Customs, Excise and Gold Tribunal - Tamil Nadu
A.F. Gani vs Commissioner Of Customs on 19 October, 2004
Equivalent citations: 2005(98)ECC844, 2005(186)ELT493(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The appellant, in this appeal, is aggrieved by the imposition of a penalty of Rs. 2,00,000 (Rupees two lakhs) on him by the Commissioner of Customs under Section 114(i) of the Customs Act.
2. On the basis of intelligence, officers of Customs kept surveillance on one Shri Makesan Mottayan in Chennai Airport from where he was about to proceed to Singapore the fight No. SQ 409 on 22.11.93. They questioned that passenger, after his clearance by immigration and customs, as to whether he was carrying any Indian or foreign currencies on his person or in his baggage. Shri Makesan denied having and such thing. But, when the officers examined his baggage, six paper bundles containing foreign currencies were recovered. The search on his person also resulted in the recovery of foreign currencies. In all, 68,050 US Dollars, 3,08,500 Saudi Rials, 10,500 UAE Dirhams, 500 Quatar Rials and 100 Singapore dollars were recovered from Shri Makesan, who had not declared the said currencies to the Customs. Shri Makesan could not produce any permit of the Reserve Bank of India for export of the currencies either. Hence, the currencies were seized under a Mahazar on 23.11.93 itself. In an immediate follow-up action on the basis of information furnished by Shri Makesan, Room No. 14, 1st Avenue, Ashok Nagar, Chennai-83, which was then occupied by one Shri Arasu, was searched by the Customs officers. When questioned, Shri Arasu disclosed that he was having some foreign and Indian currencies as well as silver granules (200 kg) in his possession, which were produced before the officers. The currencies and silver granules were also seized under a Mahazar. Statements of S/Shri Makesan and Arasu were also recorded. In his statement, Shri Arasu stated, inter alia, that he used to receive gold and silver brought from Singapore by passengers, as arranged by one Shri Ravichandran (brother of Shri Makesan) and sold the goods in India through one Shri A.F. Gani (appellant), who would obtain the sale proceeds in foreign currencies. These foreign currencies received from the appellant were then sent to Singapore through the same passengers, who had brought the gold and silver. Arasu also stated that the foreign currencies seized from him were the sale proceeds of gold and silver, returned by the appellant. On the basis of this statement, the residential and business premises of the appellant were searched by the Customs officers, but nothing incriminating was found. The efforts of the Customs to apprehend the appellant were not successful. From the investigative results, it appeared to the department that the seized currencies and silver granules were liable to be confiscated and penalties were liable to be imposed on Makesan, Arasu and the appellant. Therefore, a show-cause notice was issued to these three persons. The allegation levelled against the appellant was that, by dealing in foreign currencies contrary to the restriction of the Reserve Bank of India and arranging to sell the imported silver/gold and providing the sale proceeds to Shri Arasu in foreign currency for illicit export, he (appellant) had actively associated with Arasu and Ravichandran and had abetted the offence committed by Makesan and Arasu. The proposal in the show-cause notice to penalize the appellant under Section 114(i) of the Customs Act was based on this allegation. In reply dated 20.7.98 to the show-cause notice, which was submitted through his counsel, the appellant contested the above allegation and claimed that he had not been incriminated in Shri Arasu's statement. The appellant stated that there was no reason to connect him with Shri Arasu or the seized currency. He contended that the uncorroborated statement of Shri Arasu, who was a co-accused, was not liable to be used against him. Shri V. Devanathan, Superintendent of Customs, who had recorded the statement of Arasu on 23.11.93, was cross-examined by the appellant's Counsel. Shri Devanathan deposed that Arasu's statement was voluntary. In a subsequent letter dated 15.7.99 submitted by the appellant's counsel to the Commissioner, it was stated that Shri Arasu had retracted his statement dated 23.11,93 through his Counsel's letter dated 18.5.94 addressed to the Commissioner. The Counsel for the appellant reiterated the above contentions before us and argued that the appellant's activity referred to in Arasu's statement was not illegal and the same did not attract Section 114 (i) of the Customs Act. It was pointed out that there was nothing in Arasu's statement to indicate that the appellant even remotely knew what Arasu had been doing with the foreign currencies. The appellant was denied opportunity to cross-examine Shri Arasu. Arasu's statement was not to be used against the appellant without allowing him to cross-examine Arasu. Even otherwise, no case was made out against him for penalty under Section 114(i) on the basis of Arasu's statement which only indicated that the appellant had arranged for sale, in India, of gold and silver licitly imported into India and that the sale proceeds were collected from the buyers in foreign currencies. No offence was involved in this activity. No incriminating material was recovered from the appellant's business/residential premises. In the circumstances, according to Ld. Counsel, there was no evidence of the alleged complicity of the appellant in the attempted export of foreign currency from Chennai airport. Ld. Counsel for the appellant also pointed out that no statement was recorded from the appellant. He referred to Section 13 of the Foreign Exchange Regulation Act, 1973 (FERA) and argued that it was permissible for any person to lawfully take or send out of India any Indian or foreign currency after declaring it to the authorities concerned, In the instant case, the department had no case that the foreign currencies which were allegedly attempted to be exported to Singapore had not been declared to the authorities. Hence, the currencies were not liable to be confiscated and, consequently, nobody having anything to do with the currencies was liable to be penalised.
3. We have heard Ld. SDR also, who referred to Section 13 of FERA and contended that the appellant had not shown that the foreign currencies in question had satisfied the requirements of the said provision of law, to be taken out of the country. According to Ld. SDR, the statement dated 23.11.93 of Shri Arasu indicated the complicity of the appellant in the attempted export of the foreign currencies. The appellant was also aware of the fact that the sale proceeds of gold and silver which he handed over to Makesan and Arasu were to be illicitly exported to Singapore. The appellant's involvement in the transaction was in the nature of abetment of the offence of attempted illicit export of foreign currencies. Therefore, he was liable to be penalised under Section 114(i)ibid.
4. We have examined the submissions. There is no dispute of the appellant having been penalised on the basis of the statement given by Shri Arasu on 23.11.93. This statement has been claimed to have been retracted through letter dated 18.5.94 of Arasu's Counsel addressed to the Commissioner of Customs. We are unable to under stand as to how Arasu's statement could be retracted by his Counsel, and that too, after about six months, We shall, therefore, proceed on the basis that Arasu's statement dated 23.11.93 was never retracted. We have perused this statement, which indicates that Arasu is a graduate in Civil Engineering. Being a literate person, his statement should be literally understood. Shri Arasu referred to the appellant's role in his statement thus: "Gani's function is that he will dispose the silver/gold given to him by us and will give the sale proceeds of it in foreign currencies to us after deducting his commission". Shri Arasu further disclosed that he (Arasu) used to visit India from Singapore, bringing with him gold and silver. During his visit in October 1993, he brought 4,900 gs. of gold and 100 kgs. of silver, which were disposed of through the appellant. During his stay in India, Arasu used to receive passengers bringing gold/silver sent from Singapore by Ravichandran. The foreign currencies given by Gani after disposing of the gold and silver were sent back to Singapore through the passengers within the permissible limit of 10,000 US dollars. Arasu also disclosed that the foreign currencies seized from him by the Customs officers on 22.11.93 were the sale proceeds (of silver and gold) given by Gani.
5. We have not been able to perceive any incriminating element against the appellant in the above statement of Arasu. Nothing contained in Arasu's statement seems to support the finding recorded against the appellant by the Commissioner. The relevant finding of the Commissioner is contained in para 15 of his order.
"Normally when the goods are sold in India, the sale proceeds should be in Indian currency which is a legal tender in India. The fact of Shri Gani returning the sale proceeds to Arasu and others in foreign currencies is an unusual one. This unusual practice indicates the knowledge on the part of Shri A.F. Gani that the said foreign currencies which are the sale proceeds are taken out of the country by S/Shri Arasu, Ravichandran and Thiyaga since he is in active business with Arasu/Kavichandran/Thiyaga. Mod Shri Gani been ignorant, he would have returned the sale proceeds in Indian currency and not in foreign currencies."
The finding is to the effect that the appellant knew that the foreign currencies (sale proceeds of gold and silver) were taken out of the country by Arasu and others. We are unable to accept this finding inasmuch as Shri Arasu never stated that the appellant was aware of the sale proceeds being taken out of the country. Even if it be assumed that the appellant had any such knowledge, that is not enough to indicate mens rea on the appellant's part inasmuch as export of declared foreign currency out of India is not illegal and the Commissioner has not found that the appellant was aware of the foreign currency being taken out of the country illicitly. The FERA provisions referred to by both sides show that it was permissible for a person to take or send foreign currencies into, or out of, the country, subject to regulations prescribed under the Act. The Revenue has not shown that the foreign currencies in question were intended to be exported to Singapore in breach of any such regulation that the appellant was aware of the same. On the other hand, Arasu's statement relied on by the Revenue contains an averment that the foreign currencies returned by Gani used to be sent to Singapore through passengers within the permissible limit of 10,000 US Dollars. In the circumstances, the appellant cannot be held to have abetted the offence charged against Arasu and others and hence cannot be visited with penalty under Section 114(i) of the Customs Act.
6. In the result, the penalty imposed on the appellant is set aside and the appeal is allowed.