Custom, Excise & Service Tax Tribunal
Appearance For vs Appearance For on 22 October, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
WEST BLOCK NO. 2, R. K. PURAM, NEW DELHI 110 066.
PRINCIPAL BENCH, NEW DELHI
COURT NO. II
Customs Appeal No. C/15 of 2008
Anup Singh versus CC, New Delhi
Appearance for Appellant: Mr. Shailendra Bharadwaj, Adv
Appearance for Respondent: Mr. N. Pathak, DR
CORAM: Honble Shri D.N. Panda, Judicial Member Honble Shri Rakesh Kumar, Technical Member Reserved on : 11/09/2012 Pronounced on: 22/10/2013 Final Order No. 58106/2013 PER D.N.PANDA BACK GROUND OF THE CASE
1. On 28.8.2000 investigation noticed that a frequent flying passenger named Ms. Olga Kozireva holding an Uzbekistan Pass Port arrived at the IGI Air Port, New Delhi from Bishkek by Kyrgyzstan Airlines flight K2-545 with bulk (commercial) quantity of Chinese silk textiles of 81,160 yards approximately valued at Rs. 155.82 lakhs @ Rs. 192 per yard. Those were found to have been imported in contravention of provisions of Customs Act, 1962 (hereinafter referred to as the Act) being prohibited/restricted goods under Para 5.6 EXIM Policy 1997-2002 read with Section 3(2) and (3) and 11(1) of Foreign Trade (Development and Regulation) Act, 1992 and Rule 14 of the Foreign Trade (Regulation) Rules 1993, so also read with section 111 of the Customs Act 1962 and liable to confiscation.
2. Investigation found that the quantity as well as value of the above goods illicitly imported were not disclosed to customs but were deliberately suppressed. It was also noticed that the above said passenger had no means to discharge customs duty on 27 pieces of baggage manifested as 2,200 kgs. and was attempting to take out one of the packages. That was intercepted at the exist gate of Customs arrival hall and when questioned on the commercial quantity brought by her, she denied possession of any dutiable goods or goods in commercial quantity.
3. Ascertaining that the import aforesaid was made in contravention of the provisions of the Act, statement of Ms. Olga (the passenger) was recorded u/s 108 of the Act. She stated that she had been coming to India during last three years prior to 28.08.2000 and was bringing Chinese silk to India for sale. Her pass port also revealed that she had made short trips to India and stayed in different hotels in Paharganj, New Delhi, where the buyers of the smuggled china silk used to contact her for purchase of such goods. Such fact was noticed by Honble High Court of Delhi in the case of Olga Kozireva V. UOI while deciding her bail petition on 18.5.2001 as reported in 2001 Cri LJ 3701 : 2002 (63)DRJ 183 : 2002 (80) ECC 451. On such basis, investigation proceeded to inquire into the matter further to trace the racket and ascertain Revenue loss of the past. She was also arrested on 29th August u/s 104 of the Customs Act, 1962 and produced in the Court of the ACMM, Patiala House Court and remanded to judicial custody.
4. Extensive enquiry made by investigation revealed that a racket of some Afghans appearing in Column F of Table 14 of the adjudication order at Page 176 thereof (reproduced hereunder), a team of passengers depicted in Column E of that Table coming from CIS country, few customs officers as depicted in Column F of the said Table as well as some traders appearing in Column G thereof were involved in entire racket of bringing, clearing, possessing and disposing the illicitly imported goods which were smuggled goods in the eyes of law. They were facilitators of illicit import of Chinese silk in bulk commercial quantities in past on different dates as depicted in Column A of Table-14 of OIO and caused subterfuge to Revenue misdeclaring quantity and value thereof. The Customs officers named in Column F of the Table-14 were noticed to have abetted clearance of those goods in Airport in collusion with the passengers and racketeers for which proceedings against all of them were initiated under the Act. TABLE - 14 (Ref: Page 176 of OIO) Date & Flight Number Silk Tex.-not decl. and not assd. In meters Value of silk Tex. Not decl. and not assd. In Rs.
Customs duty evaded Person who, jointly or severally, evaded duty and prohibition Person who abetted Persons concerned with dealing with the goods.
A B C D E F G 17-12-98 KGA 2003 11338 7,71,007/-
6,19,659/-
Olga K, Nazira I and Shakista K Not know Not know 17-9-99 PK814 4546 3,09,125/-
1,89,185/-
Olga K Not know Not know 1-2-2000 KGA200 1 22272 15,14,474/-
9,26,858/-
Shakista K Kamal Bajaj, Mamoor Khan, Sanak Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 27-2-00 HY 151 26159 17,78,785/-
10,88,616/-
Olga K and Shakista K Mamoor Klldll, TRK Reddy VS Teotia Parveen Teotia JA Khan VK Khurana Ajay yadav Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 10-4-00 K2 545 20696 14,07,355/-
8,61,301/-
Shalo A Mamoor Khan, Sanak Olga K, Sudhir Sharma, Yashpal, not passenger but at airport with flight Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopa Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 17-4-00 HY 421 2129 1,44,752/-
88,588/-
Olga K Mamoor Khan, TRK Reddy, V S Teotia, Parveen Teotia, JA Khan VK Khurana, Ajay Yadav Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopa Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 23-4-2000 HY 433 3046 2472 3565 2,07,138/- 1,68,100/- 2,42,386/-
1,26,768/- 1,02,877/- 1,48,340/-
Olga K, Nazira I and Shalo A Mamoor Khan, Sanak Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 8-5-2000 K2 545 6062 6062 4,12,243/- 4,12,243/-
2,52,293/- 2,52,292/-
Olga K and Isamu KM Mamoor Khan, Sanak Shahlo, Nazira I Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 15-5-00 K2 545 25630 17,42,840/-
10,66,618/-
Shahlo A Mamoor Khan, Sanak, Nazira I, RN Zutshi, Yashpal, Vinod Kumar (Kain), VS Teotia, RK Docoliya, AK Varshney, DS Nandal Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 22-5-00 K2 545 18296 12,44,155/-
7,61,423/-
Olga K Nazira I and Shahlo A Mamoor Khan, Sanak TRK Reddy, Sudhlr Sharma, Neeraj Kumar Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 12-6-00 K2 545 30840 20,97,120/-
12,83,437/-
Olga K and Velichko Mamoor Khan, Sanak, Nazira, Isamu* KM, Mitrushov a M. *was a passenger adjudicated Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 1-7-00 HY 429 8220 5,58,946/-
3,42,075/-
Olga K Mamoor Khan, Sanak, Sudhir Sharma Neeraj Kumar, Nazira Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh >-7-00 9Y 219 14448 9,82,491/-
6,01,285/-
Olga K Mamoor Khan, Sanak, Yashpal Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 10-7-00 K2 545 21496 14,61,755/-
8,94,594/-
Olga K Mamoor Khan, Sanak, Vinod Kumar, RN Zutshi, VS Teotia, RK Dacoliya, AK Varshney DS Nandal Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 17-7-2000 K-2 545 32654 22,20,450/-
13,58,916/-
Nazira I Mamoor Khan, Sanak, TRK Reddy Kozireva# #not pax but at airoport with flight Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 24-7-2000 K-2 545 25630 17,42,840/-
10,66,618/-
Merkulova L Dil Agha Mamoor Khan, Sanak Sadullah Zanjir Khan TRK Reddy, RN Zutshi, Yashvir Singh Kozireva* Nazira*, *not pax but aport with flight Vinod Kumar (Kain), Kamal Suman, Anil Madan Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 27-7-2000 PK 270 2467 5991 1,67,742/- 4,07,374/-
1,02,658/- 2,49,313/-
Olga K Nazira I Dil Agha, Mamoor Khan, Sadullah, Zanjir Khan, V K Khurana Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 31-7-2000 K-2 545 26194 17,81,219/-
10,90,106/-
Olga K Dil Agha, Mamoor Khan, Sadullah, Zanjir Khan, V K Khurana Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain.
Anudeep Singh 1-8-2000 PK 270 5419 5638 3,68,519/- 3,83,411/-
2,25,534/- 2,34,648/-
Olga K Nazira I Dil Agha, Mamoor Khan, Sadullah, Zanjir Khan, RN Zutshi VK Khurana* *put up adjudicati on papers Vinod Kumar (Kain) Kamal Suman, Anil Madan Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopa Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 4-8-2000 PK 270 3934 6040 3,35,485/- 4,10,744/-
2,05,317/- 2,51,376/-
Olga K Nazira I Dil Agha, Mamoor Khan, Sadullah, Zanjir Khan, VK Khurana, SD Rajpal* Nitish Kedia, Anup Singh, Khem Singh, Arun Do-kania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh *comes for night duty and has contacts with OK still at aport and Shri Dinesh Agarwal Director.
11/12-8-2000 22668 15,41,424/-
9,43,351/-
Olga K Nazira I Dil Agha, Mamoor Khan, Sanak Sadullah, Zanjir Khan, Pradeep Rana Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 14-8-2000 K-2 545 18496 12,57,755/-
7,69,746/-
Merkulova Dil Agha, Olga K* Nazira I*, Mamoor Khan, Sanak Sadullah, Zanjir Khan, Pradeep Rana *not passengers but a assessed Nitish Kedia, Anup Singh, Khem Singh, Arun Dokania, Gopal Dokania, Sanjiv Jain, MahenderJain, Anudeep Singh 18-8-2000 PK-270 6410 4,35,880/-
2,66,759/-
Nazira I Dil Agha, Mamoor Khan, Sadullah, Zanjir Khan, Olga K, Pradeep Rana, SA Lamb, VK Bhardwaj Nitish Kedia, Anup Singh, Khem Singh, ArunDokania, GopalDokania, Sanjiv Jain, Mahender Jain, Anudeep Singh 21-8-2000 K-2 545 31425 21,36,878/-
13,07,759/-
Merkulova L Dil Agha, Mamoor Khan, Sanak Sadullah, Zanjir Khan, R.N. Zutshi, Olga K*, Nazira*, *not passenger but assessed.
Nitish Kedia, Anup Singh, Khem Singh, ArunDokania, GopalDokania, Sanjiv Jain, Mahender Jain, Anudeep Singh Total 421245 2,86,44,640/-
1,75,78,322/-
5. Following trader appellants whose names appear in Column G of Table-14 were noticed to be involved in acquiring and trading of the smuggled goods appearing in Column B and C of the said Table causing loss of Revenue (Customs duty) for which they faced Adjudication by order dated 1.10.2007 on the allegation of conscious knowledge of the nature and character of the smuggled goods and not supported by duty paying evidence and Penalties to the extent as mentioned against them in the table below were imposed on them:
TRADERS ALLEGED TO HAVE TRADED WITH ILLICITLY IMPORTED CHINESE TEXTILES PENALTY IN (Rs) IMPOSED IN ADJUDICATION Sl No. Appellants Appeal No. Rs.
1.
Mahender Jain C-11/2008 5,00,000/-
2. Anudeep Singh C-12/2008 5,00,000/-
3. Gopal Dokania C-13/2008 5,00,000/-
4. Anup Singh C-15/2008 5,00,000/-
5. Nitesh Kumar Kedia C-16//2008 5,00,000/-
6. Sanjeev Jain C-17/2008 5,00,000/-
7. Arun Dokania C-18/2008 5,00,000/-
6. The traders above being aggrieved by order of adjudication came before Tribunal. Those were dismissed by Tribunal by an order dated 25.01.2011 finding no merit therein. 7.1 Being aggrieved by the order of dismissal, they went to Honble High Court of Delhi in different Appeals. Honble Court observing that the order of Tribunal did not specifically deal and examine the contentions and issues raised and virtually a non-speaking order was passed without meeting requirement of law. It was directed that Tribunal shall specifically examine the contentions and issues raised by the appellant and deal with the same. A speaking order was required to be passed after referring to the evidence and material relied upon by the parties. Accordingly their cases were remanded by order dated 25.04.2012 for hearing afresh. Consequently, their appeals were heard afresh and order in each case has been passed separately considering pleadings and evidence in each case. 7.2 Present order relates to the appellant Sri Anup Singh in Customs Appeal No C/15 of 2008. COMMON MATERIAL FACTS AND EVIDENCE
8. ?Apart from the aforesaid facts on record, certain material facts and evidence which are common to all the cases of trader appellants are:
(A) That the quantity of silk textiles mentioned in column B of Table 14 above were consumer goods imported in commercial quantity on different dates as mention in column A of the said Table. Those were restricted item falling under Customs Tariff Heading 5007.20 requiring import licence as per ITC (HS) Classification 1997-2002 for import. Import of those goods into India without any import licence was not permitted. But were imported on the dates mentioned in column A of that Table in violation of prohibitions/restrictions imposed thereon under para 5.6 of the Export Import Policy 1997-2002 read with section 3(2) and (3) and 11(1) of the Foreign Trade (Development and Regulation) Act, 1992 as well as Rule 14 of the Foreign Trade (Regulation) Rules, 1993. Accordingly said silk textiles were liable to confiscation under section 111(d) of the Customs Act, 1962.
(B) Illegally imported quantities of Chinese silk into India as appearing in column B of the Table - 14 were not mentioned in the passenger manifest of the Airlines. Value of such quantity of goods were to the extent depicted in column C of Table-14 above and such imports escaped levy of customs duty to the extent indicated in column D of the said Table, in collusion, wilful mis-statement and suppression of facts.
(C) Traders in column G of the Table-14 were alleged to be concerned with carrying, removing, transporting, keeping of the aforesaid smuggled goods and were involved in sale thereof which they knew and had reasons to believe were liable to confiscation under section 111 of the Customs Act, 1962 by their repeated dealings in 22 occasions. Accordingly they made themselves liable to penalty under section 112 of the Customs Act, 1962.
(D) From the evidence available on record, ld. Adjudicating Authority was of the view that Abdul Qahar, an Afghan National, who used to buy silk textiles from the trader appellants and exporting the same to Afghanistan through M/s Kultar Exports testified in his statement dated 30.11.2000 and 29.01.2001 proved his acquaintance with Ms. Olga (Ref: Para - 12 of SCN at page -2 and Para -6 at page 29 thereof) and came to know from Nitish Kedia @Bunty that Ms. Olga was doing cloth business and if he works for her, he shall make profit. Appellant traders were named as dealers of smuggled Chinese textiles. He further stated that Ms. Olga gave her mobile number to him to contact. He was informed by her to wait at a particular place and time in Ajmer Gate and goods were delivered to him for ultimate delivery to the shop keepers. He was ensuring the shop keepers to talk to Ms. Olga confirming reaching of the offending goods at their shop and all that he was doing was for remuneration. Goods brought by Ms. Olga were duly packed as per orders of Chandni Chowk traders for delivery to them without any bill or voucher since those were pre ordered and delivered as per orders placed before arrival of such goods. It was further stated by him that every time 7 to 12 bundles of china silk were brought by Ms. Olga and he was cautioned by her for safe delivery since those goods were neither supported by any evidence of proper import nor duty paid . He knew the trader to whom Ms. Olga was supplying the illicitly imported China Silk and admitted the fact of knowing Mamoor Khan. Testimony of Abdul Qahar showed that he was one of the conduits and delivering the contraband silk textiles brought by Ms. Olga K and her group to the appellant traders, which made them aware of the illegal imports made by Ms. Olga K and her party.
(E) Statement of Dil Agha recorded on 23.05.2001 (Ref: Para 159 at page 107 of SCN) showed that he was acquainted with Mamoor Khan and his associates and influenced by him to join in his team for a remuneration to bring the illicitly imported goods by Ms. Olga and her party from Air port to Samir guest house. He stated that Sadullah and Zanjeer Khan assisted Mamor Khan for his mission. He was given a mobile phone to coordinate and brought out the material fact of delivery of the smuggled gods to the trader appellants. By his further statement dated 11.07.2001 he stated that Mamoor Khan introduced him to various shop keepers of Chandni Chowk to whom the illicitly imported China Silk were supplied. He named the traders who were: Arun, Gopal, Bunty (Nitish Kedia), Sanjeev Jain and Mahender Jain, Jasbir Textiles and Khem Singh. He along with Wali used to supply the offending goods to the said traders and wali knew all the shop keepers well and also had familiarity with the charter of the goods. He also brought out nexus of Wali with Mamoor Khan. Dil Agha on 12.07.2001(Ref: Para 162 at page 112-113 of SCN) further stated that certain Customs Officers were bribed for clearance of the smuggled textiles. Again 23.05.2001 (Ref: Para 163 at page 114 117 of SCN) he confirmed involvement of certain Customs Officers in the smuggling racket. For the offence committed by him, he was produced before Metropolitan Magistrate, Delhi on 16.07.2001.
(F) Statement recorded from Waliullah on 19.05.2001 before Metropolitan Magistrate u/s 164 of Cr. P.C in State (CBI) V. Olga Kozireva and Others in RC No. 5/2011 revealed that he worked for Mamoor Khan and Mamoor Khan used to be in contact with many shop keepers i.e. Nitish Kedia @ Bunty, Gopal, Khem Singh, Jasbir Singh Nawal and Sanjeev Jain. These persons come and pack their mal (offending goods) and under instruction of Mamoor Khan, those goods were delivered at the place of shop keepers. Mamoor Khan used to go for collection of payments from them and give the collected amount to Wali to make that reachable at the hotel where Mamoor Khan use to stay.
(G) Sri Anudeep Singh one of the trader appellants had admitted in his statement dated 8.12.2000 that he purchased imported silk fabrics without bill from one Afghan, who introduced himself as Khan and that Khan used to say that he had bought that from an importer from rejected lot. In his statement dated 01.06.2001 he stated that he knew Mamoor Khan as well as Dil Agha but denied dealing with Dil Agha.
(H) Sri Gopal Prasad Dokania a trader in his statement dated 5th Jan., 2001 admitted that he knew Mamoor Khan nad Dil Agha and their deal in Cina Silk and that person purchased silk fabrics from him. He confirmed that consideration of such deal was at times settled in exchange of China Silk thans. He admitted that he bought silk than from Mamoor Khan and Dil Agha in one or two occasions and those were of foreign origin.
(I) Sri Nitish Kedia in his statement recorded on 15th Jan 2001 admitted the fact of knowing Mamoor Khan and his deal in China silk but he denied that he had purchased silk fabrics from Mamoor Khan. A diary seized from him disclosed contact detail of Abdul Qahar (Ref: Para 16 at Page 4-5 of SCN).
(J) Sri Anup Singh in his statement dated 1st June, 2001 admitted the fact of knowing Mamoor Khan and Dil Agha but stated that he did not deal with him. So also he denied to disclose the identity of two mobile numbers contacted by him (Ref: Para 57 of SCN at Page 28-29 of SCN).
(K) Sri Mahender Jain in his statements dated 09th Jan, 2001, 91.01.2001 and 1st Frb, 2001 admitted the fact of knowing Mamoor Khan and their deal in China Silk but denied dealing with them. He brought out nexus of telephonic contacts from his residence and shop telephones to the mobile numbers of the smuggling racket without disclosing identity thereof. He stated use of his shops address by his nephew Sanjeev Jain and Sndeep Jain. He also disclosed dealing of China Silk by Mamoor Khan.
(L) Sri Arun Dokania in his statement dated 05.01.2001 identified Mamoor Khan but denied to have dealt with China Silk with him. He failed to explain reason of frequent contacts by telephone with the mobile of Mamoor Khan.
(M) Telephonic contacts records as appeared in the Table No. 10 of the impugned order at page 123 and show cause notice at page 131 thereof threw light that the appellant traders were regularly in touch with Mamoor Khan and Dil Agha on their Mobile Phones. The number of calls exchanged indeed were very large and ran into hundred in number. Trader appellants did not deny these telephonic conversations and they indeed in many cases accepted dealing with Khan for purchase of silk textiles.
(N) According to Table No. 11 of the impugned order (at page 124 thereof) and show cause notice (at page 132 to 148 thereof) trader appellants were in touch with Mamoor Khan, Dil Agha and passengers of CIS country before the date of arrival of heavy baggage of Chinese textiles. For examples, when Olga K. and Shgakista K. arrived By HY-151 at 12:15 PM on 27th Feb.,2000, 7 conversations took place between Sanjeev Jain and Mamoor Khan between 11.06 AM and 5.43 PM. Mamoor Khan also spoke to Anoop and Khem Singh at 11.30 AM. On the same date, Mamoor Khan and Nitish Kedia spoke to each other twice whereas Mahender Jain and Mamoor Khan spoke thrice. Again Mamoor Khan also spoke to Anudeep Singh at least once on this day. The next visit of Shahlo A was on 10th April, 2000 at 9.19 AM and on the same date the records of telephonic conversation between Mamoor Khan on one hand and Mahender Jain, Anudeep Singh, Gopal Kokania and Nitish Kedia were well proved from telephone call record. The passengers listed in column E of Table-14 came to India with heavy baggage to IGI Airport at Delhi. Before and after their arrival, frequent exchange of calls took place between Mamoor Khan and Dil Agha on one hand and all the trader appellants on the other. Such circumstantial evidence existed showing knowledge of the illicitly imported smuggled good by the trader appellants.
SUBMISSIONS OF APPELLANT 9.1 It was argued by Sri Bharadwaj, learned counsel on behalf of Sri Anup Singh, the trader appellant that statement dated 9.1.2001 (Ref: Page 526 530 of appeal folder)was recorded from this appellant and there was no self-incriminating admission on the part of the Appellant on the facts of imports and/or sale and purchase of Chinese Silk Fabric and that the Appellant had no role whatsoever in the alleged transactions (Ref: Para 57 at 45 of the appeal folder). The appellant never had involved knowingly in purchasing, selling or otherwise dealing with Chinese silk textiles as mentioned in the SCN. But the department simply relied on statements of following persons to implicate the appellant without any cogent evidence:
i) Statement of Sh. Dil Agha dated 11-07-2001
ii) Statement of Sh. Dil Agha dated 16-07-2001 u/s 164 Cr.P.C.
iii) Statement of Walliullah dated 19-05-01, u/s 164 Cr. P.C. before M.M.
iv) Statement of Abdul Qahar dated 30-11-2000.
9.2 It was further submitted by ld. Counsel that reading of the statements of above persons show that none of them directly named the appellant for which the statements made by the person who were charged in the case cannot be taken as corroboration. Statements can be corroborated from independent facts and statements. In any event, statements of above persons are not reliable till veracity and genuineness thereof is tested by cross examination since all the above persons have given contradictory versions. 9.3 Abdul Qahar had retracted his statement. Even otherwise, his statement is full of contradictions. Many persons named by him could not be found. Some persons named by Dil Agha could not be traced and it shows that his statements are not trustworthy. Why the persons who used to allegedly deliver the cloth to shopkeepers, are not made witness, is also not clear. Why these persons were not confronted with the shopkeepers is also not made clear. 9.4 Whole statement of Walliullah and his role is suspicious and he is out of ambit of investigation for the reasons best to known to investigating authority, which spells a doubt over the genuineness of whole investigation. 9.5 The impugned adjudication order is arbitrary, unjust and patently illegal in as much as the order has been passed in contravention of the established principles of natural justice in as much as the appellant has been denied an opportunity of being heard as envisaged in Section 124 of the Customs Act, 1962 in as much as the appellant has been denied permission to cross examine the witnesses so as to enable him to establish his innocence. As a result, the appellant has been denied an opportunity of being heard and to state and/or explain his case. Consequently, the impugned order passed by the learned Adjudicating Officer imposing personal penalty on the appellant is null and void and deserves to be quashed. 9.6 The Customs Authorities have failed to establish any specific link with the imported silk fabrics and the appellant. Telephonic conversations are not on record. Therefore fastening liability is undesirable. Conversations took place for the purpose of selling of Indian goods by the appellant to these persons rather than purchasing of imported silk fabric as alleged in the SCN. In any event even if the appellant made telephonic calls to certain persons or he knew them who were allegedly dealing in silk fabrics, it is not a crime. There were many more persons who were named by the same persons who named the appellant, but they were not named in the SCN notice, for the reasons best known to the authorities. 9.7 There was no direct evidence at all against the appellant. Appellant refutes entire case against him as that is based on assumptions, presumptions, suspicion and circumstantial evidence, conjectures and surmises without any legal footing. Therefore, the proceedings be dropped against the appellant, in the interest of justice. 9.8. Bare glance to the statement of the witnesses recorded under Section 108 Customs Act, 1962 and the entire material brought on record would show that the appellant had no knowledge that the textile allegedly brought into India was either smuggled or brought without payment of requisite Customs duty etc. or in contravention of any prohibition or restriction. Not only that, it is interesting to note that while recoding the statement of the appellant, he was not asked even a single question as to whether or not he knew that the textile allegedly brought by Mrs. Olga etc. was either smuggled into India or was brought into India in contravention of any other law. The essential ingredient of necessary knowledge of smuggled nature of the goods or the essential mens rea on the part of the appellant is clearly missing on the face of it. As a result, the appellant cannot be said to be liable for any offence under the Customs Act and the impugned order is absolutely unwarranted and shows total non application of mind on the part of the Adjudicating authority while passing that order. 9.9 The Honble Supreme Court in the case of Gian Chand Vs. State of Punjab reported as AIR 1962 SC 496 has held that under the Customs Law two matters had to be established before a person could be held guilty of that offence. Firstly, that the goods were imported into the country either without payment of duty or in contravention of any restriction or prohibition imposed by the statute and secondly, that the accused knowing that the goods were of that character did any act of omission or commission. This decision had stood the test of time and has been followed in a catena of decisions delivered by Honble Supreme Court and the various High Courts in the Country. As a result, the appellant cannot be said to be liable for any offence under the Customs Act and the impugned adjudication order is absolutely unwarranted, contrary to law and shows total non application of mind on the part of the Adjudicating authority while passing the said order. 9.10 The appellant has never been knowingly involved in purchasing, selling or otherwise dealing with Chinese silk textiles, mentioned in column B imported on dates mentioned in column A of Table 14 of the Show Cause notice which were liable to be confiscated u/s 111 of Customs Act 1962. Hence, no penalty u/s 112(b) of Customs Act 1962 can be imposed on the appellant. SUBMISSIONS OF REVENUE 10.1 On Behalf of Revenue it was submitted that a diary seized in the course of investigation disclosed telephone numbers, name and address of Abdul Qahar who brought the appellant to the purview of investigation. The appellant identified photo and mobile number of Mamoor Khan as well as Dil Agha. Acquaintance of that appellant with Mamoor Khan was from April 2000 when Mamoor Khan and Dil Agha visited shop of the appellant as well as in contact with him by phone. 10.2 According to Revenue Abdul Qahar in his statement stated that he knows Ms. Olga bringing the Chinese Silk from abroad. He was introduced by the appellant trader to Ms. Olga. Accordingly, the goods smuggled by Ms. Olgas were delivered to all the appellant traders who were placing orders with Mamoor Khan. Wherever Ms. Olga was directing to deliver goods, Abdul Qahar was doing so. All these transactions were no where accounted for by trader appellant since Ms. Olga was cautioning Abdul Qahar to be careful with the goods for delivery to appellant since those goods were smuggled and had not suffered Customs Duty. All these aspects come from para 12 of the adjudication order. 10.3 Statement of Wali Ullha extracted in para 156 of the Order-in-Original exhibits that after the Chinese Silk were brought to Samir Guest House from Airport, Mamoor Khan used to contract the appellant who come and pack up the goods and Walli Ullha used to deliver the goods at their shop under instruction of Mamoor Khan. 10.4 It was further submitted by Revenue that Mamoor Khan was collecting sale proceed from the shop-keepers. It was an established fact that Abdul Quyam who was Manager of Samir Guest House stated in the statement recorded from him that the goods brought by the party of Ms. Olga were sold to nearby traders (reference para 160 of O-I-O). Mamoor Khan introduced Dil Agha to many shop-keepers of Chandini Chowk who were buyers of Chinese Silk illicitly imported. Dil Agha in his statement specifically named Gopal Dokania to be the remembered buyer of the goods. It is also fact on record from para 161 (e) of O-I-O that Walli Ullha used to supply the goods to the traders appellants and all the traders were in close contact with the conduits to buy the goods on payment of cash with utter disregard to law and not insisting evidence showing payment of customs duty on such goods. 10.5 It was further submission of Revenue that before and after the offending goods arrived in India calls were exchanged (Ref: Table 10 and 11 of show cause notice) between the conduits who were supplier of the goods and the trader appellants. When the smuggled goods came to India ultimate disposal thereof was made by the appellant traders proving that they had conscious knowledge about the origin of the goods, value thereof as well as non duty paid character of the same. So also when investigated, telephonic contacts of the appellant with smuggling racket proved his ill will to make ill-gain by such contacts since no one shall merely contact without any gain or interest and concur with him. The manner how the goods were reaching to the appellant trader motive of the deal and unaccounted purchase as well as sale of the offending goods proved that transactions were made clandestinely. 10.6 It was further submission of Revenue that echoing evidence both oral and documentary as well circumstantial self speak against appellant who dealt smuggled goods that came to India without payment of duty and confiscable. Appropriate penalty was therefore levied in adjudication and need not be interfered. FINDING AND CONCLUSION OF TRIBUNAL
11. Herd both sides and perused the record.
12.1 Revenue brought that Anup Singh and his Khem Singh were Afghan Nationals and they carried out business in the name and style of Amar Emporium, 1074, Poddar Building, Katra Naya Chandni Chowk. Statement recorded from Wali Ullah on 19.05.2001 before Metropolitan Magistrate Delhi revealed that Mamoor Khan used to be in contact by phone with many shop-keepers Nitish Kedia @ Bunty, Gopal, Khem Singh, Jasbir Singh, Naval and Sanjeev Jain. Such persons used to come to the guest house where smuggled goods transited after import into India for movement to their place of business. Mamoor Khan used to tell Wali Ulla to deliver the goods to those shopkeepers in their shops. Appellant trader was also in contact with Mamoor Khan for acquiring the smuggled textiles and disposal of the same. Mamoor Khan used to collect the payments (Ref. page 106 of show cause notice) from the trader appellants which remained un-rebutted leading evidence to the contrary. 12.2 Dil Agha in his statement on 23.05.2001 (Ref. page 107-110 of SCN) recorded u/s 108 of Customs Act, 1962 stated that Mamoor Khan used to deal with white coloured china silk brought from abroad which were transported to the guest house for delivery to nearby traders (Ref. page 110 of show cause notice). In his statement dated 11.07.2001 (Ref. page 110 of show cause notice), he stated that Mamoor Khan introduced him to various shop-keepers of Chandni Chowk to whom imported textiles were to be delivered. Mamoor Khan used to supply the goods to the shopkeepers who were: Arun & Gopal, Bunty, Sanjeev Jain & Mahinder Jain, Jasbir Textiles and Khem Singh. Dil Agha demonstrated familiarity of Mamoor Khan with the trader appellant and their deal in smuggled goods came to light. Investigation at page 120 of the show cause notice brought out that Abdul Qahar in his statement connected the smuggled goods brought by Ms. Olga and her party with the smuggler as well as conduits of smuggling and the shop-keepers. Inextricable link was Mamoor Khan in the entire ill design (Ref: Para 167 of show cause notice). Also in Para 168 of show cause notice investigation brought out that the offending goods delivered by Mamoor Khan were illicitly imported into India by Ms. Olga as per prior orders of the shopkeepers so that the smuggled goods shall disappear soon after arrival in India. Since those were non duty paid goods. Statement of Abdul Qahar remained un-assailed by the appellant. Submission of the appellant that he had not dealt with the smuggled goods became unbelievable. Appellants familiarity with Abdul Quhar, Mamoor Khan and Dil Agha was well established and he was not stranger to the acquisition and disposal of the smuggled good. Telephone contacts appearing at Table No.10 & 11 of the show cause notice proved malafide intention of the appellant having concern and intrest in the smuggled goods being in touch with racketeers to make ill gain. He could not detach himself from the charge of acquisition, possession and disposal of the smuggled goods. 12.3 Revenue proved acquaintance, contacts, conscious knowledge of the appellant including the nature and character of the offending goods dealt by him. Mamoor Khan, Dil Agha and Abdul Qahar as well as Wali who were member of the smuggling racket exposed the appellant to broad day light as to his deal with contraband goods which came to India by the racketeers. He no more became stranger to the deal. He failed to prove that he had no hand in glove with the racketeers in the deal and was not an ignorant. No one would prefer to be in touch with another without any object within his special knowledge and he has interest or concern with such object. Accordingly plea of not naming the appellant by members of the racket is immaterial. 12.4 Statement of Wali before Metropolitan Magistrate on 19.05.2001 was credible. The appellant being a trader was susceptible to deal with the unaccounted goods for unlawful gain without insisting duty payment evidence of such goods. Therefore it is not possible to appreciate innocence of the appellant which otherwise shall be bonus for infraction of law. The appellant associated himself with the clandestine deal. Statement recorded from the conduits of racket u/s 108 of the Act was valuable piece of evidence not being recorded by a Police Officer and not under threat or coercion was cogent and credible. 12.5 Revenue led cogent evidence against the deals of the appellant which remained un-rebutted except technical pleas raised on flimsy grounds. Evidence gathered by Revenue were not more piece of papers but well founded and stand to reason. Even statement recorded from Dil Agha who was produced before Metropolitan Magistrate on 16.07.2001 self speak appellants active role in abetment of disposal of the smuggled goods knowing character thereof. He could not go out of the mess of smuggling racket having frequent telephonic contacts with them before and after arrival of smuggled goods into India. His proximity to the offence was so nearer he could not remain far from the deal. He failed to state the reason why such contacts were made by him and why racketeer contacted him by phone. 12.6 It would be appreciated that no would prefer to make unwanted calls by his mobile to a stranger unless he knows the person to whom he called frequently shall fulfill his object. There was nothing presumption nor suspicion against the appellant by learned Adjudicating Authority to deal him under law. The appellant had thorough knowledge of the identity of the persons with whom he dealt and contacted him as per Table 10 and 11 of the Adjudication order. He was quite aware of the smuggling character of the goods supplied to him by Mamoor Khan. The appellant and his brother were in conversation with Mamoor Khan 259 times of call made and received from April 2000 till 28.8.2000. But he refused to identify the mobile numbers. 12.7 It is not necessary that investigation should ask the appellant leading question to defeat object of the investigation meant to bring the offender to the fold of law. What that was relevant for the investigation were put to discover truth and make the case of investigation successful. Appellants plea that other traders were not brought to the charge under law has no basis in view of the law laid down by Honble High Court of Delhi in the case of Rajiv Kumar Sharma V. CCe, Adjudication 2012 (276) ELT 321 (DEL) holding that negative equality cannot be pleaded as a defence to any action which is in accord with law and justified. It was also held in that judgment that when the reason why telephonic conversation took place remained unexplained that does establish and corroborate a close relationship between the parties to the calls. The appellant failed to lead any cogent reason why calls were made as appearing in Table 10 and 11 of the impugned orders. 12.8 The term concerned appearing in section112 of the Act has been explained by Apex Court in the case of Sachidananda Banerji V. Sitaram Agarwala 1999 (110) ELT 292 (SC) laying down the law that this term is to be given wide interpretation and even if a person has no physical connection with the smuggled goods, he is liable if he is interested or consciously takes any steps to promote smuggling. In the present case the appellant promoted smuggling acquiring and selling the smuggled goods consciously knowing origin of the goods and the oblique motive. It has also been laid down in the case of Bhagwan Swarup and Others V. State of Maharashtra - AIR 1965 SC 682 that an agreement between the conspirator need not be directly provide the offence of conspiration which can be established by either direct or circumstantial evidence. There were reasonable grounds in the case of investigation to appreciate malafide of the appellant being in association with the smuggling racket and being familiar with the offending goods. As has been held in the case of Radha Kishan Bhatia V. UOI 2004 (178) ELT 8 (SC) that it is immaterial what meaning be attributed to the word concerned. It can have the meaning interested and it may also have the meaning involved or engaged or mixed up. 12.9 Appellants interest in the smuggled goods could not be ruled out when credible statements of Abdul Qahar, Wali and Dil Agha recorded by investigation discovered truth of the deals. Their statements remained un-rebutted unwarranting their cross examination following the ratio laid down in the case of Surjeet Singh Chhabra V. UOI - 1997 (89) ELT 646 (SC). Similarly as has been held in the case of K. T. M. S. Mohammed and Others V. UOI 1992 SCC (3) 178 that merely because a statement is retracted that cannot be said to be involuntary or unlawfully extracted. It is for the maker thereof who alleges inducement, threat and promise etc to establish that such improper means has been adapted to. 12.10 Appellant lost his right to gain from the plea of retraction of statement by Abdul Qahar when truth of ill deal was established by investigation. It has been held in the case of Naresh Sukhwani V. UOI 1996 (83) ELT 258 (SC) that the statement of a person in the status of co-accused obtained u/s 108 of the Customs Act, 1962 forms material evidence. When Department has appraised the appellant of the results of investigation as also the evidence on record which militates against the appellant, burden of proof shifted to the appellant from investigation which does not get discharged if the appellant is not able to meet the inference arising therefrom following the ratio laid down in the case of Kanungo & Company V. CC 1983 (13) ELT 1486 (SC). Similarly investigation was not required to prove its case with mathematical precision or accuracy and need not be required to prove every link in the chain as has been held in the case of CC. V. Bhoormull AIR 1974 Sc 859. Accordingly failure of the appellant to come out with clean hands implicated him to charges rightly leveled against him in adjudication. 12.11 Penalty against the appellant was imposed under section 112(b) of the Act. If any person acquires possession of or in any way is concerned in carrying, removing, depositing, harboring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111 of the Act, he is charged by that section. In the present case conscious knowledge of the trader appellant about character and nature of the goods illicitly imported and his deal theron was established by the seller racketeers. His ill will and deal satisfied essential ingredients of section 112 (b) of the Act. The appellant was aware of the origin and destination of goods demonstrating his intimacy with the racketeers by telephone contacts before and after arrival of the smuggled goods in India which come to record from Table 10 and 11 of show cause notice. Positive act of the appellant making conscious breach of law brought him to penal consequence of law. Perfect proof with mathematical precision in this imperfect world seldom exists. Preponderance of probability was in favor of Revenue to hold the appellant guilty. 12.12 Except raising technical pleas, the appellant did not deny conscious dealing of the offending goods by him. In substance, offending goods found its destination at the place of business of the appellant. Accordingly when the appellant failed to go out of the scope of Section 112 (b) of the Act, penalty was bound to be suffered. It is only the quantum thereof needs determination on the gravity of the matter since value of goods dealt by the appellant was not quantified by learned Adjudicating Authority. Considering that the appellant was involved in dealing with the smuggled goods came to in India on 22 occasions as per column A of Table 14, in the fitness of the circumstances of the case, levy of penalty of Rs. 10,000/- for each such occasion may not be improper. Accordingly penalty levied is reduced to Rs. 2,20,000/- instead of a compounding levy of penalty of Rs. 5,00,000/- made in adjudication. Thus appeal is partly allowed.
(Pronounced in the open Court on ________) (RAKESH KUMAR) (D.N. PANDA) TECHNICAL MEMBER JUDICIAL MEMBER PER RAKESH KUMAR:
13. I have gone through the order prepared by my Learned Brother. Since I do not agree with his conclusion, I am recording a separate order. Though my learned brother has prepared seven separate orders in respect of the appeals filed by the Appellants namely:-Sh. Mahender Jain, Sh. Sanjeev Jain, Sh. Anudeep Singh, Sh. Gopal Dokania, Sh. Arun Dokania, Sh, Anup Singh and Sh. Nitesh Kumar Kedia, since the fact of these seven appeals are common and the evidence relied upon by the Department also more or less common, I am recording a common order, though separate findings would be given in respect of each appellant.
14. Before the coming to the issues involved in these appeals, it would be worthwhile having a brief look at the facts of this case. 14.1 The appellants in this case are the textile dealers having shops in Delhi. All these appeals arise out of the order-in-original No8/GS/CC/ NCH/2007 dtd.01.10.07, passed by the Commissioner of Customs (Adjudication) New Delhi, by which the Commissioner, besides the imposition of penalties of these seven appellants under section 112(b) of Custom Act, 1962, has confirmed duty demands totalling Rs.1,75,78,322/- against some foreign passengers and has imposed of penalties of different amount on the passengers and other persons involved in this case. 14.2 There are four categories of persons involved in this case.
14.2.1 The first category of persons involved in this case are the Uzbek Nationals namely MS Olga Kozirava, MS Shahlo, MS Isamu, MS Nazira and MS Merkulova, M/s. Shakusta, MS Valichko and MS Mitrushova, who during the period from Dec98 to 21stJan 2000 are alleged to have smuggled into India without payment of duty, huge quantity of Chinese Silk fabrics. Total duty demand of Rs. 1,75,78,322/- under proviso to Section 28(1) to the Custom Act, 1962 has been confirmed against these passengers and besides this, penalty has been imposed on them under section 114A and 112(a). The investigation into this case was started when on 28.08.2000, MS Olga Kozireva was intercepted with 81160 Yards of Chinese Silk packed in 27 bags, totally weighing 2200 Kgs. and totally valued at Rs. 155.82 lakhs (market value), which she was trying take out through green channel without declaring the same. Sh. Dil Agha, an associate of Sh. Mamoor Khan, who was waiting outside the exit gate for receiving the smuggled goods, were also apprehended at that time. On inquiry with MS Olga, Sh. Dil Agha, the manager of Samir Guest House, where Sh. Mamoor Khan/Sh.Dil Agha had a room and the manager of Hotel Yes Please, where MS Olga used to stay, involvement of other persons was revealed. 14.2.2 The Second category of persons involved in this case are the persons involved in this racket for whom the above mentioned Uzbek lady passengers were bringing the Chinese Silk fabrics. The main person in this category is Sh. Mamoor Khan, an Afghan National. The other persons Sh. Dil Agha, Sh. Sanak, Sh. Sadullah, Sh. Jagir Khan and Sh. Walliullah are alleged to be his associates working for him. There is one more person Sh. Abdul Qahar known to Mamoor Khan who is alleged to have purchased smuggled fabrics directly from MS Olga Kozireva. Since July 2000, Sh.Dil Agha was organizing illicit clearance of Chinese Silk fabrics brought by the above mentioned passengers, as Sh. Mamoor Khan had gone for Afghanistan sometime in July.2000. 14.2.3 The Third category of persons are the officers of the Customs Department posted at Delhi Air Port and Air Lines employees, who are alleged to be hand in glove with Sh. Mamoor Khan and Dil Agha and who are alleged to have facilitated the smuggling of Chinese Silk fabrics brought by the above mentioned lady passengers. 14.2.4 In the impugned order, the Commissioner has imposed penalty on the persons in the second and third category (except for Sh. Abdul Qahar) under section 112(a) of the Custom Act, 1962 as the persons who abetted the smuggling by the passengers mentioned above. Penalty on Sh. Abdul Qahar has been imposed under section 112(b) as he is alleged to have acquired smuggled fabrics from MS Olga for delivery to various dealers. 14.2.5 The fourth category of persons are the seven appellants in this case, who are the dealers, dealing in textiles from their shops located in Delhi. Sh. Sanjeev Jain is a relative of Mahender Jain who has a shop at 5513, Moti Katra, Nai Sadak, Delhi. Anudeep Singh is the Proprietor of M/s. Jasbir Textiles, having shop in Chandni Chowk. Sh. Gopal Dokania is Proprietor of M/s. Anjali Feb., having shop at Nai Sadak, Chandni Chowk, Delhi, and Sh. Arun Dokania is a relative of Sh. Gopal Dokania. Sh. Arun is proprietor of M/s. Amar Emporium in Chandni Chowk Area. Sh. Nitesh Kumar Kedia (known as Bunty) has a shop M/s. Durga Creation in Chandni Chowk. All these dealers are alleged to have purchased smuggled textiles from Sh. Mamoor Khan/ Sh.Dil Agha and Sh. Abdul Qahar knowing that the goods purchased by them were of smuggled origin and accordingly the Commissioner has imposed penalty of Rs. 5,00,000/- on each of these persons u/s 112(b) of Custom Act, 1962. While the allegations of smuggling and its abetment against the passengers, Sh. Mamoor Khan, Sh. Dil Agha, Sh. Zanjeer Khan, Sh. Sadullah etc. and the Custom Officials are date wise and in all, twenty FOUR incidents of smuggling of Chinese Silk fabrics are alleged during the period from Dec.98 to 21stth Aug.2000, and in respect of each incident of smuggling, the quantity and value of the fabrics alleged to have been smuggled is also mentioned, the allegation of purchasing smuggled fabrics against the seven appellants are general allegation, without mentioning the dates on which the fabrics are alleged to have been purchased and the quantity and the value of the fabrics alleged to have been purchased by them on each occasion.
15. The appeals filed by the seven appellants in this group of appeals were first decided by the Tribunal Vide Final Order No.C/50-84/2011 dtd. 25.01.2011 by which this Tribunal upheld the imposition of penalty on them under section 112(b) of the Custom Act, 1963. All the appellants filed appeals to Honble Delhi High Court against the Tribunals Order. The main question raised before the Honble High Court was as to whether the Tribunal had dealt with the contentions raised by the appellants before dismissing their appeals. Honble Delhi High Court vide Common Order dtd. 22.04.2012 set aside the Tribunals Final Order dtd. 25.01.2011 with regard to these seven appellants and remanded the matter back to the Tribunal for de-novo consideration, holding that the contentions raised by the appellants were not considered by the Tribunal and as such the order passed by the Tribunal with regard to the appeals filed by these appellants is virtually a non speaking order and does not meet the requirements of law. In this regard the observations of Honble high Court in Para 8, 9 & 10 of the judgment are reproduced below:-
8. Paragraph 27 is the only paragraph which specifically deals with and refers to the allegations and records the findings of the tribunal both on facts and law. Second sentence in the said paragraph states that during the course of hearing before the tribunal, no evidence was led by the seven appellant traders to demonstrate that they were strangers to the proceedings. Learned counsel of the appellants has accepted and admitted that they were not strangers to the proceedings as they had dealt with and sold Chinese Silk. The seven appellants also admit and accept that they knew Mamoor Khan, Dil Agha, Abdul Qahar and Dilbar. However, their contention is that they did not know that the aforesaid persons were dealing with smuggled goods or were dealing with goods, which had been clandestinely imported into India without payment of customs duty or by mis-declaration. The contention of the appellants, which is strenuously urged, therefore, is that penalty under the said Section can be imposed only if the appellant, traders had knowledge or reason to believe that the goods in question i.e., Chinese Silk, was liable to be confiscated. The next sentence in paragraph 27 refers to the intimacy of the appellants with the smuggling racket and it is observed that this proves their dealing with the smuggled goods. The aforesaid sentence does not carry forward and is merely a statement or an inference, which does not discuss the material and evidence against the appellants. The tribunal thereafter has mentioned and recorded that the statements made by the seven appellants as well as the smuggling racket disclose their identity and destination of the offending goods. The statements of the seven appellants have not been referred and or specifically examined in paragraph 27 or any other portion of the impugned order.
9. There is no other discussion in the impugned order relating to defense or the contention of the seven appellants. In this regard, we may mention that in paragraph 17, the tribunal has recorded that both sides were heard extensively on various occasions and their contention/submissions were recorded in the open court on the dates of hearings and copy of the same were provided to the parties. The contentions raised by the seven appellants as recorded by the tribunal at the time of hearing have been enclosed as annexures to the present appeals. The examination and scrutiny of the said annexures would reveal that hearings had taken place on 27th August, 2009 and various contentions and issues were raised by the appellants, e.g., in the case of Mahender Jain it was submitted that his statement under section 108 of the Act does not bring out or support of the Revenues allegation; does not show his involvement in the smuggled goods; these was no presumption that Mahender Jain knew or had reason to believe that he was dealing with smuggled goods or goods which were liable to be forfeited etc. Reference was also made to the order in original and it was contended that it does not show conscious involvement of the said appellant. The statement of Abdul Qahar was referred and it was submitted that the said statement also does not show his involvement. Even in the statement under section 164 of the Code of Criminal Procedure, Abdul Qahar had not implicated the said appellant. In the statement of Wali recorded under section164 Cr. P.C., there was no whisper of the nexus of the said appellant with the offense alleged. Reference was made to the first statement of Dil Agha wherein no allegation was against Mahender Jain but subsequently Dil Agha had mentioned Mahender Jains name. It was submitted that in the statement of Mahender Singh under section 108, no question was put to him whether he was involved or had dealt with Dil Agha. Our attention is also drawn to separate and different contentions raised in the case of Sumeet Kumar, Anudeep Singh, Gopal Dokania, Nitesh Kumar Kedia, Sanjeev Jain and Arun Dokania. It is pointed out that in the case of Sanjeev Jain; no statement was recorded under section 108 of the Act.
10. We have examined the contentions and issues which were raised by the appellants and have been noticed by the tribunal itself in the record of proceedings. We have also examined the written submissions which were filed by the appellants before the tribunal and have been placed on record. We do not think the tribunal was right in disposing of the appeal by recording the reasons given in paragraph 27, which according to us do not specifically deal and examine the contentions and issues raised. The order is virtually a non-speaking order and does not meet the requirements of law, what is mandated and required to be discussed and examined by the first appellate authority which is also the final fact finding authority. The contentions and issues raised by the appellants on facts and law have to be specifically examined, dealt with and considered. A speaking and reasoned order is required to be passed after referring to the evidence and material relied upon by the parties. We find that the appellate order passed by the tribunal in the present case does not meet the prescribed and legal parameters. Accordingly, we answer the question of law mentioned above in negative i.e., in favour of the appellants and against the Revenue. We pass an order of remit and the tribunal will re-hear the arguments and thereafter pass a reasoned and speaking order as is mandated and required in law.
16. Accordingly these appeals were heard again when Sh Shailender Bhardwaj, Advocate,learned counsel for the appellants and Sh. N. Pathak and Sh.Govind Dixit the learned departmental representatives appeared and made their submissions. Since the submissions made from both the sides, are recorded in the order prepared by my learned brother, there is no need to repeat the same in this order.
17. I have considered the submissions from both the sides and perused the records. The dispute in this case is as to whether the appellants, who are the dealers in textiles and are alleged to have purchased illicitly imported Chinese Silk fabrics, are liable for penalty under section 112(b) of Custom Act 1962.
18. Section 112 of the Custom Act, 1962 is reproduced below:-
Any person
(a) Who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(b) Who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evade on such goods or five thousand rupees, whichever is the greater
(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater;
(iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest;
(v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.
18.1 From the perusal of this section, it will be seen that for imposition of penalty on a person under section 112(b), the following conditions must be satisfied.
(i) The person must have acquired possession of or must be in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which are liable for confiscation under section 111 of Customs Act, 1962.
(ii) The person must have knowledge or have reason to believe that the goods acquired by him or dealt with by him in the manner as mentioned above, are liable for confiscation under section 111 i.e. he has knowledge or has reason to believe that any one or more of the contraventions mentioned in Clause (a) to (p) of Section 111 have been committed in respect of the imported good acquired or dealt with by him.
Thus in contrast to Section 112(a), where mere act or omission by a person, which would render the goods liable for confiscation under section 111 or abetment any of such act or omission by a person, is sufficient to attract the penalty, for imposition of penalty under section 112(b) of Custom Act, 1962, it is also necessary to prove that the person had knowledge or had reason to believe that the goods acquired or dealt with by him are liable for confiscation under section 111. 18.2 The evidence in support of penal action on the appellants under section 112(b), as relied upon by the Department is, in brief, as under:-
(a) The statement dtd. 30.11.200 of Sh. Abdul Qahar an Afghan National, wherein he has stated that he had been introduced to MS Olga Kozireva by Sh. Naresh Kedia of M/s. Durga Creations, Chandni Chowk, Delhi, that he used to receive part of the Chinese Silk fabrics cleared by MS Olga Kozireva without payment of duty, and that he used to supply MS Olgas goods to several shop keepers, a few of them, which he remembered are Durga Creations, Chandni Chowk, Delhi (Proprietor Nitesh Kumar Kedia); Jasbir Textiles, Chandni Chowk, Delhi; Prabhu Katra Market, New Delhi; Samurai Fabrics, Krishna Market, Chandni Chowk Delhi, etc.
(b) The statement dtd.19.05.2001 of Sh.Waliullah recorded before the Metropolitan Magistrate where in he stated that he was working for one Sh. Mamoor Khan, that he used to go to the Air Port with Mamoor Khan for bringing the goods brought by Uzbek lady Passengers, that the textiles brought by the passengers used to be taken to Samir Guest House, where Mamoor Khan used to stay, that Mamoor Khan to be on phone with many shop keepers -Bunty (Nitesh Kumar Kedia), Gopal, Khem Singh, Jasbir Singh and Sanjeev Jain, that these persons used to come and pack their goods and that there after Mamoor Khan used to tell him and some other labourers - Naushad, Sansar and Qayub to deliver those goods to the shops of the above mentioned persons.
(c) The statements dt. 23.05.2001 and 11.07.2001 of Sh. Dil Agha where in he stated that he was working with Sh. Mamoor Khan since about a year back, that after Mamoor Khan went to his country in July 2000, he along with Sadullah and others was organizing the illicit clearance of the Chinese Silk fabric brought by Uzbek ladies, that Sh.Mamoor Khan had introduced him to various shop keepers to whom the imported textile were to be supplied, that he remembers names of some of the shop keepers and that these were:- Arun, Gopal, Bunty(Nitesh Kedia), Sanjeev Jain, Mahender Jain, Jasbir Textiles and Khem Singh.
(d) The record of telephonic contacts of Mamoor Khan/ Dil Agha with the appellants or on around on the days when the passengers arrived with Chinese Silk. This record is as under:-
Dots Name of person whose Telephone No. interacted.
01/02.02.2000 Niktesh Kedia 27.02.2000 Anudeep Singh Nitesh Kumar Kedia Sanjeev Jain Anup/Khem Singh Mahender Jain 10.04.2000 Mahender Jain Anup/Khem Singh Arun/Gopal Dokania Nitesh Kumar Kedia 17.04.2000 Mahender Jain Anudeep Singh Arun/Gopal Dokania Nitesh Kumar Kedia Anup/Khem Singh 23.04.2000 Khem Singh Arun/Gopal Dokania Nitesh Kumar Kedia 08.05.2000 Mahender Jain Nitesh Kumar Kedia Anup/Khem Singh Arun Gopal Dokania 15.05.2000 Anudeep Singh Arun/Gopal Dokania Nitesh Kumar Kedia 22.05.2000 Arun/Gopal Dokania Mahender Jain Anup/Khem Singh 12.06.2000 Mahender Jain Arun/Gopal Dokania
19.06.2000 Anudeep Singh Nitesh Kumar Kedia Arun/Gopal Dokania Anup/Khem Singh 03/04.07.2000 Nitesh Kumar Kedia Arun/Gopal Dokania Mahender Jain 10.07.2000 Nitesh Kumar Kedia Arun/Gopal Dokania Anup/Khem Singh 17.07.2000 Mahender Jain Anudeep Singh Anup/Khem Singh Arun/Gopal Dokania 24.07.2000 Arun/Gopal Dokania Anudeep Singh Mahender Jain Anup/Khem Singh 27.07.2000 Sanjeev Jain Anup/Khem Singh 31.07.2000 Anudeep Singh Anup/Khem Singh 01.08.2000 Nitesh Kumar Kedia Anudeep Singh 11/12.08.2000 Anup Khem Singh Mahender Jain Arun/Gopal Dokania 14.08.2000 Anudeep Singh 18.08.2000 Nitesh Kumar Kedia Arun/Gopal Dokania 21.08.2000 Arun/Gopal Dokania
(e) The statement of Anup Varshney of Shree Ram Traders, Delhi, who identifying Dil Agha, stated that he had seen him meeting with his neighbor Sh. Mahender Jain at his shop.
(f) The statement dtd. 08.12.2000 of Sh. Anudeep Singh, Proprietor of M/s. Jasbir Textiles, stating that he had purchased 400 Mtrs. of Chinese Silk from one Khan who told him that he had bought it from importers.
(g) Statement of Sh. Gopal Dokania where he admitted to have known Sh. Mamoor Khan and purchased small quantity of Chinese Silk fabrics from him, under impression that the same were duty paid. 18.2.1 Of the above statements, the statements of Sh. Abdul Qahar have been retracted by him. The Commissioner on the basis of the above evidences has concluded that the appellants were purchasing the textiles smuggled by the Uzbek lady passengers with the active assistance of Sh.Mamoor Khan and his Associates and that the telephonic contacts between Sh.Mamoor Khan/Sh.Dil Agha and the appellant on or around the dates on which the passengers arrived with Chinese Silk fabrics show that the appellants were aware of smuggled nature of the textiles purchased by them.
19. The common plea of the appellants is that there is no recovery of imported Chinese Silk fabrics from the Appellants and the allegation against them is based only on the statements of Sh. Abdul Qahar, Sh. Walliullah and Sh. Dil Agha, that while the statement of Sh.Abdul Qahar has been retracted by him, the statements of Sh.Walliullah and Sh. Dil Agha are full of contradictions, that though the appellants had requested for cross examination of these persons, the same was not allowed, which has resulted in denial of natural justice, that the telephonic conversation of the appellants with Sh. Mamoor Khan/Sh.Dil Agha were for the purpose of selling of Indian goods to them rather than purchase of imported silk fabric as alleged in the Show Cause Notice, that there were many more persons named by Sh. Abdul Qahar, Sh.Waliullah and Sh.Dil Agha but no action has been taken against them, that neither the statements of Sh. Abdul Qahar, Sh. Waliullah and Sh. Dil Agha nor the other evidence like record of telephonic contacts, in any manner prove that the appellant had knowledge about the smuggling activities of Sh. Mamoor Khan/ Sh. Dil Agha, that for imposition of penalty under section 112(b), the evidence showing that the person alleged to have acquired certain imported goods or having dealt with certain imported goods, had knowledge or reason to believe that the same were liable for confiscation, is essential and in this regard there is no evidence, that in this regard, no adverse inference can be drawn from record of Appellants telephonic contacts with Sh. Mamoor Khan as the same were for sale of fabrics to them rather than purchasing anything from him, and that in case of Sanjeev Jain, no enquiry was made with him and no statement was recorded and penalty is sought to be imposed on him simply on the basis of statement of Sh. Abdul Qahar and Dil Agha. 19.1 The contention of the Department on the other hand, is that the statements of Sh. Abdul Qahar, Sh. Waliullah and Sh. Dil Agha clearly show that the silk being smuggled through Uzbek lady passengers was being sold to appellants, that the statements stand corroborated by the record of telephonic contacts between Mamoor Khan/Dil Agha and the appellants, which are on or around the dates on which the passengers bringing Chinese Silk had landed, that cross examinations of the witnesses was not required in view of Apex Courts judgment in the case of Surjeet Sing Chhabra Vs. Union of India reported in 1997 (89) ELT-646 (SC)and that the evidence on record, specially the telephonic contacts of the appellants with Sh. Mamoor Khan/Sh.Dil Agha on or around the dates on which the lady passengers from Uzbekistan landed in India shows that the Appellants were aware of the smuggling activities of Sh. Mamoor Khan/Sh. Dil Agha.
20. In this case, as discussed above, for imposition of penalty on the Appellants under section 112 (b) of the Custom Act,1962,it has to be proved that;
(a) the appellants had purchased Chinese Silk fabrics from Sh. Mamoor Khan/Sh.Dil Agha and that Chinese Silk has been illicitly imported into India without payment of duty; and
(b) the appellants had knowledge or reason to belief that the goods purchased by them had been illicitly imported into India. 20.1. For point (a) the appellant wise evidence relied upon by the Department can be summarized as under:-
(1) SH.MAHENDER JAIN & SH. SANJEEV JAIN:-
Sanjeev Jain admittedly is a relative of Mahender Jain. While Sh. Mahender Jain has been named only in the statement dtd. 11.07.2001 of Sh. Dil Agha, Sh.Sanjeev Jain has been named by Sh. Walliullah in his statement dtd.19.05.2001 and also by Dil Agha in his statement dtd.11.07.200. Sh. Anup Varshney, a neighbor of Sh. Mahender Jain, has also stated in his statement that he had seen Mamoor Khan coming to Mahender Jains Shop and meeting him. Besides this, there is record of telephonic contacts between Mamoor Khan/Dil Agha and the telephones installed at the residential premises of Mahender Jain. While Sh. Mahender Jain in his statement has denied having any dealings with Mamoor Khan/Dil Agha, he has stated that these persons used to come to his shop asking for Sh.Sanjeev Jain. But no statement of Sh. Sanjeev Jain has been recorded.
(2). SH. ANUDEEP SINGH:-
Sh. Anudeep Singh is the proprietor of M/s. Jasbir Textiles. He has been named by Sh.Dil Agha in his statement dtd.11.07.2001, Sh. Abdul Qahar in his statement dtd. 30.11.2000 and Sh.Walliullah in his statement dtd. 19.05.2001. Besides this, Sh. Anudeep Singh in his statement has admitted to have purchased 300 to 400 Mtrs. Chinese Silk from one Khan. There is also a record of telephone contact of Sh.Mamoor Khan/Sh. Dil Agha with Sh. Anudeep Singh.
(3) SH.GOPAL DOKANIA & SH. ARUN DOKANIA:-
Sh. Gopal Dokania is the proprietor of M/s. Anjali Feb., Chandni Chowk, Delhi and Sh. Arun Dokania is his relative. While both Gopal Dokania and Arun Dokania have been named by Sh.Dil Agha his statement 11.07.2001, Sh.Walliullah in his statement dtd. 19.05.2001 has named only Gopal Dokania. Besides this, there is also record of telephonic contact between Sh. Mamoor Khan/Sh. Dil Agha and Sh. Gopal Dokania /Sh. Arun Dokania.
(4). SH. ANUP SINGH:-
He is the proprietor of M/s Amar Emporium. Sh. Khem Singh was also working with him. Sh. Anup Singh has not been named either by Sh. Abdul Qahar or by Sh.Dil Agha or Sh.Walliullah. However, Khem Singh has been named in the statements of Sh.Walliullah and Sh. Dil Agha. There is also record of telephonic contact between Mamoor Khan/Sh Dil Agha and Sh. Anup Singh/Khem Singh.
(5) NITESH KUMAR KEDIA:-
He is also known as Bunty and is the proprietor of M/s. Durga Creations, Chandni Chowk. He has been named by all the three persons mentioned above in their statements and besides this, there is record of telephonic contact between Mamoor Khan/Dil Agha & Sh.Nitesh Kumar Kedia.
20.2 In my view when there is no recovery of any un-accounted imported Chinese Silk fabrics from the Appellants, merely on the basis of the statements of Sh. Abdul Qahar, Sh.Walliullah and Sh.Dil Agha, out of which the statement of Sh. Abdul Qahar has been retracted, it would not be correct to conclude that the appellants had purchased smuggled Chinese Silk from Mamoor Khan/Dil Agha, as some other persons like Naval, Prabhu, M/s. Samurai Fabrics etc.have been also named but they could not be traced and even Dil Agha in his statement mentioned above, has stated that some of the shop keepers to whom the goods smuggled by Mamoor Khan were being supplied were Arun, Gopal, Bunty, Sanjeev Jain, Mahender Jain, Anudeep Singh and Khem Singh, from which it would appear that there were some other dealers also. In fact, the commissioner in para 545 of the impugned order has given a finding that Sh. Abdul Qahar was also supplying smuggled Chinese Silk fabrics to other traders namely Sumit Print, Gupta Print, Pawan Print House, Malik Textiles, Sita Fabrics, Shine Textiles, Ashish Traders, Shamit Textiles etc. Therefore on the basis of the statements of these three persons, it can not be concluded that, the Chinese Silk fabrics smuggled by the lady passengers, mentioned above with the help of Sh. Mamoor Khan/Dil Agha and their associates were being sold only to the Appellants. Here comes the need for testing the probative value of their statements by permitting their cross examination which had been requested but was not allowed the Commissioner has not given any finding on the point as to whether the request for cross examination is acceptable and if not, why.
20.3 Apex Court in a series of judgments Arya Abhushan Bhandar Vs.Union of India reported in 2002(143) ELT 25 (SC) and M/s. Tele Star Travels Pvt. Ltd. and others reported in 2013 TIOL (17)(SC)- FEMA has held that when the statement of a person is used against another person and the cross examination of the person who had given the statement is requested by the other person (accused), the request has to be considered. In fact in the case of M/s. Tele Star Travels Pvt. Ltd. (Supra) the Apex Court has held that it is only when a deposition passes through the fire of cross examination that a court or a Statutory Authority may be able to determine its probative value and that using a deposition that is not so tested, may, therefore, amount to using the evidence which the party concerned had no opportunity to question. Same view has been taken by Honble Allahabad High Court in case of Parmarth Iron Pvt. Ltd. reported in 2010 (260) ELT-514 (All.) and also by Honble Bombay High Court in the case of Gyan Chand Sant Lal Jain Vs. Union of India, reported in 2001(136)ELT-9 (Bom.). The Apex Courts Judgment in case of Surjeet Singh Chhabra Vs. Union of India reported in 1997 (89) ELT-646 (SC) was in the background of the fact that the petitioner in that case had admitted that he had purchased gold bars abroad and got the same converted into Gold Kara and the cross-examination of pancha witnesses was sought only on the point regarding the place at which the recovery was made-at the baggage belt on at Green Channel and since this point, in view of his confession admitting the purchase of gold and its conversion into Kara, was not relevant, the Apex Court held that the denial of cross-examination of the witnesses was not violative of principles of natural justice. The ratio of this judgment of the Apex Court can not be generalized. In fact, in the above mentioned judgments of High Courts and the Apex Court, the general principles laid down on the question of permitting cross examination of the witnesses, whose statements have been relied upon, are that
(a) while in adjudication proceedings, the adjudicating authority is not bound by the strict rules of evidence, the request for cross examination of a witness, whose statement is being used against a person, if made, has to be considered by the adjudicating authority and denial of cross examination without any valid reason would amount to violative of the principles of natural justice.
(b) the cross examination of a witness can be refused if the point in respect of which cross examination of a witness has been requested, is not relevant in view of the relevant fact having been admitted by the assessee/noticee or backed by documentary evidence on record;
(c) Cross examination of an expert who has given some opinion or of a witness who has given some statement implicating person has to be allowed if the same has been requested and the Departments case against the person is based mainly on the opinion given by the expert or the statement given by the witness. Since for testing the probative value of the statement of Sh. Abdul Qahar, Sh. Dil Agha and Sh. Walliullah, it was necessary to permit their cross examinations, and the same inspite of being requested, has not been permitted, in my view, these statements can not be used against the Appellants. Even otherwise in this case, the cross-examination of Sh. Abdul Qahar, Sh. Walliullah and Sh. Dil Agha was all the more necessary, as, from their statements, it is not clear as to when the smuggled textiles were supplied to the Appellants and if so in how much quantity. The information about quantity and value is not only necessary for determining the quantum of penalty but also for determining existence of reason to believe about smuggled origin of the goods, as if there is evidence that a trader purchased a huge quantity of goods of foreign origin without ascertaining about their legal import, existence of reason to believe about smuggled origin of the goods could be presumed on the part of such trader. But in this case, there is no such Information. Therefore, the statements of Sh. Abdul Qahar, Sh. Dil Agha and Sh. Walliullah in absence of their probative value having been tested by cross examination are of little evidentiary value. 20.3.1 Honble Gujrat High Court in case of State of Gujrat Vs. Hasmukhlal Ambalal Kariwala reported in 1999 (109) ELT-51 (Guj.); Honble Bombay High Court in case of Paru Marugeb Jaikrishna Vs. Assistant Collector of Custom reported in 1988 (36) ELT-394 (Bom.) and the Apex Court in case of Mohtesham and Mohd. Ismail Vs. Sp. Director, Enforcement reported in 2007 (22) ELT-3 (SC) has held that-
(a) confessional statement of a co-accused can not be treated as substantive evidence; and
(b) confessional statement of a co-accused by itself is not sufficient to prove the charge unless corroborated by other evidence. In this case from the other evidence i.e. the record of telephonic contacts between the Appellants and Sh. Mamoor Khan/Sh. Dil Agha, it can not be inferred that the Appellants had purchased smuggled Chinese Silk fabrics as it can not be presumed that the telephonic contacts had materialized into purchase deals, more so when the Appellants plea is that their telephonic contacts with Mamoor Khan were for sale of fabrics to him, rather than purchase of fabrics from him, and there is no evidence that this claim of the Appellants is false. Therefore the record of telephonic contacts can not be treated as evidence corroborating the statements of Sh. Mamoor Khan/Sh. Dil Agha. 20.3.2 I, therefore, hold that the statements of Sh.Walliullah, Sh. Abdul Qahar and Sh. Dil Agha coupled with the records of telephonic contacts of Mamoor Khan/Dil Agha with the appellants, are, by themselves, not sufficient evidence in support of the allegation that the appellants, had purchased smuggled goods from these persons.
21. Even if it is assumed that the appellants in this case had purchased the smuggled goods from Sh.Mamoor Khan/Sh.Dil Agha/Sh.Abdul Qahar, for imposition of penalty on them under section 112(b), it is necessary to prove that they knew or had reason to believe that the goods purchased are of smuggled origin. The Department, in this regard relies upon the record of telephonic contact between Mamoor Khan/Dil Agha and the appellants and on this basis the Commissioner in the impugned order has given a findings that the telephonic contact between Mamoor Khan/Dil Agha and the appellants on or around the dates of which the Uzbek lady passengers had arrived in India, indicates that the appellants had not only purchased the goods smuggled by the passengers, but also had knowledge about the smuggled nature of the goods. There is nothing in statements of Sh. Abdul Qahar, Sh.Walliullah and Sh. Dil Agha from which it can be inferred that the Appellants had knowledge about there smuggling activity i.e. getting the Chinese Silk fabrics brought by, Uzbek lady passengers illicitly cleared in connivance from customs in convenience with some Customs Officials and Airlines Staff. 21.1 The evidentiary Value of the record of telephonic contact between two persons A and B depends upon several factors like;-
(i) Whether the telephonic contacts had taken place on or around the date and time when one of the two persons, say A, was undisputedly involved in some crime;
(ii) Background of the person- A and B, is such that in normal course there is little likelihood of their contacting each other on phone;
(iii) Duration and frequency of the telephonic contacts; and
(iv) Whether the calls were made from both the sides.
For example if on a particular date, a person A is caught smuggling a huge quantity of prohibited goods through an Airport where a Customs Officer B was on duty and if on or around that date, he was in telephonic contact with the Customs Officer B and calls of considerable duration were made from both the sides, the record of telephonic contacts between A and B, even if its content is not known, would be a strong circumstantial evidence against B in support of allegation that he was also involved in the smuggling Act of A and this evidence would be sufficient to shift the burden of proof to B and if B is unable to give satisfactory explanation for the telephonic contacts with A, this can be treated as an evidence against B of his involvement. In this case, had there been some record of Appellants telephonic contacts with the Uzbek lady passengers smuggling Chinese Silk fabrics into India, that record would have been a strong circumstantial evidence of their involvement. But the record of telephonic contacts of the Appellants with Sh. Mamoor Khan/Sh. Dil Agha can not be treated as an evidence of the Appellants having purchased smuggled Chinese Silk fabrics from Sh. Mamoor Khan/Sh. Dil Agha and that too with knowledge or reason to believe about its smuggled origin more so, when the Appellants plea is that these calls were for sale of Goods rather then purchase of any goods from Mamoor Khan and there is no evidence to indicate that this claim of the Appellants is false. Though Sh. Anudeep Singh and Sh. Gopal Dokania admit to have purchased some quantity of Chinese Silk fabrics from Sh, Mamoor Khan,the quantity purchased is small and, therefore, their plea that they were under impression that the same was duty paid would be acceptable and from these admitted transactions Appellants knowledge or reason to believe about smuggled origin of the goods can not be presumed.
22. The judgment of Apex Court in the case of D. Bhurmall reported in 1983 (13) ELT 1546 (SC) referred to by my learned brother in Para 12.10 of the order prepared by him, does not help the Department. In this case, what the Apex Court has held is that
(a) while burden of proving that the goods are of smuggled origin is on the Department, the Department or the prosecution is not required to prove its case with mathematical precision to a demonstrable degree, that this is not the requirement of law, as in all human affairs, absolute certainty is a myth, that all that is required is the establishment such a degree of probability that a prudent man on its basis, would believe in the existence of fact in issue and that legal proof is not necessarily the perfect proof and often it is nothing more than a prudent mans assessment as to the probabilities of the case;
(b) Initial onus of the proof on the Department can be sufficiently discharged by circumstantial evidence and once the initial burden of the proof is discharged, the onus of the proof shifts to the person concerned and if he fails to establish those facts, adverse conclusion can be drawn against him; and
(c) Since smuggling is clandestine conveying of goods to avoid legal duties and secrecy and stealth are its covering guards, and since many facts, relating to this illicit business remain in special knowledge or peculiar knowledge of the persons concerned, on the principle of Section 106 of Evidence Act, the burden to establish those facts is cast on the person concerned and if he fails to establish or explain those facts, an adverse in inference of facts, may arise against him. 22.1 In this case, even if on the basis of the record of telephonic contacts between Sh. Mamoor Khan/Sh. Dil Agha and the Appellants, at the most, it is presumed that they were buying some quantity of smuggled goods from Sh. Mamoor Khan/Sh. Dil Agha, no presumption can be made about the knowledge or reason to believe of the Appellants about smuggled origin of the goods. For this purpose it has to be proved that the Appellants had knowledge about smuggling activities of Sh. Mamoor Khan/Sh.Dil Agha or that the quantity of Chinese Silk fabrics being purchased by the Appellants was so huge that no normal law abiding business man would have purchased the same without satisfying himself about its legal import. But in this case, there is no evidence from which such a presumption can be made as there is no evidence to indicate as to whether on each incident of smuggling by Uzbek lady passengers, the fabrics were purchased by the Appellants and if so how much quantity. While the Department is not required to prove every link in the smuggling chain from the persons smuggling the goods into India to the persons buying the smuggled goods, for imposition of penalty on the buyer under Section 112(b), Some evidence, direct on circumstantial, indicating acquisition or dealing with the goods with knowledge or reason to believe about their smuggled origin, has to be adduced and in case of circumstantial evidence, the same has to be such that the burden of proof is shifted to buyers and in that case, the buyers inability to explain the facts, can be used against him for proving the allegation. In this case, such evidence against the Appellants is missing.
23. The standard of proof required in Departmental adjudication proceedings, as held by the Apex Court in case of Commissioner of Police, New Delhi Vs. Narender Singh, reported in 2006(4) Sec-265 and by the Tribunal in case of K. Janendharan Pillai Vs. Collector of Customs, reported in 1988 (38) ELT-647 (Trib.), is preponderance of probability. Preponderance of probability means more probable than not. The existence or otherwise of preponderance of probability has to be determined by summing up the evidence in a prudent manner i.e. drawing logical conclusion on the basis of different pieces of evidence without making any presumption or assumptions, other than those permitted under the law. In this case, in my view, there is no justification at all for making assumptions like-
(a) the Appellants being traders, were susceptible to deal with un-accounted goods for unlawful gain without insisting on duty payment evidence of the goods;
(b) telephonic contacts between the Appellants and Sh. Mamoor Khan/Sh. Dil Agha prove melafide intention of the Appellants having concern and interest in smuggled goods being in touch with racketeers to make ill gain; or
(c) the Appellants were aware of the origin and the destination of the goods demonstrating their intimacy with the racketeers by telephonic contacts before and after arrival of smuggled goods in India. Without making the above assumptions, for which there is no basis, the sum total of the evidence on record against the Appellants (i.e. the statement of Sh. Abdul Qahar, Sh. Walliullah and Sh. Dil Agha, untested for their probative value by permitting their cross examination, and the record of telephonic contacts of Sh. Mamoor Khan/Sh.Dil Agha with the Appellants) does not establish preponderance of probability in support of the allegation against them. The sum total of evidence only creates suspicion against the Appellants but the same does not constitute preponderance of evidence which is the standard of proof required for proving the change against them.
24. In view of the above discussion I hold that the impugned order, imposing penalty on the appellants under section 112(b) of the Custom Act, 1962 is not sustainable. The same is set aside. The Appeals are allowed.
(Rakesh Kumar) Member (Technical)
25. Since there is difference of opinion between the Member (Judicial) and Member (Technical), the Registry is directed to place this matter before Honble President for constituting a bench in terms of Provisions of Section 129C (5) of the Customs Act, 1962 for deciding the following point of difference. Whether the facts situation, evidence, surrounding circumstances and principles of preponderance of probability recorded by the judicial member calls for imposition of penalty to the extent ordered u/s 112(b) of the Customs Act, 1962? OR Whether the evidence of record is sufficient to uphold the imposition of penalty on the Appellants under section 112(b) of the Custom Act, 1962.
(Pronounced in the open Court on)
(Rakesh Kumar) (D.N.Panda)
Member (Technical) Member (Judicial)
S.Kaur
PER SAHAB SINGH:
26. I have gone through order passed by Member (Judicial) Shri D.N. Panda and Member (Technical) Shri Rakesh Kumar also and I have seen the difference of opinion referred to me by the President.
27. Brief facts of the case have been narrated in paragraph 1 to 8 of the order passed by Shri D.N. Panda and there is no necessity of repeating the same. In the Show Cause Notice adjudicated by the Commissioner, there were four types of persons involved. Firstly the foreign nationals who were smuggling the goods into India without payment of duty, secondly the person for whom the smuggled goods were brought into India, third category pertained to Customs officers and fourth category is in respect of persons who are dealer/shopkeeper dealing in textiles who purchased these goods. The appeals filed by seven appellants before us are in respect of the fourth category.
28. In earlier proceedings, appeals filed by these seven appellants were dismissed by the Tribunal vide Final Order No. C/50-84/2011 dated 25.1.2011 upholding the penalty imposed on these appellants under Section 112(b) of the Customs Act. The order passed by the Tribunal was challenged by these appellants before High Court of Delhi. The Court after setting aside the Tribunals order, remanded the matter back to Tribunal for de novo consideration holding that contentions raised by the appellants were not considered by the Tribunal and as such order passed by Tribunal in respect of these seven appellants is a non-speaking order and doe not meet the requirement of law. The difference of opinion is in remand proceedings between two Members.
29. Heard Shri S. Bhardwaj, ld. Advocate appearing for all seven appellants and Shri Goving Dixit, Additional Commissioner (A.R) both at length. I have also seen the submissions made before Division Bench by the appellants and Revenue which are briefly stated by ld. Member (Judicial) in para 9.1 to 9.10 and para 10.1 to 10.6 respectively.
30. The issue to be decided is whether these seven appellants are liable to penalty under Section 112(b) of the Customs Act in facts and circumstances of the case. It is the contention of the appellant s that for imposing any penalty under Section 112(b) of the Act department is required to prove that appellants had any knowledge that goods dealt/acquired/purchased/sold by the appellants were smuggled goods and were liable for confiscation. On the other hand, it is Revenues contention that appellants were deeply involved in the racket of smuggling of textiles as purchasers and cannot escape from the penal provisions of Section 112(b) of the Act.
31. For the sake of convenience, Section 112 of the Customs Act is reproduced below :-
Any person -
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111. shall be liable-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater.
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sough to be evade on such goods or five thousand rupees,, whichever is the greater;
(iii) in the case of goods in respect of which the value stated in entry, made, under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater;
(iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest;
(v) in the case of goods falling both under clauses (ii) and (iii) to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest.] For imposition of penalty under Section 112(b) of the Act, any person who acquires possession, or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he has reason to believe are liable to confiscation under Section 111 of the Customs Act is liable to penalty.
32. Revenue is relying on the statement of Shri Abdul Qahar. Shri Dil Agha and Shri Walliullah and recorded telephone contacts between the appellants with Mamoor Khan and Dil Agha in support of contention that appellants had knowledge about smuggled nature of goods. (A) Abdul Qahar in his statement dated 30.11.2000 mainly stated that :-
(i) He was introduced to Ms Olga by Bunty of Durga Creation who advised him if he does cloth business with Ms. Olga he would earn more profit.
(ii) He used to receive the goods cleared by Ms. Olga and then he used to deliver the goods to shopkeepers who placed orders for the same. He used to make shopkeepers to speak to Olga on her mobile for confirming the delivery of goods to shopkeepers.
(iii) Money was being collected by Olga herself.
(iv) He named the Durga Creation, Jasbir Texiles, Samurai Fabrics.
(B) Shri Walliullah in his statement dated 19.5.2001 has mainly stated :-
(i) He was introduced to Mamoor Khan by a resident of his village and he started cooking for Mamoor Khan.
(ii) When Mamoor Khan went to Airport, he accompanied him and he used to take transport vehicle to Airport. When Mamoor Khan came out of Airport with ;the goods, goods were loaded into the vehicle with the help of tempo driver and brought to Ajmeri gate and thereafter goods were brought to Sameer Guest House in rickshaws.
(iii) Mamoor Khan used to phone to many shopkeepers Bunty, Gopal, Khem Singh, Jabbir Singh and Sanjiv Jain and Nawal
(iv) Named persons used to come to Guest Home and pack their goods.
(v) Money was collected by Mamoor Khan.
(C) Shri Dil Agha in his statement dated 23.5.2001 and 11.7.2001 has mainly stated that ;
(i) He was employed by Mamoor Khan and his allotted work was to go to Airport and get goods loaded in a vehicle, bring the same to Ajmeri Gate and from there to bring the goods to Samir Guest House in Rickshaw.
(ii) Mamoor Khan used to sell the goods in the market from Guest house.
(iii) Mamoor Khan introduced him to various shopkeepers and these were Arun and Gopal, Bunty, Sanjeev Jain and Mahender Jain, Jasbir Textiles and Khem Singh.
From these statements, it is noticed that goods brought into India by Uzbek Ladies were purchased by the appellants traders. Appellant traders also visited the Guest house and selected goods, packed for themselves. Payment was made after delivery of goods to Ms. Olga or Mammor Khan both foreign national. Goods delivered to shopkeepers were first brought from airport to Samir Guest House and therefore subsequently delivered to shopkeepers; From the statements, it comes out the goods were of foreign origin and payments were made to foreign national. Therefore the contention of the appellants that they were selling Indian goods to these person is not sustainable as in that situation payments, will be received by them from foreign nationals and not otherwise.
33. From the statements of Abdul Qahar, it is also noticed he was introduced to Olga by Nitesh Kedia which shows that the shopkeepers were knowing for Ms. Olga much before they came in contact with Abdul Qahar.
34. Second evidence relied on by the Revenue is record of telephonic contact, with Mamoor Khan and Dil Agha on days when Uzbek passengers arrived with Chinese silk. Para 18.2 of the order passed by ld. Member (Technical) given the date-wise names of person whose telephone number interacted. Also from Table 10 of the Order-in-Original it is found that Shri Nitesh Kedia interacted with Mamoor Khan 235 times and with Dil Agha 13 times Shri Arun/Gopal Dokania interacted with Mamoor Khan 420 times and with Dil Agha 25 times, Shri Mahender Jain interacted with Mamoor Khan 118 times and with Dil Agha 9 times, Shri Sanjeev Jain interacted with Mamoor Khan 30 times. Similrly Anup/Khan Singh interacted with Mamoor Khan 224 times and with Dil Agha 35 times, Anudeep Singh interacted with Mamoor Khan 155 times and with Dil Agha 14 times. Frequency of interaction with Mamoor Khan is so large that it can be inferred that appellant traders were well-known to Shri Mamoor Khan and his activities. Table shown in para 18.2 of the order also shows that on the day of arrival of Uzbek national, there was regular interaction between appellant traders with Mamoor Khan/Dil Agha. Based on preponderance of probability, I find that this interaction was not for supply of Indian goods but for purchasing foreign goods and therefore it is difficult to accept the contention of the appellants that they did not have knowledge of smuggled nature of goods and this contention is rejected. Since the commissioner in his order has held the goods mentioned in Colum-3 of Table-1 liable for confiscation under Section 111 of the Act, the appellants are also liable to penalty under Section 112(b) of the Act.
35. In view of the above, I agree with the view taken by Shri D.N. Panda, Member (Judicial) and reference is answered accordingly.
36. Registry is directed to send the file to referral Bench for further necessary action. (Pronounced in Court on ...................) (Sahab Singh) Member (Technical) RM MAJORITY ORDER
37. In view of order of the third Member in reference, appeal of the appellant is allowed partly imposing penalty of Rs.2,20,000/- on him.
[Pronounced in the open Court on 22/10/2013]
(RAKESH KUMAR) (D.N. PANDA)
TECHNICAL MEMBER JUDICIAL MEMBER
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Customs Appeal No. 15 of 2008