Custom, Excise & Service Tax Tribunal
Sh. Abdul Rahman vs Cc & Ce, Hyderabad-Ii on 22 June, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Division Bench Court I Appeal No. C/74/2005, C/245-246/2006 (Arising out of Order-in-Original No. 9/2004-CUS dt. 27.02.2004 passed by CC & CE, Hyderabad - II ) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Honble Sh. Madhu Mohan Damodhar, Member(Technical) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? Sh. Abdul Rahman Sh. Mohd Osman ..Appellant(s) Vs. CC & CE, Hyderabad-II ..Respondent(s)
AND CC & CE, Hyderabad-II ..Appellant(s) Vs. Sh. Abdul Rahman Sh. Mohd Osman ..Respondent(s) Appearance Sh. P. Rama Sharma & Sh. Anand Sheshu, Advocates for the Appellant.
Sh K.S.G.S. Kumar, Assistant Commissioner (AR) for the Respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Honble Sh. Madhu Mohan Damodhar, Member(Technical) Date of Hearing: 22.06.2016 Date of Decision: 22.06.2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The issue involved in all the above appeals being the same, they were heard together and are disposed by this common order.
2. The facts are that the officers of the DRI on specific intelligence that a Dubai based person was sending 30 Kg of gold through flight No. IC 592, conducted simultaneous searches on 29.08.1997 at two branches of state Bank of India located at departure and arrival lounges at Hyderabad International Airport and searches were also conducted on the passengers. Pursuant to the search conducted at SBI branch departure lounge an amount of US $ 12530 was recovered from Sh. K. Neelakanta Rao, SBI official. Pursuant to the search conducted at SBI branch at arrival hall, an amount of US $ 18795 was recovered from Sh. M. Vishwanadam, SBI official. DRI officers also intercepted three passengers viz; Mohd. Osman, Mohd Saleem and Abdul Rehman who arrived by IC 592 on 29.08.1997 and found that each of them carrying 10 Kg of gold but did not possess the requisite foreign currency with them to pay the customs duty. On search of their personal baggage 85 FMG bars were recovered from each of these passengers, total 255 FMG bars, each weighing 116.65gm and of 999.0 purity. The 255 FMG bars valued at Rs.1,36,42,500/- were seized under provisions of Customs Act,1962 read with FERA. All the aforesaid persons were arrested. Show cause notices were issued to Mohd. Osman, Mohd Saleem and Abdul Rehman proposing confiscation of quantity of gold each 9915.25 gm valued Rs. 45,47,500/- seized from each individual and also imposition of penalty on them under provisions of Customs Act. Sh K. Neelakanta Rao and Sh. Viswanadham were called upon to show cause as to why foreign currency seized from them should not be confiscated under provisions of Customs Act and FERA, in addition of imposition of penalties.
3. On adjudication, vide order dated 27.02.2004, the lower authority confiscated gold weighing 9915.25 gms valued at Rs. 45,47,500/-, foreign currency amounting to US $ 12530 and US $ 18795, and imposed penalties, interalia, on the aforesaid five persons.
4. Aggrieved by the above order, two of the affected noticees/persons viz: Mr. Abdul Rehman and Mr. Mohd Osman have filed these two appeals No. C/245 and 246/2006-DB. They are herein after are referred to as noticees and department is referred to as Revenue for the sake of convenience.
5. The department also has filed appeal No. C/74/2005 against the same order, seeking remand on the ground that while the total FMG seized was 29,745.75 gms valued at Rs.1,36,42,500/- (85 bars from each of the three persons intercepted totalling 255 bars each weighing 116.6 gms), the adjudicating authority has ordered absolute confiscation of only 9915.23 gms (i.e. only 85 bars) valued at Rs. 45,47,500/-, without passing orders in respect of gold weighing 19830.50 gms valued at Rs. 90,95,000/-.
6. During the course of the hearing, the learned advocate for the noticees pointed out that in consequence to the common judgment dated 28.06.2005 passed by the Metropolitan Session Judge, Hyderabad in the Crl.appeal nos.293/2003 and 298/2003 filed inter alia by the aforesaid noticees (Abdul Rehman and Mohd. Osman), acquitting the noticees herein from the charges levelled against them, the order passed by the adjudicating authority will require to be set aside. The learned advocate further pointed out that the department had preferred appeal against this judgment vide Crl.Appeal nos.1203 and 1204/2005 however, the Honble High Court vide common judgment dated 02.06.2015 dismissed the appeals.
7. At this juncture it would be in order to reproduce relevant portion of the judgments passed by the Metropolitan Sessions Judge and the Honble High Court.
8. In the common judgment dated 28.06.2005 the Metropolitan Sessions Judge has inter alia found as under:
35. It is the case of the accused 1 to 3 from the beginning that all the five passengers brought with them 31325 US $ from Dubai for payment of import duty for 50 Kgs of gold. Soon after disembarkation from the Aircraft itself some officers escorted them and A1 to A3 were taken to a secluded place and detained while Syed Bin Hasan Sharabi and Syed Mazhar Ali with 31325 US $ proceeded to the SBI bank Counter in arrival lounge and later they were let off. The flight came in time and the passengers came into arrival hall and formed a queue at the SBI counter in the arrival hall standing at the said counter even by 2.30 a.m. It is the case of A4 and A5 that both of them were in SBI counter in arrival lounge attending to the passengers arrived and two passengers came and tendered US $ and A4 asked them to bring challan receipts refusing to receive the US $ and the two passengers gave the names and passport numbers and the two passengers names who are present struck off and the names of three other passengers who did not come were noted and that 31,325 US $ were placed by the passengers at the counter table tendering it for payment of custom duty for 50 Kgs of gold and that was taken away by the officers concerned. The defence case is that A1 to A3 and Syed Bin Hasan Sharabi and Syed Mazhar Ali together came is established by Ex.D2 immigration certificate for Syed Bin Hasan Sharabi and Syed Mazhar Ali. Though, it is the case of the prosecution that two other passengers did not come from Sharjah by IC 592 flight, but, the same is not proved. In fact it is proved that the other two passengers came from Sharjah by IC 592 flight in view of Ex.D2. The same is also admitted by PWs 1, 2 and 3 during the course of their evidence. The defence also established that 31325 US $ were purchased at Dubai on 26-08-1997 by the invoices put to PW2 and confronted which was also filed along with written statements of A1 to A3 while they were examined u/s 313 Cr.P.C. The defence counsel appearing for A1 to A3 submitted that there was no convincing reason why passengers bringing gold would not bring with them 31,325 US $ required for payment of custom duty from Dubai when the US $ were cheap and available in plenty in open market without any restrictions in Dubai and they will not gain any benefit by procuring the same for higher price at Hyderabad with so many restrictions. The above defence version is not an after thought.
36. In view of the above submissions of the learned counsel appearing for A1 to A3, the defence version is more probable than the prosecution version as to what was happened on that day at the Airport. Hence, the contention of the learned counsel for A1 to A3 that the finding of the Learned Special Judge that the complainant has proved the guilt of A1 to A3 for the charge leveled against them is not correct and the same is liable to be set aside. In view of my above discussion, the finding of the learned Special Judge that the complainant has proved the guilt of A1 to A3 is not correct and it is liable to be set aside.
9. It is further seen that the Metropolitan Sessions Judge has decided as under:
39. I decide the point that the finding against A1 to A5 by the lower court that the A1 to A5 have committed the offences u/s 135(1)(b)(i) and 135(1)(b)(ii) of the Customs Act is liable to be set aside and accordingly set aside.
42. The Learned Special Judge passed the order with regard to the material objects are liable for confiscation as per the provisions of the said Act and has not passed any order with regard to the disposal. Since, A1 to A3 are acquitted for the charge u/s 135(1)(b)(i) of the Customs Act they are entitled for the return of the gold seized from their possession. With regard to the foreign currency that was seized the A1 to A3 are claiming the foreign currency worth of 18,795 US $ belongs to them and they sent the said currency to the SBI counter for payment of import duty. It is not the case of A1 to A3 that the total 31325 US $ belongs to them. Hence, they are entitled for the foreign currency of 18,795 US $ and remaining foreign currency can be confiscated by the concerned officers as per the provisions of the Act and A1 to A3 are entitled to get back the gold on payment of import duty in foreign currency. The concerned authorities are at liberty to calculate the foreign currency that has to be paid towards the import duty for the gold that was brought by A1 to A3 and if 18,795 US $ is sufficient for the same the said currency is to be adjusted towards the import duty and if it is less than the import duty then the A1 to A3 have to pay the balance import duty in foreign currency for release of the gold which was seized from their possession.
10. In the Common judgment dated 02.06.2015, the Honble High Court did not find any merit in the appeals filed by the department against the above order and dismissed the same. It is seen that the Honble High Court has held as follows:
45. As regards A1 to A3, their defense was that they are owners of the gold and had purchased the foreign currency in question for payment of customs duty; alternatively, it is contended that even if they are not owners of gold, they had a right to declare the gold to the appropriate Officer under Section 77 of the Customs Act, 1962; and even if convertible foreign currency has to be utilized for payment of duty, and they did not have it, they could have exercised the option under Section 80 of the said Act to request the Customs Officials to detain the gold and take return of it while returning back to Sharjah. Their plea is that their interception prior thereto deprived them of this opportunity and does not amount to commission of any offence by them either under the provisions of the Customs Act or under the provisions of the FERA.
46. I am not going into the question whether A1 to A3 are owners of the gold although the said point was argued before me. In my opinion, even the alternative plea raised by them has considerable force and is required to be accepted.
47. The trial Court at para-114 taken the view that A1 to A3 do not have any right to declare the gold in question under Section 77 of the Customs Act, 1962 since they were only carriers of the gold.
48. Section 77 of the Customs Act, 1962 entitles the owner of any baggage to make a declaration of its contents to the proper Officer for the purpose of clearing it through Customs. Section 80 of the Customs Act states that if the baggage of a passenger contains any article which is dutiable or the import of which is prohibited and in respect of which a true declaration has been made under Sectiion 77, the proper Officer may, at the request of the passenger, detain such article for the purpose of being returned to him on his leaving India; and if for any reason, the passenger is not able to collect the article at the time is of his leaving India, the article may be returned to him through any other passenger authorized by him and leaving India or as cargo consigned in his name.
49. The finding of the trial Court in para-114 of its judgment that A1 to A3 cannot be allowed to declare the gold under Section 77 since they were only the carriers, in my opinion, cannot be accepted.
11. The Honble high Court has further held as below:
52. So even if they did not have convertible foreign currency for payment of customs duty on the gold brought by them, they would have the option under Section 80 of the Act to retain the said gold with the Customs counter and take it back when they return to Sharjah. Had they been given an opportunity to file a declaration under Sec 77 of the Act, they would have also had a choice to exercise the option under Sec. 80 of the Customs Act.
56. In this view of the matter, I am of the opinion that A1 to A3 cannot be held guilty of the charge under Secion 77 or Secion 135(1)(b)(i) of the Customs Act, 1962.
12. The learned AR appearing on behalf of department argued that department proceedings and criminal proceedings are separate and merely because there was acquittal in the latter, it would not entail in nullification of the former.
13. We have considered the facts, evidence and the submissions made before us carefully.
14. We are of the considered opinion that the judgments in the criminal proceedings cited supra, will have the effect of neutralizing the order of the lower authority in respect of the two noticees (appellants). We have no quarrel with the legal position that departmental proceedings and criminal proceedings are separate. However in the instant case, the judgments in the criminal proceedings have gone into considerable detail with regard to the actions of the two noticees, their eligibility or otherwise to import the gold and have arrived at a conclusion that the two noticees only are the owners of the gold carried by them in the result the two noticees have been found not guilty of the offences charged against them. This finding has been unreservedly upheld by the Honble High Court. This being the case in our opinion, the entire raison ditre of the impugned order will necessarily crumble and becomes redundant. We find that this view finds resonance in a number of decisions as under:
(i) In Saleh Baginwan Vs CCE Hyd II [2007 (216) ELT 420 (Tri-Bang)] . .... ..... ..... We note that there is no allegation of concealment of goods. A person who wants to smuggle will not be standing in the queue with foreign exchange. Moreover, the appellant being illiterate, had to depend upon others for filling the declaration form. Even according to the department, there was a receipt for the purchase of the goods. In these circumstances, we are inclined to accept the version of the appellant that he wanted to clear the goods only on payment of duty with the foreign exchange he brought, which was actually sufficient to cover the duty. Hence, we do not find any merit in the impugned order. We set aside the same and allow the appeal with consequential relief, if any.
(ii) In S. Duraippa Vs CC& Cus Chennai [2006(202)ELT 365 (Tri- Chennai)] We have also examined the case law cited by ld. SDR. Some of the decisions (by High Courts) cited by ld. SDR (vide K.P. Abdul Majeed, V.J.A. Flynn, etc.) are to the effect that adjudication and criminal proceedings are independent of each other and that the degree of evidence required by the adjudicating authority for imposing penalty is much less than that required by criminal court for convicting the accused. There is no quarrel about this legal position, which has been upheld by the Apex Court also. However, as we have already noted, the view taken consistently by the Apex Court is that, notwithstanding the fact that adjudication and criminal proceedings are independent, any order of confiscation and penalty resulting from adjudication cannot be allowed to stand in the face of an order of acquittal passed by the criminal court on the same set of facts and evidence. When this ruling of the Apex Court is applied to the present case, we have no option but to set aside the penalties. None of the appellants has challenged the confiscation order. Their challenge is only against the penalties. Hence we set aside the penalties imposed on the appellants by the Commissioner. The appeals are allowed.
(iii) In S.M.A. Siddique Vs GOI [1989 (42) ELT 541 (Mad)] the Honble High Court held as follows:
I had occasion to refer to the above dictum of the Bench in Abubacker v. Secretary, Govt. of India [1981 (2) MLJ 405] with reference to the proceedings taken against a party under the Customs Act, 52 of 1962. There, in the case dealt with by me, before the proceedings of the Authorities under the said statute got terminated finally, the Criminal Court rendered its judgment, acquitting the party not on any technical ground, but on the merits of the case and on identical facts and charges. The dictum of the Bench was applied and the proceedings of the departmental authorities were quashed. I find that there is a warrant to apply the above principle to the facts of the present case also. If so applied, the Orders passed by the respondents cannot stand and have got to be deleted. Accordingly, this writ petition is allowed. No costs.
15. In the result, the impugned order in respect of the aforesaid appellants/noticees (Abdul Rehman and Mohd. Osman), cannot sustain and will necessarily have to be set aside, which we hereby do, with consequential reliefs to the said two persons, if any. It is clarified that the aforesaid order is only in respect of the said two appellants/noticees viz Sh. Abdul Rehman and Mohd. Osman.
16. Coming to the appeal filed by the department, we find that the submission by the Commissioner failed to confiscate the entire 255 bars that while the total FMG seized was 29,745.75 gms valued at Rs. 1,36,42,500/-, however, while passing the order the Commissioner has confiscated only 9915.23 gms (i.e. only 85 bars). Department have sought remand for this reason. However, though this contention of department is correct, as we have already held that the impugned order per se in respect of the afore said appellants/noticees (Abdul Rehman and Mohd. Osman) set aside, the appeal of the Department is not sustainable and will require to be dismissed as infructous, which we hereby do.
17. Appeals are disposed of as above.
(Operative part of this order was pronounced in court
on conclusion of the hearing)
(MADHU MOHAN DAMODHAR) (SULEKHA BEEVI C.S.)
MEMBER(TECHNICAL) MEMBER(JUDICIAL)
Jaya.
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