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2015 (12) TMI 4 - CESTAT MUMBAI

2015 (12) TMI 4 - CESTAT MUMBAI - 2015 (329) E.L.T. 669 (Tri. - Mumbai) - Detention of assets - violation of principles of natural justice and fair play. - Allegation of Smuggling of consignment seized including Luxury Car, Luxury Wrist Watches, Assorted jewellery, pieces of fur of wild animals and cash - whether the impugned order extending the time limit under Section 110(2) is legal and proper and whether the officers of DRI had sufficient time and opportunity for investigating into the detai .....

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ceedings under this Act, are secreted in any place, he may himself or through other officers search for such documents, goods or things. The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word Magistrate, wherever it occurs, the words Commissioner of Customs were substituted. - It is ev .....

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ets under the Customs Act.

Revenue had sufficient time for conducting inquiry and or issue of show-cause notice under Section 124 within a period of six months from the date of detention of the goods. It is evident on the face of record that the investigation officers have done practically very little or nothing in spite of the appellant being available for the purpose of inquiry right from 7.12.2013 till 10.2.2014 being the period of judicial custody. Further, during the said custody .....

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vestigating authority chose about two weeks prior to the end of time limit of six months, have ventured to make further inquiry about the detained assets by recording statement and asking for further details like Bank statement and other documents.

Detention of the goods/assets in question is bad under the provisions of Section 110 as the goods/assets have only been detained and not seized as required under the scheme of the Act. We further take notice of this fact that so far the two .....

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earned Commissioner and/or the DRI to release the detained goods of the appellant and their family members after obtaining PD Bond and/or Indemnity Bond, that the appellant and other persons will not alienate the assets returned to them and/or any way deal with them without prior permission of the Commissioner of Customs. The goods are to be returned forthwith, within a maximum period of 20 days from receipt of a copy of this order.

As the appellant is a noticee in the show-cause noti .....

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Order No. A/1445/2015-WZB/CB - Dated:- 5-6-2015 - SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) AND SHRI P.S. PRUTHI, MEMBER (TECHNICAL) For the Petitioner : Shri Rizwan G. Merchant, Advocate For the Respondent : Shri M.S. Reddy, DC (AR) ORDER Per: Anil Choudhary The appellant, Shri Parminder Singh Sabharwal, has preferred this appeal against Order-in-Original No. 02/2014-15 dated 5.6.2014 passed by the Commissioner of Customs (Exp), JNCH, Dist. Raigad, wherein the learned Commissioner has been please .....

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nders were attempted to be smuggled out of the country, in July, 2013. In the course of further investigation, the Revenue felt that the appellant is also one of the person involved in the smuggling of the consignment seized in July, 2013 as well as in some previous consignments. Search was conducted in the premises of the appellant on 6.12.2013 and the following assets found were detained and taken custody by the Revenue: - (i) One BMW 525 D Car bearing No. HR-26-BQ-1600; (ii) One Jaguar XJ Car .....

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ow-cause notice dated 13.1.2014 that the appellant was alleged to be instrumental in shipment of 19 container loads of Red Sanders to Hong Kong with the help of Santosh Pandurang Patil, Ajay Kumar Sharma @ Manish Verma, Kirti Patel and others. Considering the average quantity of Red Sanders in a 40 feet refrigerated container to be 22MTs, the total quantity of Red Sanders shipped out by the appellant works out to approx. 418 MT valued at 167.20 crore. The said quantity of Red Sanders was consign .....

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of the Foreign Trade (development & Regulation) Act, 1992 and Rule 14(2) of the Foreign Trade (Regulation) Rules rendering himself liable to penalty under Section 114(i) and 114AA of the Customs Act. 2.2 Further, the appellant was required to show cause as to why not penalty under Section 114AA of the Act be not imposed and it was further observed in the aforementioned show-cause notice that financial investigation in respect of the case, including the appellant, are in progress and separate .....

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regularly attending the office of the DRI, Mumbai and has been assisting in the investigation. The appellant preferred miscellaneous application No. 29/N/2014 to 33/N/2014 before Additional Chief Metropolitan Magistrate, 8th Court, Esplande, Mumbai for return of Passport and for return of articles taken charge under Panchanama dated 6.12.2013. After receiving notice from the Court of Magistrate, Esplanade, the officers of DRI moved Miscellaneous Application before the Honble High Court seeking .....

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by him and his family members as well as in the name of the company/firm under their management, wherein it is revealed that large amount of cash deposits have been made on regularly basis. It was further stated that details of such deposit have been sought and therefore in such circumstances the order was sought from the competent authority for extension of further time to issue show-cause notice in connection with the goods detained under the Panchanama dated 6.12.2013 from the premises and Ba .....

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appellant under notice is required for which separate notice will be issued after completion of the investigation. It is further recorded that in the course of investigation after 6.12.2013, the appellant and his relatives have submitted large number of invoices in support of their claim of acquisition of the assets under detention through licit means and sources. It is further noticed that the said details have been submitted on 2.6.2014. Accordingly, the learned Commissioner found force in th .....

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llant had stated that the goods were detained on 6.12.2013 without any recording of reasonable belief under which the goods were taken charge of and/or detailed. Further, the Panchanama does not spell out that the detained goods were seized for the purpose of enquiry under the Customs Act. Consequently rendering the entire detention or the seizure as illegal and bad in law. It was further stated that granting extension of time as prayed by the DRI for issue of show-cause notice would amount to e .....

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mation and explanation have been made to the investigating officers vide representation dated 2.2.2014, 3.3.2014 and 10.3.2014 along with prayer for return of the detained/seized assets. In spite of the submission of the supporting bills and details regarding the assets, no further investigation were carried out by the DRI. It is further stated that for failure of the investigating agency to inquire or investigate the stand taken by the appellant in Feb- March, 2014, with regards to the assets, .....

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fore the Court of Metropolitan Magistrate for release of the detained articles, they further inquired by resorting to and ascertaining further documents collected from the appellant including recording of statement to justify and/or convincing the existence of reasonable ground for extension of time. This is evident on the face of the record as effort to cause further inquiry of the detained goods/assets was taken up by the officers of DRI only a few days before the issue of show-cause notice da .....

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notice with respect to Red Sanders seized on 13.7.2013 was issued within six months. The DRI believe that the high value of goods/assets found during the search at residence of the appellant, there is reasonable belief to be liable for confiscation and detained rightly for further investigation. Further, it appears from the Panchanama dated 6.12.2013 that had the appellant or any of his relatives have provided any legal admissible proof for purchase or procurement of the said goods, the DRI may .....

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s did not submit the invoices etc. at an earlier dated in order to facilitate the completion of investigation in time bound manner. The ld. Commissioner has further observed that the statement of the appellant was recorded on 26.5.2014 by the DRI, wherein he was asked to explain sources of the cash deposit, for which the noticee had sought time to provide the details. Thus, there is no force in the allegation of the appellant that the department has not utilized stipulated time for completion of .....

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department to accept the licit ownership of the goods and jewelry, in absence of any document to the contrary in support of the said case. 2.8 As regards the allegation of colourable exercise of power based on the facts that further investigation were taken up prior to extension of time for show-cause notice in question, the ld. Commissioner observed that the show-cause notice clearly states that notice in respect of the detained goods was almost ready and as the appellant have submitted large n .....

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was arrested on 7.12.2013 in the alleged acts of the smuggling of Red Sanders and was in the judicial custody till 20.2.2014, thus, there is reasonable reason for not including the detained/seized goods vide Panchanama dated 6.12.2013 in the show-cause notice dated 13.01.2014, as the investigation was pending and proposal to confiscate the same without affording an opportunity to the assessee to produce evidence in support of his legitimate claim, as that would have been allegation of violation .....

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. 3. The question arising for decision by this Tribunal is whether the impugned order extending the time limit under Section 110(2) is legal and proper and whether the officers of DRI had sufficient time and opportunity for investigating into the details of the assets detained vide Panchanama dated 6.12.2013, and further investigation only a few days before the issue of show-cause notice for extension of further time for issue of show-cause notice, vide notice dated 2.6.2014. 4. The ld. Counsel .....

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ithout recording the reasonable belief that under which provisions the jewelries have been taken charge of, is illegal. (iii) The ld Commissioner of Customs further failed to appreciate that the passport of the appellant was seized and taken charge of by the officers of DRI, which amounts to impounding and such right is vested only on the Passport Officers under the Passport Act. As such, the seizure of passport is ab initio void and is against the ruling of the Honble Supreme Court as held by .....

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er the Customs Act. (iv) That the ld. Commissioner failed to appreciate that no nexus of any nature, direct or indirect have been established or even remotely averred by the DRI neither in the Panchanama in respect of the detention/retention of these articles nor in the show-cause notice dated 13.1.2014. (v) Ld. Commissioner also failed to appreciate that neither during the course of judicial custody of the appellant from 7.12.2013 to 10.2.2014 nor after the release any attempt has been made by .....

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ing sufficient time available to them and by way of colourable exercise of power, the DRI resorted to further inquiry into the detained assets only a few days before the expiry of time limit and have issued the show-cause notice for further extension of time for issue of show-cause notice in respect of the detained assets. (vii) The ld Commissioner has further failed to appreciate that since the request of release the detained items was turned down, the appellant had preferred application for re .....

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of almost 60 days of the appellant, at no point of time any application was moved by the DRI before the Court, for obtaining order to record the statement of the applicant and to investigate with respect to the item detained or charge taken of. That the ld. Commissioner have further erred in not appreciating that the necessary information regarding the seized assets have already been disclosed to the investigating agency as early as in Feb, 2014 and for slackness on part of the DRI to investiga .....

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ice issued on 13.1.2014. (x) The ld. Commissioner further failed to appreciate that there is no allegation of non-cooperation on part of the appellant in investigation and as such timely completion was the duty of the investigating officers and failure to do so without any reasonable cause cannot be a ground for extension of time, as held in the impugned order. Ordinarily, the extension of time for issue of show-cause notice is to be considered only when there are certain issues which unknowingl .....

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ow-cause notice, the impugned order is bad in law and fit to be set aside. (xii) The ld. Counsel further urges that subsequent to the passing of the impugned order, further investigation continued and show-cause notice dated 2.12.2014 have been issued to the appellant, his wife Mrs. Dolly Sabharwal, his son Shri Pavneesh Sabharwal, daughter-in-law Smt. Gureen Kaur and father-in-law of his son Shri Amarjeet Singh Sethi, wherein the parties have been asked to show cause as to why BMW car having pu .....

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m the residential premised on 6.12.2013, appeared to be part of the sale proceeds of smuggled goods (Red Sanders) should not be confiscated under the provisions of Section 121 of the Customs Act, 1962. It is further pointed out by the Counsel that it is admitted fact as recorded in para 5 of SCN dated 2.12.2014, that BMW car s invoice, value of which is ₹ 44.04 lakhs, out of which ₹ 30 lakhs was financed by HDFC Bank. For purchase of Jaguar car as per detail invoice, the price of whi .....

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d under the Panchanama along with the procurement value and the source of the watches have also been explained. It is further urged that the Metropolitan Magistrate has only rejected the application of the appellant for return of the detained goods only on the ground of jurisdiction, as the Magistrate observed that power to release of detained goods is with the Commissioner of Customs. It is further urged that in para 10 of the show-cause notice dated 2.12.2014, it is admitted by the Revenue tha .....

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d. It is further admitted fact as it is evident from para 12.4 of the SCN dated 2.12.2014 that an amount of ₹ 10 lakhs was down payment/booking amount for purchase of Jaguar car. ₹ 10 lakhs was paid to Tata Motors by way of RTGS payment on 25.3.2013 and further ₹ 37,23,446/- was paid by cheque dated 7.5.2013 to Tata Motors issued from the Bank Account of the M/s Acer Logistics. The Revenue has further admitted in para 11.6 of the show-cause notice dated 2.12.2014 that analysis .....

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ily members, company and firm are all assessee under Income Tax and they filed regularly return of their income and assets and as such the allegation in the show-cause notice dated 2.12.2014, all the assets not properly explained, is bad in law. (xv) As per para 15 of the show-cause notice dated 2.12.2014, Mrs. Dolly Sabharwal, wife of the appellant in her statement recorded on 12.5.2014 has stated that articles of jewelry found and detained, major part of its is very old and received in gift fr .....

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mother-in-law and her father-in-law in support of they have been gifted and has also submitted old valuation report dated 20.3.1986 and 22.6.1986, issued by the Govt. Approved valuer. (xvi) Further from para 16.1 of the show-cause notice, it is on record that the letter dated 30.5.2014 was received from Mr. Amarjeet Singh Sethi, who claimed that he had given various items of jewelry as gift to his daughter Gureen Kaur at the wedding and have also submitted invoice, detail for the purchase there .....

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investigation have only made wild allegation without any reasonable basis. It is also recorded in para 19 of the show-cause notice as per statement of the appellant, that all of the cash received during the period in consideration, by the Customs department, about 90% of the turn-over is received through Banking transaction and only 8 to 10% are received in cash, being received from walk-in customers. Further the appellant has turn-over around ₹ 25 crores per annum during the period in que .....

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seeking time for providing details and to file detail of large amount of cash deposits in various accounts operated by him and his family members. Accordingly, the show-cause notice dated 2.6.2014 was issued with proposal for extension of time limit, which was allowed by the impugned order. Accordingly, the Counsel for the appellant urges that the impugned order is against provisions of law and is a colourable exercise of power and the same is fit to be set aside and further by way of consequen .....

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scate under provisions of Section 112 of the Customs Act. Further, the learned AR relies on the impugned order and states that the impugned order is legal and in accordance with law and fit to be upheld. 6. Considering the question in issue, we take notice of the relevant provisions of the Customs Act being Sections 105, 110, 110A, 111, 121 and 122. 6.1 Section 105 of the Act provides that competent officers of Customs, or in any area adjoining the land frontier or the coast of India, has reason .....

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said Code shall have effect as if for the word Magistrate, wherever it occurs, the words Commissioner of Customs were substituted. 6.2 Section 110 (1) provides that If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except .....

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iod not exceeding six months. 6.4 Sub-section (3) of Section 110 provides the proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. 6.5 Section 110A of the Act empowers the adjudicating authority to release any goods seized under Section 110 to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require. 6.6 Section 111 of the Act provides fo .....

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led goods, (ii) that the sale should have been made by a person having knowledge or reason to believe that the goods are smuggled goods. 7. It is evident from perusal of the panchanama dated 6.12.2013 that no condition precedent as required under Section 110 of the Act, is recorded at the time of detaining the goods/assets found to the effect that subject goods are liable for confiscation under the provisions of the Customs Act. Further no satisfaction have been recorded as required under sub-se .....

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of the appellant being available for the purpose of inquiry right from 7.12.2013 till 10.2.2014 being the period of judicial custody. Further, during the said custody, the DRI have never sought permission to interrogate the appellant. Even after the release from the judicial custody, the appellant was attending the office of the DRI every week particularly on Monday and such other days as he may have been advised. Further, the appellant and his family members had approached the Revenue authority .....

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nd facts on record and have failed to appreciate that there is no sufficient reason shown by the investigation officers for extension of the period for six months for issue of show-cause notice. The observation of the learned Commissioner that pursuant to recording of the statement of the appellant on 26.5.2014, wherein the appellant was asked about explanation for various cash deposit and the appellant had sought time to provide the requisite details and as such the Revenue was justified in see .....

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