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Khaja Mustafa Kamal Versus Union of India & 2 Others

2016 (4) TMI 1064 - BOMBAY HIGH COURT

Seeking direction for release of bank accounts - Export of imitation jewellery - Petitioner indulged in fraudulent exports by inflating the Prevailing Market value and Free On Board value in order to claim duty drawback and other benefits - Held that:- We are not denying to the Revenue an opportunity of investigating or unearthing huge fraud. We are also not denying them their powers, but surely if drastic powers have to be exercised by public bodies, they must be exercised reasonably and fairly .....

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me to file a very detailed affidavit-in-reply and file it in Court, but it is surprising that the Directorate and whole of it does not have time to proceed against those indulging in fraud on the public. A justification of this nature comes promptly only when parties like the petitioner complain of a freezing or attachment of their bank accounts and refusal to release them even if bona fides are shown. - This is not a case of an admitted fraud or a liability which is undisputed. Once there .....

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It is further very clear and requires no reiteration that what is prohibited directly cannot be achieved indirectly or in an oblique manner. A refusal to carry out a duty in accordance with law cannot be justified by such a continued attachment and freezing of the bank accounts. In the given facts and circumstances, we do not see any justification for the same. - Therefore, we direct that the bank accounts shall be released and this direction shall apply to all such accounts which are bearin .....

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ution of India, the petitioner seeks the following two reliefs : (a) This Hon'ble Court may be pleased to issue appropriate orders calling for record and proceedings in respect of the investigations initiated by the officers of Respondent No.2 and 3 for scrutinizing the legality, propriety and validity of the communications addressed to the banks and after examining the same, it may kindly be quashed and set aside. (b) this Hon'ble Court may be pleased to issue appropriate orders calling .....

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day affairs of certain firms whose names are listed in paragraph 1 of the petition. 3. The three firms are also proprietary concerns and are engaged in the business of export of imitation jewellery. The customers located at several places abroad place the orders and that is how the exports have been made. The petitioner says that these exports have been made after complying with the Customs Act, 1962. After setting out the complete procedure for such export in the petition, what has been urged i .....

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he entire procedure would not be known to the petitioner had he not dealt with the department from time to time in export of consignments and claimed drawback. The petitioner claims that as far as the present issue raised in the petition is concerned, the subject consignments were physically examined and found to be satisfactory. The exports were permitted and the export incentives were sanctioned. However, on the basis of certain intelligence received by the officers of the respondents, investi .....

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uring the course of investigations, summons were issued to the petitioner directing him to appear before the Investigating Officer on 9th September, 2015. Since the petitioner was unable to appear on the said date, a letter was addressed requesting for fresh date. A copy of the summons and the reply thereto are annexed as Annexure-A collectively. 5. Then the petitioner was called to attend the office of the respondents by telephonic intimation. The petitioner attended, furnished all the explanat .....

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ressed, inter-alia, to the Branch Manager of HDFC Bank Limited. 6. Thereafter, the respondents addressed a letter to the bank with a direction that the account of the petitioner in the said bank as well as any account in the name of the petitioner should not be allowed to be operated and any amount in balance in the said account should not be permitted to be withdrawn. Thus, the petitioner claims that the bank accounts were frozen and attached. The bank had no option, but to comply with the dema .....

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would be dishonoured. The petitioner claims that he has been explaining to the respondents that further compliance with the law and given that the respondents have a power to investigate that does not mean that the bank account should be frozen and endlessly. The petitioner was pressurized to make further payments and that is how the petitioner, relying upon certain judgments, pointed out by a letter of 28th January, 2016, followed by another one dated 15th February, 2016, that the bank account .....

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dgments of this Court and the final one rendered by a Division Bench to which one of us (S.C. Dharmadhikari, J.) was a party, in the case of Rajendra Vithal Shinde vs. Union of India & Anr., Writ Petition No.22728 of 2015, decided on 22nd December, 2015, permits that attachment of movable and immovable property in the manner done is impermissible. 10. On the other hand, Mr. Jetly learned counsel appearing for the respondents would submit that a detailed reply has been filed in the writ petit .....

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r. Jetly would submit that sufficient material has been placed on record to establish that the petitioner amongst other exporters was indulging in fraudulent exports by inflating the Prevailing Market value and Free On Board value (for short PMV and FOB) in order to claim duty drawback and other benefits. Mr. Jetly has invited our attention to paragraph 7 of the affidavit in reply to submit that the modus operandi used requires to be investigated in depth. The statement of Parvez Mohammed Sharif .....

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diction. Reliance is also placed upon a voluntary payment or deposit of ₹ 25,48,572/-. Reliance is also placed upon the affidavit-in-reply to submit that the petitioner does not respond to any summonses and that is why the action ultimately deserves to be upheld. 12. With the assistance of both counsel, we have perused the petition and the annexures thereto. Pertinently, the petitioner's letter and which has been addressed on 8th September, 2015, acknowledging receipt of a summons date .....

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on 11th September, 2015, he addressed a letter to the Branch Manager of HDFC Bank Limited and informed that his account has been frozen by the DRI, Mumbai Zonal Unit in connection with on-going investigation into the exports. In order to prove his bona fides, he had deposited an amount in Government exchequer. That is how the entire credit in the account which has been specifically described in this letter should be made over by a demand draft in the name of the respondents. Thereafter, the inti .....

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G1 AND G2, ARIHANT APARTMENT PLOT NO.2, JAWAHAR NAGAR, S.V. ROAD, Mumbai. Gentleman, Sub: Enquiry into exports of M/s. Infinity Trading Co., M/s. Shingar Products & M/s. Vista International-request for not allowing the operation of accounts-operation of accounts - reg. This office is investigating fraudulent/bogus exports and its Drawback of M/s. Infinity Trading Co., M/s. Shingar Products and M/s. Vista International - under the provisions of the Customs Act, 1962. During the investigation .....

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is office at the earliest. 4. In case the above mentioned account holders are having a locked in this branch, the operation of locker should not be allowed and the details of the same should be intimated to this office immediately. 5. Any fixed deposit related to this account or to the aforesaid persons may not be allowed to be transferred or paid in cash to them and the details of the same should be intimated to this office immediately. 6. An immediate action in the matter is requested. 7. Acti .....

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nk and to the petitioner alleging fraud and terming all exports as bogus so as to avail of a duty drawback, then, a one sided or unilateral version of the Revenue is not determinative or conclusive. It is not a case of an established and proved fraud but an alleged fraud. The fact that the petitioner has admitted that there was some liability but the circumstances in which he has paid the sum of ₹ 16,62,794.18 has been duly explained by him. He terms the payment as ad-hoc and when he state .....

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t documents. They have been submitted. He claims that no wrong has been committed by him in relation to the exports nor any undue benefit is availed of, still a total amount of ₹ 25,48,573/- being deposited, he should be allowed to continue his business activities. He claims that he is a exporter in imitation jewellery for past several years. He has also set out as to how he has throughout acted bona fide. He has also pointed out that there are documents which would evidence that the expor .....

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h the system and has not defrauded the Revenue at all nor made any attempt since 2011, his bank account being frozen is causing serious prejudice and loss to him. 17. Now it is indeed surprising that in the affidavit-inreply in paragraph 7, the deponent states as under : 7. I say that in the present case, sufficient material has been placed on record to establish that the Petitioner amongst other exporters was indulging in fraudulent exports by inflating the Prevailing Market Value (for short PM .....

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e monies which have been held in the bank accounts with the modus operandi of illegally obtaining the benefit of a drawback by showing inflated FOB value. I say that the data/information gathered was confirmed by Shri Parvez Mohammed Sharif Ansari, the person who was involved in issuing the bogus purchase bills to exporters, in his statement recorded under Section 108 of the said Act. I say that this fact has been admitted by the Petitioner albeit differently in para 4.9 of the petition. I say t .....

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t. Once there is an admission of guilt, according to the Revenue, then, it is enough justification for their act is the submission of Mr. Jetly. Far from reading any admission of guilt, what we do in order to completely reject the submissions of Mr. Jetly is a reading of the documents annexed to the petition as also the above reproduced paragraph in the affidavit-in-reply as a whole. We cannot pick and choose certain sentences or portions thereof. We are not denying to the Revenue an opportunity .....

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. When such petitions are filed, it is our experience that detailed affidavits are filed in order to justify the act, but there is not a word about the delay. On 21st April, 2016, the deponent has time to file a very detailed affidavit-in-reply and file it in Court, but it is surprising that the Directorate and whole of it does not have time to proceed against those indulging in fraud on the public. A justification of this nature comes promptly only when parties like the petitioner complain of a .....

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