TMI Blog2020 (6) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... against the petitioners would be an excise in futility. In view of the subsequent development that it has become inherently improbable to reach a just conclusion that there is sufficient ground to proceed against the petitioners/A6 to A8 and further considering that the case is pending from the year 2004 without any progress - revision allowed. - Crl.R.C.No.348 of 2019 and Crl.M.P.No.4842 of 2019 - - - Dated:- 5-6-2020 - HONOURABLE MR. JUSTICE M. NIRMAL KUMAR For Petitioners: Mr. B. Kumar, Senior Counsel for Mr. S. Ramachandran For Respondent : Mr. K. Srinivasan Special Public Prosecutor for CBI Cases ORDER This Criminal Revision Petition is filed by the petitioners/A6 to A8 against the dismissal of their discharge petition filed under section 239 Cr.P.C vide order dated 19.03.2019 in Crl.M.P.No.136 of 2019 in E.O.C.C.No.5 of 2004 on the file of the Additional Chief Metropolitan Magistrate (E.O.I) FAC, Egmore. 2. The case of the prosecution is as follows: (i) According to the prosecution, there was a conspiracy among Al, A3, A7, A8, A9 and A11 with A12 to A17 during 1995-1997 at Chennai, Ranipet, Tuticorin and other places in Tamilnadu to cheat th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of non application of mind and that the judgments referred by the learned Judge are not relevant to the facts of this case. The learned Judge in his order merely extracted some portion of the Sanction for prosecution under the Customs Act given by the Commissioner of Customs and by enlisting list of witnesses and documents. The petitioners are importers of the machinery. The petitioners had formed 100% EOU which exempts it from payment of any custom's duty, hence the question of any loss having been caused does not arise. The petitioners bonafidely believed the representations of the first accused (deceased) and fell victim to the fraud committed by him. On the basis of the representation of deceased A1, the petitioners put up a factory at Pudukkottai and also installed the imported machinery with a view to manufacture Iron Oxide. But on the very next day the machines did not function, but it exploded causing grave damages. He further stated that this Court quashed the complaint as regards the officials of Bank of Madura and Sundaram finance who as lessor dealt with the entire foreign exchange transaction involved in the acquisition of the plant and machinery. M/s.IPTE, USA r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval vide No.FC 18 (96) EOB (828) 95 dated 08.02.1996 and vide No.PER 32 (1996) EOB/828/95 as part of original agreement. 6. He further submitted that on the basis of the application of A7, the Industry Ministry, Secretariat for Industrial approval, EOU section accorded permission dated 08.02.1996 to A6 to import capital goods worth US $ 7.2 million for manufacturing electronic oxides with annual capacity of 5000 M.Ts. A6 also issued foreign technical collaboration approval by SIA, New Delhi vide letter dated 08.02.1996 to transact the business with A4 Company. As per the said Bond, customs duty was to be levied with interest @ 18% on the imported capital goods from the date of import. If the company fails to comply with the export obligation, the same was recoverable in accordance with provisions of Section 142 of Customs Act, 1962, which is clearly established by the evidence of L.W.3. 7. He further submitted that as per the application dated 07.03.1996 filed by A6, the Assistant Development Commissioner, MEPZ, Chennai gave the required attestation on 13.03.1996 to import capital goods for ₹ 2304 lakhs. A7 submitted letter dated 06.05.1996 to RBI Exchange Control Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falsely declaring the item exported as Capital goods, by over invoicing the value of the same by submitting fabricated documents to Chennai customs authorities, thereby suppressing the real fact and importing the same capital goods/machinery back to India via Tuticorin Port under 100% Export Oriented Unit (100% EOU) Scheme for manufacture of Iron Oxide of electronic grade without paying customs Duty, by falsely declaring the capital goods as imported from USA instead of furnishing the real description and nature of machinery to Tuticorin Customs by further over invoicing the said capital goods and also evaded Customs Duty and thereby caused wrongful loss to the Government of India to the tune of ₹ 31.10 Crores approximately and thereby committed offences punishable under Sections 120-B r/w 420, 467, 468 and 471 IPC and 132 and 135 of the Customs Act, 1962. 11. The case against the petitioners is that M/s.ORJ Electronics Oxides Limited in conspiracy with A3 Dr.K.Raghunathan and A4 M/s.IPTE Company entered into an agreement for supply of equipment and transfer of technology for manufacture of Iron Oxide in India on 19.11.1995. On the very same day, the Technical Collaboratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Ferrites Limited A2 exported goods declared as Venturi Scrubber, Wet Air-Oxidation Equipment, Solar Modules, valued to the tune of US Dollars 1.71 to the consignee M/s.IPTE INC., USA through Chennai port. The above said goods were manufactured in India by A2 company and the same carried a stencil mark which reads IPTE Inc USA No.1 Woodlake Drive New Jersy, USA . The goods were exported through container. The container was shipped in vessel Kotaria Voy 188 port of discharge of Singapore.on 22.04.1997, the consignment was shipped from Singapore to Tuticorin to the consignee Bank of Madura, Cathedral Road Branch, Madras-6 on account of M/s.ORJ Electronic Oxides Limited/A6. Dr.K.Ragunathan/A3, President of M/s.IPTE Inc., USA, issued invoice No.1450 dated 16.02.1997 for CIF value of US $ 7.2 million for the above goods shipped from Singapore to Tuticorin to the consignee M/s.Bank of Madura Limited on the account of M/s.ORJ Electronic Oxides Limited. Dr.N.M.Parthasarathy A1 had instructed Bank of Madura by letter dated 13.05.1997 in the letter head of A5 company to apportion the amount as mentioned therein. 14. The petitioners herein executed a demand promissory note and lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did loose sight on control of the funds as well accounts which were maintained in the own bank nor did it depossess itself the power to operate the funds. 17. The Income Tax Department by order dated 29.03.2006 had dropped the proceedings initiated against the 2nd petitioner/O.R.J.Jaffar Batcha. It would be beneficial to extract the order:- For the assessment year 1998-1999, notice under Section 148 of the Income Tax Act, 1961 was issued on the ground that the assessee had taken on lease of imported capital goods for a total value of US $ 7200000 from Bank of Madura making bogus claim for depreciation on lease hold assets, the price of which was highly inflated. On examination of books produced and other documents by the assessee, it was noticed that the Managing Director of the assessee Sri.O.R.J.Jaffar Batcha was approached by one Shri.N.M.Parthasarathy for starting the manufacture of iron oxide. The project report, technical specifications of the machinery, identification of the exporter of the concerned machinery, agreements with the assessee, price determinations of the machinery and import of the same were all carried out by the same Shri.N.M.Parthasarathy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned goods were made at Singapore during the period when the subject goods were in Singapore and the same goods were shipped back to Tuticorin port as such. In fact, the goods came back from Singapore in the same container and the customs seal affixed on the container at the time of export from Chennai port was found to be in tact at that time of landing at Tuticorin port. M/s.Bank of Madura Ltd employed the alleged imported assets in its purported business of lease financing. However, the leasee, ORJ Electronic Oxide Ltd never used the asset for any commercial production. M/s.Bank of Madura Ltd. the lessor itself dealt with the entire foreign exchange transactions involved with the collective arrangement for the acquisition of the concerned plant and machinery. IPTE, USA received the said amount of US $ 7.2 million on 22.05.1997 and paid the same into the account of ETKIF America Inc., USA held in M/s.Bank of Madura Ltd. From this account a sum of Rs. US $210000 was remitted to Summit Bank, New Jersey, USA, the beneficiary of IPTE, USA. Another sum of US $ 1202000 was credited to the account of M/s.ORJ Electronics Oxide Ltd, Pudukottai as payment towards equity participation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted for orders, brought back did not function properly and was able to produce less than 50 kgs. of iron oxide power (as against 35 annual capacity of 5000 Mt.tonnes). Thereafter the oil tank exploded and a worker died in the explosion and no further attempt was even made to the manufacture anything using the machinery. The specification of the plant and machinery are not in conformity with the specifications given by the alleged supplier (IPTE, USA) in the relevant invoice and documents. The concerned plant machinery was supposed to have been mad of special proprietary mental alloy capable of working in highly corrosive conditions. But the materials used were found at the time of inspection to be of absolutely poor quality and had in fact started rusting even without regular dues. The plant machinery available and inspect were not even designed for regular production and thus incapable of producing electronic grade iron oxide (the started purpose of the concerned machinery). The capital goods actually imported by M/s.Bank of Madura given on lease to ORJ and available in their factory have no correspondence to the nature of plant machinery specified in the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover double the amount of duty while confirming the adjudicating Commissioner's order fixing duty liability jointly and severally in both the cases. 19. The Income Tax Department after analyzing all official transaction and on perusal of the document, books of account found that the petitioner did not import the machinery and did not make any claim for depreciation. Likewise the CESTAT has held M/s.Sundaram Finance Limited (SFL) and M/s.ICICI Bank (erstwhile Bank of Madura) are its importers, owners of the goods and liable to pay duty. Further, in view of the live connect of conspiracy being snapped at both end, this Court finds that the continuation of the proceedings against the petitioners would be an excise in futility. 20. In view of the subsequent development that it has become inherently improbable to reach a just conclusion that there is sufficient ground to proceed against the petitioners/A6 to A8 and further considering that the case is pending from the year 2004 without any progress and also most of the accused/A1 to A5, A12, A13 to A17 in this case were relieved either case against them stands abated or quashed, the trial Court s order dated 19.03.2019 in C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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