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Bhargav B. Patel, Supaporn Viboonwetwanich@Kanchana, Nilesh B. Patel Versus Commissioner of Customs, CST, Mumbai

2015 (9) TMI 1197 - CESTAT MUMBAI

Confiscation of seized diamonds under Section 111(d), (f), (i) and (m) - imposition of penalties - Smuggling - It is seen that in the context of section 111(d) or 113(d), in several precedents, the definition of 'prohibited goods' as contained in section 2(33) of the Customs Act, 1962 has been applied liberally, including in Om Prakash Bhatia vs. Union of India, [2003 (7) TMI 74 - SUPREME COURT OF INDIA] and Sheikh Mohd. Omer vs. Collector, [1970 (9) TMI 36 - SUPREME COURT OF INDIA]. - Under sec .....

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, after conclusion of the hearing, on instructions, advocate for Ms. Kanchna informed that now she will not avail the option of redemption even if granted. Therefore, we are not interfering with the order of absolute confiscation. - Since the courier parcel was in the name of his sister, considering the gravity and penal consequences and due to natural love and affection he initially accepted under pressure the ownership and importation of the seized courier parcel. He categorically stated t .....

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statements, which were also recorded under section 108, do not incriminate him or Nilesh Patel. These statements cannot be ignored. His explanation therefore seems plausible. - The adjudicating authority has recorded that Ms. Kanchana appears to have been pressurized to file an affidavit giving untenable grounds such as non dutiability of the seized diamonds and conflicting reasons for sending concealed diamonds for collection by Jimmy who was not even known to Shri Bhargav Patel or his par .....

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f Mr. Bhargav Patel and Nilesh Patel in the smuggling of the diamonds under seizure is not established even on preponderance of probability and penalties imposed on them are set aside. - Decided partly in favour of appellants. - Appln. No. C/MA(Ors)/92963, 93053/15, Appeal No. C/381/10 & C/87679, 87757, 87758/13 - Order No. A/2388-2391/15/CB - Dated:- 4-8-2015 - M V Ravindran, Member (J) And P. S. Pruthi, Member (T), JJ. For the Appellant : Shri Prakash Shah, Adv For the Respondent : Shri M S Re .....

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ch@ Ms.Kanchana and Mr. Nilesh B. Patel, are against Order-in-Original dated 28.3.2013. This impugned order imposed penalties on them of ₹ 1 Lac and ₹ 2 Lacs respectively under section 112(a) of the Customs act, 1962, while directing absolute confiscation of the said seized diamonds stating them as rough diamonds. Before the adjudicating authority Ms. Kanchna had requested for permitting her to redeem the goods on payment of fine, which was rejected. One Appeal filed by Bhargav B. Pa .....

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ng on them penalties of ₹ 1 Lac and ₹ 2 Lacs respectively, were allowed by way of remand by Tribunal. Thereafter, the impugned Order-in-Original dated 28.3.2013 is passed in de-novo adjudication. 5. We have carefully considered the rival submissions and the available records. The Ld. DR has supported the impugned Orders and submitted that the Appeals are liable to be dismissed by taking us through the findings recorded against the Appellants. He submitted that no case for either sett .....

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nsignee named Ms. Shilpaben, showing address of the Appellant Shri. Bhargav B Patel. (ii) During investigations, in his initial statement, Shri. Bhargav Patel stated that he was partner of M/s. Parvati Gems, Mumbai having workshop at Surat for cutting and polishing of diamonds and was importing and exporting diamonds through DPCC, Mumbai. His brother Nilesh Patel stayed in Bangkok and his sister Shilpaben was married and stayed in Surat. He had attended the Customs Office in response to summons .....

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10 parcels had only magazines related to jewellery designing and advertising etc. (iii) He was arrested thereafter, on 21.04.2005. In searches at his residence and office premises, nothing incriminating was found. He retracted his statement before the Magistrate, to which a rebuttal was filed before the Court by the Department. He was released on bail on 28.04.2005. (iv) M/s. Fedex Express revealed that from 15.04.2005 to 25.04.2005 a person named Jimmy from Bangkok pursued M/s. Fedex telephonic .....

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2005 and 29.09.2005 Shri Bhargav Patel stated inter alia that the seized diamonds did not belong to him and that he did not know as to why they came in the name of his sister. He stated that the diamonds were not called for by him. He did not know who were Som, Pannifer and Ms. Kanchana. He did not call for any diamonds and came to know about it only after getting the summons in his sister's name. He did not have contact with any person named Jadhav for helping him in his business. He did no .....

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eizure. His sister was not connected with the parcels and he did not know why the parcels were sent in her name. He stated that he was not aware of any such parcel's arrival and hence there was no question of his calling Fedex and giving any instruction regarding its delivery. He did not know Thai language and was not aware as to why such book was sent in the seized parcel. His company never received any exported goods back due to any problem related to quality etc. (vi) Ms. Kanchana, in res .....

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parcel to one Mr. Jimmy, who was to follow her instructions and collect the same in India. That, before the parcel could reach the addressee, it was detained by the Customs. The diamonds were not dutiable and no law has been violated by her and that the diamonds be handed over to her legal representative, as it was her first mistake. She gave the value of the seized goods which was in dispute. The value given by the expert was on lower side. (vii) Statements of various personnel from M/s. Fedex .....

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was issued to the applicant amongst others. 20.10.05 Applicant filed Settlement Application u/s 127B of the Customs Act, 1962 before the Settlement Commission. 29.12.05 Interim Order passed by the Settlement Commission interalia, directing the parties to submit names of approved assessors by 10.01.2006. The matter was accordingly adjourned to 17.1.2006 at 11.00 hours to appoint an approved assessor to determine the value of the diamonds. It was also observed that the adjudication order would bec .....

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ed by the applicant, came to be stayed. Whereas the impugned order claims that goods were not dutiable, before the Hon'ble High Court the department claimed that duty leviable would be 1.58 lakhs. 07.11.07 During the pendency of this stay order by the Hon'ble Bombay High Court vide ex-parte final order passed by the Settlement Commission, the application filed by the applicant was rejected interalia for the reason that the SCN has been adjudicated by the competent authority on a specific .....

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er dated 12.01.10 and requested for withdrawal of the application, so as to file appeal before this Tribunal. 18.3.10 The Settlement commission informed that in the meanwhile the application filed by the applicant and others were already rejected vide order dated 07.11.07. 17.6.10 Appeal filed. 8. In the de-novo adjudication, the stand taken by Ms. Kanchna before the adjudicating authority is evident from para 3.7 of the impugned order dated 28.3.2013 as follows: "3.7 That One Courier parce .....

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he vast Indian Market by clearing Indian Customs without declaration; that she categorically says that though she works in M/s Bhargav Gems at Bangkok, neither Shri Nilesh B. Patel, nor Shri Bhargav Patel were aware of the fact that she has sent a corier parcel which contained diamonds. Nor any of them, or any of the other notices in the Show Cause Notice, is concerned with the seized diamonds; that she could not even inform them about having sent the parcel, as whiles she was about to make a ca .....

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tter dated 26-09-2005 and informed the factual position to the case wherein she has claimed the diamonds and also informed that she had invested her savings in these diamonds; that she made efforts to recall the consignment, but failed; that she chose to send the parcel at the Mumbai address of Shri Patel, in the name of "Shilpaben", as she knew Patel's brother and other family members in India; that she could have even collected the same at the office of the courier company itself .....

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redemption fine and leviable Customs duty." 9. It is also a matter of record that Ms Kanchna had earlier filed an application for settlement seeking immunities from imposition of any penalty or fine, and from prosecution by admitting her duty liability of ₹ 2,11,415/- towards these seized goods before the Settlement Commission. This application is duly notarized. In this application she states that- "The facts leading to the filing of present Application are as mentioned hereunde .....

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mis-declared the goods covered the said courier parcel, for my own benefit. However, the said act was to encash the diamonds in the vast Indian Market, for licit importation of which I was not having any infrastructure in India. 5. I categorically say that though I work in M/s Bhargava Gems at Bangkok, neither Shri Nilesh B. Patel, nor Shri Bhargava Patel were aware of the fact that I had sent a courier parcel which contained diamonds, Nor any of them or any of the other notices in the Show Cau .....

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osing the good job, for having mis-utilised the Indian residential address of Shri Nilesh Patel and the name of Mrs. Shilpaben. 7. Several persons including their family and the courier people faced a lot of problems, which I regret. 8. I say that I have not conspired with M/s FEDEX or M/s Jeena & Company or any Customs officer. 9. A summons bearing no AKS/229/05 was received by me for appearance before the office of AIU, in connection with the said import of diamonds in a fraudulent manner. .....

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llected the parcel through "Mr. Jimmy" immediately upon delivery of the parcel at their residence, or could have even collected the same at the office of the courier company itself. 11. Vide this letter dated 26-09-2005, I categorically informed the officers of the Customs department that it was the first courier consignment sent by me, 12. A Show Cause Notice bearing F. No. SD/INT/AIU/UNI-2/2005/STF dated 29/09/2005 has been received by me. The said Show Cause Notice is not annexed an .....

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liability before this Hon'ble Commission. I say that I am not a habitual offender and I undertake that I will never indulge in such fraudulent practice in future. 15. I further say that in the true spirit of settlement I have disclosed my duty liability, which was not disclosed before the proper officer, I also say that the application fulfils all the parameters of section 127B of the Customs Act, 1962, and therefore this Hon'ble Commission can consider this application for settlement o .....

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rough diamonds in the impugned Order) on the ground that granting of option to redeem was mandatory in view of use of word "shall" in section 125 of the Customs Act, 1962, as the 'cut and polished diamonds' are not amongst goods which are in the list of prohibited goods. It is seen that in the context of section 111(d) or 113(d), in several precedents, the definition of 'prohibited goods' as contained in section 2(33) of the Customs Act, 1962 has been applied liberally .....

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concealment was pleased to hold that attempt to import gold un-authorisedly will come under the second part of Section 125(1) of the Act where the adjudging officer is under mandatory duty to give option to the person found guilty to pay fine in lieu of confiscation. Section 125 of the Act leaves option to the officer to grant the benefit or not so far as goods whose import is prohibited but no such option is available in respect of goods which can be imported, but because of the method of impor .....

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/08 vide order dated 23.6.2014 in Appeal No. C/65/08-MUM held that currency beyond permissible limit are prohibited goods, however, without these binding precedents in the context of section125 were not brought to notice of the larger bench. Further, in Asian Food Industries, 2006 (204) ELT 8 (SC), the Hon'ble Apex Court inter alia observed that the meaning of word 'prohibited' will have to be construed in regard to the text and context in which it is used and the words prohibition, .....

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the conditions subject to which the goods are permitted to be imported or exported have been complied with." The above liberal definition of section 2(33) which is applied in the context of section 111 or 113 cannot be applied in the context of section 125. Under section 125 upon confiscation the Adjudicating Authority has two options. If importation or exportation of the goods of specified description is "prohibited" under the Act or any other law, upon confiscation he "may .....

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cation under section 111 or 113 as the case may be without there being any violation of the provisions under the Customs Act, 1962 or under any other law or rules, regulations made thereunder. Therefore in the context of section 125 if the word 'prohibited' is construed as to apply in respect of every violation of any regulation or restriction or statutory procedural requirement, the word 'shall' in said section would be rendered redundant and meaningless. In the context of the s .....

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o offer to the Owner the goods an option to pay fine in lieu of confiscation. Since the import of 'cut and polished diamonds' is not expressly prohibited under Section11 of the Customs Act, 1962 or by any other statutory notification, we find merit in the ground that an option to redeem them on payment of fine in lieu of confiscation was mandatory. However, after conclusion of the hearing, on instructions, advocate for Ms. Kanchna informed that now she will not avail the option of redemp .....

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on proceedings and to dispose of the same qua him within a period of five weeks. In his Preliminary Reply to Show Cause Notice dated 29.9.2005 Bhargava Patel denied having any concern with the seized parcel In this reply he stated that since the courier parcel was in the name of his sister, considering the gravity and penal consequences and due to natural love and affection he initially accepted under pressure the ownership and importation of the seized courier parcel. He categorically stated th .....

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tatements, which were also recorded under section 108, do not incriminate him or Nilesh Patel. These statements cannot be ignored. His explanation therefore seems plausible. Bhargav Patel has also submitted that the subject Courier Bill of Entry contains a mandatory declaration, as reproduced in para 3.6 of the impugned order, to the following effect- "(i) I/we hereby declare that E/23 have obtained the authorization from each consignee mentioned above to act as agent for the clearance of t .....

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obtained. However, no such authorization from Shilpa Ben or Bhargav Patel has been obtained in this case. We also find force in this submission that in absence of any such prior authorization for declaration, he cannot be held responsible for any mis-declaration of the contents or material particulars in the above facts. There is neither any proposal concerning any past importation of diamonds in similar fashion, nor any of the appellants admitted the allegation which is again based on suspicio .....

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