TMI Blog2023 (1) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... horities that the word possession or similar phrases used in the statute do not imply physical possession of the goods but would imply possession in law. Reliance placed in the case of MOHAN LAL VERSUS STATE OF RAJASTHAN [ 2015 (4) TMI 688 - SUPREME COURT] , where interpreting the provisions of the Section 9 of Opium Act, 1978, and Section 18 of NDPS Act, 1985 Hon ble Supreme Court has held that A functional and flexible approach in defining and understanding the possession as a concept is acceptable and thereby emphasis has been laid on different possessory rights according to the commands and justice of the social policy. Thus, the word possession in the context of any enactment would depend upon the object and purpose of the enactment and an appropriate meaning has to be assigned to the word to effectuate the said object. Thus, it is established the phrases like Any person 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 good. used in the statute, need not be restricted to their literary meanings or imply actual physical possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wani with Shri Chirag Shetty, Advocates for Appellant 1 Shri Pravin Singh with Shri Ashok Singh, Advocates for Appellant 2 Shri Deepak Bhilegaonkar, Additional Commissioner, Authorised Representative for the Respondent ORDER These appeals are directed against order in original No 08/CSP(08)COMMR/ RGD/10-11 dated 31st August 2010 of the Commissioner of Customs, C.Ex. S.T., Raigad. In respect of the two appellant namely Shri M K Patel (Appellant 1) and Shri Riyaz Padela (Appellant 2) the impugned order held as follows: 8. (i) The amount of Rs. 1,01,35,000/- (Rupees One Crore One Lakh Thirty Five Thousand Only) paid by Shri M K Patel is ordered to be adjusted against the amount of demands confirmed against M/s Xian Organics, M/s Swift Trading (India) and M/s New Life Organics. (ii) Penalty of Rs. 90,00,000/- (Rupees Ninety Lacs Only) is imposed under Rule 26 of Central Excise Rules, 2002 on Shri M K Patel (Noticee No 9). 9. (i) The amount of Rs. 6,00,000/- (Rupees Six Lakh Only) paid by Shri Riyaz Padela is ordered to be adjusted against the amount of demands confirmed against M/s Xian Organics, M/s Swift Trading (India) and M/s New Life Organ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice has been adjudicated as per the impugned order referred to in para 1 above 2.5 Registry has confirmed that against the impugned order three more appeals viz E/2118, 2119 and 2135/2010-Ex [DB] were filed. However these three appeals have been dismissed and only these two appeals are now pending for consideration. 3.1 We have heard Shri Jitendra Motwani along with Shri Chirag Shetty, Advocates for appellant 1 and Shri Ashok Singh along with Shri Pravin Singh, Advocates and for appellant no 2. We have also heard Shri Bhilegaonkar Deepak, Additional Commissioner, Authorized Representative for the revenue. 3.2 Arguing for the Appellant 1, his counsels submitted as follows: The Appellant is ex superintendent of Central Excise. Since the investigations had raised question mark over manufacturing and export of the goods, Appellant deposited Rs. 1,01,35,000/- under protest. The Appellant was not aware about the forged and fabricated nature of the documents. It came to the knowledge of the Appellant only after the investigation by the department. The role of the Appellant was limited to introduction of Mr. Riyaz Padela with Mr. Deepak Jare. In so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etals Alloys Ltd Ors Vs Commissioner of Central Excise, Mumbai III in Appeal No. E/1628/97-Mum has categorically held in para 5 that Appellant in that case was not involved in transporting, removing, depositing, keeping, concealing etc of any excisable goods which are liable for confiscation. It was further held that Rule 209A of the Central Excise Rule cannot be imposed upon the Appellant. It is also held that in the new Central Excise Rule 2002, Rule 26 is pari materia to Rule 209A, when it was realized by the government that offence of similar nature is also occurring for extending the fraudulent benefit by way of fake documents, the legislature have consciously inserted sub-rule 2 in Rule 26 to bring such offences under the ambit of penal provision. Since the provision of sub-rule 2 of Rule 26 was neither existing in Rule 26 (1) nor in Rule 209A of the Central Excise Rule, the provision of sub rule (2) cannot be made applicable prior to 01.03.2007 when sub-rule (2) was inserted. In the present case also the allegations pertains to prior to 01.03.2007 and there is no allegation of physically dealing with the goods by the Appellant and as such Rule 26 (2) cannot be give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no intention of the legislation to impose such a penalty on mere handling of documents prior to the said amendment. This amendment is prospective in nature, Reliance is placed on the following decisions Balaji Enterprises [1997 (92) ELT 3 SC] Indian National Shipowners Association [2009 (13) S.T.R. 235 (Bom.)] Mini Steel Traders, [2014 (309) E.L.T. 404 (P H)] Steel India Company [2014 (310) E.L.T. 184 (Tri. - Mumbai)] The ratio of the above decisions applies squarely on the present matter, hence no penalty under Rule 26 (2) of the Excise Rules can be imposed on the Appellant. In any case, it is a trite law that no penalty can be imposed on such an offence which was committed before the said offence was penalized. Reliance in this regard is also placed on the decision of Hon'ble Supreme Court in the case of Commissioner of Central Excise v/s Elgi Equipments Ltd, wherein it is categorically held that illegality committed prior to insertion of section 11AC of the Central Excise Act, 1944 cannot be subject matter of penalty under the said provision. The case laws relied upon by the Learned Departmental Representative during the course of heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of Creation of alleged Central Excise documents viz. invoices, ARE-1's, alleged duty payment documents, alleged proof of exports, are activities which perfectly fit the expression in any other manner deal with the excisable goods in Rule 26. As the investigation could not trace the manufacturer of goods, it does not necessarily lead to conclusion that there was no existence of excisable goods per se. Even otherwise, the expression Excisable Goods in Rule 26 if read standalone (as the expression in any other manner deal with the excisable goods is duly separated by expression or and , from the expression acquire possession of means goods liable to excise duty i.e. it has no relationship with physical existence of goods. According to Section 2 (d) of Central Excise Act 1944: Excisable goods means goods specified in the first schedule and the second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt . Thus, any goods mentioned in the first schedule of the said Central Excise Tariff Act will also be excisable goods. In M/s. Hiralal Ratanlal vs. STO, (AIR 1973 SC 1034), the apex Court observed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (b) after sub-rule(1) as so re-numbered, the following subrule shall be inserted, namely:- (2) Any person, who issues- (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater . It is worthwhile to note that the said amendment to Rule 26 has been carried out without any corresponding amendment in the Section 37(5) and thus derives its power from the said section and is only clarificatory in nature. The amendments carried out through notification No. 8/2007- Central Excise (N.T.) 01.03.2007 therefore, are, equally applicable to cases prior to issuance of this notification read with provisions of Section 37(5) of the Central Excise Act, 1944. In any case, each issue has to be dealt wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Valsad, Gujarat 15 1,14,67,021/- 5 M/s. J.D. Trading House (Noticee No.5) 15 2,41,70,349/- Total 85 8,32,00,658/- 4.3 Rebate claims as detailed in table below, after causing due verification rebate claims as detailed below were sanctioned in the favour of claimant merchant exporters Merchant Exporter Number of Rebate Claims Total Rebate Claimed (Rs.) 1 M/s. Xian Organics (Noticee No. 1), Valsad, Gujrat 11 82,07,736/ - 2 M/s. Swift Trading (India) (Noticee No. 2). Ankleshwar, Gujarat 6 57,39,258/- 3 M/s. New Life Organics (Noticee No. 3). Valsad, Gujarat 2 19,60,693/- 19 1,59,07,687/- 4.4 Investigations made in respect of the rebate cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Riyaz Padela. After receipt of the cash from Shri Afroz Bachau and/or Shri Javed Shaikh, Shri Riyaz Padela distributed the amount in the ratio of 60% to Shri M.K. Patel, 30% to Shri Dilkumar and Shri Rakesh and 10% to Shri Riyaz Padela himself, as agreed upon by them. Shri Ashvin Virani had transferred the share of Shri M. K.Patel from Surat to Mumbai Thane, through the courier account of his courier. 4.6 During the course of investigations, the noticee have returned the amount of Rs. 1,59,26,000/ which covers rebate which was fraudulently availed as per the following details: - Sr No Person Amount (Rs) 1 Amount transferred from the a/c of Shri Pinakin Rajwala with the Memon Co-op Bank, Mumbai branch 22,15,000 2 DD issued by Memon Co-op Bank, Surat from A/c of Shri Ketan Gotawala 29,76,000 3 Amount paid by Riyaz Padela 6,00,000 4 Amount paid by Shri Venkat Chari on behalf of Shri M.K.Patel 1,01,35,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,90,053/- 88.3 Shri Deepak Sharad Jare was in the business of Clearing and Forwarding. In 2004, he met Shri M K Patel at Bhiwandi, while dealing with certain export consignments, stuffed under the supervision of Shri M. K. Patel. Later on Shri M K Patel introduced him with Shri Riyaz Padela from Surat. Shri M.K. Patel and Shri Riyaz Padela had requested him to help them in processing of several Central Excise rebate claims which were to be filed with the Maritime Commissioner, Raigad. As Shri M K Patel was known to him, he had instructed his cousin, Shri Bhaskar Tate to assist them in the work related to processing of the said rebate claims. Thereafter, Shri Riyaz Padela had handed over the 'Authority Letters' of above named firms, which authorized Shri Bhaskar Tate to act on behalf of the firms. As per the directions of Shri M K Patel, Shri Bhaskar Tate collected the rebate claims from the residence of Shri M. K. Patel situated at B-201, Siddhi Towers, Bhakti Mandir Marg, Thane(W) and submitted to the office of the Maritime Commissionerate, Raigad, when the rebate claims were sanctioned, Shri Bhaskar Tate collected the cheques and handed ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ode, Inspector, Central Excise, Raigad in his statement dated 26.06.06, stated that he has not played any active role in filing rebate claims of the above mentioned firms. He was not aware of any of the merchant exporters. In November/December, 2005 Shri M.K. Patel told him that, some of his friends wanted to file rebate claims with the Maritime Commissioner, Raigad. He sent their agent Shri Deepak Jare to him with a request to introduce Shri Deepak Jare to the officers in rebate section of Raigad, for the said purpose. Accordingly, as per the request of his senior colleague, Shri M K Patel, he had introduced the said person to the Rebate Section on the assumption that the rebate claims were correct and genuine. In June 2006 he had learnt that investigations were going on in the matter of the above mentioned rebate claims. He immediately contacted Shri M. K. Patel and had confronted him, but Shri M. K. Patel had assured him that everything was above board. He had called up Shri Deepak Jare and Shri M K Patel and requested them to come clean on the issue and also asked Shri M.K. Patel to advice Shri Deepak Jare to appear before the investigating officials and co-operate in the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e processed in the office of the Maritime Commissioner, Raigad and requested him to receive the cheque of rebate sanction amount from Shri Bhaskar Tate, who would be collecting the same personally from the department. Accordingly, Shri Bhaskar Tate brought the envelope containing the cheque to his residence, which was collected from him on the same day by Shri Riyaz Padela in person. Similarly on two/three occasions the exchange of documents between Shri Bhaskar Tate and Shri Riyaz Padela had taken place through him. 88.7 Shri Riyaz Padela in his said statement dated 15.12.06 deposed that- (i) he knew Shri M.K. Patel from the time when he was Superintendent at Bhiwandi in the year 2004. Somewhere in March-April, 2005, Shri M. K. Patel offered him help as he was in a position to facilitate the rebate claims, with the officers in Central Excise Raigad Rebate Department. Thereafter, he had offered one Shri Dilkumar to carry out the work of encashing the cheques with his friend, Shri Afroz Bachau, which Shri Dilkumar accepted. Shri Dilkumar had informed him that he indeed had some claims of Excise Rebate and in case any person could help him to process the same, he would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Patel, his share of 60% of the rebate amount. Shri Riyaz Padela further stated that he did not have any knowledge about the merchant exporters in respect of whom the rebate claims had been filed. Shri Riyaz Padela in his statement dated 19.12.2006 admitted that the complete set of rebate claim documents were sent by his friend Shri Afroz Mansoori, on his instructions to Shri M.K. Patel, for processing and sanction. The documents sent to Shri M.K.Patel were provided to him by Shri Rakesh, who was introduced to him by Shri Dilkumar. (iv) Further Shri Riyaz Padela in his statement recorded on 26.12.2006 stated that Shri Rakesh had contacted him on several occasions with regard to written references/queries from Central Excise Raigad Commissionerate in relation to the rebate claims. He used to prepare a draft reply as per the guidance of Shri M.K. Patel and give it to Shri Rakesh, who in turn, used to bring back the said reply duly typed over the concerned company's letter- heads and duly signed by the authorized persons, which he then, forwarded to Shri M. K. Patel for submission to the excise authority. The documents of rebate claims received from Shri Rakesh and forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri M.K. Patel was asked to state whether the outward number '451' appearing on the letter and the address on the envelope were in his handwriting. Shri M.K. Patel stated that both the writings appeared to be similar to his handwriting and avoided giving a categorical reply. 88.9 Investigations also revealed that the documents certifying duty payment and the proof of export submitted by the exporters, were in fact fabricated documents. No such certificates were actually issued by the said authorities in respect of the said goods as confirmed by the Commissioner of Customs (Export), JNCH, Sheva, vide his letter F.No. SG/MISC-254/06 SIIB (X)JNCH dated 09.05.07. It was observed that handwriting on the sealed covers and on the letters placed inside, apparently matched the with the handwriting of Shri M. K. Patel, who merely stated that the handwriting on the said documents only appeared to be similar to his own. 88.10 In order to confirm the identity of the person who fabricated the documents in question, specimen original copies of the questionable documents (along with specimen handwriting of Shri M.K. Patel, were forwarded to the Government Examiner of Question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). He submitted copies of the TR6 challans in the said regard. He has further stated that like the earlier payments made by him on behalf of Shri M.K: Patel, he has drawn the cheques directly in the name of the Excise Department to avoid delay in the payments as requested by Shri M. K. Patel. Thus, Shri Venkat Chari had paid an aggregate amount of Rs. 101.35 lakh, on behalf of Shri M. K. Patel, towards the re-payment against erroneously sanctioned and paid rebate to the 3 merchant exporters. 89. The investigations revealed that Shri Riyaz Rafiq Padela (Noticee No.10) had actively involved in procurement and submission of fabricated rebate documents with the office of the Maritime Commissioner, Raigad and he was one of the beneficiaries of the amount of rebate obtained. The evidence collected during investigations is as under: 89.1 Shri Qadir Amin Dangra clerk in the Memon Co-op. Bank, Surat in his deposition recorded on 09.06.2006 stated that, Shri Javed Shaikh who later on was found to be associate of Shri Riyaz Rafiq Padela, had contacted him to open accounts in the Memon Co-op. Bank, in the names of some other persons. Pursuant to the said proposal of Shri Javed S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit certain cheques in such accounts and encash the full amount. According to their instructions he had opened the aforesaid accounts. Shri Riyaz Padela and Shri Javed Shaikh operated the cheque discounting accounts and the account holders viz. i) Shri Rakesh Kumar Madhubhai More li) Shri Ketan Dhansukhbhai Gotawala iii) Shri Pinakin Muljibhai Rajawala iv) Shri Sikandar Mithani v) M/s. Kulandar Textiles vi) M/s. M.N.Traders vii) Shri Faisal Dhib, never personally operated their accounts. All the cheques pertaining to the above mentioned accounts were deposited by Shri Javed Shaikh and the cash was also collected by him, 89.2 Shri Deepak Sharad Jare in his statement dated 26.07.2006 stated that Shri MK Patel had introduced him to Shri Riyaz Padela from Surat and had informed him that Shri Riyaz Padela was in the business of export. They requested for his help in processing of several Central Excise rebate claims which were to be filed with the Maritime Commissionerate, Raigad. As Shri M K Patel was known to him, he had instructed his cousin, Shri Bhaskar Tate to assist them in the work related to the processing of the said rebate claims. Thereafter, Shri Riyaz Padela h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar to carry out the work of encashing the cheques with the help of his friend Shri Afroz Bachau, which Shri Dilkumar accepted. He knew Shri M.K. Patel since 2004 and somewhere In March-April, 2005, Shri M.K.Patel had offered him that, he was in a position to facilitate the export documents for rebate claims, with the officers. In Raigad Rebate Department and further ensured that all the claims would be processed smoothly and speedily. Thereafter, he contacted Shri Dilkumar who gave him few sets of the export documents which were shown to Shri M. K. Patel on his visit to Surat. Shri Patel approved the documents and agreed to process the rebate claims on the basis of the said documents for payment of 60% of the total rebate amount claimed, towards the work done through him. He in turn had called up Shri Dilkumar and informed him that the work related to claiming of rebate on the basis of documents given by him could only be undertaken against an expense of 70% which included his share of 10% of the total rebate amount claimed, to which Shri Dilkumar agreed. Shri Dilkumar introduced him to Shri Rakesh and said that from then onwards he was required to contact Shri Rakesh for obtaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees. cheques. On 07.06.2006 Shri Riyaz Padela had given him a cheque for Rs. 10 lakh for to hand him over the concerned discounting, which he gave to Shri Qadir Amin Dangra and the amount was pending realization. 89.5 Shri Javed Abdul Quadir Shaikh Dhobi, in his statement dated 26.09.2007, interalia stated that Shri Riyaz Padela used to give the cross bearer cheques for discounting to him either directly or through Shri Afroz Bachau. Such cheques were given to Shri Quadir Amin Dangra and cash received was given to Shri Riyaz Padela, against the cheques given by him for discounting. He had so far handed over around Rs.20 lakh to Shri Riyaz Padela. 89.6 Shri Riyaz Padela in his statement recorded on 26.12.2006 inter-alia, stated that Shri Rakesh an associate of Shri Dilkumar had contacted him on several occasions with regard to queries in relation to discrepancies found in the rebate claims and at such times, he used to contact Shri M.K. Patel to get suitable reply furnished for such queries. He used to prepare a draft reply as per the guidance of Shri M.K. Patel and give it to Shri Rakesh, who in turn, used to bring back the said reply duly typed over the concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefits were shared by these four persons. The rebate claims were therefore filed and rebate amount was in reality received by them from the Government. Therefore, the Noticees No. 9, 10, 11 12 are found to be actual beneficiaries of the refund amount and the charges of demand/recovery and penalty against them are liable to be confirmed. 104. In the subject notice the charges for imposition of penalty under Rule 26 and/or Rule 27 of Central Excise Rules, 2002 are also levelled against all the noticees No. 01 to 21. It is on record that noticees No. 01 to 05 have filed fake documents with an intention to obtain rebate from the department and they have also succeeded in obtaining considerable amount of Rs.1.59 Crores from such fake rebate claims, on the basis of forged and fabricated Central Excise documents. They are therefore liable for penalty under Rule 26 and Rule 27 of Central Excise Rules, 2002. Noticees No. 6, 7 8 being proprietors of Noticees No. 1, 2 3, they are not separately liable for penalty. The liability of Noticees No. 09 to 21 is to be examined and determined in the light of the provisions of Rule 26 and Rule 27 of Central Excise Rules, 2002, and defenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... co-accused without any supportive evidence are not sufficient to uphold the charges against him. 107. It is relevant and appropriate to discuss the case laws cited by the noticees in support of their arguments. (i) In the case of M/s. Amrit Foods-2005(190) ELT-433-SC, the apex court with reference to penalty under Rule 173Q of Central Excise Rules, 1944 has held that it is necessary for the assessee to be put on notice as to the exact nature of contravention for which penalty is proposed to be imposed upon. The ratio of this judgment was followed in the case of M/s. Madhur Hosiery Industries 2006(200)ELT-147 Tribunal and in the case of Nakoda Textile Industries 2009(240)ELT-199-BOM-HC. In the case of B. Lakshmichand Vs. GOI 1993(12)ELT-322 Hon'ble Madras High Court has held that for imposition of penalty (Section 112 of Customs Act), charges against the accused should be clear and not ambiguous. If specific clause of the penal section is not quoted penalty is not sustainable. Onus of proof is on the department to prove essential Ingredients of an offence. (ii) In the case of Vijay Transport Co. Ltd. Vs. Commissioner of C.EX. 2008(230)ELT-154-Tri-Ahm. on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the law that confiscation of the goods must be invoked to impose personal penalty. The case laws on the issue of confessional statements of coaccused and circumstantial evidence are also not relevant as in this case each of the noticee has clearly admitted his involvement and none of them has retracted the statements. The statements are also corroborated with documentary evidence and hence the ratio of the cases cited by the noticees is not applicable to the subject case. 108. In addition to the case laws cited by the noticees it is also appropriate to discuss the following cases In which the provisions of Rule 26 Rule 27 of Central Excise Rules, 2002 have been dealt with in detail and therefore are relevant for deciding the subject issue. In the case of Sachindananda Banerjee, A.C.C. Calcutta Vs. Sitaram Agarwal 1999 (110) ELT-292-SC, the apex court has discussed the scope of the term in any way concerned or 'In any manner dealing with the goods'. Though the issue involved is that case was related to smuggled goods and penalty under Section 167 of the Sea and Customs Act, the ratio laid down by the apex court is relevant. The court has held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Sachidananda Banerjee Vs. Sitaram Agarwal for imposition of personal penalty is applicable to the like provisions of Central Excise Rules, 2002. 109. In view of the above, I find that - 109.1 It is clearly revealed that Shri M.K. Patel (Noticee No. 9) was the main conspirator in fraudulently obtaining rebate of Rs.1,59,07,686/- from the Maritime Commissioner, Raigad. The role of Shri M.K. Patel was fully underlined by Shri Deepak Jare, Shri Bhaskar Tate and Shri Riyaz Padela in their statements. Shri Riyaz Padela used to courier the documents related to the said claims of rebate at the residence of Shri M.K. Patel, which after scrutiny and corrections were handed over to Shri Bhaskar Tate for onward submission to the office of the Maritime Commissioner. The cheques pertaining to the rebate sanctioned amount were delivered to Shri M.K. Patel by Shri Bhaskar Tate. Shri Riyaz Padela or on his instructions Shri M.K. Patel deposited the cheques in the accounts of the merchant exporters concerned. Shri M.K. Patel had offered his services to get rebate claims processed and sanctioned from the office of the Maritime Commissioner. The deal was struck between Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchant exporters, by him with the help of Shri Afroz Bachau and Shri Qadir Amin Dangra. He had received 70% of the rebate amount so sanctioned and after retaining his share of 10%, the balance 60% amount was handed over to Shri M.K. Patel. Shri Riyaz Padela has also voluntarily deposited an amount of Rs.6,00,000/-, vide TR-6 Challans dated 21.12.06 (for Rs.5,00,000/-) and dated 28.12.06 (for Rs.1,00,000/-), towards the erroneously sanctioned rebate to the said merchant exporters, which was kept by him as his share. All the above facts have also been accepted by Shri Riyaz Padela in his written submission dated 18.03.2010. However, his claim for refund of the amount of Rs.6,00,000/-paid by him on the grounds that the said amount was recovered under stress/duress, is not maintainable, in view of the fact that there is no evidence on record to show that he had retracted any of his statements given before the investigating officers. It is therefore evident that, it is an afterthought on the part of Shri Riyaz Padela. Therefore, the amount of Rs.6,00,000/- recovered from Shri Riyaz Padela is liable to be adjusted against the demand. Shri Riyaz Padela had directly involved himself in pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that a statement made and signed by a person is relevant for the purpose of clause (b) makes it equally relevant for the purpose of confronting a person when examined under Section 107. The petitioner was confronted, counsel points out, with the statements of the co-accused and those statements are relevant material in the light of Section 138B. Counsel further points out that clause (b) says that statement has to be admitted in evidence when the maker of the statement is examined as a witness. Counsel then refers to Section 139 which reads : 139. Presumption as to documents in certain cases.-Where any document - (i) is produced by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law, or (ii) has been received from any place outside India in the course of investigation of any offence alleged to have been committed by any person under this Act, and such document is tendered by the prosecution in evidence against him or against him and any other person who is tried jointly with him, the court shall - (a) presume, unless the contrary is proved, that the signature and every other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from the officers or from the co-accused themselves. In R.S. Kalyanaraman v. Collector of Customs, Madras (1978 Tax L.R. 1735) the Madras High Court repelled the contention that the confession of a coaccused was not evidence on the basis of which a person could be found guilty in departmental proceedings. The Court stated : ........ The fact that the criminal Court had acquitted the petitioner would be of no consequence since the acquittal was on the footing that the confession of a co-accused could not be used against the petitioner. In departmental proceedings, there is no bar to use such statements...... They dispute the penalty imposed on them under Rule 26 of the Central Excise Rules, 2002. They rely on the decision of the Hon ble Bombay High Court in case of Bansal Steel Corporation [2017-TIOL-1883-HC-MUM-CX] holding as follows: 11. From the above judgment, it is clear that Rule 209A can be invoked and the penalty imposed only when the person has physically dealt with the excisable goods with the knowledge or belief that the goods are liable for confiscation. In the present case, the allegation was of unused gate passbooks being misused by the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. Fraud as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury enures therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.11 It is also settled principle in law that the economic offenders/ white collared criminals need to be dealt in the strictest manner so as maintain uniformity and well being in the society and not endanger the economy of the country as such for the said preposition reliance is placed on the decisions of the Apex Court in the following cases. Balkrishna Chhaganlal Soni [1983 (13) ELT 1527 (SC)] 17. Guilt being established, the fifth act of the tragedy is reached. Social and economic offences stand on a graver footing in respect of punishment. The appellant s advocate pleads in elimination of the imprisonment that gold of considerable value has been confiscated, that his client has gone out of business (his licence having been cancelled) and the possibility of further mischief is absent, seven years of criminal proceedings have been a long ordeal deterrent enough to inhibit future anti-social adventures, and some jail term he has already undergone. Counsel submits that his client will now turn a new leaf if he is not returned to prison. We decline to be moved by this dubious prospect. 18. The new horizons in penal treatment with hopeful hues of correction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Social and Economic Offences against light sentences on the score that : (i) the case is one of first conviction; (ii) that the matter has been already dealt with by severe departmental penalty; (iii) that the convicted person is a young man. To the extent to which gold smugglers and other anti-social operators in the field of crime can be given an unhappy holiday in jail, the courts must help the process on conviction, if judicial institutions are not to be cynically viewed by the community. We confirm the sentence. The appeal fails and is dismissed. Champalal Punaji Shah [1983 (13) ELT 1661 (SC)] 6. Shri Jethmalani also urged that the trial of the respondent was considerably delayed, that there was thus a violation of the fundamental right to life and liberty guaranteed under Article 21 of the Constitution and that was a sufficient ground to entitle the accused to a dismissal of the complaint against him. We have earlier discussed the relevant principles which should guide us in such situations. In this case the accused himself was responsible for a fair part of the delay. He has also not been able to show cause how he was prejudiced in the conduct of his defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepts of tax evasion and tax avoidance and to discover the invisible line supposed to exist which distinguishes one from the other. Tax avoidance, it seems, is legal, tax evasion is illegal. . In Commissioner of Income tax, Gujarat v. A. Raman Co.,[[1968]1 S.C.R 10] JC Shah, JJ. speaking for himself and Sikri and Ramaswami, JJ repeating almost verbatim the observations in Westminister and Fishers Executors observed: Avoidance of tax liability by 80 arranging commercial affairs that charge of tax is distributed is not prohibited. A taxpayer may resort to a device to divert the income before it accrues or arises to him. Effectiveness of the device depends not upon considerations of morality, but on the Legislative injunction in taking statutes may not, except on period of penalty, be violated, but it may lawfully be circumvented. The same Judge, speaking for himself, Ramaswami and Grover JJ in Commissioner of Income tax, Gujarat v. Kharwar [72 ITR 603] expressly followed Westminister and observed: The taxing authority is entitled and is indeed bound to determine the true legal relation resulting from a transaction. If the parties have chosen to conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions should be construed literally, or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it. A hint of this approach is to be found in the judgment of Desai, J. in Wood Polymer Ltd. v. Bengal Hotels Limited [40 Company Cases, 597] where the learned judge refused to accord sanction to the amalgamation of companies as it would lead to avoidance of tax. It is neither fair nor desirable to expect the legislature to intervene and take care of every device and scheme to avoid taxation. It is upto the Court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and consider whether the situation created by the devices could be related to the existing legislation with the aid of 'emerging' techniques of interpretation as was done in Ramsay, Burma Oil and Dawson, to expose the devices for what they really are and to refuse to give judicial benediction. Agreeing with above view Hon ble Justice Rangnath Mishra and other Justices in the bench observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emoves or does any act in respect of warehouse opium; and any person who otherwise contravenes any such rule, shall, ... 4.14 Interpreting Section 112 (b) of the Customs Act, 1962 tribunal has in the case of Bhimraj Misrilal Jain [1986 (23) ELT 499 (T)], observed as follows: 6. .. We do not also agree with the submissions of the appellant that acquisition is conditioned by physical possession. Such a concept of possession is opposed to well accepted principles of jurisprudence and a person without being in physical possession of an article can always be in law in constructive possession of the same. In the instant case, in respect of the penalty imposed on the appellant under Section 112(b)(i) of the Act the question that would fall for determination is whether on the basis of evidence available on record it could be found that the appellant had acquired possession or was in any way concerned in the carrying, removing of the goods under seizure or has in any other manner dealt with the goods under seizure knowing or having reason to believe that the same are liable to confiscation under Section 111 of the Customs Act, 1962. We have gone through the statement recorded fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Hava has been well corroborated by certain clinching circumstances like the appellant meeting the said Hava at the appointed time at a specified place and conversing with him. The appellant has also not chosen to crossexamine the said Hava. Therefore, we are convinced that the appellant is concerned with the watches under seizure. We are not going into the acceptability or otherwise of the alleged unsigned statement of the appellant dated 3-10-1983 since de hors the statement we find from the materials on record that the charge has been proved against the appellant. Having regard to the value of the watches, the quantum of penalty imposed on the appellant cannot be said to be either harsh or excessive. We therefore, dismiss the appeal. 4.15 In our view it has been settled by various authorities as follows that the word possession or similar phrases used in the statute do not imply physical possession of the goods but would imply possession in law. Some of significant decisions on the subject are reproduced below: Mangal Singh Ors [1967 AIR 1786] Stroud in his Judicial Dictionary of Words and Phrases, Vol. 3, at p. 2238, has brought out this aspect when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f possession of contraband substance also commenced prior to coming into force of NDPS Act as the FIR would clearly reveal that the theft was committed on the intervening night of 12th/13th November, 1985, whereas the NDPS Act came into force on 14.11.1985. Learned counsel would submit that the recovery of opium was done on 16.1.1986 pursuant to the disclosure statement made by the accusedappellant who was already under arrest in a different matter and under such circumstances, the appellant could not have been convicted under Section 18 of the NDPS Act, but should have been convicted under Section 9 of the Opium Act. Elaborating the said submission, the learned counsel has contended that the offence of possession of contraband substance was punishable under both the laws but there is a huge difference in the sentence prescribed. Under Section 9 of the Opium Act, the sentence was extendable to one year whereas under Section 18 of the NDPS Act, the prescribed punishment is minimum 10 years apart from imposition of huge fine. Learned counsel would submit that it is the settled principle of criminal jurisprudence that the accused cannot be subject to an offence under a new Act which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of any provision of this Act, or any rule or order made or condition of licence granted thereunder cultivates the opium poppy or produces, manufactures, possesses, sells, purchases, transports, imports inter-State, exports inter-State or uses opium shall be punishable with rigorous imprisonment for a term which shall not be less than ten years but which may extend to twenty-years and shall also be liable to fine which shall not be less than one lakh rupees but which may extend to two lakh rupees : Provided that the Court may, for reasons to be recorded in the judgment, impose a fine exceeding two lakh rupees. 8. When one conceives of possession, it appears in the strict sense that the concept of possession is basically connected to actus of physical control and custody . Attributing this meaning in the strict sense would be understanding the factum of possession in a narrow sense. With the passage of time there has been a gradual widening of the concept and the quintessential meaning of the word possession. The classical theory of English law on the term possession is fundamentally dominated by Savigny- ian corpus and animus doctrine. Distinction has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately accessible, and defendant exercises dominion or control over substance. State v. Hornaday[8]. And again Possession as necessary for conviction of offense of possession of controlled substances with intent to distribute may be constructive as well as actual, U.S. v. Craig[9]; as well as joint or exclusive, Garvey v. State[10]. The defendants must have had dominion and control over the contraband with knowledge of its presence and character. U.S, v. Morando- Alvarez[11]. Possession, as an element of offense of stolen goods, is not limited to actual manual control upon or about the person, but extends to things under one's power and dominion. McConnell v. State[12]. Possession as used in indictment charging possession of stolen mail may mean actual possession or constructive possession. U.S. v. Ellison[13]. To constitute possession of a concealable weapon under statue proscribing possession of a concealable weapon by a felon, it is sufficient that defendant have constructive possession and immediate access to the weapon. State v. Kelley[14]. 10. In Stroud's dictionary, the term possession has been defined as follows: Possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol over the same or he may have clear intention to exclude other people from the object, though he has no physical control over the same. In all this variegated situation, states Harris, the person concerned may still be conferred the possessory rights. The purpose of referring to the aforesaid principles and passages is that over the years, it has been seen that courts have refrained from adopting a doctrinaire approach towards defining possession. A functional and flexible approach in defining and understanding the possession as a concept is acceptable and thereby emphasis has been laid on different possessory rights according to the commands and justice of the social policy. Thus, the word possession in the context of any enactment would depend upon the object and purpose of the enactment and an appropriate meaning has to be assigned to the word to effectuate the said object. Tribunal has in case of Kader babu [1988 (33) E.L.T. 741 (Tribunal)] on explaining the terms possession used in Section 8 of Gold Control Act, 1968 observed as follows: 5 . In such a situation, it would not be correct to contend that the appellant has neither abetted nor agreed to acquire posse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... positing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any good.. used in the statute, need not be restricted to their literary meanings or imply actual physical possession or handling of the contraband goods, but these phrases refer to possession and handling of the contraband goods in law. This view has been expressed by the Hon ble Apex Court in the case of Mohan Lal, supra and any contrary view cannot be upheld. The Mumbai bench in case of Babulal Jain [Final Order No A/3314-3329/15/EB dated 29.09.2015] interpreted the provisions of the Rule 26 in similar manner holding as follows: 8. One of the common contentions by various learned counsels for the appellants was that penalty under Rule 26 cannot be imposed on the appellants, many of them are merchant exporters or Rule 12B manufacturers. It was the contention of the learned counsels that as per the department's case Muni Group of Companies have only supplied duty-paying invoices and the goods have come from some other sources and these goods along with the invoices of the Muni Group of Companies were exported and rebate was claimed. It was the contention of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants-merchant exporters, or in some cases, some amount was paid to certain dealers in fabric. (Perhaps, some fabrics might have been purchased from them.) Thus, it is evident that the invoices of Muni Group of Companies and the goods purported to be covered by such invoices were dealt by the merchant exporter-appellants. There can be no doubt, that these goods are liable to confiscation under Rule 25(1)(d) of the Central Excise Act, 1994. In view of the above said position, there can be no doubt that penalty is imposable under Rule 26 on the merchant exporter/manufacturer under Rule 12B 8.3. We also like to add the very fact that the appellants have procured invoices from a source other than the actual manufacturers of the goods would indicate that these goods were in reality not duty- paid goods. If these goods were dutypaid then there was no reason for the appellants-merchant exporters/manufacturers under Rule 12B to undertake the above mentioned fraudulent activity of approaching Muni Group of Companies and getting the invoices from them so as to create a fraudulent cover that the goods are duty-paid and are manufactured by Muni Group of Companies. In fact, the who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exported and procured from the market were nonduty paid goods. In case of some appellants, the goods were produced in their own unit and if in their own unit they would have paid duty, there was no reason for them to procure the invoices from Muni Group of Companies. 8.7. Various counsels have submitted that Rule 26 was amended thus, prior to 01/03/2007 no penalty could have been imposed on the dealers. We have considered this submission. While Rule 26(2) is prospective in nature, we find that in this case almost all appellants are Rule 12B manufacturers or merchant exporters. In the case of 12B manufacturers even though they may not have the manufacturing facility themselves, but they were treated as manufacturer under the Central Excise law and hence penalty under Rule 26 as it was existing prior to 01/03/2007 can be imposed. Even in respect of merchant exporter they were not the dealer in the normal sense i.e., who were passing on the CENVAT credit along with the invoices. In fact all such dealers are required to get themselves registered with the excise department and thereafter only they could issue cenvatable invoices. The merchant exporter were not that type of regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out actual delivery of any goods]. The present case is not one of issue of the invoices without delivery of goods. Hence, the case of Steel Tubes (supra) is distinguishable. Further, a similar issue had come up before the Hon ble Supreme Court in the case of Sachindananda Banerjee, A.C.C., Calcutta v. Sitaram Agarwala reported in 1999 (110) E.L.T. 292 (S.C.), which was deliberating over the expression in any way concerned in any manner dealing with prohibited goods appearing in Section 167(81) of the old Sea Customs Act, 1878, which is para materia with Section 112(b) of the new Customs Act, 1962, which in turn is para materia with Rule 209A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2002. The Supreme Court held as under : 13. The main contention of the respondents which has found favour with the High Court was that Section 167(81) when it deals with persons and subjects them to imprisonment and fine on conviction by a Magistrate is also concerned with persons who are in some way or other actually concerned in the import and has no application to third persons who had nothing to do with the actual import but might have come in possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal would have gone through and Sitaram would have paid the money and purchased the smuggled gold. This was a case therefore where by means of previous arrangement with a person in possession of a smuggled article, the intending purchaser had gone to purchase it and the deal did not go through only because the police intervened. In such circumstances whereby previous agreement or arrangement a person goes to purchase an article which he knows to be smuggled it would in our opinion be a case where such a person must be held to be concerned in dealing with the prohibited goods. Where a person does any overt act in relation to prohibited goods which he knows to be such and the act is done in consequence of a previous arrangement or agreement it would in our opinion be a case where the person doing the act is concerned in dealing with the prohibited goods. In other words any transaction relating to prohibited goods which is done or attempted to be done after some kind of prior arrangement or agreement would in our opinion clearly amount to the person being concerned in dealing with the prohibited goods. Both the words concerned and deal have a wide connotation. The words concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- (Rupees Three Lakhs only) on Mr. Ketkar to meet the ends of justice. Hon ble Punjab and Haryana High Court has in the case of Vee Kay Enterprises [2011 (266) ELT 436 (P H)] held as follows: 8 . Question for consideration is whether penalty could be levied on the person who did not actually deliver the goods and merely issued a fake invoice which enabled wrong availing of cenvat credit and the extent of penalty which could be levied. 9 . As regards applicability of provisions introduced on 1-3-2007 to alleged acts committed prior to the said date, the matter is covered by orders of this Court referred to above which are not shown to be distinguishable. Accordingly, we hold that the amended provisions will not apply to the acts committed prior thereto. 10 . Inspite of non-applicability of Rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, Rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Talbros would cover them too, it is seen that the settlement Commission itself did not admit their case and such non-admission was not on the ground that they would be covered by the main order in case of Talbros. The judgment in the case in K.I. International Limited (supra) takes note of the judgment in the case of S.K. Colombowala (supra) and holds that the benefit of the Settlement Commission s order cannot be extended to those who never approached the Settlement Commission. The learned Advocate stated that the order in case of K.I. International Limited has been stayed by the High Court, but I find that the stay is an interim stay on condition of 50% deposit and bank guarantee for the remaining amount which obviously means that what has been stayed is the consequential recoveries in terms of that order. As stated earlier, the Settlement Commission itself did not consider that the appellants would be covered by their order in case Talbros. As such, the contention of the appellants in this regard is not sustainable. The other contention of the appellants is that the penalty under Rule 25 cannot be imposed as there were no goods involved. It is seen that the Hon ble Punjab and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder; (bbbb) Contravenes any of the provisions of this Act or the rules made thereunder in relation to credit of any duty allowed to be utilised towards payment of excise duty on final products; (c) fails to supply any information which he is required by rules made under this Act to supply, or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; Section 9C. Presumption of culpable mental state. - (1) In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the Court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Explanation . - In this section, culpable mental state includes intention, motive, knowledge of a fact, and belief in, or reason to believe, a fact. (2) For the purposes of this section, a fact is said to be proved only when the Court believes it to exist beyond reasonable doubt and not merely when its e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as created any offence which was not an offence as per the provisions of Section 9 of the Act. In our view the fraudulent refund claim filed by the appellant would fall within the category of offence specified under sub section 1 (bbb) and 1 (c) of the Section 9 of the Act. For which penal provisions as per Rule 26 applies. The amendment made in 2007, do not create a new offence for which a separate penal provision has been provided but only enumerates the one more of the offence, which was even otherwise an offence as per Section 9. In case of Vijay Madanlal Choudhary vs Union Of India, Hon ble Supreme Court has vide order dated 27 July, 2022 in Special Leave Petition (Criminal) No. 4634 OF 2014, held as follows: 40. The Explanation as inserted in 2019, therefore, does not entail in expanding the purport of Section 3 as it stood prior to 2019, but is only clarificatory in nature. Inasmuch as Section 3 is widely worded with a view to not only investigate the offence of money laundering but also to prevent and regulate that offence. This provision plainly indicates that any (every) process or activity connected with the proceeds of crime results in offence of moneylaundering. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained as a result of criminal activity (a scheduled offence). It would be an offence of money-laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act - for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money-laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession in the context of Section 18 of the NDPS Act. In the said case opium was found in the dicky of the car when the appellant was driving himself and the contention was canvassed that the said act would not establish conscious possession. In support of the said submission, reliance was placed on Avtar Singh v. State of Punjab[20] and Sorabkhan Gandhkhan Pathan v. State of Gujarat[21]. The Court, repelling the argument, opined thus:- 12. We do not find any substance in this submission of the learned counsel. The appellant Dharampal Singh was found driving the car whereas [pic] appellant Major Singh was travelling with him and from the dicky of the car 65 kg of opium was recovered. The vehicle driven by the appellant Dharampal Singh and occupied by the appellant Major Singh is not a public transport vehicle. It is trite that to bring the offence within the mischief of Section 18 of the Act possession has to be conscious possession. The initial burden of proof of possession lies on the prosecution and once it is discharged legal burden would shift on the accused. Standard of proof expected from the prosecution is to prove possession beyond all reasonable doubt but what is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nscious in the logical background of Sections 35 and 54 of the Act. 16. From the aforesaid exposition of law it is quite vivid that the term possession for the purpose of Section 18 of the NDPS Act could mean physical possession with animus, custody or dominion over the prohibited substance with animus or even exercise of dominion and control as a result of concealment. The animus and the mental intent which is the primary and significant element to show and establish possession. Further, personal knowledge as to the existence of the chattel i.e. the illegal substance at a particular location or site, at a relevant time and the intention based upon the knowledge, would constitute the unique relationship and manifest possession. In such a situation, presence and existence of possession could be justified, for the intention is to exercise right over the substance or the chattel and to act as the owner to the exclusion of others. In the case at hand, the appellant, we hold, had the requisite degree of control when, even if the said narcotic substance was not within his physical control at that moment. To give an example, a person can conceal prohibited narcotic substance i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. The Article prohibits application of ex post facto law. In Rao Shiv Bahadur Singh and Anr. v. State of Vindhya Pradesh[23], while dealing with the import under Article 20(1) of the Constitution of India, the Court stated what has been prohibited under the said Article is the conviction and sentence in a criminal proceeding under ex post facto law and not the trial thereof. The Constitution Bench has held that:- .... what is prohibited under Article 20 is only conviction or sentence under an 'ex post facto' law and not the trial thereof. Such trial under a procedure different from what obtained at the time of the commission of the offence or by a Court different from that which had competence at the time cannot 'ipso facto' be held to be unconstitutional. A person accused of the commission of a particular Court or by a particular procedure, except in so far as any constitutional objection by way of discrimination or the violation of any other fundamental right may be involved. In the instant case, Article 20(1) would have no application. The actus of possession is not punishable with retrospective affect. No offence is created under Section 18 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asically a possession of the contraband articles. He has commended us to the authority in State of Bihar v. Deokaran Nenshi Anr.[24], wherein it has been held that:- A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or non-compliance occurs and reoccurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues, and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission is committed once and for all. 20. Mr. Shiv Mangal Sharma, learned AAG for the State has also drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on the date the NDPS Act came into force, the accused- appellant was still in possession of the contraband article. Thus, it was possession in continuum and hence, the principle with regard to continuing offence gets attracted. 4.20 In view of the discussions as above we do not find merits in the submissions made by the appellant. We are also not inclined to accept the plea of leniency in the case. (i) It is on record and we have referred to our earlier order in case of Appellant 1, who was the departmental officer earlier, wherein in case of similar fraud, committed by Munni Group of companies, the penalty of Rs 10,00,000/- was upheld by the tribunal. It transpires that Appellant 1 is habitual offender and has been making use of his official position to perpetuate such rebate frauds. He deserves no leniency. (ii) It is not the case that Appellant had perpetuated the fraud of Rs 1,59,07,687/- but they had filed 85 rebate claims, claiming rebate of Rs 8,32,00,658/- the fraud committed cannot be restricted to the amount claimed as rebates, as the fake documents which were prepared would be in respect of the value of goods which would be many times the amount claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive for the State to make such laws, which not only ensure that the unaccounted money is infused back in the economic system of the country, but also prevent any activity which damages the economic fabric of the nation. It cannot be gainsaid that social and economic offences stand on a graver footing as they not only involve an individual direct victim, but harm the society as a whole. Thus, the Law Commission also in its 47th report recommended an increase in punishment for most of the offences considered therein. Further, the quantum of punishment for money-laundering offence, being only seven years, cannot be the basis to undermine the seriousness and gravity of this offence. The quantum of sentence is a matter of legislative policy. The punishment provided for the offence is certainly one of the principles in deciding the gravity of the offence, however, it cannot be said that it is the sole factor in deciding the severity of offence as contended by the petitioners. Moneylaundering is one of the heinous crimes, which not only affects the social and economic fabric of the nation, but also tends to promote other heinous offences, such as terrorism, offences related to NDPS Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by posing serious threat to the financial health of the country. Further, when attempt is made to project the proceeds of crime as untainted money and also that the allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifts on the accused persons under Section 24 of the 2002 Act. (emphasis supplied) Thus, it is well settled by the various decisions of this Court and policy of the State as also the view of international community that the offence of money-laundering is committed by an individual with a deliberate design with the motive to enhance his gains, disregarding the interests of nation and society as a whole and which by no stretch of imagination can be termed as offence of trivial nature. Thus, it is in the interest of the State that law enforcement agencies should be provided with a proportionate effective mechanism so as to deal with these types of offences as the wealth of the nation is to be safeguarded from these dreaded criminals. As discussed above, the conspiracy of money-laundering, which is a three-staged process, is hatched in secrecy and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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