishwarlal C. Surana, Raichand G. Mardia, D. Kannan, Kamlesh M. Sanghvi and S. Venkatesh have planned, conspired and arranged to clear the bearings by way of smuggling without payment of huge duty. These goods valued at Rs. 1,194 Crores (Market Value) were not decl....
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....and without the basic requirement of valid IE Code number. The Current A/C. No. 1446 in the name of M/s. Sargam Enterprises with Punjab National Bank, Madras-3, was opened with Shri Kamlesh M. Sanghvi as the introducer. Shri Kamlesh M. Sanghvi has married the sister of Shri Venkatesh and it was Shri Venkatesh who impersonated as "Somasundaram", Proprietor on record for the sub­ject importing, M/s. Sargam Enterprises with the residential address of Shri Kamlesh M. Sanghvi. Shri Kamlesh M. Sanghvi as admitted by his brother and father, is working with Shri Ishwarlal C. Surana as an employee. Shri Kamlesh M. Sanghvi being a employee of Shri Ishwarlal C. Surana caused to open the account in the name of M/s. Sargam Enterprises with Punjab National Bank, Park Town, Madras-3 with the help of Shri Venkatesh. Shri Kamlesh M. Sanghvi has a separate account of his own in the same branch of Punjab National Bank and enquiries with the Bank revealed that Shri Sanghvi used to maintain and monitor the account of M/s. Sargam Enterprises with the help of Shri Venkatesh. (vii) As an employee of Shri Ishwarlal C. Surana, Shri Kamlesh M. Sanghvi handled the import documents. Du....
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....ments. They employed Shri Kamlesh M. Sanghvi as a front man and effected the smuggling in the name of a fictitious firm. Shri Kamlesh M. Sanghvi acted as per the instructions and planning and opened different fictitious firms including M/s. Sargam Enterprises. In the instant case of M/s. Sargam Enterprises, Shri S. Venkatesh, brother-in-law of Shri Kamlesh M. Sanghvi has impersonated as "Shri S. Somasundaram" at the instance of Shri Kamlesh M. Sanghvi. (x) It is further stated that Shri Raichand G. Mardia and Shri Ishwarlal C. Surana are the real owners of the goods covered by Bill of Entry No. 56720, dated 21-12-1994. Shri Kamlesh M. Sanghvi acted as a front man in the game plan of S/Shri Raichand G. Mardia and Ish­warlal C. Surana in the smuggling of bearings valued at Rs. 1,194 Crores in guise of and along with gambier. Shri S. Venkatesh, brother-in-law of Shri Kamlesh M. Sanghvi, allowed himself to be used and impersonated as "S. Somasundaram" and abetted in the act of smuggling. (xi) Shri D. Kannan has stated that the documents relating to the present consignment were handed over by Shri Sanghvi (Kamlesh M. Sanghv....
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....ct con­signment. Though he knew that the documents covering the subject goods belong to M/s. Sargam Enterprises, a fictitious firm, still he accepted the documents. By the detailed acts of omission and com­mission as referred to in Para 34, the Custom House Agent, M/s. Madras International Shipping and Clearing Agency, with its sole Proprietor, Shri D. Kannan, rendered the goods liable to confiscation under different sections as already referred to in previous para­graphs and the Customs House Agent, as a firm rendered itself li­able to penalty under Section 112(a) of the Customs Act, 1962. 36. Thereafter, after further investigations, show cause notice was issued to M/s. Sargam Enterprises, Madras, S/Shri Raichand G. Mardia, Ishwarlal C. Surana, Kamlesh M. Sanghvi, S. Venkatesh and M/s. Madras International Shipping and Clearing Agency, calling them to show cause as to why : (a) the bearings under seizure valued at Rs. 1,194 crores which were not declared, smuggled into India, concealed in the gunny bags contain­ing gambier should not be confiscated under Section 111(i), (l) and (m) of the Customs Act, 1962; (b)....
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....a who represented M/s. Sargam Enterprises at the instance of Ishwarlal Surana had acted for delivering the documents and handing over the duty clearance of the subject goods. They also pointed out Kamlesh Sanghvi was absconding as per the advice of Ishwarlal Surana was not based on any materi­als on record and this is only a presumption. They further pointed out that the findings of the adjudicating authority that Raichand Mardia and Ishwarlal Surana employed Kamlesh Sanghvi as a front man and effected the smuggling in the name of a fictitious firm is only an imagination of the adjudicating officer for which there is absolutely no evidence on record. They also pointed out that without any evidence on record the adjudicating officer has come to a finding that Raichand Mardia and Ishwarlal Surana are the real owners of the goods covered under the Bill of Entry dated 21-12-1994. They pointed out that on mere presumptions and conjectures the findings could not be arrived by the adjudicating authority. So also they pointed out that there is no evidence to show that Shri S. Venkatesh, brother-in-law of Kamlesh Sanghvi allowed himself to be used and acted as Somasundaram and abetted t....
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....n the container in a foreign land like Sin­gapore and is put on the ship for onward transport. It was further contended be­fore us that the Customs House Agent can only go by the declaration made by the importer and as the importer has the full knowledge about the nature of the consignments, the Customs House Agent cannot be said to have colluded with them. It was further pointed out that the statements recorded on 23-12-1994 and 28-12-1994 were under threat and coercion. So also the statements dated 4-1-1995 and 6-1-1995 are also recorded under threat and coercion. These statements along with other statements dated 23-3-1995 and 25-4-1995 were obtained under duress by the officials and therefore they have no evidenciary value and they cannot be acted upon. It was further pointed out that the statement of Yuvaraj who was working in the appellants' office was also obtained under threat on 28-12-1994 and 26-4-1995. Those statements not being voluntary, cannot be acted upon. It was further pointed out that the appellants had retracted all those statements obtained from him. The appellants had also stated these facts in their reply to the show cause notice. Therefore imposition....
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....prove this case with mathematical precision. It was further pointed out that Shri Kannan had given statements voluntarily and there is nothing to show that the statements are extracted under threat or coercion. He also reiterated the findings in the impugned order in paras 45 to 68. He therefore pointed out that a case is made out against the appellants and the appeals are liable to be dismissed. 41. We have considered the submissions of both the sides. First we will take up the case of Ishwarlal Surana as well as Raichand Mardia. It is now seen that the father and brother of Shri Kamlesh was examined by the Department. Both of them stated that Kamlesh was working with Ishwarlal Surana. The contention of the learned Advocate appearing on behalf of Raichand Mardia and Ishwarlal Surana is that they have denied about the employment of Kamlesh with them. It was pointed out that they have produced the records to show that he was not employed by them. But the fact remains that the father, and brother of Kamlesh Sanghvi have clearly stated that Kamlesh was working with Ishwarlal Surana. The appellants have not cross-examined the father and brother of Kamlesh Sanghvi. There is also....
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.... working with Raichand Mardia and Ishwarlal Surana. His brother-in-law S. Venkatesh opened the bank accounts in name of M/s. Sargam Enterprises by making fictitious name as Somasundaram which clearly establishes that Venkatesh was in active association with Kamlesh Sanghvi. 45. The statement of the father and brother of Kamlesh that he was at large under the instructions of Ishwarlal Surana also has to be accepted in view of the fact that these statements were not in any way challenged by cross-examining them. There is also nothing in record to show as to why they should give a false statement. This is further corroborated partially by the fact that both Raichand Mardia and Ishwarlal Surana accepted that they knew Kamlesh Sanghvi. They had also accepted that they knew D. Kannan of Madras International Shipping and Clearing Agency and they were clearing the imported goods through Kannan only. Ishwarlal Surana in his statement also confirms that Kamlesh Sanghvi was in touch with him up to December, 1994. Coupled with this, the false denial of Ishwarlal Surana that Kamlesh Sanghvi was not employed by him is another circumstance which strengthens the case of the Department. ....
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.... statement given by Mr. Dudani incriminates the petitioner. This was established with reference to the photographs and other intrinsic material. On that basis, he concluded that Mr. Dudani incriminated himself and the appellant in passing of foreign currency out of India, i.e., to Hong Kong. It was accordingly held that the contravention was established. It is contended that the statement of co-accused could be used only to corrobo­rate other evidence as one of the circumstances under Section 30 of the Evidence Act. But it cannot be used as substantive evidence without corroboration from other independent evidence. Except the statement of Dudani, there is no other independent evidence. Mr. Dudani's evidence cannot be pressed into service to arrive at the conclusion that the petitioner is involved in the passing of foreign currency out of India. 4. It must be remembered that the statement made before the Customs offi­cials is not a statement recorded under Section 161 of the Code of Criminal Procedure, 1973. Therefore, it is a material piece of evidence collected by Customs officials under Section 108 of the Customs Act. That material incriminates the petitione....
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....itled to cross-examine the panch witnesses before the authority takes a decision on proof of the offence. We find no force in this contention. The customs officials are not police officers. The confession, though retracted, is an admission and binds the petitioner. So there is no need to call panch witnesses for examination and cross-examination by the petitioner." Therefore the confession of Kannan binds him and merely because it is retracted, it cannot be said that it is not reliable. This confession of Kannan is implicating the co-accused and that evidence itself is sufficient for implicating Ishwarlal Surana and Raichand Mardia as held by the Hon'ble Supreme Court in the case of Naresh J. Sukhwani v. Union of India cited supra. This statement of Kannan is further corroborated in several respects as already discussed by us. 50. It is further seen that Yuvaraj, an executive of Madras International Shipping and Clearing Agency in his statement dated 28-12-1994 and 26-4-1995 corroborated the version of Kannan to the effect that Kamlesh Sanghvi, Raichand Mardia and Ishwarlal Surana had come to their office and requested for early clearance of the goods covered by Bill of ....
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....nied as being taken under duress or coercion, the burden is on him to show that there were such circumstances. These are the principles laid down by the Hon'ble Supreme Court in the case of K.T.M.S. Mohammed and Another v. Union of India, reported in 1992 (40) ECC 352 wherein at para 31 the Hon'ble Supreme Court held as follows :- "31. We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice it 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 Authorities or the officers of Enforcement Directorate un­der the relevant provisions of the respective Acts is a sine qua non to act on it for any purpose and, if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means, that statement must be rejected brevi manu. At the same time, it is to be noted that, merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully ob­tained. It is only for the maker of the statement who alleges inducement, threat, promise, etc. to establish that such improper mea....
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....confiscation of the goods are hereby confirmed. Dt. 16-4-1997 Sd/- (T.P. Nambiar) Member (J) 55. [Contra per : Shri V.P. Gulati, Vice President]. - I have perused the order recorded by my ld. Brother, and I with respect am not able to agree with his conclusions. 56. My learned Brother has abstracted the facts from the order of the ld. lower authority and I do not feel it necessary to repeat the same. I however am detailing the pleas as were urged by the respective advocates for the appellants and the ld. SDR. 57. Shri Nankani has appeared on behalf of Shri Surana and Shri Satish for Shri Mardia and Shri A.K. Jayaraj has argued on behalf of Madras International Shipping and Clearing Agency. 58. Shri Nankani pleaded that to appreciate the facts it is necessary to refer to the way the investigation in the case progressed. He pleaded that the Bill of Entry for the goods was filed in the name of M/s. Sargam and the same was signed by one Shri S. Somasundaram. After duty had been paid and examination of the goods had been ordered on intelligence a detailed check revealed the concealment of ball bearings in the consignment which was declar....
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....-law of Shri Kamlesh Sanghvi. He pleaded that both Sanghvi and Venkatesh were not traceable and their landlord of the house where he lived stated that Venkatesh was living with Shri Sanghvi. He pleaded that investigation about Shri Sanghvi was carried out with his father and brother who wrote to the authorities that Kamlesh was employee of Shri Surana. Shri Rohit his brother gave a statement about the same. He pleaded that no details of employment were given by Shri Rohit or the father. He pleaded the authorities examined the list of employees of Shri Surana and no evidence about his being his employee was found. He stated no doubt summons were sent to Shri Mardia and Surana on 19-4-1995 and thereafter also. Shri Mardia appeared on 25-5-1995 and a statement was recorded from him. He denies any connection with the goods. Shri Surana also he pleaded appeared on 31-5-1995. The statement was recorded from him and thereafter on 1-6-1995 and 14-6-1995 when further statement were recorded from him. He pleaded the statement given was exculpatory. He pleaded he was confronted with the statement of Shri Kannan and his statement in regard to the assertion of Shri Kannan his having visited him....
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....g an employee of Shri Ishwarlal C. Surana caused to open an account in the name of M/s. Sargam Enterprises with M/s. Punjab National Bank, Park Town, Madras-3 with the help of Shri S. Venkatesh. Shri Kamlesh had a separate account of his own in the same branch of Punjab National Bank." 62. He pleaded that learned Collector has placed heavy reliance on the letter written by Shri Kamlesh Sanghvi's father and statement of Shri Rohit, his brother. He pleaded that he was estranged child of the family and was living separately from the family for a long time. He referred to para 12 of the order of the learned lower authority wherein it is recorded that landlord of the building where father and brother of Shri Kamlesh Sanghvi were living that Shri Kamlesh Sanghvi had left the family in 1980. He pleaded even if for the sake of argument it was conceded that Shri Kamlesh Sanghvi was working with Shri Surana, nothing has been brought on record to say that the work he was assigned related to the goods in question. He pleaded that none of the persons other than Shri Kannan as it is has made any reference to Shri Mardia. He has pleaded that even Shri Kannan has not stated that the goods ....
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....party to say that the Tribunal has held where a person has been shifting stand taken as in the by Shri Kannan the statements as given by such person are acceptable as evidence being unreliable. 64. Arguing for the department the ld. SDR pleaded that both the father and brother of Shri Kamlesh Sanghvi have stated in their letters that he was working for Shri Surana. He pleaded that their letters should be accepted as evidence as they had no enmity with him. He pleaded that Shri Yuvaraj, employee of Shri Kannan corroborated the statement of Shri Kannan. He pleaded role played by the appellants has been brought out in para 54 of the ld. lower authority's order. 65. He pleaded that statements of Shri Kannan were taken on different dates and therefore the same stand corroborated. The retraction he pleaded was done only in reply to the show cause notice. He pleaded that as held by the Hon'ble Supreme Court in the case of Bhoormull in the case of smuggling the case need not be proved to a mathematical precision. He pleaded that non-implication of appellants by Srinivas Agencies proprietor grandfather of Shri Venkatesh does not make a difference to the case. He referred to ....
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....statements given by Kannan on 23-3-1995, 25-4-1995 were obtained by threat, harassment, intimidation and coercion whenever the Special Intelligence and Investigation Branch had some false or misleading information to corrobo­rate or implicate people in accordance with the false and misleading information. The Custom House Agent states that none of the above statements are voluntary. The Custom House Agent states that Mr. K. Yuvaraj, nephew of D. Kannan, who works in the Custom House Agent's office, was also subjected to threat, coercion and intimidation on 28-12-1994 and 26-4-1995 to give the statements the way the Special Intelligence and Investigation Branch wanted. The said statements are not voluntary. The Custom House Agent states that in any event these statements are not binding on the Custom House Agent." 67. He pleaded as would be seen from the order of the ld. lower authority in the imputations in para 55 there is no charge of smuggling against the appellant. He pleaded that the findings of the ld. lower authority that he filed the documents for a fictitious firm is not to say that he had knowledge about the firm being fictitious. He pleaded that the Bill of E....
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.... the same person. He however in the later statement on 4-1-1995 and 6-1-1995 changed his version and mentioned the name of one Shri Sanghvi who brought the papers to him for clearance of the consignment in question. A check of the bank account of Shri S. Somasundaram who had signed the Bill of Entry for the importing firm showed that one Shri Kamlesh Sanghvi had introduced him to the Bank. The address of Shri Kamlesh Sanghvi and that of the importing firm in the Bill of Entry filed were the same. Both Shri Surana and Mardia had not been indicated as connected with the importing firm in the first statement recorded. Even in the second statement on 4-1-1995 after stating the firms whose business was brought to him by Shri Sanghvi, Shri Kannan stated one belonged to Shri Surana and Mardia. No information as to which firm belonged to them was elicited. No further question was asked by the officers from Shri Kannan as to which firm to his knowledge belonged to them and on what basis he was making this statement about ownership of one firm by Shri Mardia and Surana. In the statement of 6-1-1995 the information elicited from Shri Kannan was about the five firms for which papers were broug....
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....espect of four i.e. leaving out Sargam in respect of which allegation is that it belonged to Shri Mardia and Surana the appellants herein Shri Sanghvi therefore can be taken to have been acting for persons other than for Shri Surana and Mardia. On 23-3-1995, Shri Kannan was shown photographs of Shri Mardia and Surana and he identified them but he did not identify the persons in the other, four photographs shown. Why these four photographs were shown and whose photographs these were is not matter of record. It was in the statement of 25-4-1995 that Shri Kannan in specific terms stated that documents for the importation in question were handed over by Shri Sanghvi, representative of M/s. Sargam En­terprises and that Shri Surana and Mardia were owners of M/s. Sargam Enter­prises and that they had come to his office and requested for early clearance of the consignment. 70. It is seen that Shri Kannan had mentioned the name of Shri Surana and Mardia in his statement of 4-11-1995 by stating to a query from the officers as under : Qn. Furnish the details about the owners/directions of 5 companies namely (1) Kiran Trading Co. (2) Srinivasa Agencie....
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....be desired. No basis was elicited from him by the authorities for the same. At the earliest point of time i.e. on 4-1-1995 when queried about the ownership of the five firms he never mentioned that they were owners of M/s. Sargam Enterprises and it was much later that he mentioned so. Further on 4-1-1995 without any specific query he stated that they were absconding when the authorities had not yet tried to contact them. It is clear that a basis was slowly being created to link them with the M/s. Sargam Enterprises as owners. In the above background the statement of Shri Kannan cannot form a reliable basis for holding against the appellants. The ld. lower authority has for the corroboration of statement of Shri Kannan relied upon the statement of Shri Yuvaraj his employee. It is interesting to note that Shri Kannan first stated that one Shri Gulabchand who was identified by him was the person who gave the papers for importation and Shri Yuvaraj also did the same and later when Shri Kannan stated Shri Sanghvi was the person who handed over the papers he stated likewise. He has in this regard stated as under : "I wish to state that since our Proprietor Shri D. Kannan, had id....
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....er and son would feel compelled to write a letter to the Customs authorities. Shri Kamlesh was not living with them and they have furnished no details of his employment i.e. for which of the companies of Shri Surana he was working and when he informed them about the circumstances under which he left Madras. It is also not mentioned by them that they were in regular touch with him. As against the above, the appellant's firms were investigated and no evidence of employment of Shri Kamlesh by Shri Surana was found. No statement of any of the other employees of Shri Surana and Mardia was recorded to ascertain whether Shri Kamlesh was one of the employees of Shri Surana. From the statement of Shri Kannan it is seen that Shri Kamlesh was representing five firms of which as per his statement of 4-1-1995 one belonged to Shri Surana and Mardia. The owners of other four firms were indicated as other people in his subsequent statement as brought out above. It is not alleged that other four firms were bogus. That means Shri Kamlesh was do­ing the work for five different firms. The statement of his father and brother and veracity thereof has to be read in the above background. It goes to sh....
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....n with certainty. This circumstance can give rise to suspicion. In the absence of, however, any other concrete or reliable evi­dence connecting the appellants with the commission of the offence cannot con­stitute the basis for levy of penalty under Section 112 of Customs Act, 1962. 74. The reliance of the department on the judgment of the Hon'ble Supreme Court in the case of Bhoormull reported in [1983 (13) E.L.T. 1546 (S.C.) = AIR 1974 SC 859] cannot be pressed into service as in that the question was regarding the smuggled nature of the goods and taking into consideration the restrictions on importation of the goods, circumstances of seizure and other attendant circumstances in that case the Hon'ble Supreme Court observed that the Customs did not have to prove the case to the mathematical precision. Here it is case of levy of penalty under Section 112 on the appellants. Section 112 of the Customs Act, 1962 is reproduced below : "112. Penalty of improper importation of goods, etc. - Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to conf....
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....earance charges. There is nothing to say that any inducement for the clearance for the same was offered by them to Shri Kannan or anybody in this office. There is also no evidence brought on record to say that any one of the earlier consignments cleared for M/s. Sargam Enterprises were delivered to them or on their instructions after clearance or they had been concerned with those clearances. In the absence of all this any tenuous link as has been sought to be established with the goods is not adequate to hold against the appellants. It has also been urged by the revenue that the statement of Shri Kannan being a co-accused was acceptable as piece of evidence against the appellants and reliance was placed on the judgment of Hon'ble Supreme Court reported in 1996 (83) E.L.T. 258 = 1996 (64) ECR 346 in the case of Shri Naresh J. Sukhawani v. UOI. 75. In that case the Hon'ble Supreme Court while holding so has observed as under in paras 3 and 4 of the judgment : "3. The Joint Secretary to the Government, the revisional authority, has held that the evidence and the statement given by Mr. Dudani incriminates the petitioner. This was established with reference to the....
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....e Supreme Court cited supra is not applicable. 76. The corroboration by Shri Yuvaraj his employee cannot be accepted as he parroted out whatever Shri Kannan stated and in his own words he stated Shri Kannan had knowledge about the person and he was doing outside field work and that he stated about the person in view of what Shri Kannan stated. 77. In sum in view of the above discussion when statement of Shri Kannan cannot form the basis for holding against the appellants and evidence of father of Shri Kamlesh Sanghvi is not adequate to draw adverse inference against the appellants and the appellants have explained the basis of their connection with Shri Kamlesh and there is no direct or indirect evidence brought against the appellants regarding arranging of importation and in the absence of any connection with imports by the firm earlier, the evidence of their absence from Madras and even having visited the clearing agent is not adequate to establish preponderance of probability that appellants were concerned or connected with the importation of smuggled goods. Shri Mardia as it is has not been connected by father and brother of Kamlesh with him. The benefit of doub....
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....garding cancellation. In this background it is not understandable how any deliberateness in the matter on the part of the clearing agent can be attributed. He knew Shri Surana and Mardia by reason of the earlier clearing work he had done for them. No falsification of any information filed in the bill of entry has been attributed to him. The Bill of Entry was signed by Shri Somasundaram who turned out to be Shri Kamlesh. There is no evidence or any attribution that he knew that Bill of Entry was signed by a benami. He came on record about Shri Sanghvi although after first pointing a finger at Shri Gulabchand as the person who brought the papers for clearance to him. He even helped the department by bringing in the names of Shri Surana and Mardia even though his statement about them has not been found reliable evidence for the reasons set out in earlier paragraph. There is nothing on record to show that he did or omitted to do anything deliberately which would render the goods liable to confiscation to attract the provisions of Section 112 of Customs Act, 1962. There is no evidence to support the allegation that he knew that contraband goods were concealed in the consignment. He had ....
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....msp;Heard ld. Advocate Shri Nankani for appellants. He divided his presentation into three distinct parts : (a) Admitted facts (b) Disputed facts & (c) Order of Tribunal recorded so far. 82. He reiterated the admitted facts that in the Customs examination of Gambier imported, ball-bearings were also found; that the B/E was dealt with by CHA M/s. Madras International Shipping & Clearing whose proprietor was Shri Kannan; and that 5 statements of Shri Kannan under S. 108 of Customs Act, 1962 were recorded. In his statement dated 28-12-1994 he disclosed Shri Gulabchand Sanghvi as the importer of goods were to be delivered to 83 CIDCO, Ambattur, etc. 7 days later, in his statement dated 4-1-1995 he shifted his stand to Gulabchand and Sanghvi being different persons and documents were given to him by Kamlesh Sanghvi. In his third statement dated 6-1-1995 he disclosed that payments were received from Sanghvi and introduced one Sankaran as proprietor of Srinivas Agencies but was totally silent on Surana and Mardia. In his 4th statement dated 23-3-1995 photos shown were not ident....
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....ustoms Act, 1962 only on 19-4-1995 for appearance on 28-4-1995, therefore the department's charge that they were abiding is baseless, as they gave their statements soon thereafter. When no attempt was made to summon them earlier, where is their absconding involved? 89. Ld. Advocate then proceed to reiterate the disputed facts. These were as follows : (a) Letters dated 26-5-1995 of Rohit Sanghvi and B.R. Sanghvi referred to in para 12 of the Tribunal's order on record; and (b) Statement dated 8-6-1995 of Rohit Sanghvi in which he deposed that K. Sanghvi no longer lived with them but worked for Surana, who had advised Sanghvi to leave from Madras with family in Dec., 1994 so that the specified telephone numbers on which he contacted K. Sanghvi were of Surana. 90. Ld. Advocate argued with respect to these disputed facts (para 10) that : (a) as there is no mention of Mardia in these, it does not apply to him ipso facto; (b) the letter of Rohit Sanghvi - B.R. Sanghvi dt. 26-5-1995 are not U/S 108 of Customs Act, 1962; (c)  ....
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.... (c) Ld. Advocate further argued that even if statement of Rohit Sanghvi considered to show that Kamlesh Sanghvi was working for Surana, it at best shows that K. Sanghvi was merely working for him but does not establish any nexus between Surana and the consignment, as any employer is not concerned with the actions of an employee for himself and on his own. Further, Mardia is not mentioned at all, and is so not at all implicated. (d) In para 43 of the order, Hon'ble Member (J) concludes that a connection between Venkatesh and Sanghvi is established. Ld. Advocate argued that a mere connection does not mean anything and it cannot logically lead to a conclusion that K. Sanghvi handled the import on behalf of Surana. A link between Venkatesh and Sanghvi in no way establishes a link between Sanghvi and Surana. Even Kannan has not in any statement directly deposed that K. Sanghvi worked in this import "on behalf of" Mardia or Surana. (e) Ld. Advocate further argued that Sargam was not a fictitious firm be­cause its proprietor Shri Venkatesh is available in another name. If a proprietor assu....
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....er Order-in-Original nor Order of Hon'ble Member (J) has commented on this. This evidence on C/E needed to be critically evaluated and hence both Order-in-original and Hon'ble Member (J)'s order on record are not fully speaking orders. Ld. Advocate further argued that Kannan, in his statements dt. 4/6-1-1995 had deposed that Mardia and Surana were owners of 5 firms including Srinivas Agencies. But it is on record that owner of Srinivasa Agencies is K.P. Sankaran. Therefore, Kannan's statements are not reliable and do not prove anything. He reiterated Hon'ble Vice-President's order at page 55, para 75 ibid. (k) Ld. Advocate concluded that documentary evidence showed Kamlesh Sanghvi was not working for Surana. Only knowing him is not enough. Also merely because Surana knew Kannan, it does not establish any nexus. (l) Ld. Advocate then submitted that with respect to para 51 of Hon'ble Member (J)'s order, the conclusion reached is not correct. Kannan's letter dated 20-3-1995 merely stated that concerned persons were not available. Mere absence does not mean that Surana and Mardia are in­volved. Till April, 1995....
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.... (g) Ld. Advocate cited : - 1996 (83) E.L.T. 557 (T) - negligence different from culpable negligence; - 1978 CRJ 1690 SC - AIR 1977 SC 666 - intention to aid commission of an offence - AIR 1975 SC 175 - abatement means intentionally aided - 1992 (60) E.L.T. 433 - benefit of doubt always to importer - 1983 (12) E.L.T. 322 Madras HC - Penalty power under S 112 Customs Act, 1962 to be exercised judiciously - Case laws of Mahabir Prasad wherein Allahabad High Court held that suspicion cannot take the place of positive material and prayed for concurrence with Hon'ble Vice-President's order. 94. Heard ld. J.D.R. Shri Ravinder Saroop. He reiterated the findings of Hon'ble Brother Member (Judicial). Facts had already been outlined and need not be repeated. He argued that in 1986 (24) E.L.T. 308 it had been held that discrepancies should not be allowed to let off the culprit and the chaff should be separated from the grain. He reiterated the findings of Hon'ble Member (Judicial) in para 13 of the Order and submitted that as per Bhoormull's case, no mathematical precision of proof was called for....
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....T. 646] as it deals with a confession/retraction. In this case there is neither confession nor retraction involved. 96. At this point ld. JDR rose to point out that goods being smuggled, Bhoormal's case-law applied. Also identification by photo of Surana and Mardia and their request for early clearance cannot be ignored. 97. I have considered the arguments on both sides as also the views recorded by Brother Hon'ble Vice-President and Brother Hon'ble Member (Judicial). With due respects to Brother Hon'ble Member (Judicial), I cannot subscribe to the learned conclusions reached by him, because of the following infirmities in the conclusions reached therein. 98. In paras 41 & 44 of his order, Hon'ble Brother Member (J) has rejected the documentary evidence led that Kamlesh Sanghvi did not work for Surana on the ground that Rohit and his father were not cross-examined. Ld. Advocate argues that it was so because the letters from them were of not much value, being suo motu and not evidence obtained under S. 108 of Customs Act, 1962. Hon'ble Brother Vice-President holds that their suo motu nature, make the documents unreliable. While I agree that suo motu letters r....
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....s not prove anything. If retraction is supported by deposition in cross-examination, as happened here, then the case law relied upon by Hon'ble Brother, is of not much use. 103. In para 48, the case law of Sukhwani is held applicable in this case. With due respect, I find the facts here to be different. There the co-accused had incriminated himself. Here Kannan accepts no knowledge or responsibility for the crime. The case law is therefore not an all fours. 104. The value of evidence of Yuvaraj is not discussed. In view of his admission that he was toeing his employer's views, I am unable to accept the conclusion in para 50. 105. In this case, the offences alleged and confirmed at original stage vis-a-vis the penalties imposed are based on the following types of evidences: (a) Statements of Shri Kannan (b) Statement of Shri G. Yuvaraj (c) Letters of Shri Rohit Sanghvi and his father and the statement of Rohit 106. Shri Kannan is an interested party inasmuch as that he is charged with acts of commission or omission in this illegal import. To exoner....
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....nkani, I agree that Yuvaraj is even less reliable as a witness, because he shifts his deposition and follows that of Kannan. When questioned on this, he almost confesses to be following what his employer has said. His evidence is therefore worthless. 108. The next source is Shri Rohit Sanghvi and his father. The crux of their evidence is that K. Sanghvi was working for Surana and they would contact him on telephones of Surana. Secondly, Surana told Kamlesh to run away. However, there are three difficulties in fully accepting this position. First, as Hon'ble Vice-President in his dissenting order has analysed at length, why did they write their letters suo motu to Customs? Secondly, these are not statements recorded under Section 108 of Customs Act, 1962 and so need further corroboration. Thirdly, as ld. Advocate Nankani has argued in detail, in the absence of examination of his mother, they tend to be hearsay. Even if in spite of these infirmities, if we still accept that they have some value and as statement of Rohit is also recorded under S. 108 of Customs Act, 1962, then we have to evaluate them in the face of contradictory evidence led in defence i.e. that Mardia/Surana....
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.... far available, only suspect this as a possibility. But what we need to impose penalty is a preponderance of probability [1989 (41) E.L.T. 265 (T)] and not a preponderance of possibility, which is what we have. We may not need mathematical precision but we need a clear picture showing probability of a high order. 111. Furthermore, this case totally hinges on circumstantial evidence, as far as penalty imposable on Mardia and Surana is concerned. Now, it is also laid down that circumstantial evidence must be compatible with the guilt of the accused and totally incompatible with the innocence of the persons 1988 (37) E.L.T. 269 (Tribunal). In this case, due to reasons discussed above, the evidence is neither compatible with the guilt, nor totally incompatible with the innocence, as there is no clear predominance of either. An objective and judicious approach in these circumstances would be to give benefit of doubt to the appellants S/Shri Mardia and Surana. 112. As far as the CHA firm and its partner Shri Kannan is concerned, I find that there is nothing to show that he was knowingly involved in the smuggling activities, that he was the recipient of any extra considera....