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TMI Blog2010 (1) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... radeep Jain, counsel for accused No.1 Beam Technologies Pvt. Ltd., enclosing certain invoices therewith and claiming that there was no variance in the description given in those invoices and the actual goods found in the packages. It was, however, found, on a scrutiny, that the invoices enclosed with the letter did not tally with the invoices found inside the packages since there was discrepancy in the quantity and value. The invoice No. 6070forwarded with the letter showed the quantity as 100 and total price as US$3,500, whereas the invoice recovered from the package showed the quantity as 50 and the price as US$1,750. The quantity actually recovered from the package was 100 and not 50. 2. During the course of investigation, statement of accused No.2 Sandeep Sehgal was recorded, in which he stated that petitioner Joginder Gulati was also a Director in Beam Technologies Pvt. Ltd. He further stated that Joginder Gulati used to reside at Singapore and owned two companies including VIST International Pvt. Ltd. and that he along with Joginder Gulati, had decided to import computer parts to India from the company of Gulati in Singapore. He also stated that during the period from August ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Sehgal has stated that petitioner was also a Director of Beam Technologies Pvt. Ltd. besides being owner of M/s VIST International, Singapore. It has been further alleged that both, Sandeep Sehgal and the petitioner Joginder Gulati had hatched the conspiracy for import of computer parts in the Country without payment of customs duty and double set of invoices were created intentionally for the purposes of evading duty, which was clearly indicative that they were fully aware of the modus operandi and had conspired with the management of Beam Technologies to evade duty, as the Consignment Note on the parcels did not carry the true declaration regarding the description of the items or quantity being imported. It has been further claimed that the investigations have revealed that the petitioner was also a Director of Beam Technologies Pvt. Ltd. 5. The issue which comes up for consideration in this case is as to whether the criminal proceedings initiated against the petitioner are liable to be quashed merely on account of the order passed by CEGAT on 4th June 2009. The issue as to whether the decision in adjudication proceedings has any impact on the criminal prosecution or not, came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the preservation of foreign exchange, the primary purpose of prosecution is to serve as a strong deterrent to persons or companies contravening the provisions of the Act and to send a message to the society at large. Counsel pointed out that Section 56 of FERA which deals with offences and prosecutions, commences with the words "without prejudice to any award of penalty by the adjudicating officer under this Act". A person contravening any of the provisions shall upon conviction by a court will be punished, even if a penalty has been imposed on him." 7. Upholding the contention made by the learned Addl. Solicitor General and repelling the contention made on behalf of the petitioner, the Hon‟ble Supreme Court inter alia held as under: "The Act was enacted, as indicated by its preamble, for the conservation of foreign resources of the country and the proper utilization thereof in the economic development of the country. When interpreting such a law, in the absence of any provision in that regard in the Act itself, we see no reason to restrict the scope of any of the provisions of the Act, especially in the context of the presence of the "without prejudice" clause in Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs will not influence the criminal prosecution, irrespective of whether the result is in favour of or against the accused. Section 135(1)(a) of Customs Act also opens with the words "without prejudice to any action that may be taken under this Act". Therefore, the decision of the Hon‟ble Supreme Court in the case of Standard Chartered Bank (supra) would squarely apply to prosecution under Section 135 of Customs Act and consequently the proceedings for imposition of penalty initiated under Section 124 of Customs Act would not affect the criminal prosecution for the offence punishable under Section 135 of Customs Act irrespective of the outcome of the penalty proceedings. 9. In „Assistant Collector of Customs vs. L.R. Malwani‟ 1999 (110) ELT 317 (SC) issues that came up for consideration before the Hon‟ble Supreme Court included the following two: "(i) Whether the prosecution from which these Criminal Revision Petitions arose is barred under Article 20(2) of the Constitution as against accused Nos. 1 and 2 in that case by reason of the decision of the Collector of Customs in the proceedings under the Sea Customs Act? (ii) Whether under any circumstance the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted before a criminal court for an offence under Section 23 of the Foreign Exchange Regulation Act in respect of the same act, the proceeding before the Sea Customs authorities was not a "prosecution" and the order for confiscation was not a "punishment" inflicted by a Court or judicial Tribunal within the meaning of Article 20(2) of the Constitution and hence his subsequent prosecution was not barred. The said rule was reiterated in Thomas Dana v. State of Punjab (1959) SCR 274 and in several other cases." 11. As regards the applicability of the Rule Estoppel, the Hon‟ble Supreme Court inter alia held as under: "But before an accused can call into aid the above rule, he must established that in a previous lawful trial before a competent court, he has secured a verdict of acquittal which verdict is binding on his prosecutor. In the instant cause for the reasons already mentioned, we are unable to held that the proceeding before the Collector of Customs is a criminal trial. From this it follows that the decision of the Collector does not amount to a verdict of acquittal in favour of accused Nos. 1 and 2." 12. In "Sant Ram Paper Mills vs. Collector of Central Excise" 1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said that the view taken by the Adjudicating Authority or the Tribunal, as the case may be, represents the view of the department. In fact, in the present case, the petitioner was not exonerated by the Adjudicating Officer and it was only the Tribunal which has decided in his favour. The view taken by the Tribunal cannot be said to be the view of the department and, therefore, does not bind it. 15. I feel that considering the authoritative pronouncement of the Hon‟ble Supreme Court in the case of Standard Chartered Bank (supra), it is difficult to make the fate of the criminal proceedings dependent upon the outcome of the proceedings initiated for adjudication and recovery of penalty. The Hon‟ble Supreme Court having specifically held that the two proceedings are independent and launching of the one or the other or the both is controlled by the respective provisions themselves and having further held that the findings in adjudication were not binding on the court in a proceedings under Section 56 of FERA and also having held that the findings in one proceedings is not conclusive in the other, it is difficult for this court to take a contrary view and to say that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings as the two proceedings are independent in nature. 2. The findings in the departmental proceedings would not amount to resjudicata and initiation of criminal proceedings in these circumstances can be treated as double jeopardy as they are not in the nature of "prosecution". 3. In case adjudication proceedings are decided against a person who is facing prosecution as well and the Tribunal has also upheld the findings of the adjudicators/assessing authority, that would have no bearing on the criminal proceedings and the criminal proceedings are to be determined on its own merits in accordance with law, uninhibited by the findings of the Tribunal. It is because of the reason that in so far as criminal action is concerned, it has to be proved as per the strict standards fixed for criminal cases before the criminal court by producing necessary evidence. 4. In case of converse situation namely where the accused persons are exonerated by the competent authorities/Tribunal in adjudication proceedings, one will have to see the reasons for such exoneration to determine whether these criminal proceedings could still continue. If the exoneration in departmental adjudication is on tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees and Rajesh Kumar, the Customs Inspector on the other hand for illicit clearance of the dutiable goods imported through post parcels, without payment of duty and in this regard, the statements of these persons recorded under Section 108 of the Customs Act are clear evidence." 21. It would, thus, be seen that the Tribunal did not at all scrutinise the allegations against the petitioner on their merits. Despite the department claiming that there was a conspiracy between the petitioner and his co-accused Sandeep Sehgal, on one hand, Shri Kishori Lal and Vishnu Kumar postal employees and Rajesh Kumar Customs Inspector, on the other hand, for illicit clearance of the dutiable goods imported through post parcels without, payment of duty, the Tribunal has not given a finding that there was no such conspiracy or that the petitioner was not a party to the conspiracy pursuant to which dutiable goods were imported without payment of requisite customs duty. The case of the respondent/complainant is that double sets of invoices were created intentionally as per arrangement with the petitioner for the purpose of evading duty as was clearly indicative from the fact that the consignment note o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the invoices found in the parcels. The Tribunal has not at all gone into the allegations made and the evidence collected against the petitioner and has simply chosen to, altogether, ignore the allegations made and evidence collected against him. 23. In the case of Sunil Gulati (supra), the petitioner before this Court was let off by CEGAT on the ground that imposition of penalty on him was based on his solitary statement which had later been retracted by him. The trial court, which rejected the application of the petitioner for discharge, relying upon the various judicial pronouncements held that the statement under Section 108 of Customs Act could not be disbelieved merely because of retraction. In these circumstances, it was held by this Court that exoneration of the petitioner was not on merits and it would still be open to the criminal court to decide as to whether the statement made by the petitioner before it under Section 108 of Customs Act should be believed, or not. Thus, the exoneration was not held to be on merit as the Tribunal had based its decision on a wrong view of law regarding admissibility of a retracted statement. In the present case, the Tribunal has not ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinguishable. The Court proceeded as if under the Income Tax Act, the prosecution is dependent on the imposition of penalty. That was a case where the prosecution was based on a finding of concealment of income and the imposition of penalty. When the Tribunal held that there was no concealment, and the order levying penalty was cancelled, according to this court, the very foundation for the prosecution itself disappeared. This court held that it was settled law that levy of penalties and prosecution under Section 276-C of the Income Tax Act are simultaneous and hence, once the penalties are cancelled on the ground that there was concealment, the quashing of the prosecution under Section 276-C of the Income Tax Act was automatic. We have held already that on the scheme of FERA, the adjudication and the prosecution are distinct and separate, Hence, the ratio of the above decision is not applicable. That apart, there is merit in the submission of the learned Additional Solicitor General that the correctness of the view taken in K.C.Builders (supra) may require reconsideration as the reasoning appears to run counter to the one adopted by the Constitution Bench in Assistant Collecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the appellant under Section 340 of the Cr. P.C. In these circumstances, prosecution was quashed relying upon the guidelines laid down in "State of Haryana Vs. Bhajan Lal", 1992 SCC (Crl.) 426. This judgment is of no help to the petitioner in the facts and circumstances of the present case. 26. The learned counsel for the petitioner has lastly submitted a copy of the decision of this Court in Arjun Amla(Supra). In that case, the department itself had taken a view that no case was made out against the petitioner and had decided not to initiate criminal prosecution against him. The petitioner was, however, summoned by the learned ACMM under Section 319 of Cr.P.C. During the course of arguments before this Court, it was conceded by the respondent that the show-cause notice issued to the petitioner had been recalled and a decision was taken not to levy any penalty against him. Even before the Adjudicating Authority, the department took the view that no case was made out against the petitioner. In these circumstances, it was held by this Court that when the department itself had decided not to take any criminal proceedings against the petitioner and was not even seriously opposin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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