TMI Blog2022 (9) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... f business, appellant did not deal with alleged gold smuggling activity in question. Facts borne on record revealed that the appellant has maintained all along that it never had the possession of the impugned goods nor was in any way concerned with the carrying, removing, etc., of the consignments in question and hence, it was beyond their comprehension that the goods in question were per se liable for confiscation under Section 111(d) ibid - Undisputed peculiar facts of the case are that the appellant is neither the importer nor the owner who had acquired possession nor in any way concerned with the carrying, removing, etc., of the goods in question, and Revenue has nowhere ascribed knowledge of the appellant as to the confiscation. Penalty under Section 112(b) can be imposed when a person acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111. It is submitted that it is not the case of the Revenue that the Noticee was indulged in any of the activities as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... packet and found the same contained 47 gold bars. The officers seized the said gold under Seizure memo dated 04.06.2019. Statement of Shri Jignesh Savaliya was recorded wherein he stated that the said gold bars were given to him by a person named Shri Lokesh Sharma and he was supposed to hand over the same to Shri Rutugna Trivedi outside the Airport terminal. The officers further carried out the investigation and the evidences in the form of statements of persons involved in smuggling of gold, documents recovered after searches carried out at various locations, documents recovered and retrieved from the Mobile phones of various persons involved in smuggling of gold, data storage devices recovered from the residence of Ms. Nita C Parmar and also the email recovered from account of Shri Jignesh Savaliya and Shri Jitendra Rokad reveal that a Gold smuggling racket was orchestrated and operated by Shri Rutunga Trivedi, his wife Smt. Hina Rutunga Trivediand their employee and key associate Ms. Nita C Parmar. This smuggling activity was aided by Shri Jignesh Savaliya, Asst. Duty Officer of M/s Global Ground India Pvt. Ltd., ground handling agency working at Sardar Vallabhbhai Patel Intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he had reasons to believe the smuggle under Section 111 of the Customs Act, 1962. After following due process, the adjudicating authority vide impugned order dated 29-11-2021 confirmed the charges and demands proposed in Show Cause Notice. He imposed the penalty of Rs. 1,63,00,000/- under Section 112(b)(i) of the Customs Act 1962 on the appellants. Being aggrieved, the appellants preferred appeal before this Tribunal. 3. Shri Hardik Modh and Shri Amit Laddha, Learned Counsel appearing on behalf of the appellant submits that Appellant was inter-alia engaged in business of lending business through M/s Manas Enterprises and D.H. Quickfin Pvt. Ltd.. Both these firms have been licensed by RBI and state of Gujarat respectively. Since the Appellant lent money to Shri Mehul Bhimani, Shri Jitendra Rokad and Shri Rutugna Trivedi as part of Business activities without having knowledge that the same fund was used for smuggling of gold activity. Being part of financial activity, the Appellant financed to Shri Mehul Bhimani, Shri Jitendra Rokad and Shri Rutugna Trivedi after obtaining collateral security as mortgage of immovable property. 3.1 He submits that Ld. Commissioner erred in holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (335)ELT 297 Commissioner of Central Exicse Vs. P.D. Industries Pvt. Ltd. -2016 (340) ELT 249. 3.4 He further submits that in the absence of any charges of malafide intention in as much as not having smuggled gold, penalty under Section 112(b) cannot be sustained. He placed reliance on the following judgments: Deepak Kumar Vs. Commissioner of Customs 2017(358)ELT 854 (T) Jaisukh Gobarbhai Savalia Vs. Commissioner of Customs 2019 (367) ELT 290 (T) (iii) A V Global Corporation Pvt. Ltd. Vs. CC 2018 (363) ELT 676 (T), The appellant also filed a written submission dated 04.08.2022 post hearing then his counsel which is taken on record. 4. Shri R P Parekh, Learned Superintendent (Authorized Representative) appearing on behalf of the Revenue reiterates the findings of the impugned order. 5. We have carefully considered the submissions made by both sides and perused the record. The appellant has challenged the penalty imposed upon him under Section 112(b)(i) the Customs Act, 1962 which reads as under:- 112. Penalty for improper importation of goods, etc. - Any person, - (b) who acquires possession of or is in any way concerned in carrying, remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have also gone through the statements of persons recorded in impugned matter. Upon perusal of these statements nowhere it has been found that the Appellant had knowledge about the use of fund in smuggling of gold. Appellant has financed the fund against the mortgage of properties owned by Shri Mehul Bhimani, Shri Jitendra Rokad, Ms.Hina Rutugna Trivedi and Shri Rutugna Trivedi. Details of the property mortgaged to lenders were also furnished by the Appellant to the investigation authority during the investigation. We also reproduce the relevant paras of the Appellant s statement dtd. 30.08.2019 as under: Today on being specifically asked about one Shri Mehul Rasikbhai Bhimani and Shri Jitendra Rokad, I state that I know them since 2012, they were introduced by one on my client Shri Montubhai (Mahesh) Vyas, who belongs to Amreli. They (Mehul and Jitendra) contacted me for availing Bank finance for their Pharmaceutical Company in the name of M/s Aprica Pharmaceuticals. In this matter I further state that I have done financial consultancy for them viz., M/s Aprica upto 2016. In this connection, I also produce the relevant bills for the said period viz total finance of approx. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finance business, they required some funds for their existing business, I arranged finance of total amount of Rs. One Crore approx. during the period 2013-19 against the mortgage of flat of Residency, Tal- Ghatlodia, Sola, Ahmedabad office of Mehul Bhimani Jitendra Rokad at 202, Sparsh at 304/305, Brooklyn Tower, Nr YMCA Club, Makarba, SG Highway Ahmedabad. In the matter I here by also produce the ledger account copies for the said transaction for your reference. Now, on being asked about one Sh Rutugna Arvindbhai Trivedi, I state that I know him and he was introduced by Shri Mehulbhai Bhimani Shri Jitendra Rokad. As Rutugna Arvindbhai Trivedi wanted finance for his trading business LED lights business in India. On being asked I gave finance to them in the name of Hina Rutugna Trivedi of Rs. 25 lacs in 2013 against their Swagat city. Bunglow, Adalaj, Gandhinagar on mortgage. There after in 2015-16, I have arranged further funds of Rs. 01 Crore against their office at 306/504 at Bala Heights, on CG Road, Ahmedabad on mortgage. 5.3 We find that Relevant pages retrieved from Pen Drive recovered from residential premise of Ms. Nita Parmar shows an amount of Rs. 2,66, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted more than Rs. 2 crores. Harshad Savalia who is my brother-in-law had also invested about Rs. 1 crore, JItendra Rokad had invested about Rs. 85 lakhs. Hariani, Chartered Accountant who is known to me had invested Rs. 2 crore, for which collateral securities were also provided to Mr. Hariani. 5.6 Similarly, statement of Shri Jitendra Rokad dated 29.06.2019 wherein he mentioned as under:- On being asked about investment of individuals for the entire gold smuggling activities I state that Mehul Bhimani invested about Rs.2 crore, Harshad Savalia who is brother- in-law of Mehul Bhimani invested about Rs.1 crore, I myself invested about Rs.85 lakhs and Mr. Hariani, Chartered Accountant who is known to Mehul Bhimani has invested Rs.2 crore for which collateral security was also provided to Mr. Hariani. On being asked I state that I, Mehul Bhimani and Rutugna Trivedi, all partners of this entire activity, have earned equal profit i.e. 33% each. The above statement reveals that the Appellant invested money for interest whereas partners for carry out the alleged illegal activity were Shri Jitendra Rokad, Shri Mehul Bhimani and Shri Rutugna Trivedi who shared equal profit i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n no evidence whatsoever was found to substantiate the finding of the Respondent that the Appellant financed to Shri Rutugna Trivedi for smuggling of gold. The above facts stated by the Appellant in their statement nowhere disputed by the department. From the evidence available on record and statement of Appellant it is clear that he was in normal course of his business lending the fund. The business activity of financing of fund has been turned by the Ld. Commissioner into direct participation in the conspiracy to smuggle gold. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge on part of the person has to be established. From the above statement of Appellant it is also clear that he had not confessed in his statement that he had knowledge about use of the funds provided to Shri Mehul Bhimani and Shri Jitendra Rokad for smuggling of gold. The Appellant had nowhere stated that this fund used by persons for import of smuggling of gold. During the investigation officers did not find any documents/ piece of paper or any other evidence against the Appellant to show that the Appellant financed money for smuggling of gold into India. Clearly, the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) who acquires possession of or is in any way concerned in carrying removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 shall be liable Rule 209A of the Central Excise Rules, 1944: Rule 209A. Penalty for certain offences. Any person who acquires possession of, or is any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater. Rule 26 of the Central Excise Rules, 2002 Rule 26 came to enacted which came in force with effect from 1st March, 2007. Rule 26 reads as under: Rule 26. Penalty for certain offences. - (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter referring to the decision of the Hon ble Bombay High Court in the case of Jayantilal Thakkar and Co 2006 (195) ELT 9 (Bom.) held that for imposition of penalty under Rule 209A of the Central Excise Rules, 1944, the person must have dealt with excisable goods with knowledge that they are liable for confiscation. 5.16 Similarly, in the case of R.C. Jain Vs. Commissioner of Central Excise and Service Tax 2016 (334) ELT 115, the Hon ble Tribunal held that penalty under Section 112(b) of the Customs Act cannot be imposed if the assesse has not dealt with or transported goods physically in any manner. 5.17 The Tribunal in the case of D. Ankneedu Chowdhry Vs.Commissioner of Customs 2004 (178) ELT 578held that in any other manner dealing with used in Section 112(b) of the Customs Act has to be read ejusdem generis with the preceding expression in the clause viz. carrying, removal or depositing etc. It is held that accordingly to the above doctrine, meaning of expression in any other manner of dealing with should be understood in sense similar or comparable to how preceding words viz. carrying, removing, depositing etc. are understood. In other words, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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