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TMI Blog2024 (5) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... ing them as sunglasses but on investigation, it was found to be readymade garments, which fact is not under dispute and accordingly, the value for these mis-declared goods was redetermined at Rs.41,18,73,552/- and the differential duty was Rs.16,20,12,083/-. Show-cause notices issued to these three importers were not responded to because these were dummy IECS being misused without the knowledge of the IEC holders on the strength of the stolen identity and these documents were used for carrying out illegal importation of goods. The main culprits in these cases were Shri Krishna Naik, Shri Dinesh Gowda assisted by the appellants in the present appeals. 2. The appellants have defended themselves only on the ground that the goods were not liable for confiscation and therefore, the entire order is of no legal basis. It is also submitted that cross-examination of witnesses were not allowed and in view of the various decisions, the undervaluation cannot be sustained only based on statements. It is also submitted that department had investigated only two importers though there were many such cases where such instances have happened. It is also stated that the penalties imposed on them was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed were found to be branded readymade garments as against the declared items '1500 pieces of packing materials (sunglasses and 920 pieces of sunglasses (unbranded)', is not under dispute. The so-called importers M/s. Maxco Traders, Shri Mimoh Balu Bhawar, Proprietor, 24 years old and educated only up to 10th Standard when contacted informed that he was not aware of the name of the company and how his name and other details were misused was not known to him and he knew none of them whoever was involved in these illegal imports. Similar was the case of other importers who claimed that they were not aware that their documents were being misused by floating these companies. After assessment, the out of charge and other documents were found to be with Shri Krishna Naik who was a 'H-cardholder' working for the Customs House Agent (CHA) M/s. Avenue Logistix. It was also found that the bank accounts mentioned in the IEC documents were fake as confirmed from the respective banks. 5. The appellant Shri Dharaneesh Raju Shetty in his statement dated 3.1.2018 had stated that he had sent WhatsApp messages of pictures of Airway Bill IEC registration certificate invoices to Shri Krishna Naik and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty was imposed on him. In 2017, he was involved in a case of undervaluation and many other cases where his active involvement is found and investigations clearly proved and penalties were imposed on him. None of these have been disputed in his grounds. The appellant's claim that the goods were not liable for confiscation itself speaks the interest they have in the goods that were misdeclared. Moreover, the goods were seized from the custodian within the customs area and therefore, they were liable for confiscation. The statements of Shri Krishna Naik from whom the documents were recovered corroborated with the appellants statements and the witnesses who have corroborated the events were none other than the employees of the airways, custodian and his own colleagues who were party to the offence. Therefore, he has committed an offence under Section 112(a) and (b) by abetting and mis-declaring the goods and violated provisions of Section 114AA by knowingly and intentionally mis-declaring and giving false declaration which has resulted in confiscation of goods. Therefore, the Commissioner was right in imposing penalties for violating the above Sections. Moreover, we find that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dummy IECs were arranged by Shri Dharaneesh Raju Shetty with the assistance of Shri Nasir which was admitted by Shri Krishna Naik in his statement cannot be ignored. The records show that the payments for actual goods as per Airway Bill and invoices were arranged by Shri Dharaneesh Raju Shetty and Shri Sahil Moiz Zafar is also not disproved with any evidences on record. Shri Dharaneesh Raju Shetty's involvement in Mumbai has been proved by various witnesses as discussed above. From the records and various statements and from the detailed call records, it is very clear that Shri Shail Moiz Zafar was partner along with the Shri Dharaneesh Raju Shetty in mis-declaring the goods and misusing the names of unknown persons for importing the mis-declared goods. Accordingly, he is also liable for penalty under Section 112(a) and under Section 114AA of the Customs Act, 1962. 8. The Hon'ble High Court in the case of Rama Nagappa Shetty Vs. Commissioner of Customs: 2020 (374) E.L.T. 683 (Guj.) decided on 12-3-2020 held that: "45. Another facet of arguments that the statements made by the co-accused cannot be made admissible in evidence to establish the guilt of other co-accused even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nect the petitioner in the contravention inasmuch as Mr. Dudani's statement clearly inculpates not only himself but also the petitioner. It can, therefore, be used as substantive evidence connecting the petitioner with the contravention by exporting foreign currency out of India. Therefore, we do not think that there is any illegality in the order of confiscation of foreign currency and imposition of penalty. There is no ground warranting reduction of fine." 10. The Supreme Court of India in the case of K.I. Pavunny vs. Asstt. Collr. (Hq.), C. Ex. Collectorate, Cochin Dated 3-2-1997. 1997 (90) E.L.T. 241 (S.C.) held that: "17. It would thus be clear that the object of the Act empowering Customs Officers to record the evidence under Section 108 is to collect information of the contravention of the provisions of the Act or concealment of the contraband or avoidance of the duty of excise so as to enable them to collect the evidence of the proof of contravention of the provisions of the Act so as to take proceedings for further action of confiscation of the contraband or imposition of the penalty under the Act etc. By virtue of authority of law, the officer exercising the powers und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the impugned order is upheld and the appeals are dismissed. (Order pronounced in open court on 10.01.2024.) Per: P. A. AUGUSTIAN 13. Appellants in the present appeals are challenging the penalties imposed under various provisions of the Customs Act, 1962. Appellant in Appeal No. C/20310/2020 hereinafter referred as "First appellant", is a commission agent and purchasing consumer goods on wholesale basis from various importers. Appellant in Appeal No. C/20311/2020 hereinafter referred as "Second appellant" is an indenting agent who places orders for various importers. Alleging that various importers including M/s. Maxco Traders, M/s. Samrath Enterprises and M/s. Noble Enterprise had imported goods by mis-declaring the value, proceedings were initiated. Show-cause notices were issued to various persons including Appellants herein and thereafter, Adjudicating Authority vide impugned order imposed penalties on appellants. Aggrieved by said order, present appeals are filed. 14. When the matter came up for hearing. Learned counsel for the Appellant submits that the First appellant was summoned by Directorate of Revenue Intelligence (DRI) and after recording the statement on 03.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that he had appeared before the DRI office on 05.01.2018 and no statement was recorded as there was no substantial evidence against him though he was detained under COFEPOSA and the detention order was quashed by Hon'ble High Court. In the absence of any statement recorded from the Appellant or any specific question regarding his involvement in alleged illegal activities, only based on the statement of co-accused which was retracted later, no presumption could be drawn that he had abetted illegal import as held by Adjudication Authority. 16. The Learned Counsel for the Appellants also draws our attention to the findings of the Adjudicating Authority that the correlation of the statement of the First appellant from the statement of other co-noticees was not a mere coincidence but clinching evidences gathered during investigation against the appellants. Such finding is given only based on the statements recorded from him on 03.01.2018 which was retracted later, based on the statements recorded from co-noticees and evidence recovered from WhatsApp messages of the co-noticees. 17. Ld. Counsel submits that the Adjudicating Authority has reached the finding by relying on the documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded. {See Pon Adithan v. Deputy Director, Narcotics Control Bureau, Madras [(1999) 6 SCC 1]} 34. A person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction. With a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession which has since been retracted, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such." 19. Regarding evidentiary value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Customs reported in 2013 (294) E.L.T 353 (Del), it is held that: "14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in Section 138B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exist, the Noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi judicial proceedings. The Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt except under an Importer-exporter Code Number granted by the Director General or the officer authorised by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General". The expression "import" occurring in the said section means bringing into India of goods as defined under Section 2(e). There is nothing in the law which requires an importer to be either the consumer or even the buyer of the goods also. Even otherwise, we are of the opinion that it is a matter of common sense that no importer would consume all the materials imported. Necessarily, the goods imported are meant for sale to the consumer, in which case, if an importer, who enjoys the facility of I.E. Code imports certain goods in the normal course of business on the strength of a contract entered by such importer with either a consumer or a trader who eventually sells the imported goods to consumers. We do not understand what can be the legal objection for such a transaction especially where the import of such goods is otherwise not prohibited by law. At any rate, if the respondents have any tenable legal objection on that count, the respondents must pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds "if the person who lends his support does not know or has no reason to believe that the act which he was aiding or supporting was in itself a criminal act, it cannot be said that he intentionally aids or facilitates the doing of the offence". 23. Learned Counsel for the Appellant further submits that as per the judgment of Hon'ble High Court of Madras in the matter of CC (Sea) Chennai-I vs. M/s. M R Associates (2013 (297) E.L.T 504 (Mad.), it is held that: "13. We do not accept such contention of the learned counsel for the assessee. Even if such concession made by the assessee, was for the purpose of clearance, yet, the fact remains that the assessee had not produced contemporaneous documents to substantiate the value. However, for the purpose of invoking penal provisions, we do not think such a concession made would in any way provide a good ground to invoke the penal provision. In the circumstances, we direct the Adjudicating Authority to complete the assessment taking note of the value agreed for enhancement in respect of calculators with cartons by 50% and the calculators without cartons by 25%, but without penal action therein. In the light of the order made, there sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in any quasi-judicial proceeding is a valuable right given to the accused/Noticee as these proceedings may have adverse consequences to the accused. In the present appeal, no cogent and valid reasons have been brought out by Adjudication Authority to deny cross-examination. 27. Regarding evidentiary value of the WhatsApp messages retracted during investigation, in spite of specific contention taken by the appellants, there is no finding given by adjudication authority as why it can be considered as admissible evidence. Regarding evidentiary value of such documents in the matter of S.N. Agrotech (supra), after considering the statutory provision and judgments of Hon'ble Supreme court, Tribunal held that unless the requirement of Section 65B of the Evidence Act is satisfied, such evidence cannot be admitted in any proceeding. Since Section 138C of the Customs Act is pari materia to Section 65B of the Evidence Act, the evidence in the form of computer printouts, etc., recovered during the course of investigation can be admitted only subject to the satisfaction of the sub-section (2) of Section 138C. This refers to the certificate from a responsible person in relation to the operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... branded products which are regularly imported, no attempt was made to ascertain the value of lowest among contemporaneous import. Against the declared value of Rs. 14,70,176/-, based on statement and WhatsApp messages, the value was loaded to Rs. 24,66,75,552/- and duty demanded accordingly. As against the importer M/s. Noble Enterprises, though there is no declaration made by the importer, presuming that the importer will resort undervaluation at the time of filing the Bill of Entry, goods were seized and loaded the value as Rs. 16,51,98,000/-, thus the total assessable value of the goods is more than Rs. 41 crore and duty evasion alleged is more than Rs. 6 crores. Considering the findings in the impugned order, the market value of the goods should have been more than Rs. 60 crores. The said goods were imported in December 2017 and while issuing the impugned order in 2020, the Adjudicating Authority admits that the goods were still lying unclaimed. When a specific question was put up regarding the disposal of the goods, learned counsel for the Appellants submits that it is still in Respondent's custody. The goods were seized and when there was no claimant even after extending oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against first appellant. (iv) Whether the findings of the adjudicating authority regarding role of second appellant in illegal import is sustainable considering the fact that during investigation, in spite of appearing before the investigating officer, no statement is recorded from the second appellant under Section 108 of the Customs Ac, 1962. The above Differences of Opinion are referred to the Hon'ble President for referring the same to Third Member to be appointed by him. (P. A. AUGUSTIAN) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) ORDER [Per : Ms. Sulekha Beevi. C.S] The above matter was heard as per the reference made by the Hon'ble President dated 20.02.2024. I have perused the orders recorded by sister Ms. R. Bhagya Devi, Member (Technical) as well as brother Sri P. A. Augustian, Member (Judicial). 2. The issue involved in these appeals is the penalty imposed on the appellants under Section 112 (a) and (b) and 114AA of the Customs Act, 1962. The Member (Technical) has upheld the penalties imposed and dismissed the appeals whereas, the Member (Judicial) has set aside the penalties and allowed the appeals. The points of difference are noted in page 28 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the each type goods or the readymade garments or the sun glasses. So also, there is no steps taken by the department to check the brand by calling the representatives of the respective brand or to ascertain whether these goods belong to the brand of the company. Generally, the department has to take such steps to check whether there is IPR violation. In the impugned order, the adjudicating authority has stated that the value has been enhanced on the basis of price available from website. However, there is nothing forthcoming from the adjudication order as to what is the model of the brand and the difference in the price for enhancement of the value. The entire enhancement of value as well as the confirmation of duty demand stands under shadow of doubt, as these are adopted from internet and not on the basis of contemporaneous imports. It is to be noted that no Bill of Entry was filed in respect of goods mentioned in Annexure IV. In other words, there is no declaration as to the description of goods, value etc. There cannot be misdeclaration of goods unless there is declaration. However, the value of goods in Annexure IV also has been enhanced. 4. The first point of difference f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8B of the Customs Act, 1962 provides for examination in chief as well as cross examination of the witnesses. This provision is pari materia to Section 9D of Central Excise, 1944. Though the statement recorded before the Customs Officer may be admissible in evidence, it has to be noted that in the present case all the noticees have retracted their statements at the earliest. Further, the statement of Sahil Moiz Zafar was not recorded at all. Even though he is a co-noticee the said appellant has been implicated on the basis of call records and the statement of other noticees. When the noticees have retracted their statement it was incumbent upon the adjudicating authority to allow cross examination when requested for by the appellants. The rejection of the request for cross examination has caused prejudice to the appellants as they were not able to bring out the credibility of the witnesses and statements recorded before Customs Officers. 5.1 In the case of J & K Cigarettes Ltd. Vs Collector of Central Excise - 2009 (242) ELT 189 (Del.) the Hon'ble High Court held that reliance cannot be placed on the statements unless an opportunity is granted to the assessee for cross examining th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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