Custom, Excise & Service Tax Tribunal
M/S Premium Intertrade Pvt. Ltd. (In ... vs Commissioner Of Customs (Airport), ... on 14 December, 2012
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. III IN APPEAL NOs. C/512 & 1127/06 Mum (Arising out of Order-in-Appeal No. 324/2003-AP DBK (Air) Dated 05.12.2003 passed by the Commissioner of Customs (Appeals), Airport, Mumbai.) For approval and signature: Honble Shri P.R.Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) =========================================================1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for Publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy : yes of the order? 4. Whether Order is to be circulated to the Departmental : yes Authorities? =========================================================
M/s Premium Intertrade Pvt. Ltd. (in Appeal No. C/512/06) Mrs. Vinita Lakhotia (in Appeal No. C/1127/06) : Appellant Versus Commissioner of Customs (Airport), Mumbai : Respondent Appearance Shri V.S. Nankani, Advocate : For Appellant Shri K.M. Mondal, Special Counsel : For Respondents CORAM:
Honble Shri P.R.Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of Hearing : 14/12/2012 Date of Decision : /03/2013 ORDER NO.......................................................
Per: Anil Choudhary:
These two appeals have been preferred against Order-in-Appeal No. 324/2003 AP DBK (Air) dated 05.12.2003 passed by the Commissioner of Customs (Appeals), Airport, Mumbai, by which the order of attachment (Order-in-Original dated 06.06.2003) of the two flats in the name of the appellants purchased out of money obtained fraudulently-availing wrong Duty Drawback by Shri Nawal Kishore Bangard and others was confirmed. The Dy. Commissioner of Customs ordered attachment of the said flats towards recovery of government dues. Being aggrieved by the said order, the appellant preferred an appeal before the learned Commissioner (Appeals), who dismissed the appeals and upheld the Order-in-Original (attachment order). As the facts and circumstances in both the Appeals are common they are taken up together for disposal for the sake of convenience. The appellant Mrs. Vinita S. Lakhotia is director of the other appellant M/s Premium Intertrade Pvt. Ltd. & sister in law of the said Mr. Nawal Kishore Bangard.
2. The brief facts of the case are as follows:-
2.1 On 16.10.1997 Central Intelligence Unit, Air Cargo Complex, Sahar, Andheri (E), Mumbai 400 099 detected a case of fraudulent claim of duty drawback to the tune of Rs.50 crores approx. by Shri Nawal Kishore Bangard through M/s. Om Traders, M/s Prime Agricom and M/s Tropical Exotics. Shri Nawal Kishore Bangard and Shri Giriraj Das Bangard (Brother of Nawal Kishore Bangard) were the two partners of M/s Om Traders, while Smt. Sangeeta Bangard (wife of Nawal Kishore Bangard) was the sole proprietor of M/s Prime Agricom and M/s Tropical Exotics. Shri Nawal Kishore Bangard admitted in his statement recorded under Section 108 of the Customs Act, 1962, recorded on 17.10.1997 that he claimed the duty drawback fraudulently on the basis of forged examination reports, shipping documents, etc. and there was no physical export of the goods. He also admitted in the same statement that he had forged several documents, signatures and rubber stamps used for certification of the invoices etc., for advance payment and making of shipping bills etc. Shri Nawal Kishore Bangard also told that he was in actual control of all the three firms and he alone committed the fraud by submitting forged shipment documents. The investigations revealed that total amount of Rs.50,14,80,668/- was illegally claimed and received by him in the name of the above said three firms.
2.2 During the search of office premises of Shri Nawal Kishore Bangard at 310, Maker Bhavan III, 21 New Marine Lines, Mumbai on 16.10.97 and 18.10.97 a number of documents, rubber stamps, bank cheque books etc., pertaining to Smt. Vinita Lakhotia and her firms/companies were recovered. Some of the relevant documents and evidences recovered were as below:-
(a) Memorandum of Association of M/s. Oyster Financial Solution Pvt. Ltd. Promoters/Directors Smt. Vinita Lakhotia and Mr. Abhishek Lakhotia(minor son of Smt. Vinita Lakhotia).
(b) Memorandum of Association and Article of Association of M/s. Premium Intertrade Pvt. Ltd. Promoters/Directors Smt. Vinita Lakhotia and Mr. Abhishek Lakhotia( minor son of Smt. Vinita Lakhotia).
(c) Blank letter heads in the name of Smt. Vinita Lakhotia.
(d) Dena bank deposit slips of account No. 325181 of M/s Premium Intertrade.
(e) Payment receipts of Godrej Properties and Investments Ltd. in the name of Shri Satish Lakhotia (husband of Smt. Vinita Lakhotia) alongwith instalment advice No. 97/08/1915.
(f) Dena Banks cheques book of Account No. 325181 of M/s. Premium Intertrade.
(g) Bank of Americas Cheques book of Account No. 137323 of M/s. Premium Intertrade Pvt. Ltd.
(h) Rubber Stamps embossed as:-
For Oyster Financial Solution Pvt. Ltd. DIRECTOR
(i) Rubber Stamp embossed with the office address of M/s. Premium Intertrade Pvt. Ltd. as below:
9, Kakad Arcade, Opposite Liberty Cinema, 11, New Marine Lines, Mumbai 400 020.
(j) Rubber stamp in the name of: SATISH LAKHOTIA (Husband of Smt. Vinita Lakhotia)
(k) Rubber Stamp with the office address of M/s. Shree Growth Plus owned by Smt. Vinita Lakhotia as below:
34, Anil Apartments, College Street, Dadar (E), Mumbai 400 028.
(l) Rubber Stamp in the name of -
ABHISHEK LAKHOTIA, (Minor son of Smt. Vinita Lakhotia, at the material time)
(m) Rubber Stamp in the name of:-
VINITA LAKHOTIA,
(n) Rubber Stamp in the name of:-
ADITI LAKHOTIA, (Daughter of Smt. Vinita Lakhotia)
(o) File regarding copy of registration dated 29.04.1997 of Oyster Financial Solution Pvt. Ltd. having promoter directors Smt. Vinita Lakhotia and Shri Abhishek Lakhotia.
(p) Correspondence file for the period 29.05.1997 to 18.06.1997 of M/s Utopian Financial Solution Pvt. Ltd. having promoter directors as Smt. Vinita Lakhotia and Shri Abhishek Lakhotia.
(q) Correspondence regarding commercial space of M/s Premium Intertrade Pvt. Ltd.
2.3 Immediately after detection of the duty drawback fraud case on 16.10.1997, six summons on different dates i.e. from 21.10.1997 to 06.11.1997 were issued under Section 108 of the Customs Act, 1962, to Smt. Vinita Lakhotia and were duly served upon her by pasting and displaying the same at the main door of her residential premises under the panchanama. But Smt. Vinita Lakhotia was not traceable till 19.11.1997.
2.4 Verification of the bank accounts of Smt. Vinita Lakhotia and her firms/companies revealed that after detection of the case on 16.10.1997, a number of transactions were found to have been made which showed her attempt to siphon-off the money in connivance & conspiracy with Mr. Bangard. On 18.10.1997 Rs.14.25 lakhs were transferred to M/s Siddharth Thirani and Co. belonging to Shri Sidharth Thirani, her brother-in-law, and on 20.10.1997 Rs.1.05 crores were transferred to M/s. Wollen and Textile Industries Ltd., managed by her father Shri H. D. Baheti.
2.5 In her statement dated 19.11.97, Smt. Vinita Lakhotia interalia admitted that she had received the money from Shri Nawal Kishore Bangard as favour; and assured that if Shri Nawal Kishore Bangard gives her in writing to return the same to the Customs, she would do the needful. In her statement dated 20.11.97 she stated that she received a letter from Shri Nawal Kishore Bangard asking her to transfer to Customs the entire amount given by him, she also agreed to transfer Rs.3 Crores to Customs on behalf of Shri Nawal Kishore Bangard. This shows a very clear and unambiguous nexus or connivance between the said Shri Nawal Kishore Bangard and Smt. Vinita Lakhotia and her companies.
2.6 Smt. Vinita Lakhotia in her statement dated 20.11.1997 also stated that she had no knowledge of accounts abroad in her name and that she might have signed the papers (for opening the accounts abroad) in good faith, given to her by Shri Nawal Kishore Bangard. Shri Nawal Kishore Bangard also deposed inter alia in his statement recorded on 21.11.97 that he had obtained signatures of Smt. Vinita Lakhotia on the blank forms of M/s. Topworth Investment (Macau) Ltd., Macau in order to open an account in her name and that she willingly signed the blank forms in good faith. He had also taken her signature on another blank form of Citibank, Singapore, in order to open another account. She had signed both the forms in good faith and that she had no knowledge of the same and the said accounts stand in joint names of Smt. Vinita Lakhotia and Shri Nawal Kishore Bangard.
2.7 The bank accounts of Smt. Vinita Lakhotia and her companies/firms and of the three fraudulent firms in whose name(s) duty drawback cheques were claimed fraudulently were verified. On close verification of the bank accounts of Smt. Vinita Lakhotia and her firms/companies revealed that the huge amounts were deposited in those accounts from the amounts siphoned off from the accounts of the three firms viz. M/s Om Traders, M/s Prime Agricom and M/s Tropical Exotics, the firms of Shri Nawal Kishore Bangard and his wife Smt. Sangeeta Bangard. In addition to the above, in Smt. Vinita Lakhotias bank accounts abroad i.e. Citibank N.A., Singapore and M/s Topworth Investments (Macau) Ltd., Macau were deposited with the tainted money claimed and received fraudulently from Customs by Shri Nawal Kishore Bangard.
2.8 Further investigations and various admissions under Section 108 of the Customs Act, 1962 by Shri Nawal Kishore Bangard as well as his sister in law Smt. Vinita Lakhotia(appellant), confirmed that out of the fraudulent claim of duty drawback, an amount Rs.6.40 crores(approx.) alongwith unspecified amounts in foreign bank accounts were transferred by Shri Nawal Kishore Bangard to Smt. Vinita Lakhotia and her firms/companies without any business transaction. The particulars of these are given below:-
I. Amount received by Smt. Vinita Lakhotia:-
a) From M/s. Om Traders:
i) A/c. No. 015118 at Dena Bank, Scruz (E), Mumbai Rs.23,00,000/-
ii) A/c. No. 115018 at Dena Bank, Pedder Rd., Mumbai Rs.10,00,000/-
b) From M/s Tropical Exotics:
i) A/c. No. 020152 at Dena Bank, Scruz (E), Mumbai Rs.28,00,000/-
ii) A/c. No. 120077 at Dena Bank, Pedder Rd., Mumbai Rs.5,89,634/-
c) From M/s Prime Agricom:
i) A/c. No. 016285 at Dena Bank, Scruz (E), Mumbai Rs.1,52,10,000/-
----------------------
Rs.2,18,99,634/-
==============
II. Amount received by M/s Premium Intertrade (Pvt.) Ltd. :
a) From M/s. Om Traders:
i) A/c. No. 115018 at Dena Bank, Pedder Rd., Mumbai Rs.15,00,000/-
b) From M/s Tropical Exotics:
i) A/c. No. 020152 at Dena Bank, Scruz (E), Mumbai Rs.11,00,000/-
ii) A/c. No. 120077 at Dena Bank, Pedder Rd., Mumbai Rs.32,00,000/-
c) From M/s Prime Agricom:
i) A/c. No. 016285 at Dena Bank, Scruz (E), Mumbai Rs.74,00,000/-
----------------------
Rs.1,32,00,000/-
==============
III. Amount received by M/s Utopian Financial Solutions Pvt. Ltd. :
a) From M/s. Om Traders:
i) A/c. No. 015118 at Dena Bank, Scruz (E), Mumbai Rs.45,00,000/-
b) From M/s Tropical Exotics:
i) A/c. No. 020152 at Dena Bank, Scruz (E), Mumbai Rs.30,00,000/-
c) From M/s Prime Agricom:
i) A/c. No. 016285 at Dena Bank, Scruz (E), Mumbai Rs.48,00,000/-
----------------------
Rs.1,23,00,000/-
==============
IV. Amount received by M/s Premium Intertrade:
a) From M/s. Om Traders:
i) A/c. No. 015118 at Dena Bank, Scruz (E), Mumbai Rs.7,00,000/-
b) From M/s Prime Agricom:
i) A/c. No. 016285 at Dena Bank, Scruz (E), Mumbai Rs.18,89,645/-
----------------------
Rs.25,89,645/-
==============
V. Amount received by M/s Ezee Reach Finance:
a) From M/s Tropical Exotics:
i) A/c. No. 020152 at Dena Bank, Scruz (E), Mumbai Rs.8,00,000/-
c) From M/s Prime Agricom:
i) A/c. No. 016285 at Dena Bank, Scurz (E), Mumbai Rs.5,00,000/-
----------------------
Rs.13,00,000/-
==============
VI. Amount received by M/s Gayatri Investments:
a) From M/s Prime Agricom:
i) A/c. No. 016285 at Dena Bank, Scruz (E), Mumbai Rs.70,41,407/-
b) From M/s. Om Traders:
i) A/c. No. 115018 at Dena Bank, Pedder Rd., Mumbai Rs.1,00,000/-
c) From M/s Tropical Exotics:
i) A/c. No. 120077 at Dena Bank, Pedder Rd., Mumbai Rs.60,54,482/-
----------------------
Rs.1,31,95,889/-
==============
VII. Amount received by M/s Oyester Financial Solutions Pvt. Ltd. :
a) From M/s. Om Traders:
i) A/c. No. 115018 at Dena Bank, Pedder Rd., Mumbai Rs.2,00,000/-
------------------------
Rs. 2,00,000/-
================
From the amounts(tainted money) as shown above, Smt. Vinita Lakhotia and M/s Premium Intertrade Pvt. Ltd. Purchased two flats Viz. Flat Nos. 6/1 and 6/2 both situated at Lloyds Garden, Prabhadevi, Mumbai. Payment details of the same are as under:-
I. Smt. Vinita Lakhotia paid from:-
A/c No. 5-585983 006 at Citi Bank, Mumbai vide Cheque Nos.
657779 dated 23.10.1996 657780 dated 23.10.1996 657786 dated 10.03.1997 657787 dated 10.03.1997 Rs.6,50,000/- Rs.6,50,000/- Rs.80,62,500/- Rs.37,06,250/-
Rs.1,30,68,750/-
=============== II M/s Premium Intertrade Pvt. Ltd. paid from:-
A/c No. 137323 at Bank of America, Mumbai vide Cheque Nos.
119004 dated 23.10.1996 119005 dated 23.10.1996 119009 dated 10.03.1997 119010 dated 10.03.1997 Rs.6,50,000/- Rs.6,50,000/- Rs.80,62,500/- Rs.37,06,250/-
Rs.1,30,68,750/-
=============== Further investigations and admissions under Section 108 revealed that Shri Nawal Kishore Bangard was in actual control of the above mentioned properties acquired out of the ill-gotten money.
2.9 Smt. Vinita Lakhotia, in her various statements under Section 108 given before the investigating agency admitted that she had received money from Shri Nawal Kishore Bangard and had utilised part of that money for the purchase of flats in the name of M/s Premium Intertrade Pvt. Ltd. and in her name. In her statement dated 12.12.97 she also stated that those very flats were under the control of Shri Nawal Kishore Bangard. Similarly, Shri Nawal Kishore Bangard also sought to acquire office premises situated at 125, Free Press House, Nariman Point, Mumbai, in the name of M/s Utopian Financial Solution Pvt. Ltd. (a bogus company of Smt. Vinita Lakhotia). Therefore, an agreement was entered upon for Rs.4.5 crores towards the purchase of the same and an EMD of Rs.90.93 lakhs was paid from the bank accounts of Smt. Vinita Lakhotia. Shri Nawal Kishore Bangard also admitted in his statement recorded on 19.11.97 that he had negotiated the deal for the purchase of the said property. This is also evident from the Agreement for Sale dated 17.07.97 itself. As per the Form No. 18 filed with the Registrar of Companies, the registered office address of M/s Utopian Financial Solutions Pvt. Ltd. was shown at 9, Kakad Arcades, New Marine Lines, Mumbai- 400 020 whereas, in the Agreement for Sale of the said property and in the resolution authorizing Smt. Vinita Lakhotia to execute the said agreement on behalf of the said company, the address of the registered office of M/s Utopian Financial Solutions Pvt. Ltd. was mentioned as 310, Maker Bhavan No. III, New Marine Lines, Mumbai-400 020 which is the address of M/s Om Traders, one of the fraudulent firms of Shri Nawal Kishore Bangard. Further on the last page of the said agreement, the director executing the agreement on behalf of M/s Utopian Financial Solutions Pvt. Ltd., was shown as Shri Nawal Kishore Bangard, which was subsequently cancelled and substituted with the words Smt. Vinita Lakhotia. Even the Resolution of the said company authorizing Smt. Vinita Lakhotia to execute the said agreement, was signed by Mr. Abhishek Lakhotia the minor son of Smt. Vinita Lakhotia at the material time. This also indicates the abetment of Mrs. Lakhotia with Mr. Bangard in the duty drawback fraud and subsequent laundering of the ill-gotten money.
2.10 Subsequent, investigation and admissions made by Shri Nawal Kishore Bangard and Smt. Vinita Lakhotia, revealed that out of the total duty drawback amount of Rs.50.14 crores claimed fraudulently by Shri Nawal Kishore Bangard, a part of the said amount was siphoned off in collusion to Smt. Vinita Lakhotia, which was subsequently used for the purchase of the two aforementioned flats and the office premises at Free Press House, Nariman Point.
2.11 The original documents pertaining to the purchase of immovable properties in the name of Smt. Vinita Lakhotia, her company and photocopies of cheques issued towards the purchase of the same, surrendered voluntarily by Smt. Vinita Lakhotia, revealed that all were written by Shri Nawal Kishore Bangard and signed by Smt. Vinita Lakhotia. The investments in real estate (in question) by the appellants are explicitly out of the government money (duty drawback) from the accounts of the aforesaid fraudulent firms, routed to the accounts of Smt. Vinita Lakhotia and her companies and from there into the real estate (including the flats in question).
2.12 Smt. Sangeeta Bangard wife of Shri Nawal Kishore Bangard had categorically stated that her husband Shri Nawal Kishore Bangard had illicit relations with her sister Smt. Vinita Lakhotia. Shri Nawal Kishore Bangard colluded with & utilized the name and bank accounts of Smt. Vintia Lakhotia and her companies for laundering/parking the fraudulently claimed duty drawback money. Out of the total tainted money of Rs.50.14 crores, approximately Rs.6.40 crores were transferred to the bank accounts of Smt. Vinita Lakhotia and her firms/companies and various properties were acquired and/or sought to be acquired in her/their names. In addition to the above there are cash deposits of Rs.62.20 lakhs in 28 instalments between 10.06.96 to 05.04.97 in her account No. 110121 at Bank of America, Mumbai. It was also found that two unauthorized/ illegal accounts were opened in bank/investment company abroad viz. a joint account No. 6-273820-009 with Shri Nawal Kishore Bangard at Citi Bank, Singapore and another account No. FMP01-002 with M/s Topworth Investment Pvt. Ltd., Macau, in her name i.e. in the name of Smt. Vinita Lakhotia. Among various devices planned for siphoning off the ill-gotten money, bogus and illegal companies viz. M/s Premium Intertrade Pvt. Ltd., M/s Utopian Financial Solution Pvt. Ltd. and M/s Oyster Financial Solutions Pvt. Ltd. Etc. were created by Smt. Vinita Lakhotia at the instance of the Shri Nawal Kishore Bangard. The above mentioned three companies, each one of which has only two members/ promoters/ directors viz. Smt. Vinita Lakhotia and her son by name Abhishek Lakhotia who was minor at the material time of incorporation of these companies. Verification of the bank accounts of the fraudulent firms of the said Mr. Nawal Kishore Bangard revealed that part of the fraudulent money initially received by these firms were transferred to the above mentioned three companies of Smt. Vinita Lakhotia without any business transaction. The resolutions of her companies authorizing Smt. Vinita Lakhotia to enter into agreements for purchase of various properties on behalf of her companies were signed by her minor son Abhishek Lakhotia. The documentary evidence discussed above clearly establishes that Smt. Vinita Lakhotia was the major recipient of fraudulently claimed duty drawback money and Shri Nawal Kishore Bangard had defacto control over the properties and the firms of Smt. Vinita Lakhotia. The above facts establish that the properties of Smt. Vinita Lakhotia and her companies (including the two flats in question) were very much under the control of Shri Nawal Kishore Bangard and they were working in conspiracy with Shri Nawal Kishore Bangard.
2.13 In the statements of Smt. Vinita Lakhotia and Shri Nawal Kishore Bangard recorded on different dates under Section 108 of the Customs Act, 1962, they could not give the exact figures of the amount given to or received by Smt. Vinita Lakhotia and her firms/companies and also they could not produce any evidence of commercial transaction between them. Only the verification of the bank accounts could provide some figures during the investigation of the case. It reflects the fact that there was no quid-pro-quo or any business transaction between the two except that the fraudulent money was simply being parked or laundered in the bank accounts of Smt. Vinita Lakhotia and of her firms/companies as an extended bank account of Shri Nawal Kishore Bangard. Thus abetting & conniving with Mr. Bangard.
2.14 During the personal hearing on 10.12.97, before the Assistant Commissioner of Customs, Drawback Department in the case of fraudulent claim of drawback by M/s Om Traders and M/s Prime Agricom, Shri Nawal Kishore Bangard admitted the correctness of demand against the above said firms. Shri Nawal Kishore Bangard requested the adjudicating authority to give opportunity to his family members, especially to Smt. Vinita Lakhotia (appellant) to surrender some of the properties purchased in her name out of the fraudulently claimed duty drawback amount received by him from the Customs department and that the said properties or the cash paid by them to the department may be adjusted against the (duty drawback) amount payable by him.
2.15 In her letter dated 10.12.97 addressed to Assistant Commissioner of Customs, Drawback Department Smt. Vinita Lakhotia volunteered on her own to repay the portion of drawback amount refundable to the Customs Department by Shri Nawal Kishore Bangard. She further mentioned therein that she had already agreed in her statements to repay approximately Rs.3 crores to the Customs Department towards the drawback amount fraudulently received by Shri Nawal Kishore Bangard. She also mentioned that the said amount was favoured to her by Shri Nawal Kishore Bangard and that she had already instructed her bankers to transfer the balance amount in her bank accounts in favour of the Assistant Commissioner of Customs Air Cargo Complex, Sahar, Mumbai. She further added that she has already given her consent to transfer two flats situated at 6/1 and 6/2, A Wing Lloyds Garden, Prabhadevi, Mumbai which are in the name of her company M/s Premium Intertrade (P) Ltd., where she is a director, and in her personal name respectively, towards the refund of drawback claim which Shri Nawal Kishore Bangard had already received and owed to pay. She requested the Assistant Commissioner of Customs, Drawback Department to take charge of the said properties with all rights toward the settlement of drawback amount repayable to the Customs Department by Shri Nawal Kishore Bangard. As stated by Smt. Vinita Lakhotia in her letter dated 10.12.97 Rs.25 lakhs approx. were transferred by bankers cheques to the Customs by January 1998. This includes a bankers cheque of Rs.17,02,390/68 from the bank account of her company M/s Premium Intertrade Pvt. Ltd. Details of the above said payment of Rs.25 lakhs are shown below:-
Sr. No. Bank & Account Cheque Particulars Amount Rs.
1.
Dena Bank, Peddar Road Account M/s Premium Intertrade No. 770582/ 27.11.97 2,10,487.79
2. Bank of America, Mumbai Account M/s Vinita Lakhotia No. 150238/ 28.11.97 1,38,622.87
3. Bank of America, Mumbai Account Premium Intertrade No. 154522/ 01.12.97 17,02,390.00
4. Citibank N.A., Mumbai Account No. 448946/ 22.12.97 1,89,278.76
5. Citibank N.A., Mumbai Account Smt. Vinita Lakhotia No. 448949/ 22.12.97 1,01,862.41
6. Citibank N.A., Mumbai Account Smt. Vinita Lakhotia No. 448947/ 22.12.97 1,58,119.60
7. Citibank N.A., Mumbai Account Smt. Vinita Lakhotia No. 450410/ 29.12.97 7,779.91 2.16 The Assistant Commissioner of Customs, Drawback Department vide Adjudication Order No. S/10-7/97 DBK/ACC dated 27.12.1997 confirmed the demand of drawback amounting to Rs.17,39,57.985/- and Rs.16,61,22,704/- erroneously paid to M/s Prime Agricom and M/s Om Traders respectively, and ordered that the amount stated above along with 20% interest p.a. should be paid forthwith by the owner of the firms i.e. Shri Nawal Kishore Bangard and Smt. Sangeeta Bangard immediately, failing which the same shall be recovered by resorting to section 142 of the Customs Act, 1962. It was also ordered that the properties mentioned in the letter of Smt. Vinita Lakhotia, offering to transfer to the Customs, should be adjusted against the confirmed demand. Smt. Vinita Lakhotia received the Order-in-Original dated 27.12.97 on 29.12.97. No appeal was filed against the above said order within the stipulated period or thereafter by any of the respondents (including the appellants). Therefore, the order became final and operational.
2.17 On the basis of the Adjudication Order dated 27.12.97, two Notices of Demand to the Defaulters both dated 06.04.98 under the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995 were issued to M/s Om Traders, M/s Prime Agricom, and to their proprietors and to Smt. Vinita Lakhotia. The said Notices were served upon the Smt. Vinita Lakhotia also alongwith others on the admitted fact that the benami properties were purchased out of fraudulently claimed duty drawback money by Shri Nawal Kishore Bangard in her name and in the name of her companies/firms and further the same were in actual control of Shri Nawal Kishore Bangard. She was also willing to surrender the same to Customs under the provisions of Section 142 of the Customs Act 1962 and the Customs (Attachment of Property of the Defaulters for Recovery of Government Dues) Rules 1995 as the same are applicable to the properties under the control of defaulter. Smt. Vinita Lakhotia received both the notices on 09.04.98.
2.18 On the basis of Adjudication Order dated 27.12.97, the Order and the Notice of Attachment both dated 19.06.98 for attachment of immovable properties voluntarily surrendered by them during the course of adjudication, were issued in the name of M/s Om Traders, M/s Prime Agricom, Shri Nawal Kishore Bangard, Smt. Sangeeta N. Bangard and Smt. Vinita Lakhotia prohibiting and restraining them until further orders, from transferring or charging the properties-
Properties Name of the Owner Details of Ownership 6/1, A Wing Lloyds Garden, Prabhadevi, Mumbai.
M/s Premium Intertrade Pvt. Ltd.
Smt. Vinita Lakhotia as the director of the said company 6/2, A Wing Lloyds Garden, Prabhadevi, Mumbai.
Smt. Vinita Lakhotia Smt. Vinita Lakhotia 2.19 Smt. Vinita Lakhotia received both the Order dated 27.12.1997 and the Notice of Attachment dated 19.06.98 for herself and on behalf of her firm/company M/s Premium Intertrade Pvt. Ltd. on 19.06.98 itself. The above said two properties voluntarily surrendered by her earlier were attached under panchanamas dated 19.06.98. She received the copies of panchanama for herself and on behalf of M/s Premium Intertrade Pvt. Ltd.
2.20 That an Order and the Notice of Attachment both dated 04.09.98 were issued for attachment of the bank accounts of all the three fraudulent firms, their proprietors and Smt. Vinita Lakhotia & her firms/companies. Smt. Vinia Lakhotia received both the orders as well as the Notice of Attachment on 25.09.98. The bank accounts of two companies of Smt. Vinita Lakhotia namely M/s Utopian Financial Solutions Pvt. Ltd., and M/s Oyster Financial Solutions Pvt. Ltd., which were inadvertently not attached by the said order, were attached by Orders and Notice of Attachment both dated 23.02.99. All the Orders and Notices were issued for attachment of the bank accounts of Smt. Vinita Lakhotia and her firms/companies in view of the fact that the amounts deposited in these accounts were out of the fraudulently claimed & received duty drawback money. She herself vide her letter dated 10.12.97 to the adjudicating authorities had admitted & stated that she had already instructed her bankers to transfer the balance amount in her bank accounts in favour of Customs.
2.21 During the personal hearing on 26.02.98 before the Assistant Commissioner of Customs, Drawback in the case of erroneous payment of duty drawback to M/s Tropical Exotics, Shri Nawal Kishore Bangard appeared as an authorized person on behalf of his wife Smt. Sangeeta Bangard, the sole proprietor of M/s. Tropical Exotics and admitted that though his wife is the proprietor of the said firms however, he managed the firms completely. He admitted the receipt of Rs.16,13,99,979/- as duty drawback in the name of M/s Tropical Exotics by submitting forged documents.
2.22 During the above said personal hearing on 26.02.98 Shri Nawal Kishore Bangard submitted another letter dated 25.02.98 from Smt. Vinita Lakhotia addressed to the Commissioner of Customs, Sahar Airport wherein she has stated that she has paid Rs.90.93 lakhs as advance towards the purchase of property (office space) at 125, Free Press House, Nariman Point, Mumbai 400021 and that the said amount was paid out of the duty drawback amount received erroneously by the fraudulent firms of Mr. Nawal Kishore Bangard. She further requested that the said property to the extent of the advance payment including the interest thereof may be considered as surrendered by her to the Customs Department on account of Mr. Nawal Kishore Bangard and his firms. It is seen from the Agreement of Sale between M/s. Gem Nuts and Produce Export Company Pvt. Ltd. and M/s. Utopian Financial Solutions Pvt. Ltd. that agreement for sale was executed on 17.07.1997 for the purchase of office premises for Rs.4,54,65,000/-. On page No. 11 of the said agreement the name of the director of M/s Utopian Financial Solutions Pvt. Ltd. was type written as Shri Nawal Kishore Bangard which appears to have been cancelled (scored out) and substituted with the hand written name of Smt. Vinita Lakhotia. The said agreement was terminated by the purchaser i.e. M/s Utopian Financial Solutions Pvt. Ltd. on 10.01.1998 (after discovery of fraud) and the balance amount of Rs.3,63,72,000/- was also not paid to the seller. The above mentioned evidence indicates clearly that the said agreement was executed on 17.07.1997 for the purchase of the office premises before the detection of the duty drawback fraud by Customs on 16.10.1997 and cancelled on 10.01.1998 after the detection of the fraud. It shows that the said premises was being purchased by none other than except Shri Nawal Kishore Bangard. If Smt. Vinita Lakhotia was the actual purchaser of the said premises then there was no reason for her to cancel the agreement after the detection of the fraud. Accordingly, the Customs department started recovery procedure of Rs.90.93 lakhs from M/s Gem Nuts and Produce Export Co. Pvt. Ltd. Aggrieved by the recovery actions initiated by the Customs department, M/s Gem Nuts and Produce Export Co. Pvt. Ltd. filed a writ petition no. 2517/ 1998 before the Hon'ble High Court, Bombay and prayed to quash and set aside the letters and orders of the Customs department seeking to recover the amount of Rs.90.93 lakhs as well as in seeking to attach the premises under question. After dismissal of the W. P. No. 2517/1998 by the Hon'ble High Court the department recovered the said amount from M/s Gem Nuts and Produce Export Co. Pvt. Ltd. From the above facts it is clear that Smt. Vinita Lakhotia was simply a benamidar/conspirer, whereas the actual purchaser was Shri Nawal Kishore Bangard only.
2.23 The Assistant Commissioner of Customs, Drawback vide Order No. S/3-95/97 DBK ACC, S/10-07/98 DBK ACC dated 11.06.98 confirmed the demand of Rs.16,13,99,979/- against M/s. Tropical Exotics and ordered that all the properties and /or the deposits surrendered by Shri Nawal Kishore Bangard, his wife Smt. Sangeeta Bangard and his sister-in-law Smt. Vinita Lakhotia as recorded during the personal hearing should be appropriated and adjusted against the demand through the prescribed procedures. The above said order was duly received by Smt. Vinita Lakhaotia on 19.06.1998.
2.24 Adjudication Orders dated 27.12.97 and 11.06.98, Demand Notices to the Defaulters dated 06.04.98, Order and Notice of Attachment for voluntarily surrender of immovable properties both dated 19.06.98 and Order and Notice of Attachment for Bank accounts both dated 04.09.98 were duly served upon Smt. Vinita Lakhotia duly acknowledged under her signature, both for self & M/s Premium Intertrade Pvt. Ltd.
2.25 M/s Premium Intertrade Pvt. Ltd. and Smt. Vinita lakhotia filed the Writ Petition No. 2068/1998 before the Hon'ble High Court, Bombay challenging the adjudication order dated 11.06.98, Notice of Attachment and Order of Attachment dated 19.06.98 issued for attachment of immovable properties, Notice of Attachment and Order of Attachment dated 04.09.98 issued for the attachment of movable properties and the Notice of demand dated 06.04.98. In the said Writ Petition following was submitted to the Hon'ble High Court of Bombay:-
i) As per para 1 it was alleged that no opportunity of being heard was given to Smt. Vinita Lakhotia nor she was issued any show-cause notice for adjudicating any demand against her. This contention of her may not be true because Shri Nawal Kishore Bangard had produced the letter dated 10.12.97 from Smt. Vinita Lakhotia addressed to the Asstt. Commissioner of Customs with a request to take charge of the flats under question with all the rights towards the ownership of both the flats. Therefore, the contention that no opportunity of being heard was given is not proper and tenable.
ii) As per para 3 (c) it was alleged by the petitioner i.e. Smt. Vinita Lakhotia that she was in dire financial need therefore she borrowed money as personal loans from her sister and brother-in-law, therefore, the respondent i.e. Asstt. Commissioner of Customs had nothing to do with the same. In this context her statement dated 19.11.1997 may be recalled wherein she stated that if Shri Nawal Kishore Bangard gives her in writing to return the money she would do the needful. In her subsequent statement dated 20.11.1997 she admitted that she received a letter from Shri Nawal Kishore Bangard asking her to return the money which he had favoured her. In the same statement she agreed to pay Rs.3 crores to the Customs department. Consequently she paid approximately Rs.25 lakhs to the Customs by January, 1998 through bankers cheques. In the same para she narrated a concocted story that her sister and brother-in-law Shri Nawal Kishore Bangard were arrested and detained during the period when investigations were being carried out by the Asst. Commissioner of Customs. She was also summoned by the office of the Asstt. Commissioner of Customs to give details of the money borrowed by her. During the investigations she informed to the department that she had taken the money as personal loans which she was bound to repay as and when demanded by her sister and/or her brother-in-law. The above said versions she deposed before the Hon'ble High Court, Bombay. In her further versions she stated that she was forced under the guise of cooperation to execute certain writings purporting to surrender the money received as loans from her sister and the brother-in-law. It cannot be held proper because the money from her bank accounts was transferred after the receipt of her letter and thereafter the cheques were issued by her suo-moto in favour of the Asstt. Commissioner of Customs. During the period she had ample opportunity to seek legal assistance towards the stoppage of the payments to Customs. It shows that her attempts at this stage to deny the contents of letters and statements are noting more than an after thought to jeopardize the recovery of the Government dues.
iii) The Hon'ble High Court, Bombay, heard both the sides and considered the submissions made by the petitioners and the department, thereafter passed the order to allow the petitioners to withdraw the petition on the grounds that alternate statutory efficacious remedy is available to the petitioner under Section 128 of the Customs Act, 1962 and they should avail of the same. In view of the above the petitioners withdrew the petition form the Hon'ble High Court of Bombay.
2.26 After the disposal of their writ petition in the Hon'ble High Court Smt. Vinita Lakhotia and M/s Premium Intertrade Pvt. Ltd. filed appeal before the Commissioner of Customs (Appeals) Airport, Mumbai. Their appeals before the Commissioner of Customs were dismissed being time barred vide order dated 08.07.99.
2.27 Aggrieved by the order of the Commissioner of Customs (Appeals) dated 08.07.99 Smt. Vinita Lakhotia & M/s Premium Intertrade Pvt. Ltd. preferred an appeal before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai under the provisions of Section 129 A of the Customs Act, 1962. Appals of Smt. Vinita Lakhotia and her firm were disposed by the CESTAT Mumbai vide their order dated 14th October, 2000, on the grounds that their appeal was not one as contemplated under Section 129A (I) of the Customs Act, 1962 but was covered by sub clause (c) of the said Section and therefore the CESTAT had no jurisdiction to decide the appeal.
2.28 Pending disposal of their appeal before CESTAT, Mumbai, Smt. Vinita Lakhotia and M/s Premium Intertrade Pvt. Ltd. filed a Revision Application before the Joint Secretary, Ministry of Finance, Department of Revenue, Government of India. Their Revision Application was returned to them on the grounds that the issue involved therein was regarding attachment of movable and immovable properties and the said orders are not of the nature referred to in the 1st provision to sub section (1) of section 129 A of the customs Act, 1962.
2.29 Thereafter, M/s Premium Intertrade Pvt. Ltd. and Smt. Vinita Lakhotia filed Writ Petitions No. 671/2001 and 1012/2001 on 3rd March, 2001 and 23rd April, 2001 respectively in the Bombay High Court seeking relief against the Notice and the Order of Attachment dated 19.06.98, Order-in-Original dated 27.12.97, Order-in-Appeal dated 8.7.99, Order-in-CESTAT dated 14.10.2000 and Order-in-Revision Application dated 23.12.1999. Hon'ble High Court, Bombay quashed and set aside the notice and order of attachment dated 19.6.98 vide their order dated 10th April, 2001 in W.P. No. 671/2001 and liberty was granted to the department to serve show-cause notices upon the petitioners calling upon them to show-cause as to why their immovable properties should not be attached and hold adjudication proceedings against them. As per paras 4 (h) and 4 (g) of W.P. Nos. 671/2001 and 1012/2002 respectively, in the brief facts it was deposed (by appellants) before the Hon'ble Court that the copy of Order-in-Original dated 27.12.97 has not yet been served upon them. This allegation does not seem to be proper because the captioned Order-in-Original dated 27.12.97 was duly received by Smt. Vinita Lakhotia, acknowledged under her signature on 29.12.97. Evidently Smt. Vinita Lakhotia received the Order-in-Original dated 27.12.97, wherein properties surrendered by her vide her letter dated 10.12.97 to the Department were appropriated, was received by her on 29.12.97. Thereafter no Appeal was preferred before any of the authorities either under Customs Act, 1962 within the stipulated period for filing appeal or before the Hon'ble High Court. It shows that she had no grievances against the Order-in-Original dated 27.12.97 and she had accepted the order. Therefore, subsequent filing of Writ Petition before the Hon'ble High Court is an after thought. The facts mentioned above revealed that on the basis of vital information given by Smt. Vinita Lakhotia vide her letter dated 25.02.98 and her statement that she had paid an amount of about Rs.91 lakhs approx for purchase of a property at Free Press House, enabled the department to recover the said money from M/s Gems Nuts Produce Export Pvt. Ltd. after disposal of the W.P. No. 2068/1998 filed by them.
2.30 Accordingly, as per the liberty granted by the Hon'ble High Court of Bombay, Notices dated 25.08.2001 and 13.12.2001 were issued to Smt. Vinita Lakhotia and M/s Premium Intertrade Pvt. Ltd. calling upon them to show-cause as to why:-
i) The fraudulently claimed duty drawback money received by Shri Nawal Kishore Bangard should not be recovered from them.
ii) Failing which their properties i.e. flat nos. 6/1 and 6/2 purchased in the names of M/s Premium Intertrade Pvt. Ltd. and Smt. Vinita Lakhotia respectively should not be attached under the provisions of the Section 142 of the Customs Act, 1962.
2.31 Smt. Vinita Lakhotia filed replies to the notice issued to M/s Premium Intertade Pvt. Ltd. as well as to her on 23.01.2002. In the replies for herself and on behalf of her firm she submitted that her surrender letters were not the result of her free consent and neither she nor her firm M/s Premium Intertrade Pvt. Ltd. are defaulters of any tax dues.
2.32 On 21.03.2002, Smt. Vinita Lakhotia filed an affidavit before the Dy. Commissioner /Dbk denying that her statements given to the department and letter dated 10.02.1997 and 25.02.1998 were not the result of her free consent i.e. of the notice/appellant.
2.33 In pursuance to the notices dated 25.08.2001 and 13.12.2001, personal hearing was granted on 22.03.2002. Mr. Ragesh S. Mehta, advocate for Smt. Vinita Lakhotia and M/s Premium Intertrade Pvt. Ltd. appeared on their behalf and reiterated the written submissions filed on 23.01.2002 and further added that the noticees were in no way concerned with fraudulent firms (of Mr. Bangard) and his clients were not defaulters of any tax dues. During the personal hearing oral submission were made by the advocate that It is not in dispute that my clients namely M/s Premium Intertrade Pvt. Ltd. and Smt. Vinita Lakhotia are in any way concerned with M/s Prime Agricom, M/s Om Traders and M/s Tropical Exotics, who were issued show-cause notices by the department for recovery of wrongfully availed duty drawback by the said firms. In terms of para 4 of Hon'ble High Courts Order dated 10.04.2001, there is a conclusive finding that there is no dispute that the petitioner namely M/s Premium Intertrade Pvt. Ltd. and Smt. Vinita Lakhotia are not defaulters of any tax dues. Further I reiterate my written submission.
2.34 In view of the liberty granted by the Hon'ble High Court of Bombay the Order-in-Original dated 06.04.2002 was passed & issued for the attachment of the properties namely flat Nos. 6/1 and 6/2, A- Wing, Lloyds Garden, Prabhadevi, Mumbai 400 028 purchased in the name of M/s Premium Intertrade Pvt. Ltd. and Smt. Vinita Lakhotia by Shri Nawal Kishore Bangard towards the pending recovery of Govt. dues from M/s Om Traders, M/s Prime Agricom and M/s Tropical Exotic under sub-clause (ii) of clause (c) of Section 142 (I) of the Customs Act, 1962 read with Customs (Attachment of property of the defaulters for recovery of Government dues) Rules 1995.
2.35 The Order of Attachment dated 06.04.2002 for the attachment of properties acquired in the name of M/s Premium Intertrade Pvt. Ltd. and Smt. Vinita Lakhotia was challenged before the Hon'ble High Court, Bombay praying that the order of attachment of the properties may be quashed and set aside. Therefore, M/s Premium Intertrade Pvt. Ltd. and Smt. Vinita Lakhotia filed writ petition Nos. 1394/2002 and 1395 before the High court.
2.36 The Hon'ble High Court, Bombay disposed of the Writ Petition Nos. 1394/2002 and 1395/2002, filed by M/s Premium Intertrade Pvt. Ltd. and Vinita Lakhotia, Observing that there is prima facie material to show that Shri Nawal Kishore Bangard has defrauded the Customs department and had transferred part of the money to Vinita Lakhotia and that money was utilised for the purpose of acquiring the flats/properties 6/1 and 6/2 at Lloyds Gardens, Prabhadevi, Mumbai. It was also observed by the Court that above said position was admitted by both Shri Nawal Kishore Bangard and Smt. Vinita Lakhotia in their statements recorded under Section 108 of the Customs Act, 1962. Further both of them had issued letters to the department whereby they had agreed to surrender the flats to the Customs Department. Therefore the Hon'ble Court felt that in the circumstances, it is not possible to hold that the department has no power to initiate proceedings against Vinita Lakhotia and her firms/ companies.
3. That the Assistant Commissioner of Customs (drawback) after perusing the reply to show-cause notice and after giving opportunity of hearing recorded the following findings:-
3.A That in view of the facts and evidences on record it is established that Shri Nawal Kishore Bangard had claimed and received duty drawback to the tune of Rs.50.14 crores (through the three firms owned by him or by his wife) on the basis of fake and forged shipping documents, etc. This fact was admitted by him in his statement under Section 108, dated 17.10.97. During the personal hearing on 10.12.97 before the Asstt. Commissioner/Drawback, he confirmed the correctness of the demand raised against his firms. He also deposed in his statements that he had given money to his sister-in-law Smt. Vinita Lakhotia out of the drawback money he received fraudulently from the Customs Department. His sister-in-law Smt. Vinita Lakhotia (appellant) also admitted the receipt of such money from Shri Nawal Kishore Bangard in her statement under Section 108 dated 19.11.97 and other dates and assured if Shri Nawal Kishore Bangard gives her in writing to return the same to the Customs, she would do the needful. In her statement dated 20.11.97 she admitted the receipt of a letter from Shri Nawal Kishore Bangard asking her to transfer the entire amount, given by him, to customs. She also expressed her willingness in writing to transfer Rs.3 crores on behalf of Shri Nawal Kishore Bangard. Investigations and documents on records revealed that Shri Nawal Kishore Bangard had given (approx.) Rs.6.40 crores alongwith other unspecified amounts in foreign bank accounts, to Smt. Vinita Lakhotia and her firms/companies without any business transaction. Smt. Vinita Lakhotia in her statements recorded under Section 108 of the Customs Act, 1962 interalia stated that she had received money from Shri Nawal Kishore Bangard and utilised part of the said money for the purchase of the two flats i.e. Flat Nos. 6/1 and 6/2 at Lloyds Gardens, Prabhadevi, Mumbai 400 028 in the name of her company M/s Premium Intertrade Pvt. Ltd. and in her name respectively. In her statement dated 12.12.97 she also stated that the flats were under the control of Shri Nawal Kishore Bangard. In her letter dated 10.12.97 addressed to Asstt. Commissioner of Customs, Drawback Department, Smt. Vinita Lakhotia volunteered on her own to repay the portion of drawback amount refundable to the Customs Department by Shri Nawal Kishore Bangard. She further mentioned therein that she had already agreed in her statements to repay approximately Rs.3 crores to the Customs Department towards the drawback amount fraudulently received by Shri Nawal Kishore Bangard. She also mentioned that the said amount was favoured to her by Shri Nawal Kishore Bangard. The said money belonged to Shri Nawal Kishore Bangard and that no consideration moved from her for the receipt of that money. She further added that she has already given her consent to transfer both the flats i.e. 6/1 and 6/2, A Wing, Lloyds Gardens, Prabhadevi, Mumbai 400 028 which are in the name of her company M/s Premium Intertrade Pvt. Ltd., where she is a director, and in her personal name respectively, towards the refund of drawback money which Shri Nawal Kishore Bangard had already received and owed to repay. In the same letter she requested the Asstt. Commissioner of Customs, Drawback Department to take charge of the above properties/ flats with all rights towards the settlement of drawback amount repayable to the Customs Department by Shri Nawal Kishore Bangard. The facts as stated above, more particularly in para nos. 2.2, 2.4 to 2.15, 2.22, 2.25 and 2.36 clearly establish that Shri Nawal Kishore Bangard conspired and colluded with Smt. Vinita Lakhotia and her companies for siphoning off or laundering the tainted money and/or Smt. Vinita Lakhotia and her companies were merely name lenders in conspiracy and collusion with Mr. Bangard.
3.B That it is evidently clear that Shri Nawal Kishore Bangard colluded and conspired with Smt. Vinita Lakhotia and her companies for siphoning off the tainted money. In other words, Smt. Vinita Lakhotia, her son Abhishek Lakhotia and their companies were accomplice or co-conspirators of Mr. N.K. Bangard in conspiracy and money laundering, in cheating the Government exchequer.
3.C That it is clearly established that Smt. Vinita Lakhotia and her Co. M/s Premium Intertrade Pvt. Ltd. had conspired & colluded with Mr. N.k. Bangard and purchased the flats in question out of duty drawback money wrongly obtained by playing fraud with the Customs Department and the same is returnable to the Government.
3.D It is further established that the appellants herein have not invested any money of their own, in real estate (property in question).
3.E The fact of purchased of flats in question out of the defrauded amount is established beyond doubt from the evidence on record, corroborated by the statements recorded under Section 108 on various dates.
3.F The statement of Mrs. V. Lakhotia to the effect that she is willing to transfer the properties in question if instructed by Mr. Bangard. Her subsequent act of surrender of part of the money and the flats in question on the instruction of Mr. Bangard prove beyond doubt that the flats were purchased in conspiracy and collusion and the same were under control of Mr. Bangard.
3.G That it is also evident that several companies/firms like Premier Intertrade Pvt. Ltd., Gayatri Investments, Oyster Financial Solutions Pvt. Ltd. etc. Were floated or created by the appellants in conspiracy and collusion with Mr. Bangard for siphoning of and/or laundering of the duty drawback money wrongly obtained from the Government.
3.H That it was earlier ordered vide Order-in-Original dated 27.12.1997 in the adjudication case of excess/fraudulent duty drawback, that the properties (flats in question), mentioned and surrendered unequivocally in the letter dated 10.12.97 of Smt. Vinita Lakhotia for transfer to the Customs, stand adjusted against the confirmed demand. Smt. Vinita Lakhotia received the Order-in-Original dated 27.12.97 on 29.12.97 (served in person). No appeal was filed against the above said order ever by the appellants. Therefore, the order (among others adjusting the flats in question against the confirmed demand) became final and operational.
3.I The subsequent retraction of her statements (Mrs. Lakhotia) recorded under Section 108 in 1997, by affidavit dated 28.10.2002 is not tenable being after thought and tainted with malafide. It has been stated in para 7 of the affidavit that she was under complete bed rest from 25.09.97 to 20.10.97 which is evidently wrong in view of the glaring fact that she has issued cheques for Rs.14.25 Lakhs and 1.05 crore between 15.10.97 and 21.10.97 for laundering of the tainted money(para 2.4 above). It is not the case of the appellant that she had applied for copy of her statements soon after recording under Section 108 and the same was denied or not granted. It is also unbelievable that the appellant had no knowledge of the tainted nature of money when received, in view of evidence on record establishing collusion and conspiracy with Mr. Bangard. The subsequent suo-moto act of Mrs. Lakhotia- surrendering the agreement of purchase of office space with Gem Nuts and Produce Export Co. Pvt. Ltd., on 25.02.98, to the Customs Department for recovery of money advanced to Gem Nuts and Produce Export Co. Pvt. Ltd. (Rs. 91 lakhs approx) establish beyond doubt the voluntary nature of her earlier statements under Section 108. At the same time re-confirms her earlier statements and surrender of flats in question.
3.J The statement recorded under Section 108 of the Customs Act are substantive piece of evidence, admissible in law. Reliance was place on the ruling on the Apex Court in the case of ACCE, Rajamundri Vs. Duncan Agro Industries (2000) 120 ELT 280 SC and Harban Sing Sardar Lena Singh and anothers vs. State of Maharashtra AIR 1972 SC 1224. Further the appellants have not discharged the onus as regards the allegation, brought about five years after, alleging coercion or inducement or duress. Further it is evident that the appellant is an educated lady knowing English. Further it is evident that the appellant started deviating from her statement for the first time after above ten months only after issue of attachment order, when she moved before the Honble High Court in writ petition No. 2068/98.
3.K In view of the facts circumstances and evidence on record it was held that the appellants are defaulter of Government dues and hence the amount due is recoverable under the provision of Section 142 of the Act read with the Recovery Rules.
3.L That it was also held that Mr. N.K. Bangard was in actual control of the flats in question and the appellants (Mrs. Vinita Lakhotia and her Company) are not the real owners. Further, from the evidence on record & the contents of letter dated 25.02.98 written by Mrs. Lakhotia to the department makes it evident that she was aware of the tainted nature of money from the day she received it from Mr. Bangard. The contests of the letter are reproduced for ready reference:-
However, as the advance amount paid (Rs.90.93 lakhs) to the present owner (M/s Gem Nuts and Export Produce Co. Pvt. Ltd.) of the said properties (at 125, Free Press, Nariman Point, Mumbai) was out of the duty drawback amount erroneously received by the firms of Shri Nawal Kishore Bangard which has been demanded by the Department of Customs, I therefore, request you (Commissioner of Customs) that the said property to the extent of my advance payment including the interest thereof may be considered as surrendered by me to the Customs Department on account of Shri Nawal Kishore Bangards firms by adjusting the demand for the duty drawback erroneously received by his firms
3.M The transaction of transfer of funds from the firms of Mr. Bangard to the appellants and their other concerns without any consideration and further transfer by the appellants or investment made at the instance of Mr. Bangard clearly indicate collusion and conspiracy committed by them jointly. The same is corroborated by evidence on record. Hence the property in question is available for recovery of Government dues under Section 142 of the Act.
3.N That Mrs. Lakhotia as director of her other companies namely Utopian Financial Solutions Pvt. Ltd. and Oyster Financial Solution Pvt. Ltd., the property of which (both) was also attached, have never appealled against the same. The facts and circumstances of attachment and realisation are pari-passu, as regards Mrs. Lakhotia and all her firms/companies.
The Assistant Commissioner of Customs (drawback) passed the following operative order dated 06.06.2003 :-
3.1 I order attachment of the properties i.e. flat No. 6/1 A Wing, Lloyds Garden, Prabhadevi, Mumbai 400028 purchased in the name of M/s Premium Intertrade Pvt. Ltd. and the flat No. 6/2, A Wing, Lloyds Garden, Prabhadevi, Mumbai 400028 purchased in the name of Smt. Vinita Lakhotia, under the provisions of sub-clause (ii) of clause (c) of Section 142 (I) of the Customs Act, 1962 read with Customs (Attachment of property of the defaulters for Recovery of Government dues) Rules 1995, towards part recovery of the fraudulently obtained drawback amount of Rs.50.14 crores by M/s Om Traders, (owned by Shri Nawal Kishore Bangard and Shri Giriraj Das Bangard) M/s Prime Agricom, and M/s Tropical Exotics (owned by Smt. Sangeeta Bangard).
3.2 This order is passed without prejudice to any other action that may be taken under any other Section of the Customs Act, 1962 and/or any other law of the land for the time being in force in India.
4. Being aggrieved by the order of learned Assistant Commissioner, joint appeal was preferred (by the appellants) before the learned Commissioner of Customs (Appeals), Airport, Mumbai. The learned Commissioner (Appeals) took notice of the facts mentioned above as well as also took particular notice of the statement(s) of the parties involved, in Para 4 of his order as follows:-
i) The statement of Shri Nawal Kishore Bangard on 21.11.97 On being asked I have to state that I had given approx. Rs.3 crores by way of cheque to Mrs Vinita Lakhotia from which she has purchased two flats at Lloyds Garden at Prabhadevi, the flat Nos. 6/1 and 6/2 and paid earnest money towards the office at Free Press Building, Nariman Point, Mumbai amounting to Rs.90.00 lakhs. I am willing to write a letter to Ms. Vinita Lakhotia to transfer the said amount of Rs.3.00 crores to the account of Asstt. Commissioner, Air Cargo Complex, Sahar, Mumbai. On being asked I have to state further that I had also paid an amount approx Rs.1.5 crores to Ms Vinita Lakhotia toward the loss in share trading.
ii) The relevant extract of the statement given by Smt. Vinita Lakhotia on 19.11.97 is as under:
.. I have received approx Rs.2.25 crores as a favour from Shri Nawal Kishore Bangard who is my brother-in-law and rest of the money arranged by me..
He had time to time approximately from August- 1996 favoured by financing around (approx). Rs.3 crores (three crores) which I have invested in properties mentioned earlier If Shri Nawal Kishore Bangard gives me in writing for returning money to customs which was given to me by way of favour by him I am ready to cooperate to the customs department and do the needful.
(iii) Statement given on 20.11.97 today I have received letter from Shri Nawal Kishore Bangard stating that he has given me Rs.4.5 crores and asking me to transfer the entire amount to the customs department.
I agree to the contents of the said letter and I am willing to transfer rupees three crores to customs department on behalf of Shri Nawal Kishore Bangard
(iv) She wrote a letter to the department on 10.12.97 where she stated, I have already agreed in my statement to pay approx Rs.3 crores to the customs department towards the fraudulent drawback claim received by Shri Nawal Kishore Bangard. I hereby state that the said amount was favoured to me by Shri Nawal Kishore Bangard. I also state that I had already instructed my bankers to transfer the balance amount of my bank accounts in favour of Asstt. Commissioner of Customs, Air Cargo Complex, Sahar, Mumbai towards the refund of drawback amount earlier received by Shri Nawal Kishore Bangard. I further add that I have already given my consent to transfer two flats at 6/1 and 6/2 A Wing, Lloyds garden, Prabhadevi, Mumbai-28 which are in the name of my company, M/s Premium Intertrade Pvt. Ltd. where I am the director and in my personal name respectively towards the refund of drawback claim amount which Shri Nawal Kishore Bangard had already received. (emphasis supplied) I hereby request you to take charge of the said properties with all rights towards the settlement of drawback amount repayable to the department by Shri Nawal Kishore Bangard.
(v) In her statement dated 12.12.97 she stated that:
. in my earlier statement I have admitted that flat No. 1 and 2, A Wing, 6th floor, in Lloyds garden, Prabhadevi, Mumvai - 400 028 which were purchased respectively in the name of M/s Premium Intertrade Pvt. Ltd. where I am a director and in the name of Vinita Lakhotia (myself) out of the amount favoured to me by Shri Nawal Kishore Bangard. I have also agreed to handover the said flats to customs department.. In this connection I further confirm that the said two flats were still under the control of Shri Nawal Kishore Bangard and if any other documents or a separate consent to handover the said properties to the customs is required by authorities, I will submit the same as and when required.
5. After considering the grounds and the contentions raised by the appellants the learned Commissioner (Appeals) in the operating part of his order dated 05.02.2013, at para 6, 7 and 8 have held as follows:-
6. At the time of making investigation the appellant as well as Shri Nawal Kishore Bangard co-operated with the department and willingly and voluntarily agreed to return back the fraudulent amount found with them and the property purchased out of such fraudulent drawback money. Keeping in view these facts department did not initiate other legal remedies available to them, and also did not investigate the case further. On the basis of evidences and confession made by them and written consent given by them and their voluntary action of handing over the properties to the department with all rights, the department attached the aforesaid flats. Now after 5 years when all the investigations were terminated on the basis of confession and/or consent given by both the parties, whether the appellants can now be allowed to say differently and question the attachment of the aforesaid flats. Appellants as well as their counsel knew very well that if they had not voluntarily surrendered the properties purchased out of the fraudulent drawback claim, department would have investigated the case further or would have taken other legal recourse available to them. Now when the investigations are over, if it is to be started afresh, department would not be able to collect any further evidence due to long gap of time or such evidence may not be there at all. Here I find that the appellant wants to exploit this situation. When the investigations were terminated or stopped and other legal recourses were not taken due to written consent and/or confession given by the appellants then they cannot be allowed to take advantage of this even if it is assumed that they had not given any voluntary statements.
7. I find that the appellants were honest and sincere and fully co-operated with the department and when fraudulent claim of drawback was brought to their notice, they after initial hesitation agreed to hand over the amount and properties bought by them out of such amount and they in fact handed over the remaining amount from their account to the department as well as the aforesaid flats. If that is so then why they are singing a different tune now? Why they are telling lies and taking baseless plea and not allowing the truth to prevail in the garb of legal remedies. Whatever legal remedies are available the truth must be allowed to prevail. In a country like India where one third of population goes to bed hungry, no one should be allowed to syphon of the public money to the tune of Rs.50 crores, nor such person or their beneficiaries should be allowed to flourish on the basis of baseless pleas. In such a situation even if there were some legal infirmities in the action taken by the department, should be ignored.
8. In view of the above discussion, appeals as well as stay application is dismissed. Order-in-Original is upheld.
6. That being aggrieved by the order of learned Commissioner (Appeals), the appellants have carried the matter before this Tribunal.
7. The grounds taken by the appellants and submissions made are as follows:-
7.1.0 NON APPLICABILITY OF SECTION 142 (1)(c)(ii) OF THE SAID ACT AS THE APPELLANTS ARE NOT DEFAULTERS 7.1.1 It is contended that the provisions of Section 142 (1)(c)(ii) of the said Act are inapplicable as the appellants are not defaulters within the meaning of Rule 2(vi) of the of the said Rules. It is contended that, said provisions only apply to such persons from whom a sum is due to the government and in case of non-payment can be recovered from such a person by detaining movable or immovable property belonging to such person or under the control of such person. In view of the above, it is contended that since no dues are recoverable from the appellant, the provisions of Section 142 of the said Act are rendered inapplicable in the facts of the present case.
7.1.2 On the other hand, the Revenues contention is that the term Defaulter means any person from whom Government dues are recoverable under the Act and Government Dues means any duty or drawback to be recovered from any person or .... under the Act and has not been paid. Rule 2(vi) read with Rule 2(ii) of the Customs (Attachment of the Property of Defaulters for Recovery of Government Dues) Rules, 1995 hereinafter referred to as Recovery Rules for short. There is sufficient evidence on record both documentary as well as oral testimony of the appellants-Mrs. Lakhotia and also of Mr. N.K. Bangard wherein it have been admitted by them that Mr. Bangard conspired with Mrs. Lakhotia in laundering the duty drawback money. About 6.4 crores or more was transferred by Mr. Bangard to the bank accounts of Mrs. Bangard and her companies/firms. Out of the duty drawback money, the flats in question were purchased by Mrs. Lakhotia and Premium Intertrade Pvt. Ltd.
7.1.3 Considering the rival contentions and the evidences more fully discussed hereinabove, it is unequivocally held that the appellants herein are defaulters of Government Dues within the meaning of the Recovery Rules, read with Section 142 of the Act.
7.2.0 APPELLANTS ARE THE OWNERS OF THE SAID FLAT:
7.2.1 It is contended that appellants are the rightful owners of the said flat and are not a benami of Bangard and the purchase of the said flat is not a benami transaction as defined under the provisions of Section 2(a) of the Benami (Transactions) Prohibition Act, 1988 (Hereinafter referred to as the Benami Transactions Act) and that the said property has been purchased out of Appellants own resources and funds.
A. It is submitted that the Appellant purchased the said property by a sale deed dated 28.02.1997 and thus are the rightful owners of the property. It is submitted that burden of proof cannot be cast on the Appellant to prove the veracity of the title acquired through the sale deed and that the transaction was consistent with the apparent tenor of the document.
B. It is submitted that an amount of Rs. 3 Crores received by the Appellants was given as a favour by Mr. Bangard and the same has been recorded in a statement of the Appellant dated 12.12.1997 under Section 108 of the said Act. It is submitted that as per Section 122 of the Transfer of Property Act, 1882:
Section 122 in The Transfer Of Property Act, 1882
122. " Gift" defined.-" Gift" is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.
In view of the above, it is submitted that the amount of 3 crores paid to the Appellants is on account of natural love and affection and is a gift within the meaning Section 122 of the Transfer of Property Act.
C. It is the submission of the Appellants that anything given by way gift is outside the ambit of benami transaction as defined under Section 2(a) of the Benami Transactions Act. (imphasis supplied). As per the Benami Transaction Act, a benami transaction means any transaction in which property is transferred to one person for a consideration paid or provided by another person. Further, the Honble Supreme Court in the case of Syed Abdul Khader vs. Rami Reddy, [AIR 1979 Supreme Court 553] at para 24 held:
the genesis of concept of benami is that consideration for a transfer must flow from one person and the transfer is taken in the name of another person and the consideration so flowing for the transfer was not intended to be a gift in favour of the person in whose name the transfer is taken. All these ingredients of benami are absent in this case and, therefore the contention that plaintiff is a benamidar cannot be accepted.
D. Further, the Honble Supreme Court in the case of Pawan Kumar Gupta Vs. Rochiram Nagdeo [AIR 1999 Supreme Court 1823] while interpreting the scope of the said section at para 29 and 30 held:
29. The word provided in the said clause cannot be construed in relation to the source or sources from which the real transferee made up the funds for buying the sale consideration. The words paid or provided for are disjunctively employed in the clause and each has to be tagged with the word consideration. The correct interpretation would be to read it as consideration paid or consideration provided. If the consideration was paid to the transferor then the word provided has no application as for the said sale. Only if the consideration was not paid in regard to the sale transaction the question of providing the consideration would arise. In some cases of sale transaction ready payment of consideration might not have been effected and then the provision would be made for such consideration. The word provided in Section 2(a) of the Benami Transactions Act cannot be understood in a different sense. Any other interpretation is likey to harm the interest of persons involved in genuine transactions., e.g., a purchaser of land might have availed himself of loan facilities from banks to make up the purchase money. Could it be said that since the money was provided by the bank it was a benami transaction?
30. We are, therefore, not inclined to accept the narrow construction of the word provided in Section 2(a) of the Benami Act. So even if the appellant had availed himself of the help rendered by his father Pyarelal for making up the sale consideration that would not make the sale deed a benami transaction so as to push it into the forbidden area envisaged in Section 3(1) of the Benami Act.
In view of the above it is submitted that it is immaterial as to from where the Appellants have arranged funds for the purchase of the said flat and only and only if Mr. Bangard had provided the consideration money for the purchase of the said flat, would the transaction in question be termed as a benami transaction. It is submitted that if, Bangard is substituted for the father of the Appellant in the case cited above, it is amply clear that any money flow from Bangard to his sister-in-law would not hit the prohibition laid down in Section 3 of the Benami Transaction Act.
E. It is further submitted that there is no evidence on record to show that the purchase of the said Flat is a benami transaction and there is nothing in the statements recorded under Section 108 of the said Act also, which contradicts the fact that the Appellant have purchased the said flat out of their own resources. However, the Appellants submit that it a settled law that when the statements recorded under Section 108 of the said Act, are inconsistent with the documentary evidence then the documentary evidence is to be preferred. Reliance in this regard is placed on the decision of the Honble Tribunal in the case of Philip Fernandes Vs. Commissioner of Customs, Airport, Mumbai [2002 (146) E.L.T. 180 (Tri.- Mumbai) and R.P. Industries Vs. Collector of Customs, Ahmedabad [1996 (82) E.L.T. 129 (Tribunal). It is thus submitted that the sale deed which establishes that the Appellants are the true owners of the said flat prevails over any contradictory statement on record, if any.
7.2.2 The Counsel for Revenue submitted that in view of the unequivocal and categorical admission by Mr. Bangard and Ms Vinita Lakhotia and documentary evidence on record, it is evident that they have conspired and diverted part of the ill-gotten duty drawback money towards the purchase of flats, etc. Thus they are jointly and severally defaulters of government dues as discussed above. Further, admittedly the flats have been acquired out of the duty drawback money and hence the same are rightly liable for attachment and recovery under the Recovery Rules.
7.2.3 Having considered the rival contentions, we agree with the Revenue that the appellants are defaulters under the Recovery Rules and accordingly the said two flats are available to the Revenue for attachment and recovery. Secondly, the issue raised under benami transaction is of no avail to the appellants and hence not required to be answered, being irrelevant at the same time. Thirdly, the contention raised regarding the amount received by the appellant from Mr. Bangard as gift, is an afterthought, having no legs to stand. On the question raised by the Bench to the Counsel of the appellants as regards evidence of gift, duly corroborated with the Income Tax records, to which the Counsel did not give any answer nor any evidence was produced.
7.3.0 UNDER THE CONTROL OF MEANING AND SCOPE:
7.3.1 It is further submitted that as per Section 142(1)(c)(ii) of the said Act, property which is being sought to be attached must be under the control of the defaulter. It is submitted by the Appellants that the said flat is not under the control of the defaulter and therefore the said property cannot be attached.
a. It is submitted that to understand the scope of the phrase under the control of definitions from various dictionaries and judgments are illustrated herein. As per Blacks Law Dictionary, 8th Edition, edited by Bryan A. Garner on Pg. 353 control is defined as the direct or indirect power to direct the management and policies of a person or entity whether through ownership of voting securities, by contract, or otherwise; the power or authority to manage, direct, or oversee. Further as per, P. Ramanatha Aiyars, Advanced Law Lexicon, Vol. 1 A-C, 3rd Edition 2007, the word control on Pg. 1038 has been defined to mean as the power to check or restrain; superintendence, to regulate; to govern; or have under command.
b. Further, in Honble Supreme Court in the case of Shamrao Vthal Co-operative bank Ltd. Vs. Kasargod Pandhuranga Mallya, [AIR 1972 SC 1248] and State of Mysore Vs. Allum karibasappa and Ors. [AIR 1974 SC 1863] it was held that the word control is synonymous with superintendence, management or authority to direct, restrict or regulate. Control is exercised by a superior authority in exercise of its supervisory power.
c. It is submitted that in view of the definitions produced herein above, Bangard did not manage, direct, regulate or govern the said property and therefore it cannot be said that the said property was under the control of Bangard. In view of this it is submitted that the said property being not in control of the defaulter within the meaning of Section 142 of the said Act is not liable to be attached.
7.3.2 The argument of the Revenue is that a direct link is established both by the documentary evidence as well as statement of the concerned parties recorded under Section 108 of the Act. Further, as the appellants are defaulters of government dues, the ground taken is hardly of any help to the appellants. Moreover, in the statement of Mr. Bangard, he has admitted the fact of having purchased the flats in question in the name of Mrs. Lakhotia & her Co. and have also deposed that he will direct Mrs. Lakhotia to surrender the documents of title to the flats to the Revenue as well as possession. Similarly Mrs. Lakhotia in her statement under Section 108 has agreed and offered to surrender the said flats in favour of the Revenue on being so directed by Mr. Bangard. This is further corroborated from the fact on records that Mrs. Lakhotia subsequently on 25.02.1998 also surrenderd the agreement of the purchase of office premises at 125 Free Press House, Noriman Point, Mumbai entered by her as Director of Utopian Financial Solutions Pvt. Ltd. with one Gem Nuts & Produce Export Co. wherein advance of Rs.90.93 lakhs was given as earnest money out of the ill-gotten duty drawback money. She categorically sought the assistance of Revenue to recover the duty drawback money paid by way of advance-earnest money to Gem Nuts & Produce Exports Co. Pvt. Ltd.
7.3.3 Having considered the rival contentions and going through the evidence on the record, we are satisfied with the contention of the Revenue that the flats in question were under the control of Mr. Bangard. Further, it is held that the issue of control raised by the appellant is not important as we have held herein above that the appellant are also defaulters and liable for recovery of government dues under Section 142 of the Act read with the Recovery Rules.
7.4.0 SOURCE OF FUNDS TEST REJECTED IN Gem Nuts & Produce Exports Co. Pvt. Ltd.- APPELLANTS DID NOT HAVE ANY KNOWLEDGE OF THE FACT THAT THE MONEY RECEIVED BY THEM WAS ILL- GOTTEN MONEY OR TAINTED MONEY.
a. It is submitted that the property in coins and currency notes passes by mere delivery. This rule has been stated by Wills J. in Whistler V. Forster, (1863) 14 CBNS 248,257,258 as follows:
the general rule of law is undoubted that no one can transfer a better title than he himself possess: nemo dat quod non habet. To this there are some exceptions; one of which arises out of the rule of law merchant as to negotiable instruments. These being part of the currency are subject to the same rule as money; and if such an instrument be transferred in good faith, for value, before it is overdue, it becomes available in the hands of the holder notwithstanding fraud which would render it unavailable in the hands of the previous holder. b. It is submitted that this rule has been applied by the Honble Supreme Court in the case of State bank of India Vs. Rajendra Kumar Singh and Others [AIR 1969 SC 401] and the Honble Supreme Court while applying the said rule held that the Appellant in the case had a right to possess the currency notes transferred to him in the normal course of business without any knowledge or suspicion of their having being involved in the commission of any offence.
c. It is thus submitted that the source of the money is immaterial, once the money is in possession of a person. It is submitted that the Honble Bombay High Court in Appellants own case of Commissioner of Customs. (Import) vs. Gem Nuts & Produce Exports Co. Pvt. Ltd rejected the source of funds test and at para 16 held:
Considering the ratio of the Supreme Court in State Bank of India (supra), it is thus material to show that the respondent had knowledge of the fraud and, therefore, that money could be recoverable in the hands of the respondent. d. It is thus submitted that the Honble Bombay High Court in the said case held that it is essential to show that the person had knowledge of the fraud and that the source of the funds is immaterial unless the knowledge of the fraud is established. In view of the above it is submitted that in the facts of the present case it is irrelevant as to from where the funds have been procured for the purchase of the said flat.
e. It is submitted that the appellant did not have any knowledge that the money received by her was a result of fraudulent transaction and therefore the appellant holds a good title over the money received by her in good faith.
f. It is submitted that the sale deed was concluded on 28.02. 1997, and the Order establishing the fraudulent nature of money was passed on 06.06.2003. From the facts itself, it is evident that the appellant had no knowledge whatsoever of the tainted nature of the money received by them at the time of receipt of money/purchase of the flat. It is further submitted that from the statement of the Appellant recorded on 19.11.1997 it is clear that, she came to know that Bangard had fraudulently obtained an amount of Rs. Fifty crores as duty drawback from the Customs and that the money given to her as a favour is a part of the money fraudulently obtained only during recording of her testimony. Further, in the statement dated 19.11.1997 the Appellant also stated that she was willing to cooperate with the Customs Department if Bangard writes to her requesting for return of the money. The relevant extracts of the statement recorded on 19.11.1997, Pg. 7 & Pg. 8 are produced below:
..As regards to his involvement in customs case I do not know that his office premises was searched by the Customs on 16.10.1997.
Now I have been told that by you that Mr. Nawal Kishore Bangard has fraudulently received around rupees fifty crores as duty drawback from the customs by way of producing forged export documents and without exporting goods.
g. Now I have been told by you that the money which was given to you by Naval Bangard was the part of the money fraudulently received by him from Customs. In this regards I want to assure you that if the Nawal Kishore Bangard gives me in writing for returning the money to customs which was given to me by way of favour by him, I am ready to cooperate the customs department and do the needful. h. Further by a statement dated 20.11.1997 the appellant clearly stated that she is willing to transfer Rupees 3 crores to the Customs Department on behalf of Bangard. Relevant extract of the statement recorded on 20.11.1997 at pg.7 is produced below:
Today I have received a letter from Mr. Naval K. Bangard stating that he has given me Rs. 4.5 crores and asking me to transfer the entire amount to the Customs Department.
Now I have to clarify that as stated by Mr. Naval Kishore Bangad in the said letter the payment of Rs. 1-5 crores was towards losses incurred by him in his trading of shares. I agree to the contents of the said letter and I am willing to transfer rupees three crores to Customs Department ion behalf of Mr. Nawal Kishore Bangad. i. It is submitted that, these statement clearly establishes the bona fide of the Appellant and the fact that the Appellant had no knowledge that money given to her by way of favour has been obtained by fraudulent means.
j. It is further submitted that that the documents seized by the Department during the search of the premises on Bangard on 16.10.1997 and 18.10.1997 listed on pg.2 of the Show Cause Notice dated 30.09.2002 do not prove that the Appellant had any knowledge or inkling of the tainted nature of money. It is submitted that the documents seized from the premises of Bangard are mostly public documents, and that the chequebooks seized are not of the account from which the money has been paid for the purchase of the said flat.
k. It is submitted that in Appellants own case in Honble Tribunal in the case of Gem Nuts & Produce Exports Co. Pvt. Ltd. reported as 2003 (162) E.L.T. 165 (Tri. Mumbai) held that there is in fact nothing to suggest that the Appellant (Gem Nuts) knew that the money was out of the drawback fraudulently received. The conduct of the Appellant that the commissioner relies upon only took place in fact after the appellant came to know the fraud. The liability of Bangad and his company to repay the money of drawback that was received arose only after the Order of 11.06.1998 of the Assistant Commissioner. The sum that the Appellant had received prior to this date therefore would not fall within the scope of the order passed under Rule 4 and hence, recoverable in terms of the rules. The sum had been paid by the purchaser received by the Appellant long before any notice was issued. l. Further the Honble High Court of Bombay in the case of Commissioner of Customs. (Import) vs. Gem Nuts & Produce Exports Co. Pvt. Ltd. reported as 2010 (251) E.L.T. 353 (Bom.) the Honble Bombay High Court observed at para 16 as follows:
In the instant case, the Appellate Tribunal had recorded a finding of fact that at the time the money was paid by way of any earnest money deposit, the applicants themselves were not aware of the fraud and as such the Respondent would not be aware that the money received was a part of the fraud and as such the Respondent would not be aware that the money received was a part of the fraud. The money must have been paid by cheque or draft as the law requires such payment to be so done. Considering the ratio of the Supreme court in State Bank of India (supra), it is thus material to show that the Respondent had knowledge of the fraud and therefore that the money could be recoverable in the hands of the Respondent. 7.4.2 The contention of the Revenue is that the appellants herein did have knowledge of the nature of the money received by them being tainted or ill-gotten or being wrong duty drawback availment. This is ipso facto evident from the facts on the record and more particularly various documents, signed blank cheque books, rubber stamps, joint bank A/cs etc. belonging to the appellants, found at the time of search in the office premises of Mr. Bangard. Further, the opening of several joint bank accounts with Mr. Bangard and at the same time de-facto control over the various bank accounts belonging to the appellants in the hand of Mr. Bangard, prove beyond doubt that the appellants had conspired and abetted with Mr. Bangard in the duty drawback fraud. Further, Mrs. Lakhotia being closely related to Mr. Bangard was well aware of the financial status of Mr. Bangard, whose net worth was not such that he could give her big sums at the relevant time. Hence, she consciously abetted and conspired with Mr. Bangard in laundering the tainted money by her various acts of fabrication of false evidence, making false declaration, intentional omission to give information of offence committed by Mr. Bangard, accepting money from Mr. Bangard to screen him from the offence committed by him including punishment, dishonestly receiving stolen/ill-gotten money and assisting in concealment of the same.
7.4.3 Further the facts of Gem Nuts case are different. Gem Nuts was not aware of the tainted nature of money received by it the normal course of business, deposited with it by way of earnest money under Agreement to purchase office space.
7.4.4 Having considered the rival contentions, we agree with the Revenue and hold that neither of the appellants are real owners of the flats in question. The ruling of the Apex Court in the case of SBI vs. Rajendra Kr. Singh does not help the appellants, as in that case the State Bank of India had received money in the normal course of banking business, whereas in the present case the appellants have received money from Mr. Bangard conscious of its tainted nature as they have abetted and conspired in laundering of the same as more fully discussed above. There is no normal transaction in this case.
7.5.0 CANNOT TRAVEL BEYOND THE ALLEGATIONS IN THE SHOW CAUSE NOTICE.
7.5.1 Without prejudice to the above, it is submitted that the Show Cause Notice issued on 30.09.2002 does not contain any allegation against the appellant to the effect that the appellant is a defaulter within the meaning of said Rules and/or that the appellants accepted the money knowing the fraudulent nature of money. It is submitted that when the basis of the case has not been made out in the Show Cause Notice, at a later stage the Department cannot travel beyond the allegations in the Show cause Notice. Reliance in this regard is placed on the following cases:-
Sargodha Enterprises Vs. Commissioner of Central Excise, Delhi-I - 2004 (167) E.L.T. 519 (Tri. Del.) Commissioner of Central Excise., Bangalore Vs. Brindavan Beverages (P) Ltd. - 2007 (213) E.L.T. 487 (S.C.) 7.5.2 That in answer to this ground of the appellants, the Revenue contends that the various acts of omission and commission and several documents found in the premises of Mr. Bangard belonging to the appellants and their others firms/Company, statements made under Section 108 of the Act, morefully mentioned in the show-cause-notice in several paragraphs reproduced in para nos. 2.2 to 2.36 above, do make out the allegations against the appellants to the effect that the appellants are defaulters within the meaning of the Recovery Rules. Further it explicit that the appellants accepted the ill tainted money having knowledge of its fraudulent nature.
7.5.3 Having considered the rival contentions and perusing the records, we find that both the allegations as stated in para 7.5.1 are made out, the issue have been more fully discussed hereinabove. Further, we find that the appellants have committed various offences in the nature of conspiracy, abatement, attracting various penal provisions of the Indian Penal Code, particularly Sections 107(Abetment to crime), 108(Abettor), 110(Punishment of Abetment), 120A & B(Criminal Conspiracy), 192(Fabricating false evidence), 196(Using evidence known to be false), 197(Issuing or signing false certificate), 198(Using as true a certificate known to be false), 199(False statement made in declaration which is by law receivable as evidence), 201(Causing disappearance of evidence of offence, or giving false information), 202(Intentional omission to give information of offence), 207(Fraudulent claim to property to prevent its seizure as forfeited or in execution), 213(Taking gift etc. to screen an offender from punishment), 411(Dishonestly receiving stolen property), 414(Assisting in concealment of stolen property), 424(Dishonest or fraudulent removal or concealment of property), 463(Forgery), 464(Making a false document), 468 (Forgery for cheating).
7.6.1 We also take particular of the evidence on records more particularly statement(s) of Mrs. Vinita Lakhotia recorded on 28.11.97 under Section 108 of the Customs Act, 1962 which are as follows:-
Today i.e. on 28.11.97 I reported to this office in response to the summons issued against me by Superintendent Shri R.S. Negi summons no. RSN/156/97 dated 27.11.97. In response to the above I am in receipt of summons no. YRK/159/97 dated 28.11.97 issued by Superintendent of Customs Shri Y.R. Karwasra. I am giving my further statement as under.
In my earlier statements I promised to transfer the money which Mr. Naval Kishore Bangard had favoured to me. In this regard I had agreed to transfer the said money either in movable or immovable form i.e. which was acquired out of favoured money. In order to keep my promise I have already taken steps and given letters to my bankers to transfer balance amount in all my accounts in favour of Customs. I do not exactly remember the total amount balance in my accounts but it must be around Twenty seven lakhs (27,00,000/-).
In addition to the above I am surrendering the original sale deeds/documents pertaining to Flat Nos. 1 & 2 on 6th Floor, A Wing Lloyds Garden at Prabhadevi. I shall be submitting the original documents of the said flats by 02.12.97.
As regards to your question I have to state that apart from my residential flat at 34 Anil Apartment, the above mentioned two flats respectively in the name of M/s Premium Intertrade Pvt. Ltd. & Mrs. Vinita S. Lakhotia and the earnest money given to M/s Gem Nuts & Produce Exports Co. Pvt. Ltd. For the office premises situated at Free Press House, Nariman Point, Mumbai. I do not have any other properties in my name or in my companies name. This statement was written by the officer on my request since I have gone for eye surgery.
The above statement is given by me without force, threat and coercion. 7.6.2 That it is evident from the aforementioned statement dated 28.11.97 of the appellant that the appellant had already surrendered the flats in question in favour of Revenue towards recovery of the Government dues. Due to her this gesture, it appears that the department did not proceed against her by way of penalty and prosecution attracted under the provisions of the Act and more particularly under Section 135(1)(d) of the Act. It appears, with the passage of time the appellant has changed her mind and had started opposing the attachment of flats in question which she voluntarily surrendered to Revenue on 28.11.97. We also take notice of the fact that against the order in original dated 27.12.1997 passed against Mr. Bangard and his defaulting firms/partners, wherein the said flats where adjusted towards the amount recoverable, a copy of which was duly served on the appellants on by hand on 29.12.97. The said order was not appealed against and had attained finality.
7.6.3 In view of aforesaid discussions and findings, the appeals filed by the appellants are dismissed. It is held the appellants are defaulters of Govt. Dues (duty drawback) and the flats in question have been rightly attached for recovery of Govt. Dues. No costs.
8. A copy of this order is to be sent to the Chief Commissioner of Income Tax, Mumbai.
(Pronounced in court on ..03.2013) (P.R.Chandrasekharan) (Anil Choudhary) Member (Technical) Member (Judicial) Sp 56