TMI Blog2006 (12) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of Sunil Gulati and even when Sunil Gulati had retracted his statement. It is clear from the above that in the departmental proceedings, the petitioner is not exonerated on merits and it would still be open to the criminal court as to whether the statement of Sunil Gulati u/s 108 of the Customs Act should be believed or not. Therefore, the impugned order of the learned trial court is valid and proper, though the discussion on the issue namely relevance of adjudication proceedings on the criminal cases may not be fully correct which is stated by the learned trial court in the earlier part of the order. Since the conclusion of the learned trial court in the impugned order is otherwise proper and meets the legal test, this petition is devoid of merits and is dismissed. Complaint u/s 135 - Customs Clearing Agent - filed the bill of entry himself declaring the goods - importers for the smuggling of the goods - There was nothing on record to show that he had given the description different from the one given in the import documents. On this ground the imposition of penalty was set aside. Once such a finding is given, and if these facts are taken on record, obviously the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions involve same question of law with almost same factual foundation. Therefore, these are disposed of by this common judgment to avoid repeating the legal position. After restating the legal principles in the first case, each case is dealt with separately. Crl. M.C. No. 2173/2004 Crl. M.C. No. 991/2004 Sh. R.K. Vohra, Intelligence Officer of the Directorate Revenue Intelligence (DRI), New Delhi, has filed complaint under Section 135 (1) (a) of the Customs Act, 1962 which is pending in the Court of Learned Additional Chief Metropolitan Magistrate, Patiala House Court, New Delhi. Petitioner herein is a arraigned as accused No. 1. Other accused person is one Mr. Joginder Pal Singh @ Jagmohan Singh. Taking cognizance of this complaint, both the accused persons were summoned by the learned ACMM. On receiving the summons, the petitioner filed application for his discharge which application has been dismissed by the learned ACMM vide order dated 17.2.2004. In fact, other co -accused had also filed similar application and vide the impugned order, both these applications have been dismissed. In these circumstances, petitioner has approached this Court for dismissal of the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjudication order by filing separate appeals before the CEGAT and vide common order dated 1.8.2002, the CEGAT was pleased to set aside and quash the adjudication order on merits. Thus, it is pleaded by the petitioner that since the order of adjudication passed by the adjudicating authority itself is set aside and the CEGAT has recorded the findings in favour of the petitioner, continuation of the proceedings in the instant complaint case filed by the complainant were unjustified unsustainable inasmuch as these proceedings are on the same allegations contained in the adjudication order and as the petitioner is exonerated in those proceedings. In support of this proposition, learned counsel for the petitioner referred to the judgment of the Hon'ble Supreme Court in the case of G.L. Didwania Another V. Income Tax Officer Another, 1995 Suppl. (2) SCC 724 and also three judgments of this Court in which the same view is taken, particulars whereof are as under: 1. Munna Lal Khandelwal V. B. Hazra, Enforcement Officer Others, 83 (2000) DLT 395. 2. M/s. Hitech Carbon Products Anr. V. Inspector, Anti -Evasion, Central Excise, New Delhi, 82 (1999) DLT 89. 3. Subhash Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of accused under Section 108 of the Customs Act cannot be disbelieved merely because it has been retracted by the accused. Hon'ble Supreme Court in the case of Naresh J. Sukhwani V. Union of India, 1996 (83) ELT 258 (SC) with regard to the Customs Act held that such statement of co -accused is a substantive evidence against the other accused. 8. It is, in this backdrop that I have considered the submissions of the counsel of the two parties. The first question which needs determination is as to whether the two proceedings - one filed in the criminal court and other adjudication proceedings - are totally independent and adjudication proceedings will have no bearing on the complaint case. The learned counsel for the State has strongly relied upon the judgment of Supreme Court in the case of Standard Chartered Bank and Others V. DRI (supra), in support of his plea. Therefore, it would be apt to first discuss this judgment. It was a case where alleging violation of some provisions of FERA, a show cause notice was issued by the department as to why adjudication proceedings for imposition of penalty under section 50 51 of FERA be not initiated against the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty and only in the light of those findings in the adjudication for penalty that the Directorate of Enforcement could decide as to whether to impose or not to impose any further punishment under Section 56 of the Act and thus launch prosecution or not. This argument was countered on behalf of Union of India by arguing that adjudication and prosecution are two separate and distinct proceedings with distinct purposes and there was no bar either in FERA or in any other law to an adjudication and prosecution being launched simultaneously in respect of an alleged contravention of FERA. It was argued that for the violation of those provisions both civil and criminal action could be taken under the law and criminal action was not wait till the outcome of the adjudication proceedings as even when penalty was imposed in the adjudication proceedings criminal action was still warranted in view of the provisions Section 56 of the FERA which commences with the words Without prejudice to any award of penalty by the Adjudicating Officer under this Act . 10. The Court accepted the argument of the Government and held that a complaint under Section 56 of the FERA can never be said to be pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minal proceedings are also pending, the Court observed as under: The learned Counsel for the appellant brought to our notice that the appellant is also being prosecuted in a criminal Court. It is obvious that the said case shall be determined on its own merits and according to law, uninhibited by the findings of the Tribunal. It is clear from the above that concern of the assessee in the said case was that once the appeal is decided by the Tribunal against the assessee, criminal Court may not be influenced by the findings of the Tribunal and assuaging this apprehension, the Court clarified that the case in the criminal Court shall be determined on its own merits uninhibited by the findings of the Tribunal. It was thus a reverse situation where the accused was not exonerated in the proceedings before the Tribunal. Rather penalty was imposed in adjudication proceedings and the issue related to its effect on criminal proceedings. 12. In Assistant Collector of Customs V. L.R. Malwani (supra) accused was given benefit of doubt in the departmental adjudication by Collector of Customs. Thereafter prosecution was launched against him alleging that he was a party to smuggling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, the learned Standing Counsel for the Central Customs and Excise Department Sri Gopalakrishna contends that this view of the Delhi High Court goes contrary to the view expressed by a Constitution Bench of the Supreme Court in the case of Asstt. Customs Collector, Bombay V. L.R. Melwani [ : 1999 (110) E.L.T. 317 (S.C.) = AIR 1970 SC 962] and neither stay of the proceedings nor quashing of the proceedings could be ordered under the facts and circumstances of the case. 13. As I shall endeavour to demonstrate the Andhra Pradesh High Court is not correct in its aforesaid analysis and, therefore, I respectfully disagree with its view. For this, explication of the judgments of this Court as referred to by the Andhra Pradesh High Court is necessary. In S.K. Sinha V. Singal Another, 1987 (30) E.L.T. 900. This Court held that it would be unjust to require the petitioner to go through entire process of prosecution when he was exonerated in the departmental adjudication proceedings. Rational in support of this view is found in the following observations: In criminal matters the degree of proof required is far more strict. If the departmental authority has no good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sinha V. S.K. Shingal and Another, IV : 1987 (1) Cri 1987 (1) 842 (Delhi); M/s. Jewels of India and Others V. The State and Another, XII : 1987 (3) Cri 1987 (3) 754 (Delhi); Harbhajan Kaur V. Union of India and Others,, 1993 SCC 447 (Delhi); G.L. Didwania V. Income Tax Officer, : 1999 (108) E.L.T. 16 (S.C.); and Hitech Carbon Products Anr. V. Inspector, Anti -Evasion Central Excise, N.D., : 1999 III AD (Cr.) DHC 965 in support of the said contention. Where the departmental authorities, whose task is to ensure strict compliance with the relevant provisions of a Statute are satisfied that there is ex facie no contravention of the provisions of any Act, it would be utterly unjust to force a person to face the ordeal of a trial on the same set of facts and evidence. The least that can be said in the case is that if the department does not feel aggrieved of the order of the Competent Authority and accepts it as final and correct, then I fail to understand as to how on the same set of facts and evidence, the department can foist criminal liability upon a person about whom it has accepted the findings of the adjudication proceedings. That apart in the case of P.S. Rajya V. State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belonged to assessee. After this clean chit given by the Appellate Tribunal assessee filed application before the Magistrate to drop the criminal proceedings which was dismissed. His petition under Section 482 of Cr.P.C. before the High Court was also dismissed and in these circumstances he appealed to the Hon'ble Supreme Court. The Hon'ble Supreme Court allowed the appeal holding that sole question was whether the appellant made a false statement regarding the income which according to the assessing authority had escaped assessment. So far as this issue was concerned the finding of the Appellate Tribunal was conclusive and hence the prosecution could not be sustained. For taking this view, the Hon'ble Supreme Court relied upon its earlier judgment in the case of Uttam Chand V. Income Tax Officer, Central Circle, Amritsar, (1982) 2 SCC 543. 16. Thus on the one hand we have judgments of the Supreme Court in the case of Standard Chartered Bank and Others V. DRI (supra). Assistant Collector of Customs V. L.R. Malwani (supra) and Santram Paper Mills V. Collector of Central Excise (supra) holding that departmental proceedings and criminal cases are two independent procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence. 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 technical ground or by giving benefit of doubt and not on merits or the adjudication proceedings were on different facts, it would have no bearing on criminal proceedings. If, on the other hand, the exoneration in the adjudication proceedings is on merits and it is found that allegations are not substantiated at all and the concerned person(s) is/are innocent, and the criminal prosecution is also on the same set of facts and circumstances, the criminal prosecution cannot be allowed to continue. The reason is obvious criminal complaint is filed by the departmental authorities alleging violation/contravention of the provisions of the Act on the part of the accused persons. However, if the departmental authorities themselves, in adjudication proceedings, record a categorical and unambiguous finding that there is no such contravention of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em Raj V. State of Ajmer, AIR 1954 SC 462, Assistant Collector of C.E. V. Duncan Agro Industries Ltd. -, AIR 2000 S.C. 2001 and Surjeet Singh V. UOI, AIR 1997 S.C. 256 on the basis of which he has observed that the statement of accused recorded under Section 108 of the Customs Act cannot be disbelieved merely because retraction has been filed. After discussing this law, in penalty made para, the learned trial court has observed: From the aforesaid authorities, it is evident that statement of accused under Section 108 of the Customs Act cannot be disbelieved merely because it has been retracted by the accused. Hon'ble Supreme Court in the case of Naresh Sukhwani V. UOI : 1996 (8) E.L.T. 258 (SC) with regard to the statement of co -accused u/s 108 of the Customs Act held that such statement of co -accused is a substantive evidence against the other accused. 19. It is clear from the above that in the departmental proceedings, the petitioner is not exonerated on merits and it would still be open to the criminal court as to whether the statement of Sunil Gulati under Section 108 of the Customs Act should be believed or not. Therefore, the impugned order of the learned tria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased thereafter. While setting aside the penalty imposed upon the petitioner, the Tribunal recorded the following reasons: As regards the imposition of personal penalty on Shri Naresh Kumar Mittal, we find that he is a Customs Clearing Agent and had filed the bill of entry describing Shahtoosh and Pashmina Raw Wool as Nepalese Mountain Goat -hair. From the description given in the import documents, we find that the goods had been described as Nepalese Mountain Goat -hair, which had been picked by the Customs House Agent. The adjudicating authority has observed that as a Customs Agent, it was the responsibility of the appellant to give the correct identity/description of the goods in the document namely, the bill of entry, before presenting the same before the Customs Authorities. Accordingly, he has observed that the appellant is responsible for the act of misdeclaration. It has been argued before us by Shri K.K. Banerjee, learned Advocate for Naresh Kumar Mittal, that the appellant could only identify the goods from the description given in the import papers. It is not possible to examine the goods with naked eye and find out whether the said goods were Shahtoosh Shawls and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed against the petitioners by the Chief Enforcement Officer, Enforcement Directorate, alleging contravention of Sections 18(2) read with Section 18(3) of the Foreign Exchange Regulation Act (hereinafter referred to as 'Act'). Primarily, the allegation is that the petitioner No. 1 company, which is now under liquidation, failed to realise the export proceeds within the stipulated period of time and failed to initiate reasonable steps to realise the said proceeds. During the period between 1994 to 1998 it had effected shipment of goods valued at US $737035.97 under the cover of GR forms. This amount was not released within the prescribed period or time extended by the Reserve Bank of India in the prescribed manner by taking concrete steps. It is further stated in the complaint that since the offence has been committed by the company, all the Directors in terms of Section 68 of the Act are responsible for the offence committed by the company. In this complaint summoning orders were issued. Thereafter, petitioners moved application for discharge for dropping the proceedings initiated against the petitioners had been dropped which proceedings were initiated on identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent in respect of the aforesaid goods had not been received in India. Perusal of the order would show that the petitioner was charged with following: Charge On Conclusion of investigations, a Memorandum was issued to the said noticees referred to hereinabove by their taking action/refraining from taking action without any permission of the RBI, which had the effect of securing that the payment for the goods (receipt of the export value of the goods) exported to the tune of US $ 7,37,035.97 has not been received in India within the prescribed period or the period extended by the RBI in contravention of the provisions of section 18(2) of FERA, 1973 read with Central Government Notification No. F -1/67/EC/73 -1 3 both dated 1.1.73 and section 18(3) ibid. 23. The defence of the petitioners was that the petitioner No. 1 company had suffered huge losses and, therefore, it filed a reference before the BIFR under Section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 and was declared a sick company. They also submitted the reasons for non -realisation and efforts taken by them for realisation of export proceeds. In respect of certain directors, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be shown that needful is not done within the prescribed period of time or extended period of time granted by the Reserve Bank of India. Rule 8 of the aforesaid Regulation Rules empowers Reserve Bank of India to extend the period of time as prescribed in the Act for realising the export proceeds. Further proviso to Sub -Section 2 of Section 18 in no uncertain terms stipulates that no proceedings in respect of any contravention of the provisions of the said Sub -Section shall be instituted unless the prescribed period has expired and payment for the goods representing the full export value has not been made in the prescribed manner within the prescribed period. Thus, if the RBI itself has granted the extension or has ultimately waived the requirement, there cannot be any infraction of the said proceedings. In the case of LIC of India V. Escorts Ltd., AIR 1986 SC 1370, the Supreme Court emphasised this role of RBI in the following manner: The provisions of FERA are so structured and woven so as to make it clear that it is for RBI alone to consider whether the requirements of the provisions of the Act and the various rules, directions and orders issued from time to time has been f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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