TaxTMI 
TaxTMI 
2025 (7) TMI 82
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....intelligence, the officers of the Directorate searched the business and residential premises of Shri Vivek R. Mardia (the appellant herein), proprietor of the said M/s. Mardia Metals & Polymers on 02.06.2009. During the search operation conducted by ED, allegedly incriminating evidence such as emails, documents, and foreign currency held by Shri Vivek R. Mardia were seized. On further investigation, it was revealed that the modus operandi adopted by the appellant was that he used to request the supplier of goods to mention lesser values in the invoices to enable him to pay lower Customs Duty. The suppliers from abroad used to send invoices at a lesser value as requested by the appellant and the appellant used to pay the differential value in Indian currency to local persons identified by them. The said local persons were responsible for making arrangements for transfer of the unauthorized foreign exchange to the suppliers abroad. Investigations also revealed that 'Nattu', 'Mamaji', 'Ashraf', etc., were some of the contact persons who used to make the unauthorized foreign exchange transactions. The impugned order further records that the investigation clearly brought out how in resp....
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....k into account the statements of other persons who deposed against the appellant and documentary evidence mentioned in seizure memo dated 02.06.2009. 6. A Show Cause Notice was issued to appellant by the Special Director, ED on 29.08.2011 for alleged contravention of Section 3(d) and Section 4 of FEMA, 1999 read with Regulation 6A of Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Rules, 2000. In conclusion of the adjudication proceedings, the learned adjudicating authority held Shri Vivek R. Mardia guilty of contravening the provisions of Section 3(d) of FEMA, 1999 to an extent of Rs. 5,86,90,806/- and imposed a penalty of Rs.60,00,000/- under Section 13(1) of FEMA, 1999. He was also held guilty of contravening the provisions of Section 10(6) of FEMA, 1999 read with Regulation 6A of Foreign Exchange Management (Realisation, Repatriation & Surrender of Foreign Exchange) Regulations, 2000, to the extent of 500 US Dollars, 2000 Malaysian Ringgits, 570 Euros and UK Pounds 155, in all equivalent to a total of Rs. 63,176/- and imposed a further penalty of Rs. 10,000/- was imposed on the appellant. He was also held guilty of contravening the p....
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....cuments cannot be linked with the bills of entry to quantify the undervaluation precisely; (ii) The investigating officers had obtained a statement from the appellant, who deposed that, there has been under-invoicing in the imports, which varied from 40% to 50% during July, 2007 to March, 2008 and from 50% to 60% during April, 2008 to June, 2009. Based on this deposition, the quantification in the show cause notice was done by assuming that the average percentage of undervaluation is 45% during July, 2007 to March, 2008 and 55% during April, 2008 to June, 2009. Such method of quantification is not sustainable because undervaluation must be proved with corroborating evidence. Value cannot be determined on the basis of mere assumption and presumption. Suspicion, however grave, will not substitute for positive proof of evidence. The depositions of the appellant with regard to the percentage of under-valuation were not corroborated by any independent documentary evidences. Such depositions were also retracted immediately. No investigation was done with the overseas suppliers. No evidences were adduced for the transfer of money to the tune of Rs. 5,86,80,806/- through illegal c....
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....0,000/- is not sustainable. 12. Without prejudice to the above and as an alternate contention, it is also submitted on behalf of the appellant that the facts and circumstances of the case would establish that the quantum of undervaluation is not quantifiable. Therefore, only a penalty of Rs.2 lakhs only can be imposed under Section 13(1). 13. As regards the confiscation of the foreign exchange seized from the residence of the appellant on 02.06.2009, it is contended that the same is not sustainable for the reason that, those currencies were properly accounted. Sufficient proof was submitted by the appellant through his letter dated 05.09.2009. The Appellant had also informed that the foreign currencies were purchased for business purposes. 14. It is further submitted that the foreign currencies were confiscated as per Section 13(2) of FEMA 1999. As per Section 13(2) of the FEMA, 1999, the Adjudicating Authority may, if he thinks fit, in addition to any penalty which he may impose for such contravention, direct that any currency to be confiscated. Therefore, it is not mandatory for the Adjudicating Authority to confiscate the currencies. When the Adjudicating Authority is e....
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....d investigation, a complaint dated 08.11.2010 under Section 16(3) of FEMA, 1999 was filed by the then Assistant Director before the then Special Director, Directorate of Enforcement, Chennai. The complaint primarily contained allegations against appellant Sh. Vivek R. Mardia of mis-declaration of goods, also indulging in gross under- valuation of their imports and remitting the differential value of the imported goods to their overseas buyers through unauthorized/hawala channels. 18. The Appellant Sh. Vivek R. Mardia, used to import LDPE/ LLDPE/HDPE/PP granules of various colours/ grades/ quality from Malaysia, Korea, Germany, Japan, Singapore, Saudi Arabia, etc., and sell the same locally. These included, (i) LDPE (Low-Density Polyethylene) granules used in packaging material etc., (ii) HDPE (High-Density Polyethylene) granules used in plastic pipes, tanks, toys etc., (iii) LLDPE (Linear Low-Density Polyethylene) granules used in buckets, cable coverings etc., and (iv) PP (Polypropylene) granules used in syringe injection moulding etc. The said import transactions were executed by him not only in the name of his own proprietorship concern, namely, M/s. Mardia Metals & Polymers,....
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.... under-invoicing and misdeclaration of goods. Statements of proprietors of firms corroborate the evidence against the appellant. In addition, the appellant could not provide any explanation regarding the seizure of complete cheque book of Kotak Mahindra Bank issued in the name of Sh. M. Kannan, Proprietor of RKS Plast Chem. 21. It is contended that the appellant's ill-intent to circumvent the law is also apparent from a mere perusal of the statements of Sh. M. Kannan of RKS Plast Chem and Sh. D. Satish and Jayakrishnan of M/s. Yes, Jay Exports. Our attention is invited to paragraphs 8.2 & 10.2 of the adjudication order. Our attention is also drawn to para 'C' at pg. 99. It is contended that the same shows the manner in which collusion existed amongst the firms and appellant in circumventing the law. Similarly, the observations recorded in Adjudication Order (Para II on pgs. 108-109 and Para III on pgs. 109-111) are referred to. It is further contended that taking into account the facts brought out in the adjudicating order, appreciation of documentary evidence in the form of emails, seizure of currency and statements as tendered, the plea of retraction and benefit thereof, e....
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....8 is also adverted to in which the afore-stated dictum of the Hon'ble Supreme Court was reiterated while dealing with the concept of retraction under FERA. It is further pointed out that in Pyarelal v. State of Rajasthan [1963 AIR 1094] it was held that a retracted confession could form the legal basis of a conviction, if the court is satisfied that it was true and voluntarily made. 23. It is also submitted that the appellant could not offer any satisfactory explanation regarding the seizure of currency, both Indian & foreign, as can be observed from Para 12 (xxi) on page 129-130 of the adjudication order. 24. It is further pointed out that the appellant, Sh. Vivek R. Mardia, never cooperated with the respondent Directorate and several summonses issued to produce documents were never complied with. The respondent ED contended that the contravention by way of under-invoicing and paying the differential value in cash to the representatives of overseas suppliers stands established upon a holistic appreciation of the documentary evidence, statements, DRIs Show Cause Notice and the observations in para 11.8, 11.9, 11.10 on pgs.116- 119, para 12 on pgs. 119-128, clearly show th....
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....ils of advance payments made and the amount remaining outstanding. It is alleged that the email communication with suppliers includes certain emails requesting the suppliers to misclassify goods and/or mention lower values in the invoices so as to attract lower Customs Duty. Statements were also recorded under FEMA, 1999 of the appellant Sh. Vivek Mardia himself, which was admittedly retracted on the very next day, and also of Sh. M. Kannan, proprietor of M/s RKS Plast Chem and Sh. D. Sathish, proprietor of M/s Yes Jay Exports, whose IECs were misused by the appellant to make under-invoiced imports. It is emphasized that the statements made by Sh. Kannan and Sh. Sathish still stand and have not been retracted by the respective deponents. In addition to these, adverse inferences were also drawn from the seizure of Indian and foreign currencies from the appellant's premises during the search, and also from the failure of the appellant to appear before the Directorate in response to summonses on five occasions. 29. In the above context, having perused the email communications in question, we do find supporting evidence in respect of the allegation that the overseas suppliers were a....
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....braham, a citizen and resident of Malaysia for several years, was one of the directors of M/s VFL Shipping Resources, Malaysia. In respect of the exports made by this company, he himself used to receive the difference in • invoice value in foreign exchange in Malaysia. Sometimes, the amount meant for M/s Yang Jin Co., Ltd., Korea, M/s CFP Trading Corporation & Japan, M/s THA Germany, were also received by the said Ganesh Abraham and passed on to the respective suppliers. A majority of the imports in 2008 were affected from M/s VFL Shipping Resources; • That the source for paying the differential value (between the actual value & invoice value) in INR to the suppliers' contact persons in India was out of the amounts received by him towards the sale of some quantity of goods locally without any bill and from accrued profits of his business; • That the amount of Rs. 11,60,000/- seized from his residence was sale of goods locally without any bill. He has no accounts/documents/records to support the licit/legal possession of the aforesaid amount; • That the foreign currencies seized from his residence were the balances of the foreign c....
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....able duties and taxes on the actual value of the imports; that the entire export operation was managed by the appellant and they (Kannan & Sathish) only facilitated him by lending their concern's identity and IEC code, signing blank cheques and signing the requisite other documentation, wherever required. 32. With regard to the evidentiary value of the aforesaid statements, we find ourselves in agreement with the submissions made on behalf of the respondent Directorate, placing reliance on judicial precedent including the judgment of the Hon'ble Supreme Court in KTMS Mohd. Vs. Union of India (1992) 3 SCC 178 and the judgment of the Hon'ble Delhi High Court in Amrik Singh Saluja vs. Union of India & Anr. in Crl. Appeal No. 120 of 2008 and also in Pyarelal v. State of Rajasthan [1963 AIR 1094]. The position emerging from the said judgments is that a statement recorded under FERA/FEMA can be relied upon as evidence, and even a retracted statement could be relied upon if the court is satisfied that it was true and voluntarily made. 33. Upon combined consideration of the email correspondences, the statement of the appellant, statements of Sh. Kannan and Sh. Satish, we are of t....
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....rs from various overseas suppliers viz. i.Cycle Plant SDN BHD, Malaysia, ii. Eubicorp, SDN BHD, Malaysia, iii. Plastic Cycle Industries, SDN BHD, Malaysia, iv. JBC International, SDN BHD, Malaysia, v. Forte International (M), SDN BHD, Malaysia, vi. West Pack Waste Management, SDN BHD, Malaysia. (vii) Flexi Supreme, SDN BHD, Malaysia viii. EPD Plastic Industries SDN BHD, Malaysia, (ix) SSP Polymers Pte Ltd, Singapore, (x) Esika (P) Ltd, SriLanka, (xi) Zibo guanglong Plastics Industry & Trade Co. Ltd., China, (xii) Comell Industrial Co. Ltd., Taiwan, (xiii). Yurac International Trading Co., Taiwan, (xiv). On Well Inc. Ltd, Hong Kong: (b) They have imported the above goods from the above said overseas suppliers and cleared the same under 95 Bills of Entry filed with Customs during the same period from May, 2007 to July, 2009 as that of M/s MMP, Chennai and its proprietor Shri Vivek R Mardia; (c) Out of the 95 Bills of Entry, 66 Bills of Entry pertain to import of similar goods supplied by Malaysian suppliers, whose actual price varied from US$ 550 to US$ 1170 per MT during the period from May, 2007 to July, 2009 as against the declared value of US$ 300 to US$ 400 per....
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....Malaysian suppliers; (i) Therefore, the actual price/value of re-processed LDPE & HDPE plastic granules of Malaysian origin were in the range of US$ 550 to US$ 1170 per MT as against US$ 230 to US$ 400 declared by both M/s. Shami Impex & M/s. MMP. Chennai-7, M/s, RKS Plast Chem, Chennai-1 and M/s, Yes Jay Exports, Chennai -1; (j) Though the suppliers in Malaysia were different for M/s. Shami Impex and M/s. MMP, as the goods imported by them were similar and the origin is same viz. Malaysia, the actual values (viz. US$ 550 to US$ 1170 per MT) adopted by DRI, Chennail in the case of M/s. Shami Impex are very much comparable as contemporaneous price evidence) with the average (actual) values of USD 550 to 1100 per MT arrived out in the subject case: (k) Even in the aforesaid case investigated by DRI, Chennai, very few evidences were available in respect of imports made by M/s. Shami Impex in 2007 & 2008 and more evidences in respect of imports made in the year 2009 as in the case of imports made by Shri Vivek R. Mardia, in his firm's name and in the names of M/s. RKS Plast Chem, Chennai -1 and M/s. Yes Jay Exports, Chennai 1; (l) The rates avail....
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....les were also described as reprocessed LDPE, LLDPE, HDPE and PP granules and they were also under- invoiced USD 230 per MT to USD 400 per MT in the same manner as mentioned in the above mentioned e-mail. 11.10 In view of the above, it appears that the actual value of the 109 consignments covering 3,074.941 MTs of Reprocessed LDPE, HDPE & PP granules, imported by Shri Vivek R Mardia in the names of M/s. MMP, Chennai, M/s. RKS Plast Chem, Chennai & M/s. Yes Jay Exports, Chennai from the above mentioned suppliers were in the range of US$ 550 to US$ 1100 per MT as against US$ 230 to US$ 400 per MT declared in the Bills of Entry during the period from July 2007 to July, 2009 as could be seen from the various email and other evidences and statements of the persons concerned discussed above. The total declared value for 3,074.94 MTs of Reprocessed LDPE, HDPE & PP plastic granules of different grades and colours covered under 109 consignments imported from the above suppliers was US$ 10,57,496 & Euro 20,707, whereas, the total actual value of these consignments is US$ 22,66,885 & Euro 37,631. Thus the differential value works out to US$ 12,09,389 & Euro 16,924 and the differential....