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TMI Blog2010 (10) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 24 of 2010. By the said Civil Application, the original Appellant/Applicant i.e. Directorate of Enforcement sought, to amend the cause title by substituting the Directorate of Enforcement by the Union of India. The said amendment sought, was strongly objected to on behalf of the Respondent by relying upon the authoritative pronouncement of the Apex Court in the case of Mohtesham Mohd. Ismail v. Spl. Director, Enforcement Directorate & Anr. reported in 2007 AIR SCW 6348 = 2007 (220) E.L.T. 3 (S.C.). This Court by order dated 17-6-2010 allowed the said Civil Application in terms of prayer clause (a), thereby permitting the amendment of substituting the Original Appellant/Applicant with the Union of India, however the same was allowed without prejudice to the rights and contentions of the parties in the above Appeals. In terms of the Order of this Court dated 17-6-2010 the Learned Counsel for the respective parties addressed us on the said issue also. 2. Since the issue regarding the confiscation of the foreign currency in question, is pending since the year 1993, the parties had requested that the Appeals he heard at the admission stage itself. Accepting the request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to judicial custody till 17-8-1993. Both the Dodia brothers filed their retracted statements which were replied to by the Assistant Collector Air Intelligence Unit. Whilst the Dodia brothers were arrested. Jatin Jhaveri could not be arrested till much later as he was apparently evading arrest. However, on his arrest, he made a statement that part of the foreign currency i.e to the extent of 2,89,250 U.S. $ belongs to him and the rest of the amount i.e. 1,14,300 U.S.$ did not belong to him. The said Jatin Jhaveri produced copies of currency declaration forms dated 25-6-1993 and 28-6-1993 at the time of bringing/importing the said US $, while returning to India. The said amount according to him was received by him as an advance for business transaction from his business associates in the USA, when he was on a foreign tour to America. He also relied upon the Affidavits of the persons who had purportedly given him the said foreign currency amount of 2,89,250 U.S.$. It is required to be noted that all the three Appellants were issued show cause notices under the Customs Act. In so far as the Appellants excluding Jatin are concerned, their statements were recorded on 28-7-1993 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of the hearing of the above Appeals that the said Order of the CEGAT has become final and binding as the Revenue has not chosen to carry the matter further. It would also be relevant to note that in the proceedings under the Income Tax Act, for the Assessment Year 1994-1995, the Assessing Officer had made an addition of Rs. 1,24,49,517/- to the income of Jatin Jhaveri on account of the foreign Currency to the extent of 4,03,550 US $ seized as undisclosed income. Against the order of the assessing officer, the said Jatin Jhaveri carried the matter in Appeal to the Income Tax Appellate Tribunal (ITAT) who set aside the said addition to the extent of US $ 1,14,300 on the ground that the said amount did not belong to Jatin Jhaveri and, therefore, there was no justification for its addition in the hands of Jatin Jhaveri. The ITAT accepted the stand of Jatin Jhaveri that the source of acquisition of the amount of US $ 2,89,250 was the receipt of advance payments against supply of diamonds from two over seas buyers. 9. In so far as the FERA is concerned, the Show Cause Notice came to be issued to the Appellants on 21-11-1007 for contravention of Section 8(1) read with S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 463/99 came to be partly allowed and whereas the finding of guilt was affirmed as also the confiscation of 1,14,300 US $ was confirmed. However, the amount of penalty was reduced from Rs. 30 lacs to Rs. 1 lac. The gist of the reasoning of the Tribunal was that Jatin Jhaveri had explained the circumstances on account of which in his first statement dated 12-10-1993, he had not mentioned about his calim of 2,89,250 US $. According to the Tribunal, the adjudicating authority had failed to take into consideration the subsequent statement dated 7-10-1996 of the said Jatin Jhaveri. The Tribunal was of the view that in so far as the amount of 2,89,250 US $ is concerned, there were three factors in favour of the said Jatin Jhaveri namely : (i) Two currency declaration forms whereby the amount of 2,89,250 US $ is covered. The correctness of the said currency declaration forms is neither confirmed nor denied by the Customs. (ii) Affidavits of some U.S. residents who have purportedly given the said foreign currency as advance. (iii) The photocopy of the passport of the said Jatin Jhaveri to prove his visit to USA and the Affidavit of one Mr. P.N. Shenoy who was the Bank Manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the scope of the proceedings under the Customs Act are entirely different from the proceedings under the FERA Act. (ii) That the genuineness of the currency declaration forms was itself doubtful in view of the inconsistency between the statement of Jatin Jhavcri as made on 12-10-1993 and his statement made on 7-10-1996. The case of the Jatin Jhaveri, therefore, that he had declared the foreign currency on arrival, could not be accepted. (iii) That the Tribunal failed to take into consideration that the original pass port was not produced by Jatin Jhaveri for verifying the authenticity of its relevant pages as regard his visit to USA. (iv) That the Tribunal failed to appreciate that there was no RBI permission either general or specific for the transfer of the foreign currency which would exonerate the Respondents of the contravention of Section 8(1) and 64(2) of the FERA. (v) That the Tribunal failed to appreciate that the efficacy of the confessional statement made by the Respondents under Section 108 of the Customs Act, 1962 and Section 40 of the FERA Act of 1973, which statements were given by the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een recorded by the CEGAT, it is not open for the Appellant to question the said finding of fact as the said finding has been accepted by the concerned department of the Appellant, since the matter has not been carried further by the said department. (vii) That the provisions of Section 8(1) and 64(2) of FERA are not at all attracted. (viii) That there has been no inconsistency in the statement of the Respondents and that on the basis of the said statement, it cannot be proved that there is any contravention of the provisions of the FERA. (ix) That three authorities have adjudicated upon the matter on the same set of facts and all the authorities after considering the material and documents on record have recorded a finding in favour of the Respondents above named as regards legal importation of the foreign currency. Consideration 13. Having heard the Learned Counsel for the parties, we have given our anxious consideration to the rival contentions. Since it is the contention of the Learned counsel appearing for the Respondents that in view of the adjudication by the CEGAT wherein the CEGAT has recorded a finding that Appellant-Jatin Jhaveri had legally i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the light of the currency declaration forms which were of earlier dates. The Tribunal was also of the view that the gap between the two currency forms of three days, was adequately explained by Jatin Jhaveri by stating that the baggage was mis handled by the airline and, therefore, one bag containing part of the currency, was received after three days. Therefore, as can be seen, from the order of the Tribunal which is impugned in the present Appeals, the Tribunal has considered the aspect of the acquisition of the currency amounting to 2,89,250 US $ threadbare and on the basis of material that was before it, concurred with the finding of the CEGAT that the currency was legally imported into India by Jatin Jhaveri. 15. In so far as the findings of the CEGAT are concerned, to the effect that the said currency was legally imported into India by Jatin Jhaveri. The said findings can be deciphered from paragraphs 5, 6, 7, 8 & 16 of the Order of the CEGAT, which paragraphs are reproduced herein under : "5. We shall first consider the confiscation of currency. None of the appellant has claimed ownership of US $ 1,14,300/- found in the black brief case. It is not disputed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrency of US $ 2,89,250 is liable to confiscation for being attempted to be exported without permission. However, having regard to the fact that the currency was legally imported and declared on arrival to the Customs department be permitted to be reexported subject to the permission of the Reserve Bank of India, or otherwise disposed of in accordance with that bank's disposed of in accordance with that bank's directions on payment of fine of Rs. 9.00 lacs." 16. It is also an undisputed position that in the Income tax proceedings, the ITAT in the Appeal filed by the said Jatin Jhaveri against the order passed by the Assessing officer, has brought down the addition to income of the said Jatin Jhaveri for the Assessment Year 1994-1995 from 4,03,550 US $ to 2,89,250 US $. Hence, the Income Tax Authorities have also accepted the fact that the said amount of foreign currency was the income of the Jatin Jhaveri in the said Assessment year. It is relevant to note that both the orders of the CEGAT as well as ITAT have become final and binding as the revenue in both the matters has not chosen to carry the matter further. We find considerable merit in the submission of the learned Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government. Such an Appeal is not tenable. Paragraph 12 and 13 of the said Judgment are reproduced herein under : "12 From the notification dated 22-9-1989, whereupon reliance has been placed by Mr. Bhan, it would appear that the officer authorized by the Central Government for the purpose of enforcing the provisions of the Act was specifically empowered to adjudicate upon the dispute. The said notification itself is a pointer to the fact that for the purpose of exercising the functions of the Central Government under one provision or the other, the officer concerned must be specifically empowered in that behalf. A general empowerment would, however, be permissible. Before the High Court, no notification was filed to show that the authority concerned was empowered to prefer an appeal on behalf of the Central Government. The Central Government was not even impleaded as a party to the appeal. First Respondent did not file the appeal on behalf of or representing the Central Government. It was filed in its official capacity as the adjudicating authority and not as a delegate of the Central Government. 13 An adjudicating authority exercises a quasi-judicial power an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Civil Application No. 24 of 2010 in FERA Appeal No. 64 of 2006. In our view, the objection of the Respondents to the maintainability of the Appeals would have to be sustained on the application of Mohte Sham's Case (Supra) and resultantly, the Appeals would have to be dismissed on the ground that the Director of Enforcement who was the adjudicating authority had no authority to file the Appeals. The Appeals, therefore, to stand dismissed on the said ground also. 19. In so far as Writ Petition No. 2976 of 2004 is concerned, the principal relief sought is that of the release of the currency amount of US $ 2,89,250 along with interest thereon @ 18% from date of seizure until release thereof to the Petitioner. 20. In so far as said relief is concerned, since we have dismissed the Appeals filed by the Appellant above named, the above Petition would have to be allowed in terms of prayer clause (a). However, the Petitioner would have to deal with the said amount in terms of the order of the CEGAT as also the Order impugned in the above Appeals i.e. re-export the said amount with the permission of the RBI. Since, the Respondents have retained the amount on account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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