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Kiran Nagindas Vora of Mumbai Versus The Commissioner of Customs (Export) , Nhava Sheva

2015 (9) TMI 343 - BOMBAY HIGH COURT

Conspiracy to make fictitious exports – Retraction of statement – Cross-examination of Witness – Tribunal in second round allowed Revenue appeals and imposed penalty under section 14(1) of Customs Act, 1962 upon appellant by concluding that both appellant and one other were involved in transactions which led to inflated and bogus claims of refund / rebate / drawback – Held that:- Adjudicating Authority observes that allegations against appellant are that he entered into conspiracy to make fictit .....

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error of law apparent on face of record – Instead, Tribunal makes reference to general principle that retraction of statement and cross-examination of certain persons would not make any dent in plethora of evidence produced by Department and confessions of various persons – Therefore, further finding that case cannot be demolished merely by cross-examination of witnesses by ignoring circumstances and corroborative evidence is equally vitiated because crossexamination may contain admissions – Thu .....

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RAL JUDGMENT : [Per S.C. Dharmadhikari, J.] 1. These two appeals by Kiran Nagindas Vora and Iqbal Mohan Amritlal Mehra challenge a common order passed by the Customs, Excise and Service Tax Appellate Tribunal, Bench at Mumbai. 2. In the appeal of Shri Kiran Vora it is submitted that there are substantial questions of law and which have been raised for consideration and determination by this Court. From the record, it appears that the appeals of Shri Vora appeared on Board for admission but this .....

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re, it decided to impose penalty of ₹ 15 lakhs under section 14(1) of the Customs Act, 1962. There are two appeals against two orders of the Commissioner exonerating and dropping the proceedings against Shri Vora and which appeals of the Revenue were dealt with by the Tribunal. The said Vora does not deny that he is in the business of manufacturing and dealing in bearings and for about 23 years. He was also exporting goods to Russia. However, he has absolutely no connection with the export .....

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s but eventually the appellant resigned as a Director at the end of accounting year 1999-2000. There were certain investigations in relation to the transactions but no show cause notice was issued by the Directorate of Revenue Intelligence (for short DRI ) against M/s. Buttons RUS (India) Pvt. Ltd. The officials of DRI, however, recorded statements of the appellant on 22nd and 23rd September, 1999, which came to be retracted later on. There was certain information received in the Directorate tha .....

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in that regard. There was a further statement recorded of the appellant by the said DRI on 30th August, 2000, where the appellant referred to his past dealings and business. There was also a letter sent by the appellant on 14th February, 2001, informing both the DRI and the Excise Department that he had retracted the statements. The Enforcement Directorate allegedly forced the appellant to give statements and which came to be at the behest of the officials exercising powers under the Foreign Ex .....

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ause notice dated 17th April, 2002, issued under section 124 of the Customs Act, 1962, inter-alia, calling upon the appellant and 14 others to show cause why their drawback should not be denied, why it should not be demanded under Rule 16A of the Customs and Central Excise Drawback Rules, 1995, the FOB value of the goods reported should not be redetermined and appropriate directions and orders be not made for imposing penalty. 5. The allegations in the show cause notice are that the appellant an .....

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s house agent and of misdeclaration of the value of the goods exported. That is how the appellant was proceeded against. We once again refrain from setting out these allegations in further details and equally the response of the appellant thereto. 6. It is alleged that after the two interim replies were given and the proceedings were conducted by the Adjudicating Authority, namely, Commissioner of Customs (Adjudication), Mumbai, he made an order dated 22nd January, 2008, whereunder he confirmed .....

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hemselves and set aside the earlier adjudication order. The Tribunal remanded the matter by its final order dated 18th July, 2008. It is in pursuance of such direction of the Tribunal that the Adjudicating Authority heard all parties and passed an order styled as order-in-original dated 11th May, 2009. The Adjudicating Authority on this occasion held that the appellant's acts have not resulted in the wrongful availment of drawback and, therefore, the charges levelled against him were liable .....

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eals and imposed a penalty of ₹ 15 lakhs on the appellant. The Tribunal concluded that both the appellant and Shri Mehra have colluded with others and created front companies and allowed them to avail of these drawbacks. Therefore, penalties can be imposed upon them. 9. It is this order of the Tribunal which is challenged in this appeal. 10. Mr. Sridharan, learned senior counsel appearing in support of this appeal submits that the questions of law at pages 19 and 20 as formulated and worde .....

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Commissioner had referred to the specific statement in the cross-examination of one Sandeep Naik, Director of M/s. Radheshyam Exports Pvt. Ltd. He conceded that the appellant Vora had no connection with this company - M/s. Radheshyam Exports Pvt. Ltd. at the relevant time. Mr. Sridharan points out that all the statements were recorded but retracted and promptly. They were retracted at the first available opportunity. Some of the statements recorded by the DRI in Nashik Central Prison could not .....

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to gain or avail of the drawback benefits. In the circumstances, he would rely upon the questions of law formulated by the appellant to submit that the Tribunal's order is vitiated. Mr. Sridharan would submit in all fairness that the Tribunal's order is vitiated also because it is delivered much after the period specified viz. of four months. The conclusion of the hearing is on 15th May, 2013, but the order was pronounced on 26th September, 2013. Thus, there is a delay of four months and .....

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ing the order of the Adjudicating Authority. Mr. Jetly submits that these are nothing but delaying tactics. The matter has been remitted back and on remand the appellant succeeded before the Commissioner. It is the Revenue which pointed out to the Tribunal that the retraction of statements will not in any manner assist parties like the appellant. The cross-examination of certain persons and read as a whole would reveal that both M/s. Radheshyam Exports Pvt. Ltd. and M/s. Specialist Exports did n .....

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some other entities. The exporters could not produce any evidence to show that they have made payment to the supplier of goods. Thus, one who has exported the goods ought to have been credited with the amounts received, including of drawback. That has not admittedly transpired. Mr. Jetly, therefore, relied upon paras 4.1.2 and 4.1.3 of the Tribunal order running pages 48 to 50 to urge that the appeal does not raise any substantial questions of law and it deserves to be dismissed. He would submit .....

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the following substantial question of law : Whether in the facts and circumstances of the case, the Appellate Tribunal was right in imposing penalty on the Appellant by ignoring the relevant material on record and relying upon irrelevant material? 13. Considering the limited arguments, we dispose of this appeal finally. We would once again clarify that it is not necessary for us to refer to other allegations in the show cause notice in details or the responses thereto. We are further careful in .....

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ase. Similarly, the order and directions that we propose to pass would only enure to the benefit of the appellant and not the other parties in the adjudication proceedings and before the Tribunal. The Tribunal order to the extent of these parties is, therefore, not interfered with. 14. Suffice it to note that before the Commissioner viz. Adjudicating Authority, when all the materials were placed by both sides, he had not only the statements which were later on retracted but the response or repli .....

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f the existence of the documents or their contents. There is no dispute raised in that regard. Therefore, the Tribunal has permitted cross-examination of the noticees either by the department or by the co-noticees. We are mindful of the fact that in adjudication or such proceedings, strict rules of evidence or the law of evidence may not be applicable. However, what the principles of natural justice demand is that what is in evidence cannot be relied upon. What is evidence is something about whi .....

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d. vs. The Workmen and Ors. AIR 1972 SC 330). This salutary principle would govern even adjudication proceedings. We do not, therefore, know as to on what basis, even if all had consented, that the Adjudicating Authority and the Tribunal allowed co-noticees to cross examine each other. Here also in this case and in the Memo of Appeal in the present matter, we find that the appellant has while disassociating himself completely from the transactions and the entities, sought to inculpate Mr. Mehra. .....

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tered into a conspiracy with Iqbal Mohan Amritlal Mehra to make fictitious export to Russia against repayment of state credits granted to erstwhile Soviet Union Republic (USSR) and colluded with others. He created front companies luring them with monetary gains and have managed to open and float M/s. Radheshyam Exports Pvt. Ltd., Mumbai and several other companies which have rendered themselves liable for confiscation under section 113(d) and 113(i) of the Customs Act, 1962. They have rendered t .....

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ent a registered AD letter to the DRI with his affidavit dated 14th February, 2001, which gave full particulars of his business activities, including Russian exports. He made a specific statement therein that the DRI and his officials coerced him to write a statement inculpating him. This affidavit, though received by the DRI, has not been rebutted. 17. Then, the Commissioner holds that the statements of Vora recorded at the Central Prison cannot take the case any further because the earlier sta .....

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d on 5th December, 2005, wherein he states that Kiran Vora was not involved in any activity of M/s. Radheshyam Exports Pvt. Ltd. Thus, when at the relevant time the association is not established that the Commissioner proceeds to conclude that even the principles laid down in the judgment of the Hon'ble Supreme Court in K.L. Pavunny vs. Assistant Collector (HQ), Central Excise Collectorate, Cochin would not be of any assistance. He holds that there is no corroboration forthcoming as far as t .....

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concluded that the Commissioner's reasoning is either perverse or vitiated by any error of law apparent on the face of the record. If the statements made by Vora have been retracted and the Tribunal was inclined to proceed on the footing that retracted statements can be utilised by the Revenue, then, it was incumbent upon it to refer to the corroborative material. That the Tribunal does not find it necessary to refer to it in details is evidenced by virtue of its general and sweeping observa .....

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rative material. If indeed there was any, it was the duty of the Tribunal to have expressly referred to it and relying upon the same, overturned the order of the Commissioner. Instead, the Tribunal makes reference to the general principle that retraction of statement and cross-examination of certain persons would not make any dent in the plethora of evidence produced by the Department and confessions of various persons. True that the same may be dealing with other appellants and their cases. Equ .....

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lished before the Tribunal that the Commissioner has erred in taking a view that no penalties can be imposed on the said Vora. The Tribunal's conclusion that in case of retraction of confessional statement can be ignored might be correct as a general statement of law but that inculpatory portion of retracted confession must be relied upon together with independent corroborative material. The same only cannot be then relied upon and to base any conclusion. Therefore, its further finding that .....

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