TaxTMI 
TaxTMI 
2014 (6) TMI 989
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....hri Pankaj Jhunjhunwala. (ii) A penalty of Rs. 5,00,000/- (Rs. Five Lacs only) on Shri Satish Chaudhary. (iii) A penalty of Rs. 5,00,000/- (Rs. Five Lacs only) on Shri 0m Prakash Jhunjhunwala. (c) I uphold the confiscability of the US$ 3,50,000 equivalent to Indian Rs. 1,57,50,000/- approximately, smuggled out by Shri Pankaj Jhunjhunwala on his previous five visits, as they are not available physically, under the provisions of Section 113(d), (e) and (h) of the Customs Act, 1962 read with the FEMA 1999 and the Regulation made thereunder. I impose a fine of Rs. 1,57,50,000/- (Rs. One crore fifty seven lacs and fifty thousand only) under Section 125 of the Customs Act, 1962. (d) I impose penalties under Section 114 (i) of the Customs Act, 1962, for smuggling out the above said foreign currency, in the following manner: (i) A penalty of Rs. 15,00,000/- (Rs. Fifteen Lacs only) on Shri Pankaj Jhunjhunwala (ii) A penalty of Rs. 15,00,000/- (Rs. Fifteen Lacs only) on Shri Satish Chaudhary. (iii) A penalty of Rs. 15,00,000/- (Rs. Fifteen Lacs only) on Shri 0m Prakash Jhunjhunwala. (v) I order confiscation of the dark blue coloured "Strolley bag" under Section 118 (b) and the w....
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....mmed Essa Al Marri Trading LLC Dubai. He also admitted that on his earlier five visits, he has taken out 70,000 US $ each time on the basis of the said CDF. On the basis of this statement, the currencies were seized and Shri PKJ was taken into custody. Thereafter his statement was recorded and produced before the Addl. C.M.M, on the very next day who sent him in judicial custody. On the basis of investigation, a case has been made out. A show-cause notice was issued to Shri PKJ for confiscation of the foreign currencies found in his possession, for imposing redemption fine for the currencies which have been taken out on the earlier five occasions on the basis of CDF produced and by asking why penalty should not be imposed against Shri PKJ. The show-cause notice was also issued to Shri Satish Choudhary and Shri Om Prakash Jhunjhunwala (Shri OPJ in short) both co-accused. The show-cause notice was adjudicated and impugned order was passed. Aggrieved with the impugned order, the appellants are before us. 3. Heard both sides. 4. Shri A.M. Sachwani, Advocate, learned Counsel appearing on behalf of Shri PKJ submitted that the appellant is a non-resident Indian National working in Dubai....
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....e foreign currency of 70000 US$ seized on 23.02.2004 can be confiscated under the provision of Customs Act. The learned Counsel also submitted that the appellant has cross Shri Mehta, Panchanama Officer. The records cross-examination were recorded by the stenographer on the computer of the adjudicating authority. However, due to technical difficulties the cross-examination record could not be retrieved from the Computer, therefore, the records of the said cross examination could not be available. A request was made to the adjudicating authority to recall the Panchanama Officer. As cross examination of the Pannchanama Officer was not allowed, therefore, inculpatory statement cannot be relied upon. Hence, the impugned order is in violation of principles of natural justice, so the same is liable to be set aside. 4.1. He further relied on the decision in the case of Vashdev Gobindram Adnani vide order No.A/185/08/WZB/CSTB/C-II dated 01.11.2007 wherein also the case of carrying of foreign currency which was denied by the appellant and on search it was observed that the appellant was having foreign currencies and having CDF issued by the Customs and in similar set of facts, the order of....
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....ngers licenced by the RBI as a authorized money exchanger and the currency seized from the M/s. Monalisa Forex Services Pvt. Ltd. was not found to be liable for confiscation by the adjudicating authority. In that event also the allegations against the appellant are not sustainable. The statement of Shri Om Prakash Jhunjhunwala co-accused is also self contradictory and hence cross-examination was also sought. Therefore, the statement cannot be relied upon. On merits, he submitted that CDF required to be produced only when the foreign currency brought under CDF is being taken back at the time of departure by the CDF holder. In the instant case CDF holder was admittedly Shri Pankaj K Jhunjhunwala who claims that he has not taken back to abroad, the currency declared in CDF on any earlier occasion. No-where in the law it is required that the foreign currency brought under CDF, if not encashed, shall necessarily be carried back on the very first departure from the country. It is also not shown as to how the amounts confiscated or held as liable for confiscation were in any manner connected with the advance payment in respect of Shri JBS Bakshi of M/s. Taj Exim International. He further ....
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.... adverse was found against the Monalisa Forex Services Pvt. Ltd. Therefore, the amount seized from M/s. Monalisa Forex Services Pvt. Ltd. so held not liable for confiscation, shall be released immediately. 4.6 Shri Sheshgopalan, Advocate appeared on behalf of Shri Omprakash Jhunjhunwala and submitted that there is no corroborative evidence has been adduced against Shri OPJ, therefore the penalty imposed on him is not sustainable. To support this contention he relied on the decision of the hon'ble apex court in the case of Collector of Customs, Madras v. D. Bhoormull - AIR 1974 Supreme Court 859. 5. On the other hand Shri V.K. Singh, learned A.R appeared on of the Revenue and strongly opposed the contentions raised by the learned Advocates and supported the impugned order. The learned A.R. further submitted that in this case the currency was seized from the checked-in baggage of Shri PKJ at the time when he was about to board the flight. The CDF was also in the checked-in baggage. Therefore, the intention to smuggling the foreign currency is very much clear from the act of Shri PKJ and when the statement was recorded Shri PKJ stated the truth before the Panchas and he named Sh....
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....n act of smuggling of foreign currency. Therefore, the said currency if 70000 USD is fiat k for confiscation. (b) As the genuineness of CDF was not doubted therefore, absolute confiscation is incorrect. It is also found that although Shri PKJ has gone out of India on five occasions after 08.09.2003 (when the CDF was obtained) but no corroborative evidence has been produced by the Revenue either by any statement or by any other cogent evidence that on all the occasions, Shri PKJ was carrying foreign currency with him at the time of going out of India. Therefore, it is only a presumption that earlier occasions also, he had smuggled foreign currency of 70000 USD each time and the said currency is liable for confiscation. In fact, the said currency is not available at all. Therefore, confiscation of the same does not arise on the basis of probability. Accordingly, the order of confiscation of 3,50,000 USD is set aside. Shri PKJ is a Non-Resident Indian national and eligible to carry foreign currency with him and, therefore, absolute confiscation is not required. As it has been held that foreign currency of USD 70000 is held liable for confiscation, the same may be redeemed on payment ....
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....hat foreign currency seized was not liable for confiscation. In the absence of corroborative evidence on record, it is mere probability that Shri Satish Choudhary was involved in the act of smuggling of foreign currency along with Shri PKJ. Merely on the basis of statement of Shri PKJ which was retracted, the penalty cannot be imposed in the absence of any corroborative evidence. Therefore, the penalties imposed on the Shri Satish Choudhary are dropped. 7.2 Shri Omprakash Jhunihunwala (OPJ). In the impugned order the penalties on Shri OPJ has been imposed on the basis of his statement. In the statement he has stated that advance payment were received only through banks and the cash brought by Shri PKJ was for some other purpose, nature of which could be given by Shri Satish Choudhary only. As the findings are on the basis of statement of other and in the case of D. Bhoormal (supra) the hon'ble apex has held that in case of penalty, the department has to prove that the person proceeded against was concerned with the smuggling or not. As the department has failed to establish that Shri OPJ was connected with the alleged smuggling of foreign currency, therefore no penalty is imposabl....
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....o. FEMA/16/RB-2000 dated 3rd May, 2000, issued by the Reserve Bank of India under the provision of clause (g) of sub-section (3) of Section 6 and sub-section (2) of Section 47 of the FEMA, 1999, there are restrictions placed on the export of foreign exchange and currency notes as per para 7 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000. The said regulation is reproduced below:- Export of foreign exchange and currency notes : (1) An authorised person may send out of India foreign currency acquired in normal course of business. (2) any person may take or send out of India, (i) Chegues on currency account maintained in accordance Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000; (ii) foreign exchange obtained by him by drawl from an authorised person in accordance with the provisions of the Act or the rules or regulations or directions made or Issued thereunder; (iii) currency in the safes of vessels or aircrafts which has been brought into India or which has been taken on board a vessel or aircraft with the permission of the Reserve Bank; (3) any person may take out of India,- (i) ....
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....Pankaj Kishore Jhunjhunwala or by Shri Satish Choudhary. In view of this position, there is no vested right for the appellant to redeem the same on payment of fine and, therefore, absolutely confiscation of the said currency by the adjudicating authority cannot be faulted. 10.2. The Hon'ble High Court of Madras in the case of S. Faisal Khan Vs. Jt. Commissioner of Customs (Air Port), Chennai - 2010 (259) ELT 541 (Mad.) and this Tribunal in the case of Salim M, Mamdani Vs. Commissioner of Customs (Airport), Mumbai - 2007 (217) ELT 94 (Tri. - Mumbai) upheld the absolute confiscation of foreign currency attempted to be smuggled into/out of India and held that such absolute confiscation is justified. Following these decisions, I am of the view that absolute confiscation or the foreign currency of US $ 70000 in this case is justified. 11. The second issued relates to exoneration of Shri Satish Choudhary from all penal consequences. This exoneration has been done on the ground that there is no confessional statement by Shri Satish Choudhary recorded under Section 108 of the Customs Act and imposition of penalty has been done by the adjudicating authority only on presumption that S....
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....orex Services Ltd., though the person who brought in foreign currency under Customs Declaration Form was not present in India, clearly indicates violation of FEMA by the said firm M/s. Mona Lisa Forex Services Ltd., which is run by Shri Satish Choudhary. Further, Shri Pankaj Kumar Jhunjhunwala in his statement dated 23.02.2004 had clearly admitted that US $ 70000 seized from his possession was given by Shri Satish Choudhary at Shri Satish Choudhary's residence along with Customs Declaration Form. Further, Shri Om Prakash Jhunjhunwala, business partner of Shri Satish Choudhary, in his statement recorded on 15.4.2004, had stated, when a query was put to him as to who gave the foreign currency to Shri Pankaj K. Jhunjhunwala on 22.2.2003, that Shri Satish Choudhary could answer this. All these corroborative evidences available on record clearly indicates the involvement of Shri Satish Choudhary in the illegal export of foreign currency and, therefore, it is incorrect to say there is no corroborative evidences against Shri Satish Choudhary. 11.3 The Hon'ble Apex Court in the case of Naresh J. Sukhawani Vs. Union of India - 1996 (83) ELT 258 (SC.) held that statement of co-accus....
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....ine or not? (c) Whether in the facts and circumstances of the case penalty can be imposed on Shri Satish Choudhary or not? (Order Pronounced on 06.03.12) (P.R. Chandrasekharan) Member (Technical) (Ashok Jindal) Member (Judicial) Third Member decision Per: M.V. Ravindran This matter arises out of the Show Cause Notice dated 19-08-04 was issued to Shri Pankaj Jhunjhunwala, Shri Om Jhunjhunwala and Shri Satish Choudhary, proposing inter alia confiscation of foreign currency of- (i) USD 70,000 (INR 31,11,500/-) seized from Shri Pankaj Jhunjhunwala, under section 113(d), (e) & (h) of the Customs Act, 1962, read with section 6(3)(g) of FEMA, 1999 and the Regulations made there under, (ii) US $ 3,50,000 equivalent to approximately Rs. 1,57,50,000/- allegedly smuggled out during past 5 visits, though physically not available, u/s 113(d), (e) and (h) ibid. (iii) foreign currency i.e. 30 Euros, 770 UK Pounds, 2230 HK dollars, 10 Kuwaiti Dinars, 10 US dollars and 12000 Irani Rials & fake US $400 seized from the premises of M/s. Monalisa Forex Services Pvt. Ltd., u/s 111 (d) ibid, (iv) Foreign currency i.e. 75 UAE Dirhams. and 100 Baisa of Central Bank Oman seized from the residence....
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....as set aside. 6. However, difference in opinion arose in the above appeals on the following three issues framed vide Order dated 06.03.2012- (a) Whether in the facts and circumstances of the case, US $ 70000 seized from Shri Pankaj Jhunjhunwala is liable to absolute confiscation or not? (b) Whether in the facts and circumstances of the case, US $ 70000 seized from Shri Pankaj Kumar Jhunjhunwala is liable for confiscation and can be released on payment of redemption fine or not? (c) Whether in the facts and circumstances of the case penalty can be imposed on Shri Satish Choudhary or not? The first two issues are interlinked. Member (J) has held the foreign currency amounting to US $ 70000 seized from the possession of Shri Pankaj Jhunjhunwala is liable for confiscation, but has permitted redemption thereof on payment of redemption fine of Rs. 50,000/-. The Member (T) however has maintained absolute confiscation of the said seized foreign currency. Thus, so far as the confiscation of this foreign currency amounting to US $ 70000 seized from the possession of Shri Pankaj Jhunjhunwala is concerned, both the Members found the same as liable to confiscation. The real issue is onl....
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....2(33) of the Customs Act, 1962 has been applied liberally, including in Om Prakash Bhatia Vs. Union of India, 2003 (155) ELT 423 (SC) and Sheikh Mom Omer Vs. Collector, 1983 (13) ELT 1439 (SC). However, in these precedents the issue whether in the context of Section 125, the definition of 'prohibited goods' under Section 2(33) is applicable or not, was not the question. Hon'ble Andhra Pradesh High Court in Shaikh Jamal Basha Vs. GOI, 1997 (91) ELT 277 (AP), after considering both Section 111 as well as scheme of section 125 in a case of concealment was pleased to hold that attempt to import gold un-authorisedly will come under the second part of Section 125(1) of the Act where the adjudging officer is under mandatory duty to give option to the person found guilty to pay fine in lieu of confiscation. Section 125 of the Act leaves option to the officer to grant the benefit or not so far as goods whose import is prohibited but no such option is available in respect of goods which can be imported, but because of the method of importation adopted, become liable for confiscation. Hon'ble Madras High Court in T Elavarasan, 2011 (266) ELT 167 (MAD HC) = 2011-TIOL-762-HC-MAD....
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....there being any violation of the provisions under the Customs Act, 1962 or under any other law or rules, regulations made thereunder. Therefore in the context of section 125 if the word 'prohibited' is construed as to apply in respect of every violation of any regulation or restriction or statutory procedural requirement, the word 'shall' in said section would be rendered redundant and meaningless. In the context of the statutory provisions of section 125, so as to give a meaningful application to both words 'may' and 'shall C used in the said section, the definition of 'prohibited goods' is inapplicable by application of settled principles of statutory interpretation as held in Ramesh Mehta Vs Sanwal Chand Singhvi, (2004) 5 SCC 409. Under section 125 of the Customs Act, unless the importation or exportation of goods is expressly 'prohibited', the Adjudication Authority is obliged to offer to the Owner the goods an option to pay fine in lieu of confiscation. Since the import of 'cut and polished diamonds' is not expressly prohibited under Section 11 of the Customs Act, 1962 or by any other statutory notification, we find merit in the ground t....
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.... or 113 cannot be applied in the context of Section 125. The Tribunal relied upon the judgment of Hon'ble Andhra Pradesh High Court in Shaik Jamal Basha Vs. GOI, 1997 (91) ELT 277 (AP), wherein after considering both Section 111 as well as scheme of Section 125 in a case of concealment the High Court was pleased to hold that attempt to import gold un-authorisedly will come under the second part of Section 125 (1) of the Act where the adjudging officer is under mandatory duty to give option to the person found guilty to pay fine in lieu of confiscation. Section 125 of the Act leaves option to the officer to grant the benefit or not so far as goods whose import is 'prohibited' but no such option is available in respect of goods which can be imported, but because of the method of importation adopted, become liable for confiscation. Hon'ble Madras High Court in T Elavarasan, 2011 (266) ELT 167 (MAD HC) = 2011- TIOL-762-HC-MAD-CUS was pleased to rely on the said judgment of Hon'ble Andhra Pradesh High Court and held that an option has to be given to the petitioner to pay the applicable customs duty and the redemption fine and to get the gold jewellery released, as pe....
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....ted by the Member (J), and I concur with the view taken by the Member (J) in this regard. First two issues are answered accordingly. 16. So far as the third issue is concerned, I concur with the view taken by the Member (J) for the following reasons- (i) It is admitted position that Shri Pankaj Jhunjhunwala, who in his first statement alleged that the foreign currency was given by Shri Satish Choudhary, retracted his statement on the first available opportunity. (ii) His retracted statement was at variance with his submissions made in judicial proceedings such as his Writ Petition No.834 of 2004 filed before Hon'ble Bombay High Court, retraction filed before Ld. Addl. Chief Metropolitan Magistrate, Esplanade, Mumbai, and even with his subsequent statement u/s 108. He was in fact claiming seized foreign currency even in reply to the Show Cause Notice. (iii) In submissions dated 28.9.2007, his cross-examination was sought by Shri Satish Choudhary with brief reasons for the same, which was denied. (iv) Such retracted oral statement not subjected to cross examination cannot be accepted as gospel truth when contrary versions are also available on record in light of the ratio laid d....
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....m was because of threat, coercion, etc, but the requirement is that it may appear to the court as such." "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 feels the necessity of seeking for an assurance in support of the conclusion deducible therefrom. [See Haricharan Kurmi etc. v. State of Bihar AIR 1964 SC 1184; Haroom Haji Abdulla v. State of Maharashtra AIR 1968 SCC 832; and Prakash Kumar v. State of Gujarat (2007) 4 SCC 266]. 16. We may, however, notice that recently in Francis Stanly @ Stalin v. Intelligence Officer, Narcotic Control Bureau, Thiruvanthapuram (2006) 13 SCC 210, this Court has emphasized that confession only if found to be voluntary and free from pressure, can be accepted. A confession purported to have been made before an authority would requ....