TMI Blog2021 (12) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the import of the goods or disposal of the same. He stated that he also came to know about the alleged mis-declaration only after inspection of the container in January/ February, 2010 by the Customs. During the course of adjudication, admittedly, non-RUDs were not provided; appellant s prayer for one adjournment or re-fixation of the date for receiving of the documents, was not accepted by the Adjudicating authority. To that extent we find that the order is bad as the appellant has not been provided proper opportunity to defend himself. It is further found that there is nothing against the appellant wherein it can be deduced that he was doing any of the act of omission /commission with regard to the goods under import, so as to render the same liable for confiscation - Neither Shri Makhan Kant Sharma nor this appellant was aware that Shri Rajesh Kumar Gupta was importing goods by resorting to mis-declaration and suppression, which amounted to smuggling. Revenue places reliance on some documents which have been allegedly taken from the pen drive, alleged to have been given to appellant by Shri Rajesh Kumar Gupta. However, there are no proper procedures for recovering the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultancy Service as well as Liaison Work for the export import trade. 3. Revenue had some specific information regarding evasion of custom duty by import of goods lying in container pending clearance at ICD, Agra. The Bill of Entry have been filed by M/s Maa Shakti Industries (Maa Shakti in short). The said container was detained and direction for 100% examination was given as well as the other container(s), if any, of the same importer lying at ICD. Inspection was done on 05.02.2010 at the address of Maa Shakti as per their import export code certificate. No firm was found at the given address at J-44, Site-C, Surajpur Industrial Area, Noida. The security man present at the premises stated that although he was working for the last six months as Security Guard, but he was not aware of any such firm and further stated that this premises belonged to one Shri Abhay Mitra. On follow up search at the address of Shri Makhan Kant Sharma, Prop. of Maa Shakti at B-4/166, Yamuna Vihar, Delhi-53, as mentioned in the IEC, it was found that Shri Makhan Kant Sharma was staying as a tenant at the said address from 2006 to December, 2008 and thereafter have moved to some other address. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also drawn, the details of the goods are as follows:- Sl. No. Container No. B.E./ IGM No. date B/L No. date Description of goods as per B.E/B.L/ IGM Goods actually found on examination 1 TRLU 5705768 B.E.No.00004 dt.29.01.2010 IGM No. 23919 dt. 13.01.2010 APLU 051117121 dt. 30.12.2009 Mens casual shoes (unbranded/ branded) Shoes incl. branded Mobile batteries 2 APHU 6485271 IGM No.23961 dt.20.01.2010 APLU 051132541 dt.06.01.2010 Footwear Shoes, Mobile batteries cigarettes 3 CLHU 8447321 IGM No. 24017 dt. 28.01.2010 APLU 051132706 dt. 14.01.2010 Footwear Shoes, Mobile batteries cigarettes 4 FCIU 8116039 IGM No. 24056 dt. 03.02.2010 APLU 051132839 dt. 20.01.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iaison work of M/s Maa Shakti Industries for the past one and half years and Shri Makhan Kant Sharma is a dummy proprietor in the company and the imports are being made by Shri Rajesh Kumar Gupta @ Rajesh Bihari. He offered Shri Makhan Kant Sharma to lend his company s name and IEC for imports of goods by Shri Rajesh Kumar Gupta @ Rajesh Bihari and Shri Makhan Kant Sharma agreed to the proposal for monetary consideration of ₹ 10,000/- per month. He also stated that Shri Makhan Kant Sharma and Shri Rajesh Bihari were never in direct touch with each other and he (Gajraj Singh Baid) used to be the middle man for clearance and payments of Rajesh Bihari. He knew Shri Rajesh Kumar Gupta @ Rajesh Bihari since the last one and half years. Initially the clearances of M/s Maa Shakti Industries were done from ICD Kanpur and since December 2009 Shri Rajesh Bihari had started importing at ICD Agra. He used to go with Shri Makhan Kant Sharma for the clearances at ICD Agra and all the expenses including the conveyance were borne by Shri Rajesh Bihari. Shri Rajesh Bihari had provided him hard copy of Bill of Lading and country of origin certificate in respect of one of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was produced before the Court of Metropolitan Magistrate, New Delhi on 31.03.2010 by the Officers of DRI, Lucknow, and after obtaining transit remand was again produced before the Court of Special Chief Judicial Magistrate (Economic Offences at Agra) on 01.04.2010 and thereafter was remanded to judicial custody. Thereafter, on 03.04.2010, the appellant was granted bail by the Special CGM, Agra. Thereafter, the appellant again appeared before the DRI, Lucknow on 16.04.2010 in compliance to summons and his statement was recorded wherein he inter-alia stated that he was the Prop. of M/s Paramount Sanitation. Further, he gives consultancy with regard to import/ export. Further, he also manages customs clearances for his client. 11. Follow up search was conducted at the residence of the appellant at A-10, Aravali Kunj, Sector-13, Rohini, Delhi, was conducted on 03.05.2010 and some documents were resumed. The documents resumed contained one diary in which appellant has made some entry against the name of one Rajesh Bhai/ Rajesh A/c Agra. On scrutiny of the diary it appeared that amounts like 4 lakh, 1 lakh, 25,000/- etc. was received from Rajesh Gupta @ Rajesh Bihari for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Bihari to deposit customs duty and for other expenses and the same was written in his diary, which was resumed during his house search. Shri Rajesh Bihari gave him money in cash for depositing Customs duty and the remaining amount was deposited in the current account of M/s Maa Shakti Industries at State Bank of India Rohini Branch, Delhi or at Punjab National Bank, Janpath Branch, Delhi. Shri Rajesh Kumar Gupta @ Rajesh Bihari used to provide him the documents such as Invoice, Packing List etc., on which he used to sign and present them before the Customs. 14. In the course of further investigation it appeared that CHA firm M/s Balaji Mariline Pvt. Ltd., have filed Bills of Entry for M/s Maa Shakti Industries which have been cleared in past. On summons, the Associate Director of CHA firm Shri Vinod Mehrotra appeared and recorded his statement on 08.10.2010, wherein he inter alia stated as follows:- His firm M/s Balaji Mariline Pvt. Ltd., had filed five Bills of Entry at ICD Kanpur for M/ s Maa Shakti Industries for which Gajraj Singh Baid had contacted him. Gajraj Singh Baid had met him as the authorised representative of M/s Maa Shakti Industries. He h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll related work of ICD and he (Shri Makhan Kant Sharma) only accompanied him (Gajraj Singh Baid). After arrival of the goods at ICD Agra all the formalities and liaison were done by Gajraj Singh Baid and he (Makhan Kant Sharma) used to sign on the documents as asked by Gajraj Singh Baid. He was told by Gajraj Singh Baid in January 2010, that at ICD Agra some undeclared valuable goods have been brought with shoes and for this Gajraj Singh Baid had promised to give ₹ 10,000/- extra and he wilfully accepted his offer. He was very well aware that wrong declaration of goods for evasion of Customs duty is illegal and punishable under Customs Act and such goods can be seized. He was very well aware that Gajraj Singh Baid used to import illegal goods through his firm and was aware that this time mobile batteries and cigarettes were also brought without declaring in the IGM, along with the declared goods. He was very well aware that wrong declaration of goods for evasion of Customs duty is illegal and punishable under Customs Act and such goods are liable for confiscation. He admitted that B/E for remaining three containers were not filed as DRI had already detained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xport declarations filed before them. Further, on enquiry from the Hong Kong based supplier at the location of Galaxy Industries (Hong Kong) Limited as well as Distar Overseas (HK) Ltd., were not found on their declared address. 21. Further from the point of vigilance Shri Santosh Kumar, Inspector at ICD, Agra was interrogated on 24.08.2010 wherein he inter-alia stated as follows:- He was marked for the examination of the container by Superintendent Examination on 01.02.2010 filed through B/E No. 04 dated 29.01.2010. The container was presented by one Shri Ajay Sharma (H card holder at ICD Agra) for examination. He had asked Shri Ajay Sharma to create a passage in the container, so that the container can be examined till the end of the container. But the laborers told that it was not possible to create a passage. Hence, Shri R. C. Shukla, Superintendent suggested to remove the cartons from top and the cartons such removed were randomly examined in the presence of the Superintendent. On examination it was found that the cartons contained Branded Shoes besides Unbranded Shoes. Branded word was found added in the B/E no. 04 dated 29.01.2010 when he arrived in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issued for 100% examination. He had marked the B/E No. 04 dated 29.01.2010 to Shri Santosh Kumar, Inspector for examination on first check basis on 01.02.2010. That after the examination when Shri Santosh Kumar, Inspector requested for thorough examination of the container in shed after de-stuffing . He had marked Please do the needful , to Shri Santosh Kumar and returned him the B/E.; He had written on first check basis by another pen. He does not know why Shri Ajay Sharma presented the container for examination, though the B/E was filed on self basis. He does not remember whether the B/E was filed for Unbranded shoes or for both i.e. Unbranded/ Branded shoes. He does not know that the said party was called by Shri O.P. Shukla Superintendent at ICD Agra and had never told Shri Santosh Kumar, Inspector that the party was brought byShri O.P. Shukla, at ICD Agra. He has not dictated the examination report to Shri Santosh Kumar, Inspector, as alleged by him (Santosh Kumar) On being shown the note sheet of the file B/E no. 04 dated 29.01.2010 and asked to identify the signatures on it, he said that the note sheet was put up by Siri Ashok Gupta, Inspector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and forwarded it to Superintendent, Shri Saheb Das Srivastava. That the B/E was filed as Mens Casual Shoes (unbranded) and that the word Branded was added on later. On being asked who had filed the B/E, he said that he does not know who had filed the B/E and the file related to the said B/E was sent by the noting section to him. He does not know Shri Makhan Kant Sharma or Shri Gajraj Singh Baid.; He had not opened the docket file of M/s Maa Shakti Industries.; He had not received any orders from the Deputy Commissioner relating to processing of the B/E. 24. Further statement of Shri Ajay Sharma (H card holder) of M/s Lara Exim Pvt. Ltd., was recorded on 27.10.2010, who inter alia stated that he had not received any directions from the CHA firm regarding presenting the container of Maa Shakti for examination. He knows Shri Gajraj Singh Baid. He further stated that Shri Gajraj Singh Baid had requested in the morning of 01.02.2010, to present the container for examination, as he will be delayed to reach ICD, Agra. Accordingly, he presented the container before Shri Santosh Kumar, Inspector and accordingly put his signature on the Bill of Entry by endorsing presented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndeclared items. Further the branded shoes are counterfeit and hence are prohibited goods in terms of Rule 6 of IPR (Imported Goods) Enforcement Rules, 2007 read with Notification No. 47/2007-Cus (NT) read with Section 111 (m) and Section 156 of the Customs Act. The branded shoes which are undeclared quantity of 11,117 pairs, being counterfeit are liable to confiscation, valued at about ₹ 1,11,17,000/-. Mobile phone batteries which are also undeclared, though not counterfeit, quantified at 4,82,700 pcs., having estimated value of ₹ 7,24,05,000/-, amount to smuggling in order to evade payment of customs duty, are liable to be confiscated. Further, duty amount on the undeclared mobile phone batteries is chargeable, quantity 4,82,700 pcs., having estimated value at ₹ 7,24,05,000/-. Further in absence of the declaration of value, the value has been determined under Rule 6 of the Valuation Rules, 2007. Further observed that lower value of ₹ 99.60 per piece to be considered in view of import of similar goods vide Bill of Entry No. 717854 dated 25.01.2010 at Delhi Air Cargo, Delhi. Accordingly, duty is worked out to ₹ 1,72,23,312/-. Unbranded men s casual sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equiring to show cause as to why penalty could not be imposed under Section 112 and 117 of the Customs Act and also on iv) Shri Gajraj Singh Baid and v) Shri Rajesh Kumar Gupta @ Rajesh Bihari, vi) Shri Ajay Sharma (H card holder) of the CHA firm was also show caused as to why penalty under Section 112 and 117 of the Customs Act, be not imposed. 29. It is further observed in the show cause notice that addendum may be issued to the show cause notice, on receipt of further enquiry report in respect of past imports in the financial year, of similar nature. 30. The show cause notice was adjudicated by the Commissioner, Customs, Central Excise and Service Tax vide order-in-original dated 09.02.2016. The show cause notice was contested by all the noticees except Shri Rajesh Kumar Gupta @ Rajesh Bihari. So far this appellant is concerned, in order to contest he prayed for supply of relied upon documents and non-relied upon documents vide letter dated 21.11.2015. Thereafter, learned Commissioner by his letter dated 04.12.2016 wrote to DRI, Lucknow for supply of non-RUDs. Further, RUD No. 4 was supplied to this appellant on or about 14.01.2016. This appellant again informed non re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r:- (a) Absolute confiscation of 21,488 pairs branded shoes being counterfeit totally valued at ₹ 2,14,88,000/- under Section 111(d), (f), (i), (l) and (m) of the Customs Act, read with Rule 6 of IPR read with Notification No. 47/2007-Cus (N.T.) dt. 08.05.2007 and ordered disposal by way of destruction. (b) Confiscation of 15,86,285 pieces of mobile phone batteries totally valued at ₹ 15,79,93,986/- under Sections 111(d), (f), (i), (l) and (m) of the Customs Act. (c) Further ordering for release on payment of ₹ 1,66,50,000/- fine, in lieu of confiscation and further duty payable of ₹ 5,66,00,542/- under Section 28 of the Act. Further observing that as the mobile phone batteries have already been sold being perishable in nature for ₹ 1,66,50,000/- and not available for confiscation as such, ordered the sale proceeds towards appropriation. (d) Confiscation of 13,220 pairs of unbranded shoes, valued at ₹ 16,34,259/- under Section 111(f) and (m) read with Section 119 of the Act, with option to redeem on payment of fine of ₹ 1,63,426/- alongwith customs duty of ₹ 4,67,975/- under Section 28 of the Act. (e) Absolute confis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, as directed by the adjudicating authority. However, without providing documents to appellant, ex-parte adjudication order (dated 10.2.2016) has been passed imposing a huge consolidated penalty of ₹ 3,00,00,000/- on the appellant under Section 112(a), 114A and 114AA of the Customs Act. (iii) At the very outset, it is submitted that the show cause notice has been issued by DRI under Section 28 and Section 124 of the Customs Act, 1962. In view of the recent judgment of the Hon'ble Supreme Court in case of Canon India Private Limited v. Commissioner of Customs reported in 2021 (376) E.L.T (S.C), DRI has no jurisdiction to issue the show cause notice. Said ratio has been followed by different High Courts and thereby show cause notice issued by DRI has been held non-est and bad in law, being issued without jurisdiction. Reliance is placed upon the judgment of the Hon ble Gujrat High Court in case of CMR Chiho Industries India Pvt. Ltd. Vs. UOI (R/Special Civil Application No. 10521 of 2020) and Quantum coal energy (p) ltd. Vs. The commissioner, office of the Commissioner of Customs, Custom House, Tuticorin reported in 2021 (3) TMI 1034. The ratio laid by the Hon ble Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Account of M/s. Maa Shakti Industries which was operated by Shri Makhan Kant Sharma. The appellant, being engaged in consultancy work in relation to import and export, in normal course of business, introduced Shri Makhan Kant Sharma to Shri Rajesh Bihari who was financially sound and was interested in import of goods. This should not be made basis to implicate the Appellant for imposing penalty. (vii) As far as the statements of appellant is concerned, same were not voluntary statements but were recorded under immense coercion and pressure, which can be understood from the facts and circumstances of the case. It is evident from the impugned order itself that statement of the appellant was continuously recorded for 2 days i.e.29.3.2010 and 30.3.2010 and just after recording of statement of appellant, he was arrested by the DRI Officers on 30.3.2010. The appellant was summoned for recording of statement but kept under custody of DRI Officers for two days and was not allowed to go outside, during which period the alleged statement was recorded by the DRI officers as per their dictates and wishes, and immediately thereafter, the appellant was arrested. (viii) It is also per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has not been complied at all in the present case. In such a situation, no reliance can be placed on such documents. In this regard, reliance is placed on the judgment of the Hon ble Supreme Court in case of Anvar P.V. Vs. P.K Basheer reported in 2017 (352) E.L.T 416 (S.C) which relates to Section 65B of the Evidence Act, 1872 (parimateria to Section 138C of the Customs Act, 1962). Following the ratio laid down by the Hon ble Supreme Court, the Tribunal also, in case of S.N Agrotech Vs. Commissioner of Customs, New Delhi reported in 2018 (361) E.L.T. 761 (Tri-Del.), has held that documents retrieved from electronic devices without complying with provisions of Section 138C of the Customs Act, 1962 are not admissible. (x) It is submitted that a different yardstick has been applied towards the appellant vis- -vis the departmental officers in the present case. It is pertinent to mention that apart from Appellant, customs officers were also made noticee in the present case, who gave incriminating statements. But, at one place, on the basis of statements, the learned adjudicating authority implicated the appellant and imposed huge penal liability while on the other hand, exonerate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... together with other provisions, Section 112(a) has also been invoked. It is submitted that penalty under the aforesaid section can be imposed on the person who in relation to any goods (i) does any act which would render such goods liable to confiscation under section 111, (ii) omits to do any act which renders such goods liable to confiscation under Section 111 or (iii) abets the doing or omission of such an act. Thus, section 112(a) provides three situation under which penalty is imposable. There is no such act or omission or abetment on the part of appellant rendering the goods liable for confiscation. In fact, the appellant did not even know that the container is containing undeclared and counterfeit goods which is apparent from the extract of statement of appellant, mentioned in the paragraph F of grounds in Appeal-Memo. Therefore, no penalty under section 112(a) is sustainable against the Appellant. Penalty has been imposed on the appellant alleging knowledge on the part of appellant with respect to impugned goods. But, no evidence has been adduced by the department as to how the appellant was knowing about the same. It is submitted that Section 112 (a) provides for penalty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the allegation of abetment. The relevant paragraph of the aforesaid judgment reads as under : 25 Parliament has specifically included abetment in Section 112(a) of the Act, to include acts done with knowledge, otherwise the first portion thereof Any person - (a) who in relation to any goods does or omits to do any act . would cover acts done or omitted to be done on account of instigation and/or encouragement without knowledge. However, the first portion of Section 112(a) of the Act is only to make person of first degree in relation to the act or omission strictly liable. Persons who are not directly involved in the act or omission to act, which has led the goods becoming liable for confiscation cannot be made liable unless some knowledge is attributed to them. Therefore, it is to cover such cases that Section 112(a) of the Act also includes a person who abets the act or omission to act which has rendered the goods liable to confiscation. Imposing penalty upon an abettor without any mens rea on his part would bring all business to a halt as even innocent facilitation provided by a person which has made possible the act or omission to act possible could result in im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any such document and also there is no investigation to the effect confirming that the so-called signatures were made by the appellant. None of the evidence had been adduced by the department confirming so, except relying on involuntary statements of the appellant. Hence, penalty imposed under Section 114AA is not sustainable. Otherwise also, purpose of introducing the provisions of Section 114AA in the Customs Act was to punish those people who avail export benefits without exporting anything. Said provisions were introduced to counter serious frauds, not every kind of violations under Customs Act. The case of appellant cannot be equated with the same. Detailed submissions relying upon the report of the Parliamentary Standing Committee, have been made in para H-4 of the Appeal Memo. It is submitted that the Hon ble Supreme Court in case of Loka Shikshana Trust v. CIT reported in AIR 1976 SC 10, Indian Chamber of Commerce v. Commissioner of Income Tax reported in AIR 1976 SC 348, Additional Commissioner of Income Tax v. Surat Art Silk Cloth Manufacturers' Association reported in AIR 1980 SC 387 Novartis AG v. Union of India (2013) 6 SCC 1, relied upon the speeches made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session of this appellant. 34.1. Further, we find that during the course of adjudication, admittedly, non-RUDs were not provided; appellant s prayer for one adjournment or re-fixation of the date for receiving of the documents, was not accepted by the Adjudicating authority. To that extent we find that the order is bad as the appellant has not been provided proper opportunity to defend himself. We further find that there is nothing against the appellant wherein it can be deduced that he was doing any of the act of omission /commission with regard to the goods under import, so as to render the same liable for confiscation. Shri Makhan Kant Sharma has stated similar facts that he was in personal financial difficulty as his earlier business was stopped due to misfortune, and he was trying for some other business and accordingly own his volition with the help of this appellant got introduced to Shri Rajesh Kumar Gupta to facilitate the imports made by him. Further, we find that Shri Makhan Kant Sharma has admitted that he was consciously importing the goods for Shri Rajesh Kumar Gupta for remuneration. Neither Shri Makhan Kant Sharma nor this appellant was aware that Shri Rajesh Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he prepared and signed documents in the name of anonymous foreign seller is not substantiated as no such documents containing signature of the appellant has been brought on record. We find for these reasons, penalty under Section 114AA is not attracted. We find that the provisions of this Section are attracted only when a person is charged with liability to pay duty or interest. Admittedly, no duty or interest has been demanded from this appellant. 34.4. We find further that no acts of omission or commission, which would render the goods liable for confiscation have been alleged or proved on the part of the appellant. No charge of abetment is also evidenced against the appellant. It is not the case of the department that he was sharing the profit in the acts of duty evasion etc resorted to by the importers. It is not established that the appellant had knowledge of the illegal trade indulged in by Shri Rajesh Kumar Gupta. Therefore, we find that the penalty under Section 112(a) is also not attracted. 35. In view of our aforementioned findings and observations, we allow this appeal and set aside the impugned order. However, we leave the question open as regards the jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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