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Imtiaz Ahmed Versus The Commissioner of Customs, Mangalore

2016 (3) TMI 657 - CESTAT BANGALORE

Sustainability of penalty imposed - Under Section 114(iii) of the Customs Act, 1962 - Alleged abetment in the case of fraudulent, overvalued and mis-declared exports by SLN - Held that:- not only there is absolute lack of any material tangible evidence against the Appellant, but whatever documentary evidence are collected by the department, they do not conclusively link the appellant with the alleged offence. Confessions of the two co-accused, which we have carefully seen, cannot be taken as suf .....

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een found any involvement in procurement, export or any other activity connected with the exports of SLN. Whether or not the appellant is a cousin brother of Feroze Khan is wholly immaterial in absence of any tangible material against the appellant and also there is no tangible evidence of any compensatory payment either by SLN or by Feroze Khan, to the appellant. Therefore as the department has failed to prove that the appellant is not innocent, the charge against the appellant is baseless and .....

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Authority, whereby a penalty of ₹ 2 crores has been imposed on the Appellant under Section 114(iii) of the Customs Act, 1962. The charge against the appellant is of abetting in smuggling of goods exported by S.L.N. Overseas, a proprietorship firm of Shri Shuresh Prabhu by mis-declaring the value and other material particulars. 2. We have carefully perused the records and the oral and written submissions made by the Learned Counsel for the appellant and also the submissions made by the Depa .....

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y by mis-declaring GSM of the fabric for importing more quantity of input (corduroy fabric) duty free, than otherwise admissible under the DFIA Scheme. Live export consignments entered for exports vide three shipping bills were seized in June 2009 and it was noticed that SLN had exported under DFIA scrips, 21 shipments (vide 50 Shipping Bills) of garments with total declared FOB value of US$ 3,461,952, equivalent to ₹ 16,07,44,035/- during the period from August 2007 to May 2009 through Ne .....

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ers to whom the goods were consigned, but from some unconnected parties. 3.2 During the investigations statements of said Shri Suresh Prabhu, proprietor of SLN, were recorded, who admitted willful mis-declaration of value and other material particulars with intent to avail undue benefits. Shri Suresh Prabhu in his confessions stated that the remittances were received from firms, viz. Mohammed Haneef Federal Exchange, Abdulla Ahmed Electronics, KGN Electronics and Bareeq Al-Sharq Al-Fardeen Excha .....

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nd used to present the cheques and collect the amount through his employee or his relatives working under his instructions. Whenever money was received in the account of SLN, the said Shri Suresh Prabhu informed him, and accordingly he filled up the details and withdrew the amounts. After collecting the amount, he used to keep his commission and to distribute the remaining to the persons recommended by the said Shri Suresh Prabhu or one Shri Jaffar, as the case may be. He used to receive a call .....

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when there was a conversation between the said Shri Suresh Prabhu and one Mr. Mohammed Hussain of Dubai regarding a particular consignment, shipment and payment thereof. He thus stated that the said Shri Jaffar, Mohammed Hussain and the Appellant herein sent money through SLN account towards their business transactions which he handled, as narrated by him. 3.4 In a file seized by DRI from the premises of SLN, an email dated 21.02.2009 was recovered in which the said Shri Suresh Prabhu wrote to h .....

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. His statements could not be recorded during the investigations, which culminated with issuance of a Show Cause Notice bearing DRI F.No. S/IV/14/2009(MRU) dated 02.11.2010. However, he had made communications to DRI from Dubai claiming that he was not concerned in any manner with the exports of SLN. There is no dispute that in the same case a preventive detention order under COFEPOSA Act, 1974 was also issued against the appellant herein. 3.6 The Show Cause Notice alleges that the Appellant her .....

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relative of the Appellant, and proprietor of East West Tourist Corporation. Therefore, penalty was proposed on the Appellant under section 114(iii) alleging that by the aforesaid acts of omission and commission, he rendered the export goods liable to confiscation under section 113(h) and 113(i) of the Customs Act, 1962 read with Section 11 of the Customs Act, 1962 and Section 11 of FTDR Act, 1992 and Rule 11, Rule 14(1) and Rule 14(2) of the FTR Rules, 1993. 3.7 The Appellant replied to the show .....

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ppellant herein. Aggrieved by the said Order-in-Original, the appellant preferred an appeal no. C/670/2012 before this Tribunal. The said appeal was decided vide Final Order No. 20731/2014 dated 24-12-2013 and the above said OIO to the extent of imposing penalty of ₹ 2 crores on Shri Imtiaz Ahmed was set aside, and the matter was remanded to the adjudicating authority with a request to pass a fresh order after observing principles of natural justice. 3.9 The counsel for the appellant appea .....

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e examination of witnesses. In light of the allegations, the Counsel also contended that the provisions of Customs Act, 1962 are not applicable to the appellant's case as the Customs Act is extended only to whole of India and not beyond that, and the appellant at the time of export was based in Dubai and imported the goods in Dubai only; and that even thereafter he was not in India. Thus, as per the Counsel even if all the allegations were assumed as correct for the sake of arguments, Custom .....

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e, the counsel craved leave to file detailed reply after examination / cross examination. 3.10 The Adjudicating Authority vide the impugned order imposed the penalty of ₹ 2,00,00,000/- on the appellant, without examining the witnesses and also rejected the request for cross-examination. In the said impugned Order, the Adjudicating Authority erroneously relies on the Order-in-Original dated 28.11.2011, which was already set aside by this Tribunal. Aggrieved by the same the appellant filed t .....

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nt is a resident of Dubai and has been staying therein. During the relevant period, when the alleged exports were carried out by SLN, i.e., May 2007 to August 2009, and even thereafter the Appellant was not in India. Section 1(2) of the Customs Act, 1962 clearly indicates that the said Act extends only to It extends to the whole of India. He relied on the decision in C.K. Kunhammed Vs. CCE, 1992 (62) ELT 146 (T). He also relied on a judgement dated 08.09.2015 of this Tribunal in C/20143/2015-D .....

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an Beverages (P) Ltd. (2007) 5 SCC 388. He also submitted that there is no independent material that the Appellant has ever been a party to the so-called mis-declared exports carried out by SNL. No relationship with the Appellant of the actual parties who remitted the moneys for payment against the exports was evident from records. No link has been shown between the Appellant and SNL itself. In the said circumstances, the reliance was placed on confessions of co-accused to penalize the appellant .....

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the show cause notice, nor the impugned Order tries to establish any link of the Appellant to the entities who either received the exported goods and/or paid for them. The Appellant has no link to the said exports and none was sought to be established by the department. He submitted that the reference to admission of import by the appellant was erroneous, as the appellant always denied his link with exports of SLN, and same was only an argument without admission of the allegation in light of se .....

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able, and thus he also prayed for suitable directions for considering revocation thereof. 5. The learned Departmental Representative supported the findings contained in the impugned Order-in-Original and submitted that the neither any leniency nor any interference in the penalty was warranted in the facts of the instant case. He took us through the allegations levelled in the show cause notice, which are already culled out by us in the earlier paragraphs. He submitted that there was no impedimen .....

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Learned Departmental Representative could not show from records any such evidence. He heavily relied upon the confessions of the co-accused Shri Suresh Prabhu and Shri Feroze Khan, and reiterated the findings recorded by the adjudicating authority. 6. After carefully considering the records and submissions of both the sides we find that- 6.1 The issue before us in the instant appeal is limited to the sustainability of penalty imposed on the appellant in the facts of the case for alleged abetment .....

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ed inter alia on the basis of independent evidence against him. 6.2 On careful perusal of the show cause notice issued to the appellant, it is evident that reference is made to interception of live export consignment of SLN, of ladies garments vide three shipping bills during June 2009, and same modus operandi is alleged in respect of past exports by SLN vide 21 shipments (50 shipping bills) of total inflated declared value 16,07,44,035/- in misuse of DFIA scheme. Market value was ascertained an .....

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he entities from whom the remittances have been received. There is no documentary evidence on record to establish that the remittances received from any of the above were remitted directly or indirectly by the appellant. 6.4 The Overseas Buyers as recorded in the same para 8.3.1 of the show cause notice were- (i) Haleema Babader Trading, (ii) True Trade General Trading, (iii) Sahara Import & Export, etc. It is not the case of the department that the appellant is either partner or shareholder .....

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t LLC in Dubai asking for a Companys name to raise Bill of Lading for shipment of garments. Name of the consignee True Trade General Trading, Dubai was, in reply, provided by the said shipping agent, who also informed that for the said purpose, AED 500 + AED 250 for license (Total AED 750) was to be paid. Shipment was made to said True Trade General Trading, Dubai and payment against the said shipment was received from the unconnected firm Abdulla Ahmed Electronics allegedly linked to Haleema B .....

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se, led to recovery of any incriminating evidence whatsoever against the present appellant. Para 7.3 of the show cause notice shows that certain chits / sheets /papers were also shown to Shri Feroze Khan, which were maintained and written by SLN. No allegation of any reference of the appellant herein even in these chits / sheets /papers is forthcoming from the show cause notice. 6.6 Admittedly, even as per the impugned adjudication order, the records reveal that the persons, who withdrew the amo .....

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stigations by Enforcement Directorate, but it is not the case of the department either in the show cause notice, or even till date that said investigation of Enforcement Directorate revealed any incriminating evidence against the appellant herein. 6.7 In his retracted confessions, co-accused Shri Feroze Khan also alleged that after withdrawing / collecting the amount from accounts of SLN, he used to keep his commission and to distribute the remaining to the persons recommended inter alia by one .....

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lant with exports of SLN are confessions of two co-accused Shri Suresh Prabhu and Shri Feroze Khan recorded on various dates. The show cause notice refers to statements of various other persons in para 7.2 and para 7.4 such as (i) Shri Raghu Achar, (ii) Shri J. Vasudevan, (iii) Shri P. Murugesh, (iv) Shri Tarachand Jain, (v) Shri V. Gheesu Lal Khanted, and (vi) Shri Madhusudan Baheti None of them deposed in any manner against the Appellant herein. 6.9 The statements of the appellant could not be .....

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erseas only. In his preliminary reply dated 8.9.2014, the appellant categorically stated that- 2. At the first outset, our clients deny all the allegations made in the aforesaid SCN. 7. Our clients crave leave to file detailed reply after examination/cross examination of witness requested hereinabove. In the appeal before us it is specifically stated that- (G) THAT, there was failure to notice that the Appellant was residing abroad and the Respondent had no territorial jurisdiction to penalize h .....

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ppellant had written a number of letters and provided material to show as to how the Appellant was not concerned or involved in the matter. There has been failure to give weightage to the same. (N) THAT, the Respondent has failed to notice that the Appellant had nothing to do with SLN Overseas in the matter of exports legally or illegally. Any action would have to be restricted to SLN Overseas only. In view of the above, we are convinced that the appellant has not admitted importation of goods i .....

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sed person, the court cannot start with the confession of a co-accused person; it must begin with other evidence adduced by the prosecution and after it has formed its opinion with regard to the quality and effect of the said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of guilt which the judicial mind is about to reach on the said other evidence. .. 15. The statements contained in the confessions of a co-accused stand on a different .....

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ble Apex Court observed that- 38. In Mohtesham Mohd. Ismail v. Spl. Director, Enforcement Directorate & Anr. [(2007) 8 SCC 254], this Court held: 15. Apart therefrom the High Court was bound to take into consideration the factum of retraction of the confession by the appellant. It is now a well-settled principle of law that a confession of a co-accused person cannot be treated as substantive evidence and can be pressed into service only when the court is inclined to accept other evidence and .....

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luntary and free from pressure, can be accepted. A confession purported to have been made before an authority would require a closure scrutiny. It is furthermore now well-settled that the court must seek corroboration of the purported confession from independent sources. 7. In view of the above, in the peculiar facts of the instant case we find that not only there is absolute lack of any material tangible evidence against the Appellant, but whatever documentary evidence are collected by the depa .....

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fessions of the co-accused. No link of the Appellant to the entities who either received the exported goods and/or paid for them has been established. The Appellant has not been found involved in procurement, export or any other activity connected with the exports of SLN. Whether or not the appellant is cousin brother of Feroze Khan is wholly immaterial, in absence of any tangible material against the appellant. There is also no tangible evidence of any compensatory payment either by SLN or by F .....

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e Act, as urged by the Learned Counsel for the appellant. Section 1(2) reads as under- 1. Short title, extent and commencement.- (1).. (2) It extends to the whole of India. No act of omission and commission is alleged to have been committed by the appellant herein within India. In C.K. Kunhammed Vs. CCE, 1992 (62) ELT 146 (T), this Tribunal held as under : 6. I have carefully considered the submissions made before me. So far as appellant C.K. Kunhammed is concerned, admittedly he was abroad not .....

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