TaxTMI 
TaxTMI 
2024 (10) TMI 1747
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....Directorate to the effect that Directorate General of Central Excise intelligence (DGCEI) Chennai had registered a case against one M/s Copier Force India, Chennai for non-payment of Central Excise Duty. The said M/s Copier Force India had imported certain goods into India from foreign countries but not foreign currency remittances against such imports were made through legal channels. The DGCEI had seized incriminating documents which revealed that the said company was also involved in hawala transactions to the tune of several crores of Rupees during the period June 2000 to March 2004. 3. Based on the above information, records of the case were sought by ED from the Additional Director General, DGCEI Chennai and the same were furnished vide letter dated 14.06.2004 by the Joint Director, DGCEI, Chennai. Perusal of the documents inter alia revealed that Mr. K A Mansoor, elder brother of Mr. K.A. Shabu who owns Copier Force India, had been involved in import of used/second-hand photocopy machines in semi-knocked down (SKD) condition in the name of Crystal Group of Companies which were floated by him. Mr. Mansoor was the president and founder of the Crystal Group of companies and ....
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.....2008 before the Assistant Director Directorate of Enforcement Chennai, Mr. Y.S. Jaliwala, Director of My Forex Services Private Limited, a complaint was filed before the ld. adjudicating authority alleging that Mr. Mansoor, a resident Indian, without the general of special permission of the Reserve Bank of India (RBI), had paid an amount of Rs. 3,69,45,273/- in India to various persons, namely, one Surya who was the representative of foreign supplier Astro Agencies Private Limited, Singapore, Jefri, representative of Rane Business Services, Singapore who used to come to Chennai, as well as the representative of the foreign supplier Business Machines International towards imports made by 13 companies of the Crystal group at Chennai under various Bills of Entry and thereby contravened the provisions of section 3(b) of FEMA 1999. 6. In consequence of the detailed discussions in the impugned order, the learned adjudicating authority recorded a finding that in the instant case, there is no dispute that imports have taken place and even the noticee has not declined the imports and as such, there should have been a record of payments made through official channels, namely, through the....
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.... persons would have to be summoned during the course of the proceedings for cross-examination or else their statements shouldn't be taken into account for recording findings against the appellant. 10. In this regard, attention is drawn to the decision of the Hon'ble Supreme Court in A. Tajudeen Vs. Union of India reported in 2015 (317) ELT 177 (SC) and that of the case in Vinod Solanki Vs. Union of India reported in 2009 (13) STR 337 (SC) to contend that retracted confession attributable to a person charged under fiscal enactment like FEMA/FERA cannot be substantive evidence and requires independent corroboration on its material particulars for its acceptability. In the present case, excepting the self-serving and so-called 'confessional' statements recorded by DGCEI and the Enforcement Directorate, which have been retracted, there is no independent material to corroborate the same and, therefore, the lower adjudicating authority couldn't have taken the so- called confessional statements on its face value and accepted it as evidence of wrong doing. 11. It is also submitted that any material gathered in an alien enactment to that of the FEMA, 1999such as st....
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....primarily and only be used for the purpose of Central Excise Act/Customs Act, 1962 and could not form the basis for any adjudication under the FEMA, 1999. This is because the purpose and object of the Customs Act, 1962/Central Excise Act, 1944 is for collection of Customs Duty and Central Excise duty whereas the purpose and object of FEMA, 1999 is one for management of foreign exchange. The Acts are alien to each other and material gathered under each of the enactments can be used only for the purpose of conducting proceedings under that enactment and not for any other enactment. This is the settled proposition as reiterated by the Hon'ble Supreme Court in the case of P.V. Mohammed Baramay Sons Vs. Directorate of Enforcement reported in 1992 (61) ELT 337 (SC). 15. The appellant, therefore, submits that free use of the Adjudicating Authority from such sources as the investigation conducted by DGCEI and proceedings thereof are not substantive evidence of contravention of FEMA, 1999. 16. The appellant further submits that even on merits two statements have been recorded from the appellant in terms of Sec. 37 of FEMA, 1999 on 30.06.2011 and 14.11.2011. These statements are no....
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....e directorate remained unclaimed. In 2011 he appeared for the first time. The appellant never co-operated with the investigation. The statements of the appellant himself as well as those of other associated persons before the DGCEI as well as before the respondent Directorate corroborate the charges against the appellant. The Authorised Dealer Banks also replied that no overseas payments have been made by them on behalf of the appellant. 19. Thus, relying strongly on the order of the authorities below, the learned counsel of the respondent has prayed the instant appeal is without any merit and deserves to be dismissed. Analysis and Findings 20. I have given careful consideration to the material on record and the rival contentions of the parties. Detailed submissions have been made on behalf of the appellants questioning the reliance placed by the respondent (ED) on the statements recorded by the DGCEI, and later, by the ED itself under FEMA, 1999. It is contended that the same were not voluntary, were made under coercion, and had been retracted; that there was no independent corroborating evidence as required under the law laid down in various authoritative judgments; and ....
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....filed and application retracting his confession wherein he stated that from 26th evening till that date when he was produced before the Ld. CMM, he was illegally detained in the office of the ED, during which all statements had been recorded by force, coercion and also the threat of being detained under COFEPOSAA, 1974. As against this, in the present case, statements were recorded by the DGCEI on 29.01.2003 and 14.05.2003 and the statement before the ED was recorded on 30.06.2011 and 14.11.2011. Thus, there was a very long time-gap between the various statements recorded by the DGCEI and subsequent statements by ED were recorded many years later. Surely, had the appellant been under any threat or coercion at the time of making his statements before the DGCEI, he had more than enough time to overcome the same by the time the ED recorded his statements about eight years later. Yet, he made elaborate admissions in his statements before the ED. The relevant part of the discussions in the impugned order are extracted below for ready reference: " 2.15 Shri K.A. Mansoor, Proprietor of M/s Crystal Copier Systems Put. Ltd. (CCSPL) final appeared before the Assistant Director, Directorat....
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....m ⮚ in order to avoid the restrictions imposed under the Export Import (EXIM) Policy of Ministry of Commerce, Govt. of India and to avoid repeated Policy of the same company and as penaltiestives would go up, he started several companies in the names of his relatives and employees of Ms. CCSPL ⮚ the companies floated by him were mentioned in the Annexure, which was Prepared by the Investigating Officer in his presence based on the Documents/ details available in the records of the Investigating Officer and also based on the inputs/ information furnished by him; ⮚ the persons mentioned in column 4 of the Annexure were made by him as the Proprietor/ Managing Director/Director of the companies floated by him and however, he was only controlling the day-to-day affairs of the companies started in their names including the imports, negotiations of prices of imported goods with the overseas suppliers, assembly of imported components in his godown at Valasarawakkam and the disposal/ sale of refurbished/ reconditioned photocopier machines assembled out of the imported components and he was the beneficiary of the imports made in the names of M/....
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.... ⮚ further, he stated that the persons (his relatives/ employees), in whose name he had started the companies and imported the photocopier components, or did not know anything about the imports, their clearance from the Customs and disposal/sale of the photocopier machines assembled out of the imported components. ⮚ he had seen the copies of documents seized by the Commercial Taxes Department, which were collected from them by Directorate of Enforcement that contained Bill of Lading showing the company names M/s Universal Traders, No. Alwarthirunagar, Valasaravakkam, Chennai-87 (which address was also the godown of M/s CCSPL, where the assembly of imported photocopier components was taking place), M/s Alpha Services, No. 11. Azeez Mulk, 4th Street, Thousand Lights, Chennai-6 and M/s Global Systems and those companies were also the companies floated by him in which he used to import second hand /used photocopier components; 11, AKR Nagar, ⮚ in the same way, he imported second hand / used photocopier components 2.1 in the names of other companies like Bharath Trading, Rainbow Traders, Infotech, Crystal Exports,....
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....ks for effecting payments the overseas suppliers, who supplied the used photocopier components; ⮚ he agreed that in all the imports, the import payments were made through hawala means/ illegal channel to the overseas suppliers of the imported photocopier components; ⮚ With reference to the query as to explain how the import payments were settled to the suppliers through illegal channel (other than banking channel), he once again stated that the suppliers of Singapore used to visit Chennai very often and at that time, he used to settle the import payments for the imported photocopier components (supplied by them) in cash out of the sale proceeds of the assembled photocopiers sold in India; ⮚ in the same way, many times the suppliers' representatives used to come to India and at that time also he settled import payments through them as per the instructions/request of the overseas suppliers; ⮚ he also used to settle the import payments through one Surya (now he is no more) in Chennai, who was the representative of the Singapore supplier, M/s Asto Agencies Pte Ltd., Singapore; ⮚ Shri Jefri of M/s Rane B....
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.... reads as below: "23. It is trite law that evidence brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidence, which would lend adequate assurance to the court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded." Notably, in K.T.M.S Mohamed Vs. Union of India (1992) 3 SCC 178, the Hon'ble Supreme Court held that merely because statement is retracted, it cannot be regarded as involuntary or unlawfully obtained. In this regard, following observations were made in paragraph 34: "34. ... 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 Custom Authorities or the officers of the Enforcement under the relevant provisions of the respective Acts is a sine qua n....
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.... against the appellant. An unreported decision of the Hon'ble Madras High Court in V. Bhaskar v. Enforcement Directorate W. P No. 18918 of 2000 (order dated 24.06.2005) is relied upon. 26. Upon perusal of the impugned order, I find that the issue of cross- examination has been discussed by the learned adjudicating authority in para 5.8 of the impugned order which reads as below: "5.8 With regard to the cross-examination request of the Noticee, it is to be noted that the statement of Shri Geever and Shri Jaliwala are only corroborating the statement of Shri K.A. Manshoor. As I am not solely relying on their statements. I find that there is no need to allow cross- examination of those persons. The Hon'ble Apex Court in the case of Kanungo & Company Vs. Collector of Customs held that "the principles of natural justice do not require that in matters like this, the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the customs Authorities" I also rely upon the following decisions to support my stand of non-acceptance of cross examination at this stage. ....
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....fferent and distinct and the Acts are alien to each other. The judgment of the Hon'ble Supreme Court in P.V. Mohammed Baramay Sons Vs. Directorate of Enforcement reported in 1992 (61) ELT 337 (SC) is relied upon. 30. The above contentions of the appellant have been examined. It is seen that the decision in K.T.M.S. Mohd. relates to a case of criminal prosecution under the I-T Act and the Cr. P.C. The context of the Hon'ble Supreme Court's observation regarding reliance on statement made under an alien Act have to be seen in the light of the observations of the Hon'ble Court in the subsequent paragraph, which reads as below: "29. If it is to be approved and held that the authorities under the I.T. Act can launch a prosecution for perjury on the basis of a statement recorded by the Enforcement Officer then on the same analogy the Enforcement authority can also in a given situation launch a prosecution for perjury on the basis of any inculpatory statement recorded by the Income-tax Authority, if repudiated subsequently before the Enforcement authority. In our opinion, such a course cannot be and should not be legally permitted." 31. In that case, the I-T....
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....llant. In the show-cause notice contravention was brought to its notice. The appellant gave the explanation. After consideration of the facts since there was no express permission granted by the Reserve Bank of India for the payments by the appellant to the agent outside India, the contravention was proved and penalty was imposed. The aforesaid decision is entirely distinguishable on facts as well as law. In the present case, while partly relying on the findings of fact made by the DGCEI, the Enforcement Directorate has independently examined the appellant's culpability under the FEMA, 1999 and held the appellant liable for penalty. Furthermore, in Vinod M. Chitalia vs. Union of India MANU/MH/0474/2012 (order dated 28.03.2012), it was held by the Hon'ble Bombay High Court that statements made to DRI can be used in the proceedings under FEMA, 1999. 34. It is next contended that there is no corresponding confirmation of the transactions from the foreign suppliers. No inquiry or investigation was conducted by the complainant with respect to proprietors/MDs of the companies through which the goods were imported. There is not even an iota of material to show that payments ....