TMI Blog2023 (12) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 - SUPREME COURT ] held that there is no escape from the conclusion that the proceedings before the Sea Customs Authorities under s. 167(8) (which was a pre-cursor to the Customs Act, 1962, a sister Act to the FA 1994 and CEA, 1944), were not prosecution within the meaning of Art. 20 (2) of the Constitution. The judgement above makes it clear that offences and penalties are of two distinct kinds. First there are contraventions of the Act and Rules thereunder which are dealt with by Customs officers and the penalty for which is imposed by them, called customs offences. Besides these there are criminal offences which are dealt with by Magistrates and which result in conviction and sentence of imprisonment and/or fine. Action by quasi-judicial officers under CEA 1944 is not done as per the provisions of criminal law. Prosecution of offenders are launched separately in a criminal court. The principal idea in this case is as per section 9D(1) of the Central Excise Act 1944, which clearly states that it is concerned with a statement which shall be relevant, for the purpose of proving, in any prosecution for an offence under the Act. Detailed Criminal Court procedures are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gaged in the manufacture of aluminium alloy ingots and zinc alloy ingots falling under Chapter 76 and 79 of the First Schedule to the CETA, 1985. They were availing CENVAT credit for payment of duty. Intelligence gathered and investigated by the officers of DGCEI, Mumbai revealed that certain importers (appellants herein) of aluminium scrap show on record that they have sold the goods imported by them on high sea sales basis to the registered dealers or manufacturers of aluminium ingots and similar other products of aluminium. The goods on importation were however diverted by the original importers to certain other actual users i.e. manufacturers of aluminium ingots, profiles etc. whereas the CENVAT credit of CVD paid on those goods were availed by the said purchasers of such goods on high sea sales basis as reflected in the Bills of Entry. The actual users of the goods then clandestinely cleared the finished goods manufactured from the imported scrap without accounting for the same in their books and thereby suppressed the actual production. The manufacturers who purchased the imported goods on high sea sales basis for availing the CENVAT credit actually bought locally available s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for confiscation. Further, import duties were promptly paid at the time of import clearance. Therefore, Rule 26 is not applicable. He stated that the prayer of all the Appellants is to restrict the penalty to the extent of pre-deposit, which was already paid. 3.2 The learned AR s have submitted on behalf of Revenue that this is a case where the Appellants sold aluminium scrap on high sea sales basis to M/s Vignesh Alloys (P) Ltd. who filed the Bill of Entry. Both, the appellants and M/s Vignesh Alloys (P) Ltd have abetted in diverting the imported goods to other manufacturers who took CENVAT credit without receipt of goods and the appellants were hence liable for a penalty. The main noticee involved in the case i.e. M/s Vignesh Alloys (P) Ltd. has not pursued his appeal before this Tribunal or availed any other alternative remedy and the matter has reached a finality on the main charge. The penalty imposed on those who collaborated and benefitted from the illegal action hence needs to be upheld. Rule 9D is applicable in the case of prosecution and not in departmental proceedings. Moreover in this case cross examination of persons who gave the statements as sought by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeding before a Court, as they apply in relation to a proceeding before a Court. (emphasis added) It is seen that section 9D is relevant for the purpose of proving the truth of a fact, in any prosecution launched for an offence under the Central Excise act, 1944. The impugned order does not emanate from a proceeding of prosecution. A five judge Bench of the Apex Court by a majority decision in Thomas Dana vs The State Of Punjab, [1959 AIR 375] held that there is no escape from the conclusion that the proceedings before the Sea Customs Authorities under s. 167(8) (which was a pre-cursor to the Customs Act, 1962, a sister Act to the FA 1994 and CEA, 1944), were not prosecution within the meaning of Art. 20 (2) of the Constitution. 6.2 The matter was examined again recently in February 2019 by the Apex Court in its judgment in Department Of Customs vs Sharad Gandhi Proprietor [LAWS(SC)-2019-2-277 / CRIMINAL APPEAL NO(S).174 OF 2019 Arising out of SLP (Crl.) No.9159 of 2015). The Hon ble Court held: 63. In fact, we find that this Court in the Assistant Collector of Customs, Calcutta vs. Sitaram Agarwala and Another AIR 1966 SC 955 considered the scheme of Sea Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of criminal law. Prosecution of offenders are launched separately in a criminal court as seen from para 85 of the Hon'ble Supreme Court judgment above. It is in these prosecution cases that section 9D ibid becomes relevant. 6.4 Further the legal position that statements recorded under Section 14 of the Act, referred to under Section 9D are admissible in evidence has been held by the Supreme Court in the case of K.T.M.S. Mohd. Anr. Vs. Union of India ((1992) 3 SCC 178): 34. We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom Authorities or the officers of Enforcement under the relevant provisions of the respective Acts is a sine quo non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means that statement must be rejected brevi manu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons who gave the statements as sought by the appellant was allowed but not availed. In Commissioner of Customs, Calcutta Vs South India Television (P) Ltd [2007-TIOL-126-SC-CUS] it was stated; . We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. . . Hence the learned AA has on his satisfaction, after allowing for cross examination which was not availed, correctly relied upon the statements and cannot be faulted. This Tribunal cannot go into the merits of the AA s satisfaction, if it is reasonable. As held by the Hon ble Apex Court in Gazi Saduddin v. State of Maharashtra and Another [(2003) 7 SCC 330] ; Primarily, the satisfaction has to be of the authority passing the order. If the satisfaction recorded by the authority is objective and is based on the material on record then the courts would not interfere with the order passed by the authority only because another view possibly can be taken. Such satisfaction of the authority can be interfered with only if the satisfaction recorded is either demonstratively perverse based on no evidence, misreading of evidence or which a rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the proceedings against him. No such proof has been provided on the above lines to taint the statements relied upon. 6.7 The belief, knowledge and intention of the parties involved in a blame worthy act are a part of evidence. A conspiracy is always hatched in secrecy, and it is at times impossible to adduce direct evidence of the same. Documentary evidence in such cases is not forthcoming. Hence the intention of the parties involved in these activities is effectively brought to life through the statements of those who are in the know of things. Voluntary statements, if clearly proved and found acceptable, are the most effective proof of law and can t be ignored. The legal issue of the admissibility of the statements in evidence in the impugned case is hence found valid. 6.8 The counsel for the appellant has referred to the judgment of the Hon ble High Court of Punjab and Haryana in the case of Jindal Drugs (P) Ltd Vs UOI [2016 (340) ELT 67 (P H)]. The said judgment states that two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D (1), viz. i) the person who made the statement has to first be examined as a witness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to prosecution as understood within the meaning of Art. 20(2) of the Constitution. This being so the learned Adjudicating Authority has after following the cross-examination procedure and on his satisfaction, correctly relied upon the statements and cannot be faulted. Hence, I do not find any lacunae in the proceedings by the Adjudicating Authority and the impugned order does not deviate from the provisions of section 9D ibid. 7. Appellants had prior knowledge of the clandestine activity 7.1 I find that the charges against the appellants have been made after a very detailed investigation of clandestine activity by a group of people who have abetted to evade payment of duty by misusing high-sea sales and CENVAT schemes. It is difficult to find direct evidence in such cases and they are mostly proved by a mix of direct and indirect evidence, as duty evasion is seldom an open affair. The blame worthy act has hence to be inferred from the circumstances and the conduct of the people involved. Although relating to a criminal case in Shivnarayan Laxminarayan Joshi Ors. vs. State of Maharashtra [(1980) 2 SCC 465], it was observed by the Apex Court: It is manifest that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on their Co s name. They had sold aluminum scrap to VAPL by high sea sales through M/s Shree Padmavati Metals. When confronted with documents they agreed that the goods had been diverted. Hence M/s. Bothra Metals and Alloys Pvt. Ltd. were fully aware of the clandestine activity and its consequences. 7.6 From the impugned order it is seen that Shri Prashant Motilal Sharma was the proprietor of M/s Yash Industries which was manufacturing aluminum alloy ingots. They had sold one container of aluminum to VAPL on high seas sale basis. When confronted with documents he agreed that the imported goods had been diverted from their actual destination. Hence M/s. Yash Industries were fully aware of the clandestine activity and its consequences. 7.7 From the impugned order it is seen that Shri Manoj Champalal Jain was the proprietor M/s Shri Padmavathi Metals. The Co was trading in scrap purchased locally and imported. He had sold three consignments of aluminum scrap to VAPL. He had engaged the CHA and the transporter for the goods. On being confronted with documents showing that the vehicle shown to have transported the goods did not have a permit and the check post report that scrap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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