TMI Blog2022 (4) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the currency was handed over to him by Hemant Dahiya who is one of the Director of SEMPL - It is clear that Amit Bali had clarified that the foreign currency that he was carrying in his hand baggage actually belonged to SEMPL and was to be utilized for the event organised by SEMPL for HMC. The Commissioner (Appeals) placed much emphasis on the earlier statement made by Amit Bali that the foreign currency belonged to the appellant without appreciating the subsequent statements made by Amit Bali. The appellant, in his statement recorded on 20.08.2018, stated that he had meetings with business clients at London, after which he was scheduled to go to Baltimore for business meetings. He further stated that Amit Bali assisted him during his business travel and that he was not aware that Amit Bali was carrying foreign currency - statements made under section 108 of the Customs Act give credence to the factual averments made by the appellant regarding the contractual arrangement between HMC and SEMPL and the fact that the foreign currency did not belong to the appellant and in fact belonged to SEMPL, which currency was in the possession of Amit Bali for meeting the expenses to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvocate with Shri Mahesh Agarwal, Shri Rishi Agarwal, Shri Alok Yadav and Shri M.S. Ananth, Advocates for the appellant Shri Nagender Yadav, Authorized Representative for the Respondent ORDER The order dated 30.07.2021 passed by the Commissioner of Customs (Appeals) [ the Commissioner (Appeals) ] has been assailed in this appeal. The order dated 19.11.2019 passed by the Additional Commissioner of Customs [ the Additional Commissioner ] dropping the proceedings initiated against the appellant by the show cause notice dated 17.07.2019, has been modified by the Commissioner (Appeals) in the following manner by treating the appellant as a beneficial owner under section 2(3A) of the Customs Act, 1962 [ the Customs Act ]: ORDER a.) In respect of foreign currency equivalent to ₹ 81,01,421/-seized from Sh. Amit Bali, penalty of ₹ 21,00,000/- is imposed under Section 114(i) of the Customs Act, 1962 read with Section 13 of the Foreign Exchange Management Act, 1999 on Sh. Pawan Kant Munjal, being the beneficial owner. b.) In respect of illicit export of currency equivalent to ₹ 3,72,64,700/-, details of which were found in pen drive recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... participations, trips, workshops, forums, sponsors etc., as afore-stated, requires outsourcing of the same to a separate and distinct legal entity for a consideration. Accordingly, the entire travel, event and logistics arrangements of the HMC personnel including that of the Appellant are and have been arranged, managed and borne by special third party presently and in past in all aspects including but not limited to bookings of hotel rooms, meeting / conference rooms, flights, transfer, food, meals beverages, client entertainment expenses etc . All such outsourcing and coordination is arranged, managed and done by HMC through several teams within HMC i.e. finance team, sales and marketing teams. As stated before, the execution teams of HMC use several specialist third party Indian service providers, who specialize in providing such travel, event management and logistics services to HMC, and HMC as a consideration against the provision of such services by such third party service providers settles their invoices in INR in India. 2.7 . That some of the specialist third-party service provider used by HMC in relation to travel, event management and logistics arrangements in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry auditors of HMC as per Indian law. 2.12. Given that the very nature of services procured by HMC from SEMPL - travel / event management outside of India, and in order to ensure smooth coordination of the travel / event management / logistics arrangements outside of India, various personnel of SEMPL have accompanied the HMC staff (including the Appellant) to various events, meetings, conferences, exhibitions organized by HMC, which have been arranged and managed by SEMPL. Accordingly, on many previous occasions various personnel of SEMPL had accompanied Appellant to various business meetings / events / exhibitions etc. abroad (hereinafter referred to as SEMPL Travel Coordinators ). Mr. Amit Bali is one of the SEMPL Travel Coordinators. 2.13. SEMPL Travel Coordinators are all employees of SEMPL, and neither HMC nor the Appellant on any occasion have provided any financial incentives / salary to the SEMPL Travel Coordinators. All payments against the services provided by SEMPL (including SEMPL Travel Coordinators) within India and / or outside of India have been made by HMC in favour of SEMPL in India in Indian Rupees either through Cheque and/or NEFT against the invoices ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act. 1962 read with Foreign Exchange Management Act of 1992 (the FEMA ), from Amit Bali vide seizure memo dated 20.08.2018. (emphasis supplied) 3. A show cause notice dated 17.07.2019 was issued to the appellant proposing to impose penalty upon the appellant under section 114 (i) of the Customs Act. The appellant filed a detail reply to the show cause notice and refuted the allegations made against him. The Additional Commissioner, by order dated 19.11.2019, dropped the proceedings against the appellant and did not impose any penalty. The relevant portions of the order passed by the Additional Commissioner are reproduced below: 58.5 Mr. Amit Bali, Noticee No. 2, is the lynchpin of the case. It is from him that forex in excess of the prescribed amount that could be carried out of India by an individual passenger without the need to declare it was recovered . It is Mr. Amit Bali who ostensibly carried forex in excess of the prescribed amount on several past occasions, and failed to declare it to customs on all occasions. xxxxxx. 58.6 It is clear that Mr. Amit Bali (Noticee No. 2) was the one required to approach customs authorities in the course of his de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recovered, is by all accounts, the person from whose possession foreign exchange was seized, and who is thus primarily culpable, as discussed above. (emphasis supplied) 4. After examining the various statement recorded under section 108 of the Customs Act and the reply filed to the show cause notice, the Additional Commissioner noted facts and drew the following inference: (v) That Noticee No. 5 / HMC is a client of M/s SEMPL i.e. mere a recipient of services provided by M/s SEMPL (which, at the cost of repletion, is an independent third party service provider) and against the provisions of such services provided by M/s SEMPL to HMC, HMC settles all the invoices raised by M/s SEMPL in INR in India . There is no evidence that the Noticee No. 5 or HMC exercise any financial/ shareholding interest in M/s SEMPL or exercises effective control of Noticee No. 5 in / over M/s SEMPL, Noticee No. 5 being the CEO and Chairman of HMC, to whom the service have been provided by M/s SEMPL, cannot be said to become the beneficial owner of M/s SEMPL in any which way. (emphasis supplied) 5. The Department filed an appeal before the Commissioner (Appeals), who by order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on similarity of facts circumstances, which has not been established in this case. Accordingly case laws referred by the Respondent are not applicable to present case. Therefore, Order-in-Original dated 29.11.2019 suffers from legal infirmity in so far as it relates to non-imposition of penalty on the Respondent. Accordingly, I pass the following order:- (emphasis supplied) 6. On the basis of the aforesaid findings, the Commissioner (Appeals) concluded that the appellant was a beneficial owner and accordingly, passed the order, the relevant portion which has been reproduced above. 7. Shri Vikram Nankani, learned senior counsel assisted by Shri Mahesh Agarwal, Shri Rishi Agarwal, Shri Alok Yadav and Shri M.S. Ananth made the following submissions: (i) The definition of beneficial owner in section 2(3A) of the Customs Act covers those cases where the owner of the goods is not available and a particular act is being carried out at the behest of some other person. Thus, if the owner of goods is available, as in the present case, the concept of beneficial owner cannot be applied. The Commissioner (Appeals) has, therefore, wrongly applied the concept of beneficial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and does not fall within the jurisdiction of the Customs Authorities. This is because the Customs Authorities are concerned only with the foreign exchange being carried out of India and are not concerned with the acquisition, possession, retention and use of the foreign exchange, which would fall within the jurisdiction of the Competent Authority under the Foreign Exchange Management Act, 1999 [FEMA]. What does not fall within the domain of the Customs Authorities i.e the purpose and use of foreign exchange, cannot be a ground for imposition of penalty on the appellant; and (viii) The order passed by the Commissioner (Appeals) is based on conjectures and surmises. 8. Shri Nagendra Yadav, learned authorised representative appearing for the Department, however supported the impugned order passed by the Commissioner (Appeals) and made the following submissions: (i) The present appeal filed under section 129A of the Customs Act is not maintainable in view of what is stipulated in the first proviso to section 129A of the Customs Act as the issue relates to export of baggage; (ii) As per section 2(3A) of the Customs Act, the appellant was the beneficial owner of foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported or exported. 12. At the same time, the definition of exporter in section 2(20) and importer in section 2(26) of the Customs Act was also amended to introduce the concept of beneficial owner . 13. Section 2(20) of the Customs Act is reproduced below: Section 2(20): exporter , in relation to any goods at any time between their between their entry for export and the time when they are exported, includes any owner, beneficial owner or any person holding himself out to be the exporter. 14. Section 2(26) of the Customs Act is also reproduced below: Section 2(26) : importer , in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner, beneficial owner or any person holding himself out to be the importer. 15. A deeming fiction has been introduced in the concept of beneficial owner as the definition seeks to cover the loop hole where the actual owner of the goods was not available but the particular act was being carried out at the behest of some other person. This would mean that when the owner of the goods is available, the concept of beneficial owner under the deeming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to be carrying foreign currency in his personal carry-in luggage during the security check by CISF officials at the Indira Gandhi International Airport, New Delhi. 19. The gist of the statements of various persons recorded under section 108 of the Customs Act are as follows: Statement of Amit Bali (employee of SEMPL) 20.08.2018 Question 1:- Whether the said recovered Currency belongs to you? Answer:- No, the said recovered Currency belongs to Sh. Pawan Kant Munjal and was handed over to me by Sh. Hemant Dahiya to look after the expenses of Sh. Pawan Kant Munjal. The bag from which the said currency recovered was mine. Question 2:- When and where did you receive the said Currency? Answer:- I received the said Currency at my office i.e. M/s Salt Experience Management Pvt. Ltd., Mudit Square Building, 2nd Floor, Plot No. 24, Institutional Area, Prempuri, Sector-32, Gurgaon from Sh. Hemant Dahiya, Owner of the firm on 19.08.2018. Question 4:- Who has given you the whole tour Programme of Sh. Pawan Kant Munjal? Answer: Sh. Pawan Kant Munjal has informed me one week ago on my mobile to arrange a tour programme and expenses for his coming scheduled tou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... USD, 30000 EURO and 25000 Pound Sterling from the account of company on 18.08.2018. The rest of the foreign currency found with me was the remaining foreign currency of previous trips, which did not return to the company and I was keeping it for my personal expenses like my food expenses/taxi/phone top up. Question 14:- Please see your statement dated 20.08.2018. In answer to question number 1, you stated that the money recovered from your hand baggage belonged to Mr. Pawan Kant Munjal and was handed over to you by Shri Hemant Dahiya to look after the expenses of Shri Pawan Kant Munjal of M/s. Here Moto Corps. But you have stated above that the seized foreign currency was given from your office? Answer 14: I state that this foreign currency was to be used for the event of M/s Hero Moto Corps to be held at Budapest thus l stated in my statement dated 20.08.2018, that this seized foreign currency belonged to Mr. P. K. Munjal of M/s Hero Moto Corps. Further, in tension took the name of Mr. Hemant Dahiya, in my statement dated 20.08.2018, that he gave me this much foreign currency instead of Mr. Girijesh Kashmira. Statement of Pawan Munjal (appellant) 20.08.2018 Que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (HMC), whose responsibility (M/s. SEMPL or M/s. HMC) was to ensure the compliance of various acts/statues especially under the Customs Act, 1962; the Foreign Exchange Management Act, 1999; the Income-tax Act, 1961 and the Companies Act, 2013? Answer 1: As per my understanding and oral agreement with M/s HMC, as M/s SEMPL was organising events for M/s. HMC, it was the responsibility of M/s. SEMPL to ensure all sorts of compliance of any act/statute including the Customs Act, FEMA, Income Tax Act, Companies Act etc., while executing any project abroad or in India. I further state that whatever expenses M/s SEMPL was incurring while executing the project, that were included in the bills raised to M/s HMC and M/s HMC was paying to us. In that process, in respect of the payments made by M/s. HMC to us, if there was any sort of violation of provisions of any Act that would be the responsibility of M/s HMC. Statement of K. R. Raman (Finance Head) 21.08.2018 Question 6:- What is the normal procedure for release of funds for organizing any event? Answer: Usually Client Servicing Team of our company finalizes the complete details with our clients and send Job Cost Analysis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 17:- How the payment of events organized or travelling expenses etc. from your clients receives by your company? Answer: We raise the bill to our clients in respect of expenses and our service charges and the payment has been made to our company through NEFT/Cheques. 11.03.2019 Question 2: Please see the statement dated 11.03.2019 of Mr. Hemant Dahiya wherein he has stated that Amit Bali was issued the forex travel cards purchased in names of other employees of M/s. SEMPL, who did not even travel abroad, and that Amit Bali had used those forex travel cards to meet out the expenses of Mr. Pawan Munjal during his foreign visits, on yours and Hemant Dahia's instructions. What do you have to state in this regard? Answer 2: I have seen the statement dated 11.03.2019 of Mr. Hemant Dahiya and have put my dated signature on the same. In this regard, I state that I used to get the details of team members who were travelling for any project along with the estimated figures towards expenses from Mr. Hemant Dahiya and he used to ask me to arrange the funds in the given names. I then used to arrange the foreign exchange in the form of cash or forex travel cards through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign currency to Mr. Amit Bali? When and where did you hand over the said foreign currency to Mr. Amit Bali? Answer: I took out the said foreign currency from the safe kept in our office. Further, I received instructions from Mr. Kumar Rajesh Raman to give the said foreign currency to Mr. Amit Bali. I handed over the said foreign currency to Mr. Amit Bali in the afternoon of 18.08.2018 at the office of M/s. SEMPL. Question 15: When and how did Mr. Kumar Rajesh Raman give you instructions for handing the said foreign currency to Mr. Amit Bali? Answer 15: Mr. Kumar Rajesh Raman telephonically instructed me on my mobile no. 9582299646 from his mobile no. 9811900563 in the morning of 18.08.2018; however, I do not remember the exact time. Question 16: Were you, Mr. Amit Bali and Mr. Kumar Rajesh Raman in office throughout the day on 18.08.2018? Answer 16: I was in office till evening. Mr. Kumar Rajesh Raman was not in the office on 18.08.2018. Mr. Amit Bali came to office in the afternoon on 18.08.2018 and left the office immediately after receiving the said foreign currency amount from me. 20. The facts alleged by the appellant in the memo of appeal have to be tested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belonged to the appellant without appreciating the subsequent statements made by Amit Bali. 23. In this context, it would also be necessary to refer in the statement of Hemant Dahiya, a Director of SEMPL, made on 20.08.2018. He stated that he was aware of the upcoming visit of the appellant in connection with the meeting with distributors of HMC. He also stated that he had asked Amit Bali to accompany the appellant and make necessary arrangements to organise the meetings and since HMC was a top client of SEMPL, it looks after the accommodation, transportation and arrangements for the official meetings. Hemant Dahiya also stated that it was the regular practice for SEMPL staff to carry foreign currency for meeting the expenses of the client. According to Hemant Dahiya, there was an oral agreement between HMC and SEMPL for organizing events and it was the responsibility of SEMPL to ensure compliance of Acts/ Statues, including Customs Act, FEMA, Income Tax Act and Companies Act while executing the project abroad or in India. Hemant Dahiya further clarified that expenses incurred by SEMPL while executing the project were included in the Bills raised to HMC and HMC paid the amount. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses to be undertaken. It also transpires that SEMPL would raise invoices for such expenses together with its service charge and thereafter payments were made by HMC. The actual owner of the foreign currency having been identified, the concept of beneficial owner does not arise. The Commissioner (Appeals), therefore, was not justified in reversing the finding recorded by the Additional Commissioner that the concept of beneficial owner would not arise in the facts and circumstances of the case. 28. It further transpires that HMC had arranged SEMPL as the service provider for the event management outside India and it was the responsibility of SEMPL to acquire foreign exchange which was acquired by SEMPL and handed over to Amit Bali for discharge of the contractual obligation of organising and arranging meetings. The Commissioner (Appeals) has merely on conjectures and surmises assumed the liability of the appellant in relation to the export of foreign currency. 29. The foreign exchange for corporate purposes has wrongly been treated as personal expenses merely because the appellant is the Chairman and Managing Director of HMC, which had organized, through SEMPL, events an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto India, but which are not unloaded at their place of destination in India, or so much of the quantity of such goods as has not been unloaded at any such destination if goods unloaded at such destination are short of the quantity required to be unloaded at that destination; (c) payment of drawback as provided in Chapter X, and the rules made thereunder: Provided Further: xxxxxxxxxxx 32. A bare perusal of the aforesaid section 129A of the Customs Act indicates that an appeal shall not lie to the Tribunal if the order said to be assailed pertains to goods imported or exported as baggage. 33. Baggage has been defined under section 2(3) of the Customs Act as follows: 2(3): baggage includes unaccompanied baggage but does not include motor vehicles; 34. Goods have been defined under section 2(22) of the Customs Act as follows: 2(22) : goods includes- (a) Vessels, aircrafts and vehicles; (b) Stores; (c) Baggage; (d) Currency and negotiable instruments; and (e) Any other kind of movable property; 35. The issue as to whether an appeal would be maintainable or not before the Tribunal came up for examination before the Tribunal in Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned that the baggage contained currency. According to us, the baggage and currency are different and when we read the definition of baggage separately, it would appear that the baggage includes unaccompanied baggage but does not include motor vehicles. Here, this baggage is completely different from the currency notes. Therefore, the learned Tribunal has not decided wrongly that baggage can be synonymous with the currency notes though Smt. Sarkar wants to persuade in other way. When the case proceeds on the basis of baggage it has to be understood whether the subject matter was baggage or not. The subject matter was Indian currency. We therefore uphold the decision of the learned Tribunal. 37. The Ahmedabad Bench of the Tribunal in Rajesh Kumar Ishwar Parikh vs. C.C.- Ahmedabad [Customs Appeal No. 10501 of 2019 decided on 11.12.2020] also examined this issue relating to maintainability of the appeal before the Tribunal and held that that the appeal would be maintainable. The observations are as follows: (A) As regard the maintainability of appeal before this tribunal I find that this tribunal has considered the very issue in the following judgments:- Shambhun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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