9911796707
TMI Blog2025 (3) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... of by a common order. 2. The appellants/exporters/noticees, namely, Shri Avinash Soni, Shri Sanjay Agarwal and Shri Preet Kumar Agarwal are in appeal against the confiscation of the impugned goods under Section 113(k) of the Customs Act, 1962 and imposition of penalties on them under Sections 114(iii) and 114AA of the said Act. They have also challenged the quantum of redemption fine imposed under Section 125 of the Act inter alia contending that the same is not commensurate with the margin of profit. The appellants-exporters have also prayed for allowing export/re-export of the impugned goods under Section 110 of the Act. 2.1. Whereas, the Revenue has filed the appeal against the respondents viz. Shri Sanjay Agarwal, Shri Preet Kumar Agarwal, Shri Avinash Soni contending that paltry amounts of penalty under Sections 114(iii) and 114AA of the Customs Act, 1962 have been imposed on them which is not commensurate to the gravity of the offence committed and also against other respondents/co-noticees viz. Shri Dhruvajyoti Roy, Shri Pallav Roy Chowdhury, Smt. Champa Mukherjee, Shri Satya Gopal Mallick, State Trading Corporation of India Ltd. and Shri Ajay Kumar Agarwal contendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Shri Preet Kumar Agarwal were thoroughly searched after observing due legal formalities. As already admitted by him, the boxes containing gold bangles meant for export were not found in his possession. 3.2. Another team of DRI officers intercepted Shri Sanjay Agarwal while he had already boarded Indigo flight No. 6E 373 to Hyderabad. The officers had to de-board Shri Sanjay Agarwal from the aircraft with the help of Airlines staff, as the aircraft had already left the terminal for takeoff. From the boarding pass recovered from Shri Sanjay Agarwal, it was found that he was travelling on a ticket bought in the name of his son Shri Preet Kumar Agarwal. On being questioned, Shri Sanjay Agarwal admitted to having received the boxes containing gold bangles from his son Shri Preet Kumar Agarwal at the gate of departure terminal of the NSCBI airport, after all formalities for export of the impugned gold bangles had been completed through Shri Preet Kumar Agarwal. He also informed that he had already booked the two boxes containing gold bangles meant for export with Indigo Airlines domestic cargo for sending to Hyderabad instead. Shri Sanjay Agarwal was also taken to the office of AIU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of Invoice No. SalesExports/18-19/UAE/01 dt. 02.04.2018, currency USD-2213425 equivalent to INR 14,19,91,214/-. 3.3. From personal search of Shri Sanjay Agarwal, two bunches of keys were recovered, which Shri Sanjay Agarwal stated to be the keys of the boxes containing gold bangles, which he had booked with Indigo Airlines domestic cargo for taking to Hyderabad. From his wallet, two Debit cards bearing Nos. 4280-9630-0012-1527 (Kotak Mahindra Bank) and 4363-9521-0024-3638 (Indusind Bank), in the name of Avinash Soni were recovered and three Debit cards bearing Nos. 4280-9630-0021-0569 (Kotak Mahindra Bank), 4373-7820-0074-3017 (Andhra Bank) and 5129-3201-0067-7910 (Axis Bank), in the name of Radhika Agarwal were recovered. However, those debit cards were not seized by DRI. 4. Yet another team of DRI officers intercepted the two boxes containing gold bangles at the office of Indigo Airlines domestic cargo, Kolkata, booked by Shri Sanjay Agarwal in his own name for delivery at Hyderabad. As per documents, the consignment was booked by one Pawan Cargo. The two boxes were taken to the office of AIU in the International Arrival Hall accompanied by the staff of Indigo Airlines an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found to have been filed manually and not through EDI system of Customs. To ascertain the total number of consignments shown to have been exported by the firms controlled by Shri Sanjay Agarwal through Kolkata Airport, the Manual Shipping Bill Filing Registers maintained at Air Cargo Complex (here in after referred to as "ACC"), Kolkata for the last three years i.e. from 2015 to 2018 were collected. 8. Thereafter, summons were issued and statements were recorded from various persons in connection with the case. 8.1. Voluntary statement of Shri Sanjay Agarwal was recorded under Section 108 of the Customs Act, 1962 on 05.04.2018, wherein he inter alia submitted as under: - i. In response to a query raised, he had inter alia stated that in relation to export of gold bangles in the name of Shree Ganesh Jewels, he and his son Preet Kumar Agarwal reached Kolkata on 03.04.2018 at about 11.00 hrs by Indigo flight from Hyderabad; that the gold bangles were sent to Kolkata by parcel through Indigo on 03.04.2018; that after reaching Kolkata they first went to the Customs office at Air Cargo Complex, Kolkata and submitted the documents for export of the bangles; that after compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Security Hold Area; that then he instructed Preet to come to the first gate (probably gate 1A/1B) to give him the two boxes containing gold bangles; that he submitted that those two boxes were being carried in the two black coloured trolley bags of brand "Delsey'; that accordingly, Preet came to the gate and handed over to him the said two trolley bags containing the two metal boxes and he took them; that Preet went inside and Shri Sanjay went to the Indigo Domestic Cargo at NSCBI Airport, Kolkata by taxi with the said two metal boxes containing the gold bangles meant for export; then on the way to Indigo Domestic Cargo, he broke the seal of the two boxes to avoid getting noticed by the Indigo people; that there he met one agent of Indigo and booked the said two boxes containing gold bangles for delivery to himself (Sanjay Agarwal) in Hyderabad; that he requested to send the goods by the first available flight of Indigo to Hyderabad; that after x-ray of the goods, he went to the domestic departure to board flight to Hyderabad from Kolkata; that after he boarded the flight and the same started taxiing, it suddenly stopped and he was de-boarded from the flight along with his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d carriage of the two boxes gold jewellery to him; that from Air Cargo Customs accompanied them in a car rented by them to the International Departure of Kolkata Airport; that before taking boarding pass, he along with the Preventive Officer entered into the Airport Departure hall and went to SDO room of Customs situated between the Immigration area and Security area through the staff lane at the extreme left side; that the Preventive Officer handed over the two boxes of gold jewellery to SDO of Customs posted at Departure Hall, NSCBI Airport who in turn handed over the boxes of gold jewellery to him in the chamber after taking the acknowledgment of receipt in SDO register; that as per his father's instructions, he then went to gate No. 1A/1B (Departure) to hand over two boxes of gold jewellery kept in two trolley bags to his father there; that he kept the two boxes in two trolley bags and handed it over to his father who was standing outside gate No. 1A/1B (Departure); that after taking the two trolley bags loaded with two boxes of gold jewellery, his father went away outside the Airport and he went to departure hall; that thereafter he took the boarding pass of Emirates fligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Shri Ajay Kumar Agarwal, brother of Shri Sanjay Agarwal, came to the DRI office, Kolkata on 05.04.2018 and his voluntary statement was recorded under Section 108 of the Customs Act, 1962 on 05.04.2018. In his voluntary statement, Shri Ajay Kumar Agarwal inter alia stated that: - i. In response to a specific question, it was submitted that the money for payments for gold jewellery were actually transferred by him through hawala channels to get the remittances for the so-called export consignments through legal channels i.e. through banks; that he used to contact one Mr Rahul in Hyderabad for transfer of the money to the consignee in Dubai in advance so that they could made the advance payments for the exports; that some person of Rahul used to come to his office to collect the money in cash; that he did not have the mobile number of Rahul or his address details; that after completion of diversion of the export goods, they submit the export proof in the form of documents signed by Customs and the tickets showing performance of outward journey; that they got the duty amount refunded by the nominated agencies to their banks; that on the diverted export consignments of K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, ACC, it is found that no permission of Commissioner of Customs (Airport) was taken for filing manual Shipping Bill No. 6530662 dt. 03.04.2018. In the note sheet, there is mention of a letter dated 29.03.2018, which appears to have been received at ACC on 02.04.2018 In the said letter, it was mentioned that Commissioner had granted them the required permission for filing Shipping Bill for export of gold jewellery by personal hand carriage. Another letter dated 03.04.2018 of Shree Ganesh Jewels addressed to Asst. Commissioner of Customs, ACC, NSCBI Airport, Kolkata was also found in that file, through which Shri Avinash Soni, proprietor of Shree Ganesh Jewels had authorized Shri Sanjay Agarwal to process documents at ACC office for the consignment being exported under invoice No. SALES-EXPORTS/1819/UAE/01 dated 02.04.2018 and also authorizing Shri Agarwal to sign necessary documents for clearing of the export consignment. 10.2. It was also found that a note was given by Assistant Commissioner on 17.02.2018 regarding filing of manual Shipping Bill by Shree Ganesh Jewels. But against the said note Joint Commissioner had categorically mentioned that 'as there is ACC with EDI, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seal of the metal boxes and handed over to Shri Preet Kumar, but he did not escort Mr Preet Kumar with metal boxes to the flight iii. In response to a specific query, Shri Roychowdhury further clarified that he was to escort Shri Preet Kumar, holder of passport No. 24198550 to flight No. EK 573, who had with him two boxes containing 54 kg gold covered under Shipping Bill No. 6530662 dated 03.04.2018 as hand baggage, but he did not; that it was a mistake on his part not to escort Shri Preet Kumar to the flight; that he was not aware whether Shri Preet Kumar had boarded flight No. EK 573 with the metal boxes containing approximately 54 kg gold bangles or not. 11.1. In the further voluntary statement of Shri Pallab Roychowdhury was recorded on 18.04.2018 under Section 108 of the Customs Act, 1962 it has been inter alia deposed as under: - i. As SDO (Departure) at Kolkata Airport, he had handled three consignments of gold which were exported on hand carry basis; that one gold consignment was carried by Shri Preet Kumar Agarwal and another two of Manikanchan SEZ details of which he could not remember at that moment, that as SDO (Departure) he was supposed to enter the export deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to SDO (Departure) and hand over for export by a passenger named Shri Preet Kumar Agarwal; that they also introduced him to Shri Agarwal as the passenger mentioned in the Shipping Bill to carry the sealed boxes for export; that he then checked the seal on the boxes and accompanied Shri Agarwal to his car waiting outside the Shed; that by car they went to Integrated Terminal, Departure Gate No. 4 and Shri Preet Kumar Agarwal showed his ticket and ID card to the CISF and Shri Mallick showed his PIC; that the bag containing the sealed boxes were put in a trolley by Shri Agarwal and they went straight to SDO (Departure) room at Departure Lounge between Immigration counter and Security area; that he handed over the two sealed boxes and papers to Shri Pallab Roychowdhury, SDO (Departure); that after checking the seal on the boxes, SDO (Departure) endorsed the papers and kept on the table; that thereafter, he left the SDO (Departure) room and carne back to the car which was waiting outside the entry gate; that he took the car and got into the car at Cargo shed with sealed boxes for going to Departure terminal; that the same person accompanied him during his journey from Departure termina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came out from the Customs office at departure level after few minutes. * Mr Preet Agarwal met near the departure gate of NSCBI Airport, Kolkata and handed over a bag to Shri Sanjay Agarwal, who was waiting outside the terminal near gate No. 1A of the said airport. That was a regular practice, as many passengers hand over the excess luggage to their friend / relative who came to see them off while waiting outside. * Due to combined Check-in area for domestic and international passengers at Kolkata airport, Shri Preet Agarwal was able to proceed up to domestic entrance gate/Check in area from Custom station Duty Officer area & International check in area. 14. After issuance of several summonses, Shri Avinash Soni, the proprietor of Shree Ganesh Jewels as per IEC, appeared at DRI office, Kolkata on 15.05.2018 and his voluntary statement was recorded under Section 108 of the Customs Act, 1962. In his said voluntary statement, Shri Avinash Soni inter alia stated as follows: - i. In response to a specific query, it was submitted that on 05.04.2018 he received call from Naresh Rampuria, an employee of Shri Sanjay Agarwal, who told him that officers of DRI, Hyderabad visited office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner (Export) giving details of export consignment such as quantity, destination etc. for permission to file manual Shipping Bill for export on hand carry basis, b. Assistant Commissioner (Export) then forwards the same to Commissioner (Airport) for necessary permission, c. After taking permission, party submits another letter for filing Shipping Bill on hand carry basis, d. On the basis of Assistant Commissioner's (Export) permission, Office Superintendent allots Shipping Bill number on the front page of the four copy of Shipping Bills and sign the same and affixes the stamp; e. All Shipping Bill copies are forwarded to Data Entry Operator for entry of Shipping Bill details, f. Shipping Bill is then presented to Appraiser for assessment of the details i.e. quantity, invoice, packing list, contract / agreement etc. g. After thorough checking / assessing, the Shipping Bill is forwarded to AC(Export) for necessary approval with signature / stamp, h. After taking approval from AC / DC (Export), Appraiser gives a 100% examination order addressed to the Shed Appraiser on the back page of the duplicate copy of Shipping Bill and forwards the same to Shed Appraiser, i. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Departure), for information regarding the specific export consignment and to hand over the goods to the person concerned after completion of all export formalities; that the parties had mis-used the letters; that the matter was between the exporter and the canalizing agents, she had no responsibility in the matter. 15.2. In his voluntary statement, Shri Dhruvajyoti Roy, Deputy Commissioner of Customs, inter alia submitted that: - i. He joined ACC on 10.07.2017 as Assistant Commissioner and since 01.04.2018 had been working as Deputy Commissioner; that he was holding charges of Export assessment, Import Shed, Un-accompanied baggage, transshipment, IGM and Administration; that on going through the list of manual Shipping Bills related to export of gold jewellery by the firms controlled by Shri Sanjay Agarwal during 201718, Shri Roy submitted that Commissioner's approval was not taken for all the consignments; that except 5 Shipping Bills forwarded earlier, no duplicate copies of Shipping Bills were traceable at ACC even after thorough search was carried out at ACC. Shri Roy then described in detail the procedure, that should be followed in case of processing of Shippin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s put up by the Appraiser for filing of manual Shipping Bill; that he had already stated earlier that he mis-read the Joint Commissioner's note and considered it as Commissioner's approval because there was no export of gold jewellery on hand carry basis in between 21.02.2018 and 03.04.2018. Shri Roy further submitted that :- a. Examination orders were given by Group Appraiser on Xerox copy of note sheet. In one such copy of note sheet, submitted by Shri Malay Das, Preventive Officer, it was found that the copy of note sheet was not matching with the original note sheet in file. b. It was submitted by the Preventive Officers that consignment with only one Shipping Bill was escorted while more than one Shipping Bill was processed in a single day, c. None of the consignments were assessed by AC/DC, d. Receipt copy of either note sheet or Duplicate copy of Shipping Bill from SDO was not in the file. 16. Letters dated 07.05.2018 were issued to all three nominated agencies, namely, State Trading Corporation of India Ltd., Diamond India Ltd & Metals & Mineral Trading Corporation to give details of the gold purchased by P H Jewels, Shree Ganesh Jewels, Kalpataru Jewellers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or procuring gold from the nominated agencies under the scheme Export Against Supply By Nominated Agencies, provided in Foreign Trade Policy, the respective firms have to deposit security amount equal to the duty payable on the gold purchased by them. As prescribed in Foreign Trade Policy / Hand Book of Procedure, the gold jewellery has to be exported within 90 days of procurement of gold from the nominated agencies. After export, on production of EP Copy of the Shipping Bill and the bank realization certificate, the security amount were either refunded back to them or adjusted against further procurement of gold. In terms of Notification No. 57/2000-Cus dated 08.05.2000 (as amended from time to time) read with CBEC circular No. 27/2016-Cus dated 10.06.2016, the nominated agencies had to furnish a bond with the respective Customs authorities binding themselves that they will pay the duty on the imported gold, if the exporter failed to export the gold jewellery against purchase of gold. (iii) As per the scheme, Shri Sanjay Agarwal purchased 50 kg gold from State Trading Corporation on account of Shree Ganesh Jewels, which was imported by the nominated agency under cover of Bill of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his father Shri Sanjay Agarwal, who was waiting outside. Shri Sanjay Agarwal took the two boxes to Indigo Airlines domestic Cargo and booked the same for delivery to Hyderabad with the help of an agent and himself boarded a flight to Hyderabad, travelling in a ticket bought in the name of his son Shri Preet Kumar Agarwal. Shri Preet Kumar Agarwal proceeded to take his boarding pass, clear immigration and went to board his flight to Dubai without the export consignment with him to complete the export process on paper. (v)The entire operation was well thought out and preplanned, as clear from the following facts. A letter dated 29.03.2018 was sent to ACC by Shree Ganesh Jewels mentioning that Commissioner had granted them permission for filing Shipping Bill for export of gold jewellery by personal hand carriage. As permission of filing of manual Shipping Bill was generally obtained on note sheet by the Customs officers, the content of the letter is sufficient to raise doubt as to how the exporter came to know that Commissioner had granted them permission. But both the Group Appraiser and Deputy Commissioner routinely processed the Shipping Bill for Export clearance without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. Accordingly, a Show Cause Notice dated 29.03.2019 vide SCN No. DRI/KZU/AS/ENQ-28/2018 was issued to show cause to the Commissioner of Customs (Airport & Admn.), Custom House, 15/1, Strand Road, Kolkata was issued to all the noticee(s) inter alia on the following allegations: - (i) The 1194 pcs of gold bangles weighing 54096 gm and ascertained value of Rs. 16,10,43,792/, which were cleared for export by Customs under Shipping Bill No. 6530662 dt. 03.04.2018 of Shree Ganesh Jewels and handed over to the declared hand carrier Shri Preet Kumar Agarwal inside NSCBI Airport for taking outside India were clandestinely diverted from the airport by Shri Sanjay Agarwal with the help of his son Shri Preet Kumar Agarwal in the domestic area are liable for confiscation under Section 113(k) of the Customs Act, 1962. For their active involvement in the diversion of export goods, Shri Sanjay Agarwal and Shri Preet Kumar Agarwal and also the part played by them in duty payable on the primary gold, they appear to be liable to penal action under Section 114(iii) of the Customs Act, 1962. (ii) The gold bangles weighing 54096 gms. were being exported for fulfilment of export obligation against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he was unaware of the implication for such export on paper without actual carriage of gold jewellery. It appears that for the lure of earning money, he never raised any alarm about the illegal activities undertaken by Shri Sanjay Agarwal using his name. He also admitted that he had signed on the blank bank cheques of Shree Ganesh Jewels as per direction of Shri Sanjay Agarwal and handed over to him. Further, his two debit cards were also recovered from the wallet of Shri Sanjay Agarwal at the time of his interception at Kolkata on 04.04.2018. Shri Ajay Kumar Agarwal, proprietor of Kalpataru Jewellery & Export Corporation also submitted in his statement that he had also diverted gold jewellery in similar fashion with the help of, among others, Shri Avinash Soni also. After interception of Shri Sanjay Agarwal & others at Kolkata, Shri Soni also left his home at Hyderabad as per direction of Smt. Radhika Agarwal after accepting money and did not appear before the officers of DRI, Hyderabad. It thus appears that Shri Avinash Soni is also an active member of the syndicate run by Shri Sanjay Agarwal and is liable to penal action under Section 114 (iii) of the Customs Act, 1962. (iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elped the exporter to get back the security amount from the nominated agency as on the previous occasions. But she herself admitted that she had neither examined the gold jewellery, scaled the boxes containing jewellery nor handed over those boxes to the Preventive Officer for escorting to SDO (Departure). It was also found that the examination order was given by her in the note sheet and not the back page of the duplicate copy of Shipping Bill, in complete violation of the Laid down procedure. Smt. Champa Mukherjee also attended DRI, Hyderabad in connection with investigation being carried out by them against PH Jewels and hence well aware of the fraud being committed by the firms of Sanjay Agarwal. Still, she processed the subject export consignment. Further, Smt. Champa Mukherjee and Shri Dhruvajyoti Roy tried to blame each other for the total breach of laid down procedure for clearance of such gold consignment, which is totally unacceptable. But it appears that they had jointly acted in collusion with the exporter by completely ignoring the direction given by their higher officers. (vii) Shri Satya Gopal Mallick, Preventive Officer was found to have escorted Shri Preet Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpted diversion of 54096 kg of gold jewellery on 04.04.2018. For the role played by him, Shri Ajay Kumar Agarwal appeared to be liable for penalty under Section 114(iii) of the Customs Act, 1962. 20.1. Accordingly, proposals were made in the above Show Cause Notice in respect of the following noticees asking them to show cause as to why: - * Shri Sanjay Agarwal, Villa No. 41. Orion Vilias. NSL Infrastructures, Raidurgam, Gachibowli, Hyderabad 500032, * Shri Preet Kumar Agarwal, H No.-1-2-593/17, Domalguda, Gaganmahal Colony, Hyderabad-500029. Telengana, and * Shri Avinash Soni, proprietor Shree Ganesh Jewels, 5-9-235, Shop No. 7A. Lower Ground Floor, Sanali Mall, Abids, Hyderabad (i) 1194 pcs gold bangles weighing 54096 gms and of ascertained value of Rs.16,10,43,792/- which were cleared for export under Shipping Bill No. 6530662 dt. 03.04.2018 but intercepted seized by DRI after diversion in the domestic area shall not be held liable for confiscation under Section 113(k) of the Customs Act, 1962. (ii) Penal action shall not be taken against each of them for their omission and commission as discussed here in above in terms of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an option to Shree Ganesh Jewels to pay a redemption fine of Rs. 80,00,000/- (Rupees Eighty lakh only) in terms of the Section 125 of the Act ibid in lieu of the said confiscation. (ii) I impose a penalty of Rs. 10,00,000/- (Rupees Ten lakh only) on Shri Sanjay Agarwal under Section 114(iii) of the Customs Act, 1962. (iii) I impose a penalty of Rs.5,00,000/- (Rupees Five lakh only) on Shri Preet Kumar Agarwal under Section 114(iii) of the Customs Act, 1962. (iv) I impose a penalty of Rs.1,00,000/- (Rupees One lakh only) on Shri Avinash Soni under Section 114(iii) of the Customs Act, 1962. (v) I impose a penalty of Rs.2,00,000/- (Rupees Two lakh only) on Shri Sanjay Agarwal under Section 114AA of the Customs Act, 1962. (vi) I impose a penalty of Rs.25,000/- (Rupees Twenty Five Thousand only) on Shri Preet Kumar Agarwal under Section 114AA of the Customs Act, 1962. vii) I impose a penalty of Rs.50,000/- (Rupees Fifty Thousand only) on Shri Avinash Soni under Section 114AA of the Customs Act, 1962. (viii) I impose a penalty of Rs. 25000/- (Rupees Twenty Five Thousand only) on Shri Pallav Roy Chowdhury under Section 114(iii) of the Customs Act, 1962 (ix) I drop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kg limit. It is to be noted that version of events is disputed by the Department alleging that Preet Agarwal proceeded directly to the Airport Terminal Gate to hand over the said goods to Sanjay Agarwal. This allegation has been made purportedly on the basis of a CISF CCTV footage report, though such report has never been shared, nor has the CCTV footage been provided to the appellant in spite of its request for production by its reply dated 29.5.2023 On being unable to check in with the said goods as hand baggage, and being unable to re-enter the SDO office without passing through immigration, and with the Preventive Officer having left his vicinity, Preet Kumar Agarwal informed Sanjay Agarwal that the airline refused to allow the goods as hand baggage, and that he was stuck in the terminal with the said goods, being around 54 kg of gold jewellery. Sanjay Agarwal reached the airport security gate, and instructed Preet Kumar Agarwal to hand over the said goods to him so that he could return it to the ACC. He also instructed Preet to meet the SDO and seek out his assistance by checking in, pass through immigration in order to re-enter his office. Thus, at around ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers under the Conservation of Foreign Exchange and Prevention of Smuggling Act (COFEPOSA). August 16, 2018 The Advisory Board under COFEPOSA declined to confirm the detention order against Preet Kumar Agarwal. August 27, 2018 The Delhi High Court quashed the COFEPOSA detention order against the appellant March 11, 2019 Special Leave Petition filed by Department was dismissed by the Hon'ble Supreme Court March 29, 2019 Subject Show Cause Notice (SCN) was issued by DRI under Section 28 and Section 124 of the Customs Act May 29, 2023 Reply of the noticees to the Show Cause Notice submitted to the Adjudicating Authority July 31, 2023 The Adjudicating Authority passed an order confiscating the gold and imposing penalties on the noticees and others. November 2, 2023 The exporter filed the present appeal before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), seeking relief. 23. The Ld. Counsel appearing on behalf of the exporters/noticees has made various submissions, which are summarized below: - * Principal grounds and contentions (i) At the outset, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The shipping documents were marked appropriately as Customs Copy, Export Promotion Copy, Exchange Control Copy, and Exporter Copy to avoid any misuse or duplication. Customs officials at various levels verified and appraised the goods, ensuring they were properly handled at each stage. The Group Appraiser of Customs sealed the consignment in two boxes, and these were verified by the Shed Appraiser before being handed over to the Preventive Officer (PO), being Satya Gopal Mallick, for escorting to the Station Duty Officer (SDO), being Pallav Roy Chowdhury. Sanjay Agarwal and Preet Kumar Agarwal were authorized by Shree Ganesh Jewels to handle the export, with authorization submitted to the Assistant Commissioner of Customs. (iv) In spite of thorough procedural compliances on the part of the appellants, unforeseen lapses by customs officials and logistical challenges with the Emirates Airline disrupted the export process. Detailed records and shipping documents submitted reflect complete transparency and compliance with export regulations. In particular, it is maintained that owing to the PO having taken Preet Agarwal to the office of the SDO to introduce him to the SDO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (SDO) without ensuring that boarding and immigration formalities were completed. This procedural lapse left the consignment in limbo at the airport. Similarly, Station Duty Officer Pallab Roy Chowdhury, in his statements dated April 4, 2018, and April 18, 2018, acknowledged that he handed over the sealed boxes of gold to Preet Kumar Agarwal without verifying whether the required formalities were completed. These admissions establish that the failure of the export process was due to lapses by the customs authorities, not deliberate diversion by the exporters as claimed by the DRI. (ii) Additionally, the statements recorded from Sanjay Agarwal, Preet Kumar Agarwal, Ajay Agarwal and Avinash Soni under Section 108 of the Customs Act were obtained under duress and coercion. The said reply dated 29.5.2023 details how physical and psychological pressure was applied during the interrogation, leading to statements that were not voluntary. These statements were later retracted before the Additional Chief Judicial Magistrate (ACJM), indicating duress and coercion as the reason for the initial admissions. Avinash Soni, the proprietor of Shree Ganesh Jewels, was arrested by the DRI o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the part of the DRI to suppress the fact of SA and PA being in their custody since the evening of 4.4.2018 till 6.4.2018 when they were produced before the ACJM, being a period of more than 24 hours only corroborates the claims of the aggrieved persons that statements were obtained from them under coercion and duress. Section 104(2) of the Act requires that a person arrested must be produced before the Magistrate "without unnecessary delay" and in any event, within 24 hours of arrest. "Arrest" for the purpose of the Act, as interpreted by the Bombay High Court in Suaibo Ibow Casamma v. Union of India, 1995 (80) ELT 762 (Bom.), in paragraphs 17 to 19 thereof, once a person is put under the complete control and custody of the authorities, his arrest would be complete. "It is nobody's case that he was ever allowed to move out of the custody of the Customs officer". In the present case therefore, it is clear that the moment Preet Agarwal and Sanjay Agarwal, both residents of Hyderabad, were brought within DRI custody in Kolkata on 4.4.2018, they were put under their control and custody (ref. Jugeshwar Dayal v. CC, Patna, 2001 (134) ELT 253 (T), and Dinesh Bhabootmal Salecha v D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -out times of the panchas from the airport were found to be prior to the time of the observations recorded in the Panchnamas. Rudra Poddar and Biswajit Ghosh according to the Deployment Sheet of Upshot Utility Services, procured through RTI, shows that they signed at 9PM on 4.4.2018, yet they were claiming to be observing together with DRI officers from 6:10 PM on 4.4.2018 and past midnight, and into the next date, being April 5, 2018 when they cast their signatures on the Panchnama. The Deployment Sheet shows further, that they returned to their place of duty at the International Arrival (Wash Room Gents), at NSCBI Airport on 5.4.2018 at 7 AM, and signed out at 9PM. Likewise, the other Panchas, Firoz Molla, Suvendu Das, Ratan Biswas and Biswajit Chowdhury had all signed out at 7 PM according to the Deployment Sheets of Upshot Utility Services that contracted them at the said airport, before any detention or seizure/recovery was made, which they claimed to have witnessed. * Non-supply of RUDs and Violation of Natural Justice principles (i) By the said reply dated 29.5.2023, particularly paras 1.9, 1.10, 1.17, 1.18, 1.25 and 1.38 thereof, the appellants also strongly contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Agarwal handing over the goods to Sanjay Agarwal at the entrance of the airport terminal. This report would demonstrate that the transaction occurred transparently, under the supervision of CISF officers, and refute allegations of clandestine activity. Additionally, the said reply questioned why other records, such as the Joint Commissioner's alleged adverse note denying permission for hand-carry export or internal customs communications, had not been provided to the appellants during the adjudication. (iii) The non-supply of these relied-upon records not only violates procedural fairness fundamentally vitiating the subject adjudication but also raises serious doubts about the case sought to be made out against the appellants by the DRI and the Adjudicating Authority. If the CCTV footage and confidential reports truly supported the DRI's allegations, they would have been shared as part of the relied-upon documents. The absence of these materials indicates that the withheld evidence likely undermines the DRI's narrative. (iv) It is for such stated deficiencies in the case, that the appellant requested cross examinations of various witnesses, including Cham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of witnesses. The case for conspiracy is also not apparent by the events on 4.4.2018, and was made out solely on the basis of witness statements recorded from Sanjay Agarwal, Preet Agarwal on 5.4.2018 and 6.4.2018, both of which were retracted at the earliest opportunity before the ACJM. The denial of cross examination is tantamount to a violation of the principles of natural justice in the present case, rendering the said impugned order and the findings therein, illegal, invalid and void ab initio. Reliance in this regard is placed on the decision of the Supreme Court in Andaman Timber Industries v. CCE, Kolkata, 2017 (50) STR 93 (SC), as well as that of the Calcutta High Court in Ajay Saraogi v. Union of India, 2023 (386) ELT 333 (Cal). * COFEPOSA proceedings dropped against Preet Agarwal. Detention set aside by Delhi HC in the cases of Ajay Agarwal and Sanjay Agarwal. (i) Though a case of smuggling was sought to be made out against the aggrieved persons, the proceedings under The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 were dropped against Preet Agarwal (vide Order of the CEIB dt. 16.8.2015) and set aside by the Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 22 carat gold, to which a common rate of Rs. 2977 per gram was applied (though the invoice rate, appraised a day prior was Rs. 2624 per gram (approx.),. The said goods had clearly been appraised, and no objections were raised by the Department during the appraisement of the said goods on 4.4.2018 for purposes of export. Since the CRCL report is dated 18.4.2018, and the Valuation Reports dated 5.4.2018 precede the CRCL report by 13 days, the purity factor of 9192% could also not have been considered by the Valuers in preparing their reports on 5.4.2018. The valuation reports also do not indicate what pricing methodology they have followed and wherefrom they have sourced the rate for gold bangles of Rs. 2977 per gram. It is not plain if the price is tax inclusive, or if it is the retail price of similar goods in Kolkata, and what retail survey if any, was done to determine such rate. Hence the weight difference in the bangles is suspicious and is not explained from the reports. It has not also been explained in the said impugned order, how the price of the said goods and rate of gold was appraised and accepted on 4.4.2018 but disagreed with the next day on the basis of valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the panchas, Rudra Poddar and Biswajit Ghosh, who were witnessing events from late evening of 4.4.2018 right up to the time of valuation the next day, on 5.4.2018, even though the said Deployment Sheets of Upshot Utility Services procured through RTI reveal that they signed out of the airport at 9 PM on 4.4.2018 itself, and had signed in for work the next day at the Gents Washroom and the Aerobridge at 7AM on 5.4.2018 at the NSCBI Airport. The valuation reports appear to have been signed by these Panchas, who were apparently not even present as per the RTI Reports, thereby raising serious questions about the reliability of the valuation reports. (ix) Further, it is also inconceivable that housekeeping staff adept at maintaining washrooms and aerobridges would have such a keen understanding of gold valuations, recording in their Panchnamas the weight of the gold bangles "sans samples" as 27892 gms and 26204 gms respectively valued at Rs. 16,10,43,792/-Given that the cross examination of such panchas was denied by the Commissioner, serious doubt is cast on the reliability of the Panchnama dated 5.4.2024 and the Valuation Reports prepared allegedly in their presence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade a procedural error, the other party to the same transaction and subject to the consequences of that very mistake/error cannot simultaneously be found to have acted in a mala fide or fraudulent manner. Such observation on the part of the Commissioner appears to be prejudiced and unfair, and totally irrational. A syndicated, planned operation cannot be conceived out of procedural lapses that could not have been foreseen by anyone. * Importer/Supplier of gold not made a party (i) The said impugned order observes that State Trading Corporation of India Limited (STCL) had imported the gold out of which the said goods were produced for purposes of re-exportation. However, as apparent from the invoices dated March 13, 2018, March 16, 2018, March 22, 2018, it will be apparent that the said goods were sourced from the gold purchased from Diamond India Limited and not STCL as alleged in the impugned order. This supplier of the gold being Diamond India Limited and not STCL is also prima facie apparent on a perusal of the relied upon invoice dated 2.4.2018 which clearly states that the gold was "purchased from: Diamond India Limited". It is inconceivable on what basis STCL was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no false declaration of any sort has been made by the appellants, given the consistency of the shipping documents with the nature and characteristics of the said goods. It cannot also be established that there was any deliberate attempt to divert the said goods inasmuch as the failure to export the same occurred on account of the lapses of the Department as acknowledged in the said impugned order. As such, there appears to be no basis for invoking Section 114AA of the Act as no false and incorrect material of any sort has been submitted by the appellants and/or produced with the Show Cause Notice or the impugned order in relation to the said goods. * Improper determination of redemption fine (i) Without prejudice to the aforesaid, further and in any event, the imposition of redemption fine of Rs. 80,00,000/- is arbitrary and without basis, and does not appear to be commensurate with the margin of profit. A perusal of the Shipping Bill dated 3.4.2023 and the Invoice dated 2.3.2024 shall reveal that the value addition is only to the extent of the making charges of Rs. 43,400.43, and that remaining value component of Rs. 2170021.59 of the said goods, is identical to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven particularly that the SDO has claimed that Preet Agarwal prompted him to take steps to recover the said goods, it would have been necessary for the DRI to reveal the CCTV footage of Preet Agarwal's movement prior to or at the time of his interception, but such CCTV footage remains suppressed to date. (ii) That a fraudulent attempt to divert goods cannot arise out of a mistake, and allegations to this effect being made against the appellants/noticees are without basis or reason. If a transaction is rendered a mistake for the Department, it should also be a mistake for the noticees. The same transaction cannot be labelled a mistake for the SDO, and an act of fraud by the exporter and his agent. * Precedents (i) In support of the stated contentions, reliance is placed on the following precedents: a. Andaman Timber Industries v. CCE, Kolkata, 2017 (50) STR 93 (SC) b. DRI v. Mahendra Kumar Singhal, 2016 (333) ELT 250 (Del)Bikash Saha v. CC (Prev), Kolkata, 2020 (371) ELT 763 (Kol) c. Suaibo Ibow Casamma v. Union of India, 1995 (80) ELT 762 (Bom) d. Jugeshwar Dayal v. CC, Patna, 2001 (134) ELT 253 (T), e. Dinesh Bhabootmal Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner's permission dated 30.10.2017 in respect of 57797.7 gms. gold jewellery under S/B No. 6526374 dt. 26.10.2017 of Kalpataru Jewellers & Export Corporation, was used to clear another consignment of 10910 gms. gold under S/B No. 6528109 dt. 29.12.2017, which implied that the approval procedure was not followed by her and the consignment under the aforesaid S/B appeared to be diverted in the domestic area, the Adjudicating Authority had observed her lapse as procedural in nature. (iii) That the Adjudicating Authority had failed to shed light into the fact that how letter dated 29.03.2018 was received at ACC from Shree Ganesh Jewels mentioning that Commissioner had granted them permission for filing Shipping Bill for export of gold jewellery by personal hand carriage, when such permission was generally obtained on note sheet side of relevant file; that how the original note sheet of Customs in which the order was given by Group Appraiser to the Shed Appraiser for 100% examination of goods under S/B No. 6530662 dated 03.04.2018 and all the four copies of the Shipping Bill were found in the possession of Shri Sanjay Agarwal at the time of his interception by the DRI, which imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anjay Agarwal, but also an integral part of the conspiracy to defraud the state exchequer in the subject consignment of attempted diversion of 54096 gms. of gold jewellery on 04.04.2018. (vii) That the Adjudicating Authority had failed to realise that the examination order given by Smt. Champa Mukherjee was in the note sheet and not on the back page of the duplicate copy of the subject Shipping Bill in blatant violation of law and laid down procedure and that though she had attended DRI, Hyderabad in connection with the investigation being carried out by them against PH Jewels and hence was well aware of the frauds being committed and modus operandi being adopted by the firms of Sanjay Agarwal, still she had processed the subject export consignment. (viii) That the Adjudicating Authority had penalised the kingpin of the syndicate, Shri Sanjay Agarwal and his son, Shri Preet Kumar Agarwal, paltry amounts under Sections 114(iii) and 114AA of the Customs Act, 1962, which should have been of appropriate quantum commensurate to the gravity of offence committed and the modus operandi adopted to defraud the state exchequer and which cannot be considered to have any deterrent eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al by the Appraiser, he (Shri Dhruvajyoti Roy) had countersigned on it. It is submitted therefore that he had done his job honestly and no allegation has been raised in the above mentioned Show Cause Notice in this regard i.e. valuation of export goods. (iii) This is an administrative issue and to be examined under the CCS(CCA) Conduct Rules, 1964 for any lapse. It is not a violation under the Customs Act, 1962, as permission has to be granted or not to be granted as per guidelines of CBEC. (iv) He states that he has already submitted in my defence that the permission for filing of manual shipping bill dated 03.04.2018 was granted by the Commissioner as per CBEC Instruction in this regard and the direction of the Commissioner had been followed. In case of not granting of permission, the Commissioner had clearly mentioned the word "Permission not granted" / "Rejected", as in the case of Kalpataru Jewellers & Export Corporation. In case of granting of permission, the Commissioner used to put his signature only. So, considering the Commissioner's signature as acknowledgement to the matter of filing manual shipping bill, he allowed the processing of the manual Shipping Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . a) Demand of gratification by the officer; b) Acceptance or receipt of such gratification by the officer; and c) Benefit to the person who is paying such gratification. (viii) None of the above three aspects have been established by the investigating agency in the said Show Cause Notice. Therefore, allegation in respect of connivance with the exporters for diversion of the export consignment to DTA is not sustainable. 26. Heard the parties and considered their submissions. 27. After hearing all the parties, we find that the case of the Revenue is that the DRI was having advance intelligence that Shri Sanjay Agarwal would divert an export consignment of gold jewellery in the domestic area after his son, namely, Shri Preet Kumar Agarwal, completes all export formalities at NSCBI Airport, Kolkata and hands over the said gold jewellery to him outside the Airport Terminal. This intelligence was known to the DRI on 03.04.2018 itself and the exporter filed the shipping bill on 03.04.2018 to export the consignment of gold bangles to meet out their export obligation. After completion of the formalities, the Preventive Officer (PO) accompanied Shri Preet Agarwal to the Office of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on 03.04.2018 that diversion of export consignment would take place, then, when Shri Preet Kumar Agarwal handed over the consignment to Shri Sanjay Agarwal outside the Airport, why did the DRI not apprehend Shri Sanjay Agarwal who was carrying the export consignment at the time when diversion of the goods was taking place? This raises a question mark on the version that the DRI was having prior knowledge of diversion of export consignment of gold jewellery. 30.1. We also take note of the fact that Shri Preet Kumar Agarwal had passed the security gate and immigration counter without having a boarding pass, to the SDO office and came thereafter, along with jewellery, to a high security zone where several CCTV cameras were installed, but no efforts have been made by the investigating team to know the truth as to how he entered or how he came back. This shows that there were lapses on the part of the investigation. 31. We also find that the investigating team has heavily relied on the statements recorded during the course of investigation. However, all those statements were retracted before the Additional Chief Judicial Magistrate. However, the procedure prescribed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng been loaded for exportation are unloaded without the permission of the proper officer;" 33.1. As per the above said provisions, any goods cleared for exportation which are not loaded for exportation on account of any wilful act, negligence or default of the exporter, his agent or employee or which having been loaded for exportation, are unloaded without the permission of the proper officer, are liable for confiscation. Admittedly, it is a case of negligence on the part of the exporters, being the circumstances at that time, the exporter was required to take more precaution but failed to do so and the goods cleared for exportation were not loaded for exportation. 34. Hence, we hold that the goods in question are liable for confiscation under Section 113(k) of the Act. 35. With regard to the imposition of penalties under Section 114(iii) of the Act, since the goods have been held liable for confiscation under Section 113(k) of the Act, we find that penalties under Section 114(iii) are imposable on the appellants/exporters. 35.1. Consequently, penalties on the appellants/exporters under Section 114(iii) of the Act are imposed as given below: - Name Amount of pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicating authority in the impugned order. The relevant observations of the ld. adjudicating authority in the impugned order in this regard are reproduced below: - "65.1 I find that Shri Dhruvjyoti Roy, DC is found to have ignored earlier approval of Commissioner (Airport) of not allowing Shree Ganesh Jewels to file manual Shipping Bill based on JC's noting that 'as there is ACC with EDI, manual permission may not be considered. For processing the subject manual Shipping Bill No. 6530662 dt. 03.04.2018 of Shree Ganesh Jewels no permission was obtained from the Commissioner (Airport). Same allegations are also made against Smt. Champa Mukherjee, Appraiser. Besides she was also found to have given the Examination Order on Note sheet instead of the back page of duplicate copy of Shipping Bill in violation of laid down procedure. 65.1.1 Shri Dhruvjyoti Roy DC (Export), has submitted that he misread/mis-interpreted the signature of Commissioner on the notesheet as approval for Export for the subject firm; that he was new to Customs and was not very familiar with Customs procedures. Smt Champa Mukherjee, Appraiser has submitted that she acted on the directions of her superio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er receipt, that he followed the procedure as per Public Notice No. 36/2001 dated 30.07.2001; that his duty was to escort the goods and the procedure did not require him to verify Boarding pass or completion of immigration formalities during the process of escorting. 65.2.2 I find that Shri Mallick has performed his assigned task of escorting the consignment without any lapse and that it was not his responsibility to ensure completion of immigration or boarding pass. I find that there is no evidence of his connivance or deviation from prescribed procedure or law, which can be said to have led to diversion of the impugned consignment. Therefore, I find that he is not liable to penal action for rendering the impugned consignment liable to confiscation under section 113(k) of the Customs Act, 1962. ..... ..... 67. I find that Shri Ajay Kumar Agarwal has been made Noticee proposing penal action against him for his actions rendering the impugned goods liable to confiscation under section 113(k) of the Customs Act, 1962. I find that Shri Ajay Kumar Agarwal, brother of Shri Sanjay Agarwal and proprietor of M/s Kalptaru Jewellers came rushing into Kolkata after interception of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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