Custom, Excise & Service Tax Tribunal
Kolkata-Admn Airport vs Shri Sanjay Agarwal on 18 March, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 75358 of 2024
(Arising out of Order-in-Original No. KOL/CUS/AIRPORT/COMMR/ADMN/22/2023
dated 31.07.2023 passed by the Principal Commissioner of Customs (Airport &
A.C.C.), Custom House, 15/1, Strand Road, Kolkata - 700 001, West Bengal)
Shri Avinash Soni : Appellant
5-9-273, C1, Mayur Kushal Complex, Abids,
Hyderabad - 500 001
[Prop. Of M/s. Shree Ganesh Jewels, 5-9-235, Shop No. 7A,
Lower Ground Floor, Sanali Mall, Abids, Hyderabad - 500 001]
VERSUS
Commissioner of Customs (Airport & Air Cargo) : Respondent
Custom House, 15/1, Strand Road,
Kolkata - 700 001
WITH
Customs Appeal No. 75359 of 2024
(Arising out of Order-in-Original No. KOL/CUS/AIRPORT/COMMR/ADMN/22/2023
dated 31.07.2023 passed by the Principal Commissioner of Customs (Airport &
A.C.C.), Custom House, 15/1, Strand Road, Kolkata - 700 001, West Bengal)
Shri Sanjay Agarwal : Appellant
5-9-273, C1, Mayur Kushal Complex, Abids,
Hyderabad - 500 001
[Villa No. 41, Orion Villas, NSL Infrastructures, Raidurgam,
Gachibowli, Hyderabad - 500 032]
VERSUS
Commissioner of Customs (Airport & Air Cargo) : Respondent
Custom House, 15/1, Strand Road,
Kolkata - 700 001
WITH
Customs Appeal No. 75403 of 2024
(Arising out of Order-in-Original No. KOL/CUS/AIRPORT/COMMR/ADMN/22/2023
dated 31.07.2023 passed by the Principal Commissioner of Customs (Airport &
A.C.C.), Custom House, 15/1, Strand Road, Kolkata - 700 001, West Bengal)
Shri Preet Kumar Agarwal : Appellant
5-9-273, C1, Mayur Kushal Complex, Abids,
Hyderabad - 500 001
[1-2-593/17, Domalguda, Gaganmahal Colony,
Hyderabad - 500 029]
VERSUS
Commissioner of Customs (Airport & Air Cargo) : Respondent
Custom House, 15/1, Strand Road,
Kolkata - 700 001
Page 2 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
AND
Customs Appeal No. 75907 of 2024
(Arising out of Order-in-Original No. KOL/CUS/AIRPORT/COMMR/ADMN/22/2023
dated 31.07.2023 passed by the Principal Commissioner of Customs (Airport &
A.C.C.), Custom House, 15/1, Strand Road, Kolkata - 700 001, West Bengal)
Commissioner of Customs (Airport & Air Cargo) : Appellant
Custom House, 15/1, Strand Road,
Kolkata - 700 001
VERSUS
Shri Sanjay Agarwal : Respondent(s)
5-9-273, C1, Mayur Kushal Complex, Abids,
Hyderabad - 500 001
[Villa No. 41, Orion Villas, NSL Infrastructures, Raidurgam,
Gachibowli, Hyderabad - 500 032]
AND
ii) Shri Preet Kumar Agarwal
iii) Shri Avinash Soni
iv) Shri Dhruvajyoti Roy
v) Shri Pallav Roy Chowdhury
vi) Smt. Champa Mukherjee
vii) Shri Satya Gopal Mallick
viii) State Trading Corporation of India Ltd. and
ix) Shri Ajay Kumar Agarwal
APPEARANCE:
Shri Arnab Chakraborty, Advocate
Shri B.N. Pal, Advocate
Shri A.K. Manna, Consultant
ALONG WITH
Shri Sanjay Agarwal (in person)
Shri Dhruvajyoti Roy (in person),
Shri Pallav Roy Chowdhury (in person)
Smt. Champa Mukherjee (in person)
Shri Satya Gopal Mallick (in person)
For the Exporter(s)/Noticee(s)/Co-Noticee(s)
Shri Faiz Ahmed, Authorized Representative
For the Revenue
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NOs. 75702-75705 / 2025
DATE OF HEARING: 25.02.2025
DATE OF DECISION: 18.03.2025
Page 3 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
ORDER:[PER SHRI ASHOK JINDAL] Both sides are in appeal against the impugned order. Since all these appeals are arising out of a common issue, they are disposed of by a common order.
2. The appellants/exporters/noticees, namely, Shri Avinash Soni, Shri Sanjay Agarwal and Shri Preet Kumar Agarwal are in appeal against the confiscation of the impugned goods under Section 113(k) of the Customs Act, 1962 and imposition of penalties on them under Sections 114(iii) and 114AA of the said Act. They have also challenged the quantum of redemption fine imposed under Section 125 of the Act inter alia contending that the same is not commensurate with the margin of profit. The appellants-exporters have also prayed for allowing export/re-export of the impugned goods under Section 110 of the Act.
2.1. Whereas, the Revenue has filed the appeal against the respondents viz. Shri Sanjay Agarwal, Shri Preet Kumar Agarwal, Shri Avinash Soni contending that paltry amounts of penalty under Sections 114(iii) and 114AA of the Customs Act, 1962 have been imposed on them which is not commensurate to the gravity of the offence committed and also against other respondents/co-noticees viz. Shri Dhruvajyoti Roy, Shri Pallav Roy Chowdhury, Smt. Champa Mukherjee, Shri Satya Gopal Mallick, State Trading Corporation of India Ltd. and Shri Ajay Kumar Agarwal contending that the ld. adjudicating authority has erred in dropping the proceedings against them and/or more stringent personal penalties ought to have been imposed against all these noticees. The Revenue has also challenged the quantum of Page 4 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB redemption fine imposed under Section 125 ibid. on the ground that the same appears to be grossly inadequate.
2.1.1.In this regard, the respondent-noticees have prayed for dismissal of the appeal preferred by the Revenue as being non-maintainable and devoid of merit.
3. The facts of the case are that specific intelligence was received at DRI, Kolkata that a person, namely, Shri Sanjay Agarwal would divert an export consignment of Gold Jewellery in the domestic area after his son, Shri Preet Kumar Agarwal completes all export formalities at NSCBI Airport, Kolkata and hands over the same consignment of Gold Jewellery to him outside the airport terminal. Intelligence further suggested that one manual Shipping Bill No. 6530662dt. 03.04.2018 had already been filed at Air Cargo Complex (ACC), NSCBI Airport, Kolkata on 03.04.2018 for the export of that impugned gold jewellery consignment. As per declaration made before Customs, Shri Preet Kumar Agarwal was to carry the said export consignment of gold bangles to Dubai, UAE by Emirates flight. No. EK 573 on 04.04.2018.
3.1. On the basis of the said intelligence, several teams of DRI officers rushed to the NSCBI Airport, Kolkata on 04.04.2018. One team of officers proceeded towards Gate No. 11 at the security hold area of the International Departure Terminal through which passengers of flight No. EK 573 to Dubai on 04.04.2018 started boarding wherein DRI officers spotted Shri Preet Kumar Agarwal when he was approaching Gate no. 11 and asked him about the consignment of gold bangles believed to be in his Page 5 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB possession for export to Dubai on hand carry basis. After initial hesitation, Shri Preet Kumar Agarwal admitted that he had already delivered the export consignment of gold bangles to his father Shri Sanjay Agarwal, outside the airport terminal for taking back the same to Hyderabad. As per directions, Shri Preet Kumar Agarwal terminated his onward journey to Dubai and accompanied the officers to the office of Air Intelligence Unit (AIU) of Customs in the International Arrival Hall of NSCBI airport along with his luggage for further proceedings. At the AIU office, the person and the luggage of Shri Preet Kumar Agarwal were thoroughly searched after observing due legal formalities. As already admitted by him, the boxes containing gold bangles meant for export were not found in his possession.
3.2. Another team of DRI officers intercepted Shri Sanjay Agarwal while he had already boarded Indigo flight No. 6E 373 to Hyderabad. The officers had to de-board Shri Sanjay Agarwal from the aircraft with the help of Airlines staff, as the aircraft had already left the terminal for takeoff. From the boarding pass recovered from Shri Sanjay Agarwal, it was found that he was travelling on a ticket bought in the name of his son Shri Preet Kumar Agarwal. On being questioned, Shri Sanjay Agarwal admitted to having received the boxes containing gold bangles from his son Shri Preet Kumar Agarwal at the gate of departure terminal of the NSCBI airport, after all formalities for export of the impugned gold bangles had been completed through Shri Preet Kumar Agarwal. He also informed that he had already booked the two boxes containing gold bangles meant for export with Indigo Airlines domestic cargo for sending to Hyderabad instead. Shri Sanjay Agarwal was also taken to the office of AIU in Page 6 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB the International Arrival Hall of NSCBI airport for further proceedings. At the office of AIU at International Arrival Hall, the baggage of Shri Sanjay Agarwal was searched, observing all due legal formalities among others, and thereupon the following articles/documents were recovered and seized: -
a. Original boarding Pass No. A9JPPF in the name of Shri Preet Agarwal for Indigo flight No. 6E 373 dated 04.04.2018 for a journey from Kolkata to Hyderabad.
b. Photocopy of letter dated 04.04.2018 issued by Shree Ganesh Jewels, Hyderabad addressed to AC, Customs (Export), Air Cargo Complex, NSCBI Airport, Kolkata regarding permission to file manual Shipping Bill for export of gold jewellery through personal hand carry by Shri Avinash Soni.
c. Original letter vide F.No. S.41(Misc)- 77/2017CCX(Pt) dated 03.04.2018 (signed by Appraiser on 04.04.2018) issued by Appraiser, Air Cargo Complex, NSCBI Airport, Kolkata regarding export of gold jewellery, to be carried personally by Shri Preet Kumar having passport No. 24198550 of M/s. Shree Ganesh Jewels.
d. One Airway Bill of Inter Globe Aviation Ltd. (Indigo) bearing No. 312-48197100 dated 04.04.2018 in respect of gold jewellery weighing 57 kgs for transportation by air from Kolkata to Hyderabad.
e. Original (Customs Copy), Duplicate (Exporters copy), Triplicate (Export Promotion copy) & Quadruplicate (Exchange Control Copy) of Shipping Bill No. 6530662 dt. 03.04.2018 of Page 7 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB M/s. Shree Ganesh Jewels along with Invoice and Packing list, all signed by the officers of Customs, NSCBI Airport, Kolkata.
f. Original letter dated 04.04.2018 issued by Shree Ganesh Jewels, Hyderabad addressed to the AC, Customs (Export), Air Cargo Complex, NSCBI Airport, Kolkata regarding undertaking for Export of gold jewellery to Dubai vide invoice No. SALES-EXPORTS/18-19/UAE/01 dated 02.04.2018.
g. One original note sheet of Customs file, where Order was given for examination of goods of Shipping Bill No. 6530662 dt. 03.04.2018 and three photocopies of Note sheet page No. (viii) to (x).
h. Original delivery challan No. 36592 dated 04.04.2018 of Indigo Cargo addressed to Mr. Preet Kumar Agarwal for delivery of 57.50 kg gold bangles, which arrived vide flight No. 6E 6246 dt. 03.04.2018.
i. Original export declaration form No. G18000047552 dt. 04.04.2018 submitted by the exporter M/s Shree Ganesh Jewels, Hyderabad in respect of Invoice No. Sales- Exports/18-19/UAE/01 dt. 02.04.2018, currency USD-2213425 equivalent to INR 14,19,91,214/-.
3.3. From personal search of Shri Sanjay Agarwal, two bunches of keys were recovered, which Shri Sanjay Agarwal stated to be the keys of the boxes containing gold bangles, which he had booked with Page 8 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB Indigo Airlines domestic cargo for taking to Hyderabad. From his wallet, two Debit cards bearing Nos. 4280-9630-0012-1527 (Kotak Mahindra Bank) and 4363-9521-0024-3638 (Indusind Bank), in the name of Avinash Soni were recovered and three Debit cards bearing Nos. 4280-9630-0021-0569 (Kotak Mahindra Bank), 4373-7820-0074-3017 (Andhra Bank) and 5129-3201-0067-7910 (Axis Bank), in the name of Radhika Agarwal were recovered. However, those debit cards were not seized by DRI.
4. Yet another team of DRI officers intercepted the two boxes containing gold bangles at the office of Indigo Airlines domestic cargo, Kolkata, booked by Shri Sanjay Agarwal in his own name for delivery at Hyderabad. As per documents, the consignment was booked by one Pawan Cargo. The two boxes were taken to the office of AIU in the International Arrival Hall accompanied by the staff of Indigo Airlines and opened in presence of Shri Sanjay Agarwal and Shri Preet Kumar Agarwal with the keys recovered from the possession of Shri Sanjay Agarwal. Both the boxes were found to contain gold bangles.
4.1. One box was found to contain 580 pcs. of gold bangles and the other box was found to contain 614 pcs. of gold bangles. The gold bangles were examined by two Government approved assayers & valuers, namely, M/s. AB Kundu Jewellers and M/s. Prafulla K. Pakhawala. After examining the gold bangles contained in the two boxes, the assayers & valuers certified that there were a total 1194 pcs gold bangles in the two boxes, which were made of 22 carat gold. Total weight of the gold bangles was certified to be 54096 gms. and the value of the same was ascertained to be Rs. 16,10,43,792/-.
Page 9 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
5. In terms of the Shipping Bill No. 6530662 dt. 03.04.2018 of M/s Shree Ganesh Jewels, the gold bangles were meant for export on hand carry basis by Shri Preet Kumar Agarwal to Dubai, wherein all export formalities were completed by Shri Preet Kumar Agarwal but those were found booked with Indigo Airlines domestic cargo meant for transportation to Hyderabad in the name of Shri Sanjay Agarwal. Shri Sanjay Agarwal could not produce any document in support of legally carrying the boxes containing gold to Hyderabad from Kolkata. Shri Preet Kumar Agarwal also could not submit any permission of the Customs authority for delivering the impugned gold jewellery, cleared for export, to his father in the domestic area instead of taking the same to Dubai. Thus, the impugned 1194 pcs gold bangles, weighing 54096 gms. and valued at Rs. 16,10,43,792/-, were seized under the provisions of Customs Act, 1962 on the reasonable belief that the same are liable to confiscation in terms of Section 113 of the Customs Act, 1962. Later on, the two sealed boxes containing the seized gold bangles had been deposited at Currency Shed, Custom House, Kolkata for safekeeping under Shed.
6. The entire proceedings starting from interception of Shri Preet Kumar Agarwal, Shri Sanjay Agarwal and the two boxes containing gold bangles meant for export, examination of the gold bangles by the authorized assayers/ valuers and drawal of the samples from them and subsequent sealing of both the bangles and samples drawn from them were covered under separate Panchnama proceedings.
Page 10 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
7. The said Shipping Bill No. 6530662 dt. 03.04.2018 was found to have been filed manually and not through EDI system of Customs. To ascertain the total number of consignments shown to have been exported by the firms controlled by Shri Sanjay Agarwal through Kolkata Airport, the Manual Shipping Bill Filing Registers maintained at Air Cargo Complex (here in after referred to as "ACC"), Kolkata for the last three years i.e. from 2015 to 2018 were collected.
8. Thereafter, summons were issued and statements were recorded from various persons in connection with the case.
8.1. Voluntary statement of Shri Sanjay Agarwal was recorded under Section 108 of the Customs Act, 1962 on 05.04.2018, wherein he inter alia submitted as under: -
i. In response to a query raised, he had inter alia stated that in relation to export of gold bangles in the name of Shree Ganesh Jewels, he and his son Preet Kumar Agarwal reached Kolkata on 03.04.2018 at about 11.00 hrs by Indigo flight from Hyderabad; that the gold bangles were sent to Kolkata by parcel through Indigo on 03.04.2018; that after reaching Kolkata they first went to the Customs office at Air Cargo Complex, Kolkata and submitted the documents for export of the bangles; that after completion of documentation work in Customs and after completion of formalities, Shipping Bill No. 6530662 dt. 03.04.2018 was allotted for the export consignment of gold bangles of Shree Ganesh Jewels.Page 11 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB ii. In the morning of 04.04.2018, they reached Indigo Domestic Cargo office at NSCBI Airport, Kolkata at about 12.00 pm; that from there they took delivery of the two metal boxes totally containing approximately 54 Kg gold bangles meant for export in the name of Shree Ganesh Jewels; that they took the two metal boxes in two black coloured trolley bags of brand DELSEY', which they brought with them from Hyderabad as hand baggage specially for carrying the two metal boxes containing gold bangles; that after taking lunch they went to the Air Cargo Complex, NSCBI Airport, Kolkata at about 01.30 pm and met the Appraiser, a lady, and placed the documents like Shipping Bill, Invoice cum Packing List; that after due verification, the appraiser signed the documents and sent them to the Assistant Commissioner (AC); that the value of the total declared 54122 gms of gold bangles was appraised as USD 22,13,425 (INR 14,19,91,214/- exchange rate being INR 64.15 per USD); that after AC signed and approved the documents, the data entry of the consignment was done in the system; then the documents was sent to the Shed Appraiser who examined the goods and ordered the Preventive Officer (PO) for escorting the goods from the Air Cargo Complex to the SDO at the airport international departure; that in respect of the subject consignment, his son Preet Kumar Agarwal (mentioned in the Shipping Bill as Preet Kumar) was to hand carry the consignment and had his ticket booked in the Emirates Flight EK 573 dated 04.04.2018 to Dubai; that they accompanied the PO from Air Cargo Complex to Page 12 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB International Departure in taxi along with the two sealed metal boxes carried in two black coloured trolley bags of brand 'DELSEY' and reached International Departure at about 04.30 pm; that Preet and PO entered the International Departure and he waited outside; that after about 15 minutes, the PO came outside and was dropped at the Air Cargo Complex in his taxi.
iii. It was further submitted that he then made a call to Preet Kumar Agarwal in his mobile No. 9000199497 to know about the happenings there; that Preet informed him that the SDO has given him back two boxes containing bangles outside the Security Hold Area; that then he instructed Preet to come to the first gate (probably gate 1A/1B) to give him the two boxes containing gold bangles; that he submitted that those two boxes were being carried in the two black coloured trolley bags of brand "Delsey'; that accordingly, Preet came to the gate and handed over to him the said two trolley bags containing the two metal boxes and he took them; that Preet went inside and Shri Sanjay went to the Indigo Domestic Cargo at NSCBI Airport, Kolkata by taxi with the said two metal boxes containing the gold bangles meant for export; then on the way to Indigo Domestic Cargo, he broke the seal of the two boxes to avoid getting noticed by the Indigo people; that there he met one agent of Indigo and booked the said two boxes containing gold bangles for delivery to himself (Sanjay Agarwal) in Hyderabad; that he requested to send the goods by the first available flight of Indigo to Hyderabad; that after x-ray of the goods, he Page 13 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB went to the domestic departure to board flight to Hyderabad from Kolkata; that after he boarded the flight and the same started taxiing, it suddenly stopped and he was de-boarded from the flight along with his checked in baggage, those were the two trolley bags of brand DELSEY' and one hand baggage; that he found a team of DRI officers waiting for him at the tarmac along with independent witnesses.
iv. Regarding receipt of payments against export of gold bangles, where the bangles were not actually exported but diverted after completion of export formalities, Shri Sanjay Agarwal submitted that he had to submit BRCs along with Shipping Bills to the companies from which he had procured primary gold to release the security amount paid at the time of procurement of gold; that for getting the BRCs he had to send money to Dubai through hawala channels which were then transferred to his bank as export proceeds; that the main hawala operator was Dinesh whose Hyderabad contact person was Samdini who resides in the old city; that another hawala operator was Rahul of Mumbai; that he sold the primary gold bought by him through companies against cash; that the money generated was then sent through Hawala to Dubai; that he sold the gold jewellery to Balaji Jewellers / Padmavati Jewellers, M Rajendraprasad Jewellers, Weonmala Jewellers etc. 8.1.1.A further statement was also recorded from Shri Sanjay Agarwal under Section 108 of the Customs Act, 1962 on 06.04.2018 wherein he inter alia Page 14 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB submitted that he reiterated his earlier statement dated 05.04.2018.
8.2. Voluntary statement of Shri Preet Kumar Agarwal was also recorded on 05.04.2018 under Section 108 of Customs Act, 1962 wherein it was inter alia stated that: -
i. He (Preet Kumar Agarwal) came to Kolkata from Hyderabad in the morning of 03.04.2018 along with his father by air; that after reaching Kolkata, both of them went to Air Cargo Complex at NSCBI Airport, Kolkata where his father did some work related to processing of export consignment of gold bangles in the name of Shree Ganesh Jewels and met with some agent over there in that regard; that at night, he stayed at the hotel named 'The Pride' near Salt Lake; that in the morning of 04.04.2018, he came to Air Cargo Complex, NSCBI Airport and received two boxes of gold jewellery from Indigo Cargo which were booked by parcel as domestic cargo from Hyderabad on 03.04.2018; that after taking meal at Haldiram, he and his father went to the cargo section of Kolkata Airport, where his father met Customs Staff for formalities related to hand carriage of the two boxes gold jewellery to him; that from Air Cargo Customs accompanied them in a car rented by them to the International Departure of Kolkata Airport; that before taking boarding pass, he along with the Preventive Officer entered into the Airport Departure hall and went to SDO room of Customs situated between the Immigration area and Security area through the staff lane at the extreme left side; that the Page 15 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB Preventive Officer handed over the two boxes of gold jewellery to SDO of Customs posted at Departure Hall, NSCBI Airport who in turn handed over the boxes of gold jewellery to him in the chamber after taking the acknowledgment of receipt in SDO register; that as per his father's instructions, he then went to gate No. 1A/1B (Departure) to hand over two boxes of gold jewellery kept in two trolley bags to his father there; that he kept the two boxes in two trolley bags and handed it over to his father who was standing outside gate No. 1A/1B (Departure); that after taking the two trolley bags loaded with two boxes of gold jewellery, his father went away outside the Airport and he went to departure hall; that thereafter he took the boarding pass of Emirates flight No. EK 573 dated 04.04.2018 from Kolkata to Dubai.
ii. After around 30-40 minutes, his father came to the departure hall and asked him to take the boarding pass for Indigo flight No. 6E 373 from Kolkata to Hyderabad dated 04.04.2018 in his name and give it to him; that thereafter, he proceeded towards immigration and after security check-in, he started moving towards gate No. 11 to board flight No. EK 573; that at that time some plain clothed person stopped them and asked about his identity; that they introduced themselves as officers of Directorate of Revenue Intelligence (DRI) by showing their identity cards; that after confirming his identity from the passport and boarding pass, he was issued summons to accompany them to the AIU office at International Arrival Hall of NSCBI Airport; that at AIU office, search of his person Page 16 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB and his hand baggage was carried out by the officers in presence of independent witnesses; that from his handbag one photocopy of Shipping Bill No. 6530662 dt. 03.04.2018 was recovered. Details of the export consignment as per the Shipping Bill is as under -
Exporter - Shree Ganesh Jewels, #5-9-235, Shop No. 7A, Lower Ground Floor, Sanali Mall, Abids Road, Hyderabad - 500001.
Consignee - Personal hand carry by Mr Preet Kumar, Passport No. 24198550, for Jumeriates Gold Jewellery LLC, F-101, Mohd. Nasr Lootad Building, Al Dhagaya Street, P. O. Box No. 28520, Deira, Dubai, UAE.
Invoice No. - SALES/EXPORTS/18-19/UAE/01 dated 02.04.2018 (IEC No. 0915027305) Goods - 2 box 22 carat (92.385% gold purity) gold bangles manufactured by fully mechanized process Net Wt. - 54122 gms.
Gross Wt. - 54122 gms Value - USD 22,13,425 (INR 14,19,91,214/-) iii. He further submitted that that he carried the Shipping Bill for hand carrying two boxes gold jewellery to Dubai as per his father's instructions but he did not take with him the said two boxes of gold bangles, while going to board flight No. EK 573 for Dubai; that he had knowingly handed over the two boxes of gold bangles as mentioned in the Shipping Bill to his father instead of hand carrying the same to flight No. EK 573 dated 04.04.2018 for handing over to Jumeriates Gold Jewellery LLC, Dubai.Page 17 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB 8.2.1. In the further statement recorded from Shri Preet Kumar Agarwal on 06.04.2018, he inter alia reiterated his earlier statement dated 05.04.2018.
8.3. Shri Ajay Kumar Agarwal, brother of Shri Sanjay Agarwal, came to the DRI office, Kolkata on 05.04.2018 and his voluntary statement was recorded under Section 108 of the Customs Act, 1962 on 05.04.2018. In his voluntary statement, Shri Ajay Kumar Agarwal inter alia stated that: -
i. In response to a specific question, it was submitted that the money for payments for gold jewellery were actually transferred by him through hawala channels to get the remittances for the so-called export consignments through legal channels i.e. through banks; that he used to contact one Mr Rahul in Hyderabad for transfer of the money to the consignee in Dubai in advance so that they could made the advance payments for the exports; that some person of Rahul used to come to his office to collect the money in cash; that he did not have the mobile number of Rahul or his address details; that after completion of diversion of the export goods, they submit the export proof in the form of documents signed by Customs and the tickets showing performance of outward journey; that they got the duty amount refunded by the nominated agencies to their banks; that on the diverted export consignments of Kalpataru Jewellers, he had defrauded government exchequer for almost an amount of Rs. 6 Crores.
8.3.1. In the further statement recorded from Shri Ajay Kumar Agarwal on 06.04.2018, he reiterated his earlier statement dated 05.04.2018.Page 18 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
9. In view of the above, it was concluded by the Revenue that Shri Ajay Kumar Agarwal was also an active member of the syndicate run by Shri Sanjay Agarwal, which specialises in diversion of gold jewellery in the domestic market from airports after completion of all export formalities and that the Export documents were later utilized by them to get back the security amount deposited with the nominated agencies at the time of purchase of gold. Thus, the gold purchased by them became duty free without any corresponding export of gold jewellery. He also admitted to have diverted around 230 kgs of gold jewellery following the modus operandi observed on 04.04.2018 executed by Shri Preet Kumar Agarwal and Shri Sanjay Agarwal and allegedly defrauded government revenue to the tune of Rs 6 Crores. As such Shri Ajay Kumar Agarwal was also arrested under Section 104 of the Customs Act, 1962 on 06.04.2018 along with his brother Shri Sanjay Agarwal and nephew Shri Preet Kumar Agarwal and produced before Ld. ACJM, Barasat on the same day. After hearing both sides Ld. ACJM, Barasat remanded Shri Ajay Kumar Agarwal to judicial custody.
10. During investigation, DRI observed that all the Shipping Bills mentioned in the Manual Shipping Bill Noting DRI Register (Export) were not entered in the Gold Register maintained by SDO (Departure) in his office at the International Departure Hall, raising doubts about their actual exports. As note sheets are the only proof that the sealed boxes containing gold jewellery had at least reached SDO office after assessment at ACC and not diverted from the ACC itself Thus, DRI sought copies of all the Shipping Bills related to export consignments of the firms controlled by Shri Sanjay Agarwal along with copies of the Note Page 19 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB sheets, where SDO (Departure) had signed as a token of receipt of the export consignments of gold from Kolkata Airport Commissionerate. However, only photo copies of Shipping were retrieved but no copies of Shipping Bills/Note Sheet showing receipt by SDO (Departure) were retrieved.
10.1. From the file No. S41(Misc.)-22/17CCX of Shree Ganesh Jewels, forwarded by Deputy Commissioner, ACC, it is found that no permission of Commissioner of Customs (Airport) was taken for filing manual Shipping Bill No. 6530662 dt. 03.04.2018. In the note sheet, there is mention of a letter dated 29.03.2018, which appears to have been received at ACC on 02.04.2018 In the said letter, it was mentioned that Commissioner had granted them the required permission for filing Shipping Bill for export of gold jewellery by personal hand carriage. Another letter dated 03.04.2018 of Shree Ganesh Jewels addressed to Asst. Commissioner of Customs, ACC, NSCBI Airport, Kolkata was also found in that file, through which Shri Avinash Soni, proprietor of Shree Ganesh Jewels had authorized Shri Sanjay Agarwal to process documents at ACC office for the consignment being exported under invoice No. SALES-EXPORTS/18- 19/UAE/01 dated 02.04.2018 and also authorizing Shri Agarwal to sign necessary documents for clearing of the export consignment.
10.2. It was also found that a note was given by Assistant Commissioner on 17.02.2018 regarding filing of manual Shipping Bill by Shree Ganesh Jewels. But against the said note Joint Commissioner had categorically mentioned that 'as there is ACC with EDI, manual permission may not be considered. The said recommendation of Joint Commissioner was found Page 20 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB approved by Commissioner on 21.02.2018. There was no further noting in the file regarding permission given by Commissioner for filing of manual Shipping Bill as mentioned in the letter dated 29.03.2018 of Shree Ganesh Jewels. Still it was found that manual Shipping Bill No. 6530662 dated 03.04.2018 of Shree Ganesh Jewels was processed from that file. It may also be mentioned here that the original note given by the Group Appraiser for examination of the export consignment and subsequent note given by the other customs officers were recovered from the possession of Shri Sanjay Agarwal.
11. It was found that on 04.04.2018, the boxes containing gold jewellery for export were handed over to Shri Preet Kumar Agarwal by SDO (Departure) in the SDO office itself, even before Shri Preet Kumar Agarwal had taken his boarding pass for his flight to Dubai and cleared immigration. Consequently, voluntary statement of Shri Pallab Roychowdhury, SDO (Departure), who had handed over the sealed metal boxes containing gold jewellery for export to Shri Preet Kumar Agarwal on 04.04.2018 was recorded under Section 108 of the Customs Act, 1962 on 04.04.2018 itself, who in the said voluntary statement, inter alia, stated that: -
i. He maintains the gold register, wherein particulars like name of the person hand carrying gold jewellery consignment as well as name of the exporter, invoice number, Shipping Bill number, gross and net weight of gold were entered; that he also gets the signature of the passenger in the said register after handing over the boxes containing gold jewellery, that after being satisfied that the sealed boxes Page 21 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB contains gold/gold jewellery. he used to escort the person with the gold into the flight, that he ensures that the gold article of gold (mainly gold jewellery) were exported; that he also issues export certificate ii. He further clarified that as SDO, it was his duty to ensure export of the gold jewellery articles; that he ensures that the passenger boards the plane with gold jewellery articles; that on 04.04.2018, Shri SG Mallick, Preventive Officer escorted one passenger from Air Cargo Complex to his chamber with two metal boxes in scaled condition; that the particulars of the boxes were entered into the register by Shri Preet Kumar;
that he had checked the seal of the metal boxes and handed over to Shri Preet Kumar, but he did not escort Mr Preet Kumar with metal boxes to the flight iii. In response to a specific query, Shri Roychowdhury further clarified that he was to escort Shri Preet Kumar, holder of passport No. 24198550 to flight No. EK 573, who had with him two boxes containing 54 kg gold covered under Shipping Bill No. 6530662 dated 03.04.2018 as hand baggage, but he did not; that it was a mistake on his part not to escort Shri Preet Kumar to the flight; that he was not aware whether Shri Preet Kumar had boarded flight No. EK 573 with the metal boxes containing approximately 54 kg gold bangles or not.
Page 22 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB 11.1. In the further voluntary statement of Shri Pallab Roychowdhury was recorded on 18.04.2018 under Section 108 of the Customs Act, 1962 it has been inter alia deposed as under: -
i. As SDO (Departure) at Kolkata Airport, he had handled three consignments of gold which were exported on hand carry basis; that one gold consignment was carried by Shri Preet Kumar Agarwal and another two of Manikanchan SEZ details of which he could not remember at that moment, that as SDO (Departure) he was supposed to enter the export details in the register maintained in SDO office; that, afterwards he was supposed to take the sealed boxes to the security hold area and had handed over to the person to whom permission was given by Commissioner to carry the gold for export; that he had taken the boxes of two consignments of Manikanchan to the security area and hand over to the person; that in case of Shri Preet Agarwal, he had handed over the sealed boxes containing gold to Shri Preet in the SDO office itself.
ii. In response to a query as to why he had not followed the laid down procedure in order to hand over the boxes containing gold to Shri Preet Kumar Agarwal at the security hold area, as was done in other two cases, Shri Roychowdhury submitted that the same was a lapse on his part; that he could not realize that Shri Preet Kumar Agarwal would leave the immigration area instead of proceeding towards security hold area. He also admitted that he had not checked the boarding pass or immigration Page 23 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB stamp as Shri Preet was escorted by his colleague Shri S G Mallick. Another specific question was asked to Shri Roychowdhury, as to why there were fewer number of entries of gold export in the register maintained at SDO office than the manual Shipping Bill noting register (export) maintained at ACC, Kolkata. In reply, Shri Roychowdhury submitted that he could not mention what practice was followed by the other officers. In case of three exports handled by him, all entries were made in the SDO register as per regulation.
iii. He did not check the boarding pass or immigration stamp of Shri Preet Kumar Agarwal, before handing over the boxes containing gold to him as Shri Preet was escorted by his colleague Shri S G Mallick.
12. Hence, summons were issued to Shri S. G. Mallick, Preventive Officer and his voluntary statement was recorded on 18.04.2018 under Section 108 of the Customs Act, 1962. In his voluntary statement Shri S.G. Mallick inter alia stated that: -
i. He was posted at Air Cargo Complex, NSCBI Airport, Kolkata since January, 2018; that being called by Appraiser and EO of Export Shed, he went to their room on 04.04.2018; that they gave him the sealed boxes which were kept in a black colour bag fitted with trolley; that they also handed over to him one sheet of paper and one Shipping Bill page and instructed him (Shri Mallick) to take the sealed boxes to SDO (Departure) and hand over for export by a Page 24 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB passenger named Shri Preet Kumar Agarwal; that they also introduced him to Shri Agarwal as the passenger mentioned in the Shipping Bill to carry the sealed boxes for export; that he then checked the seal on the boxes and accompanied Shri Agarwal to his car waiting outside the Shed; that by car they went to Integrated Terminal, Departure Gate No. 4 and Shri Preet Kumar Agarwal showed his ticket and ID card to the CISF and Shri Mallick showed his PIC; that the bag containing the sealed boxes were put in a trolley by Shri Agarwal and they went straight to SDO (Departure) room at Departure Lounge between Immigration counter and Security area; that he handed over the two sealed boxes and papers to Shri Pallab Roychowdhury, SDO (Departure); that after checking the seal on the boxes, SDO (Departure) endorsed the papers and kept on the table; that thereafter, he left the SDO (Departure) room and carne back to the car which was waiting outside the entry gate; that he took the car and got into the car at Cargo shed with sealed boxes for going to Departure terminal; that the same person accompanied him during his journey from Departure terminal to Air Cargo Complex; that after returning to ACC, he intimated Shed officer that the sealed boxes were handed over to SDO (Departure).
ii. In response to a specific query, it has been submitted that Shri Preet Kumar Agarwal had not taken his boarding pass and completed immigration formalities before going to SDO office. On another query as to how Shri Preet could go to the SDO office which was situated Page 25 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB after immigration counters without completing immigration formalities. In reply, he submitted that immigration officers allowed Shri Preet Kumar Agarwal as per his request, as Shri Preet was carrying VAL (valuable) cargo as a hand baggage for export to Dubai. Shri Mallick was then asked to explain why did not he ensure that Shri Preet complete immigration formalities before taking him to the SDO office. In reply, Shri Mallick submitted that he was deputed as an Escort officer to escort two sealed boxes from ACC to SDO (Departure) office at Departure lounge of Integrated terminal; that accordingly, he took the two sealed boxes to SDO (Departure) office and handed over the same to SDO under proper receipt, that as the goods were VAL cargo, he took the passenger to SDO office so that the sealed boxes can be handed over to SDO in his presence and also introduce him to SDO (Departure), as the passenger. He also submitted that he never escorted such VAL cargo before and never saw Shri Preet Kumar Agarwal before 04.04.2018.
13. In response to a request made to Central Industrial Security Force (CISF) regarding the incident of diversion of gold jewellery, it was reported by them through a confidential report that they had verified the CCTV footages of the incident and found the following:-
• Shri Preet Kumar Agarwal entered the international terminal of NSCBI Airport, Kolkata through gate No. 4.Page 26 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB • Shri Sanjay Agarwal entered the domestic terminal of NSCBI Airport, Kolkata through gate No. 01A.
• Shri Sanjay Agarwal did not report at the check in counters for obtaining boarding pass, instead Shri Preet Kumar Agarwal was seen taking a boarding pass for Hyderabad from Indigo counter at Portal C, which was later handed over to Shri Sanjay Agarwal • Shri Sanjay Agarwal travelled on that boarding pass as a fake passenger (in the name of Shri Preet Kumar Agarwal).
• After entering international terminal Shri Preet went straight away to Customs office and then came out from the Customs office at departure level after few minutes.
• Mr Preet Agarwal met near the departure gate of NSCBI Airport, Kolkata and handed over a bag to Shri Sanjay Agarwal, who was waiting outside the terminal near gate No. 1A of the said airport. That was a regular practice, as many passengers hand over the excess luggage to their friend / relative who came to see them off while waiting outside.
• Due to combined Check-in area for domestic and international passengers at Kolkata airport, Shri Preet Agarwal was able to proceed up to domestic entrance gate/Check in area from Custom station Duty Officer area & International check in area.Page 27 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
14. After issuance of several summonses, Shri Avinash Soni, the proprietor of Shree Ganesh Jewels as per IEC, appeared at DRI office, Kolkata on 15.05.2018 and his voluntary statement was recorded under Section 108 of the Customs Act, 1962. In his said voluntary statement, Shri Avinash Soni inter alia stated as follows: -
i. In response to a specific query, it was submitted that on 05.04.2018 he received call from Naresh Rampuria, an employee of Shri Sanjay Agarwal, who told him that officers of DRI, Hyderabad visited office of P H Jewels & Shree Ganesh Jewels on that day and asked them to report to DRI office on 06.04.2018; that he then called Smt. Radhika Agarwal on 06.04.2018 and told her that when he had already left the service of Shri Sanjay Agarwal, then why he was being asked by DRI to report to them; that Smt. Radhika told him to call on next day i.e. on 07.04.2018; that on being asked by her to meet her personally, Shri Soni met her; that Smt. Radhika Agarwal gave him Rs. 20,000/- and requested him to leave Hyderabad immediately as Shri Sanjay Agarwal, Shri Preet Kumar Agarwal & Shri Ajay Kumar Agarwal were arrested by officers of DRI, Kolkata and they may interrogate him (Shri Soni).
ii. Against a specific question regarding his resignation from Shree Ganesh Jewels, as mentioned by him in his statement, Shri Avinash Soni failed to submit any proof in that regard. He also submitted that he never interacted with any Customs officers at Air Cargo Complex, Kolkata: that Shri Sanjay Page 28 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB Agarwal comes to Kolkata every time & looks after processing of documents at Air Cargo Complex, Kolkata. Against another question regarding illegal act of not carrying export goods with him, Shri Avinash Soni submitted that whenever he enquired with Shri Sanjay Agarwal about not carrying gold with him on his journey to UAE, every time Shri Sanjay Agarwal told him that the export consignment was cancelled / permission not granted by Customs, but as the flight ticket was confirmed, Shri Sanjay told him to make the trip to UAE; that he was not aware that any illegal activities were being carried out by Shri Sanjay Agarwal
15. Observing the possession of notesheet of Customs with the exporting party and no documents requisitioned by DRI, summons were issued to both Shri Dhruvajyoti Roy, Deputy Commissioner of Customs and Smt. Champa Mukherjee, Appraiser of Customs, who appeared at the office of the DRI on 01.08.2018 and tendered their voluntary statements under Section 108 of the Customs Act, 1962.
15.1. In her voluntary statement, Smt. Champa Mukherjee, Appraiser of Customs, inter alia submitted that:
i. She was posted at ACC, NSCBI Airport, Kolkata between the period from 13.09.2017 to 11.04.2018; that the following was the procedure for clearance of export consignment of gold jewellery on hand carry basis-
a. Exporter / CHA submits letter addressed to the Assistant Commissioner (Export) giving details of export consignment such as quantity, destination Page 29 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB etc. for permission to file manual Shipping Bill for export on hand carry basis, b. Assistant Commissioner (Export) then forwards the same to Commissioner (Airport) for necessary permission, c. After taking permission, party submits another letter for filing Shipping Bill on hand carry basis, d. On the basis of Assistant Commissioner's (Export) permission, Office Superintendent allots Shipping Bill number on the front page of the four copy of Shipping Bills and sign the same and affixes the stamp;
e. All Shipping Bill copies are forwarded to Data Entry Operator for entry of Shipping Bill details, f. Shipping Bill is then presented to Appraiser for assessment of the details i.e. quantity, invoice, packing list, contract / agreement etc. g. After thorough checking / assessing, the Shipping Bill is forwarded to AC(Export) for necessary approval with signature / stamp, h. After taking approval from AC / DC (Export), Appraiser gives a 100% examination order addressed to the Shed Appraiser on the back page of the duplicate copy of Shipping Bill and forwards the same to Shed Appraiser, i. At this stage, duty of assessing Appraiser ends, ii. In response to further questions, Smt. Champa Mukherjee submitted that Shree Ganesh Jewels and Kalpataru Jewellery regularly exported gold jewellery on hand carry basis through NSCBI Airport, Kolkata; that individual / separate files Page 30 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB were maintained for those exporters; that she could not remember how many consignments of gold jewellery were processed by her; that generally those Shipping Bills were filed on the date of export; that permission of Commissioner of Customs (Airport & Admn.) had been taken for filing of manual Shipping Bills; that she could not recall whether permission of Commissioner was taken in case of Shipping Bill No. 6530662 dt. 03.04.2018, but in general, permission has been taken for each and every consignment. Smt. Champa Mukherjee was then shown the file received from AC(Export) regarding processing of Shipping Bill No. 6530662 dt. 03.04.2018. After going through the said file she admitted that there was no approval in file for the said Shipping Bill. Attention of Smt Champa Mukherjee was then drawn to the previous noting of Joint Commissioner and Commissioner wherein they had categorically mentioned not to allow filing of manual Shipping Bill by Shree Ganesh Jewels for export of gold jewellery by hand carry.
iii. On being asked to clarify how in-spite of such specific order she processed Shipping Bill No. 6530662 dated 03.04.2018, Smt. Champa Mukherjee submitted that as directed by AC (Export) she had processed the Shipping Bill.
iv. In response to a further specific question as to how all four copies of Shipping Bill No. 6530662 dt. 03.04.2018 were found in the possession of Shri Sanjay Agarwal, Smt. Mukherjee submitted that she had no idea how all four copies of Shipping Bill was kept by the exporter. Another Page 31 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB specific question was asked to Smt. Mukherjee as to how she had issued export certificate regarding gold consignment to exporters like Shree Ganesh Jewels on the same date as the one on which the Shipping Bill was processed without getting a verification report from SDO (Departure), that actual export took place. It was also pointed out to her that on the basis of such certificate, canalizing agencies like Diamond India, STC, MMTC etc were refunding the security deposit to the exporters. In reply, Smt. Mukherjee submitted that she had written the letter to the SDO (Departure), for information regarding the specific export consignment and to hand over the goods to the person concerned after completion of all export formalities; that the parties had mis-used the letters; that the matter was between the exporter and the canalizing agents, she had no responsibility in the matter.
15.2. In his voluntary statement, Shri Dhruvajyoti Roy, Deputy Commissioner of Customs, inter alia submitted that: -
i. He joined ACC on 10.07.2017 as Assistant Commissioner and since 01.04.2018 had been working as Deputy Commissioner; that he was holding charges of Export assessment, Import Shed, Un-accompanied baggage, transshipment, IGM and Administration; that on going through the list of manual Shipping Bills related to export of gold jewellery by the firms controlled by Shri Sanjay Agarwal during 2017- 18, Shri Roy submitted that Commissioner's Page 32 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB approval was not taken for all the consignments; that except 5 Shipping Bills forwarded earlier, no duplicate copies of Shipping Bills were traceable at ACC even after thorough search was carried out at ACC. Shri Roy then described in detail the procedure, that should be followed in case of processing of Shipping Bills related to the export of gold jewellery on hand carry basis. The procedure mentioned by him is more or less in harmony with the procedure narrated by Smt. Champa Mukherjee, Appraiser. In response to a further question, he submitted that during the period between 10.07.2017 to 02.04.2018 (his tenure at ACC) almost 20 consignments have been processed for export of gold jewellery signature on al on hand carry basis and gave his put his the Shipping Bills; that approval from Commissioner was given for five times during the period; that no Shipping Bills were placed before him for appraisement.
ii. On a specific query as to why he gave his consent on all the Shipping Bills when approval of Commissioner was available for only five consignments. In reply, Shri Roy submitted that he was new to Customs formation and he did not have the knowledge of the procedures thoroughly; that he was made to understand that the procedure begins with the AC's consent; that it may be seen from the Shipping Bills that he had signed where the Appraiser had marked 'AC' with his pen after putting his / her signature; that the procedural lapse took place as throughout his career he was in Central Excise formation and was unaware of Customs Page 33 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB procedure; that he had to rely upon his Gazetted Officers; that he was learning day by day and he came to know about the lapses after the incident of 04.04.2018. Shri Roy was then asked to clarify how did he process Shipping Bill No. 6530662 dt. 03.04.2018 for export when Joint Commissioner and Commissioner had categorically mentioned in their noting dated 21.02.2018 not to allow filing of manual Shipping Bill by Shree Ganesh Jewels for export of gold jewellery by hand carry. In reply, Shri Roy submitted that he mis-read the Joint Commissioner's comment; that he had recommended for Commissioner's consent / approval for manual filing of Shipping Bill; that he saw the Commissioner's signature and thought approval was given, but actually the Commissioner had approved the Joint Commissioner's note only; that it was unfortunate.
iii. In response to another question Shri Dhruvajyoti Roy, Deputy Commissioner submitted that the letter of the exporter dated 29.03.2018 was received in the office on 02.04.2018 (mistakenly written as 02.03.2018); that it speaks of grant of permission by Commissioner; that accordingly file was put up by the Appraiser for filing of manual Shipping Bill; that he had already stated earlier that he mis-read the Joint Commissioner's note and considered it as Commissioner's approval because there was no export of gold jewellery on hand carry basis in between 21.02.2018 and 03.04.2018. Shri Roy further submitted that :-
Page 34 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB a. Examination orders were given by Group Appraiser on Xerox copy of note sheet. In one such copy of note sheet, submitted by Shri Malay Das, Preventive Officer, it was found that the copy of note sheet was not matching with the original note sheet in file.
b. It was submitted by the Preventive Officers that consignment with only one Shipping Bill was escorted while more than one Shipping Bill was processed in a single day, c. None of the consignments were assessed by AC/DC, d. Receipt copy of either note sheet or Duplicate copy of Shipping Bill from SDO was not in the file.
16. Letters dated 07.05.2018 were issued to all three nominated agencies, namely, State Trading Corporation of India Ltd., Diamond India Ltd & Metals & Mineral Trading Corporation to give details of the gold purchased by P H Jewels, Shree Ganesh Jewels, Kalpataru Jewellers & Export Corporation and V N Jewellery during the period 2015-2018. Later, the details of purchase of gold by the firms controlled by Shri Sanjay Agarwal was forwarded by DRI, Hyderabad under cover of their letter dt. 15.05.2018.
Comparing the purchase details and corresponding export claim of Shree Ganesh Jewels it was found that Shree Ganesh Jewels had submitted same Shipping Bill to more than one nominated agencies as proof of export and got refund of the security deposit made at the time of purchase of gold.
Page 35 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
17. Representative samples drawn from the gold jewellery of the two metal boxes were sent to the Chemical Examiner, Custom House Chemical Laboratory for testing and from the corresponding test reports dated 18.04.2018 received, it was gathered that the seized jewellery were made of gold of more than 91% purity.
18. Further investigation was conducted by the Revenue and further statements were also recorded. On the basis of the investigation, it appeared to the Revenue that: -
(i) Shri Sanjay Agarwal of Hyderabad had hatched an elaborate conspiracy to defraud Government revenue by evading payment of duty on imported gold bars/bullions. He opened a number of firms in the name of his relatives and employees, namely Shree Ganesh Jewels (in the name of his employee Shri Avinash Soni), P H Jewels (in the name of his wife Radhika Agarwal), Kalpataru Jewellers & Export Corporation (in the name of his brother Shri Ajay Agarwal) etc. and utilizing the facilities provided to gems and jewellery sector under Foreign Trade Policy 2015-20, started procuring gold from nominated agencies like MMTC, STC & Diamond India Ltd., without payment of import duty declaring that the gold will be used for manufacture of gold jewellery for export.
However, as prescribed under Foreign Trade Policy/Hand Book of Procedure, an amount equal to the duty payable on the purchased gold has to be deposited with the nominated agencies as security deposit. After filing of Shipping Bills showing export of gold jewellery Page 36 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB and completing all export formalities, he used to divert the gold jewellery from the airport to the domestic area and used the export documents to get back the security deposit made at the time of procurement of gold from the nominated agencies. He then sold the duty free imported gold procured from the nominated agencies in the open market earning huge profits.
(ii) For procuring gold from the nominated agencies under the scheme Export Against Supply By Nominated Agencies, provided in Foreign Trade Policy, the respective firms have to deposit security amount equal to the duty payable on the gold purchased by them. As prescribed in Foreign Trade Policy / Hand Book of Procedure, the gold jewellery has to be exported within 90 days of procurement of gold from the nominated agencies. After export, on production of EP Copy of the Shipping Bill and the bank realization certificate, the security amount were either refunded back to them or adjusted against further procurement of gold. In terms of Notification No. 57/2000-Cus dated 08.05.2000 (as amended from time to time) read with CBEC circular No. 27/2016-Cus dated 10.06.2016, the nominated agencies had to furnish a bond with the respective Customs authorities binding themselves that they will pay the duty on the imported gold, if the exporter failed to export the gold jewellery against purchase of gold.
(iii) As per the scheme, Shri Sanjay Agarwal purchased 50 kg gold from State Trading Corporation on account of Shree Ganesh Jewels, which was imported by the nominated agency Page 37 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB under cover of Bill of Entry No. 5698275 dt. 23.03.2018 without payment of Customs duty in terms of Customs exemption notification No. 57/2000-Cus dated 08.05.2000 (as amended from time to time). For showing fulfiment of export obligation against that purchase, Shri Sanjay Agarwal submitted one manual Shipping Bill No. 6530662 dt. 03.04.2018 at ACC, NSCBI Airport, Kolkata for export of 1194 pcs gold bangles weighing 54096 gms. The manual Shipping Bill was allowed to be filed and processed for clearance by the concerned Group Appraiser and Deputy Commissioner (Exports), ACC, Kolkata without obtaining the mandatory permission from the Commissioner (Airport). They also totally ignored the direction given by the Joint Commissioner and Commissioner (Airport) earlier not to allow Shree Ganesh Jewels file manual Shipping Bill for export of gold jewellery. As per the Shipping Bill, the gold jewellery contained in two metal boxes was to be hand carried to Dubai by his son Shri Preet Kumar Agarwal for delivery to Jumeriates Gold Jewellery LLC. After completion of assessment & examination of the goods at ACC, the two metal boxes were sealed by the Customs officers and sent to the office of SDO (Departure) in the International Departure Hall of NSCBI Airport Kolkata escorted by a Preventive Officer of Customs.
(iv) The escorting Preventive Officer duly delivered the two sealed boxes containing gold jewellery to the SDO (Departure) under receipt. However, in doing so, he took Shri Preet Kumar Agarwal past the immigration counters to SDO Page 38 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB (Departure) office without completion of immigration formalities of Shri Preet Kumar Agarwal. SDO (Departure) also, in deviation to the laid down procedure handed over the two scaled boxes containing gold jewellery for export to Shri Preet Kumar Agarwal in the SDO office itself instead of delivering it in the security hold area. He also did not verify whether Shri Preet Kumar had obtained his boarding pass for overseas journey and that whether he had completed immigration formalities or not before handing over the boxes containing gold jewellery. Utilizing the opportunity that his immigration formalities were not complete, Shri Preet Kumar, after taking delivery of the two boxes containing gold jewellery at the SDO office, sneaked back to the gate of the departure terminal and handed over the trolley bag containing the sealed boxes containing gold jewellery to his father Shri Sanjay Agarwal, who was waiting outside. Shri Sanjay Agarwal took the two boxes to Indigo Airlines domestic Cargo and booked the same for delivery to Hyderabad with the help of an agent and himself boarded a flight to Hyderabad, travelling in a ticket bought in the name of his son Shri Preet Kumar Agarwal. Shri Preet Kumar Agarwal proceeded to take his boarding pass, clear immigration and went to board his flight to Dubai without the export consignment with him to complete the export process on paper.
(v)The entire operation was well thought out and preplanned, as clear from the following facts. A letter dated 29.03.2018 was sent to ACC by Shree Ganesh Jewels mentioning that Page 39 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB Commissioner had granted them permission for filing Shipping Bill for export of gold jewellery by personal hand carriage. As permission of filing of manual Shipping Bill was generally obtained on note sheet by the Customs officers, the content of the letter is sufficient to raise doubt as to how the exporter came to know that Commissioner had granted them permission. But both the Group Appraiser and Deputy Commissioner routinely processed the Shipping Bill for Export clearance without bothering to obtain permission from Commissioner (Airport).
(vi) Further, from the relevant file collected from ACC, Kolkata, it is found that the Joint Commissioner had categorically noted earlier that manual filing of Shipping Bill by Shree Ganesh Jewels should not be considered and Commissioner had also approved the same. Still manual Shipping Bill filed by Shree Ganesh Jewels was processed for clearance by the Group Appraiser and Deputy Commissioner, ACC, Kolkata.
(vii) Shri Preet Kumar Agarwal was escorted to the SDO (Export) office by the Preventive Officer along with two sealed metal boxes containing gold jewellery for export. The SDO office is situated between the immigration counters and security hold area. Shri Preet should have been asked to collect his boarding pass and complete immigration formalities before entering the SDO office. But the Preventive Officer took Shri Preet Kumar to the SDO office without completing the immigration formalities which enabled Shri Preet Kumar to Page 40 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB sneak back up to the terminal gate and hand over the boxes containing gold jewellery to his father.
(viii) The original note sheet of Customs, in which order was given by the Group Appraiser to the Shed Appraiser for 100% examination of goods under Shipping Bill 6530662 dt. 03.04.2018 and all the four copies of the Shipping Bill were found from the possession of Shri Sanjay Agarwal at the time of his interception by DRI. In the notesheet, there was also noting of the PO regarding handing over of the two sealed boxes to SDO and also the note of SDO regarding receipt of the two sealed boxes. It is quite clear that the note sheet was handed over to the exporter by any of the Customs officers after completion of all export formalities.
(ix) Being a frequent overseas traveller, Shri Preet was well aware of the different formalities at Airports. After getting hold of the sealed boxes containing gold jewellery for export, he went to the gate of the departure terminal and told the CISF personnel manning the gate that he had some excess baggage which he wants to hand over to his father waiting outside the terminal gate. As it is a very common practice among overseas travellers, where one has to pay heavy charges for carrying excess baggage, the CISF personnel allowed Shri Preet to hand over the bag containing gold jewellery to his father Sanjay, who was waiting outside.
Page 41 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
19. Accordingly, a Show Cause Notice dated 29.03.2019 vide SCN No. DRI/KZU/AS/ENQ-28/2018 was issued to show cause to the Commissioner of Customs (Airport & Admn.), Custom House, 15/1, Strand Road, Kolkata was issued to all the noticee(s) inter alia on the following allegations: -
(i) The 1194 pcs of gold bangles weighing 54096 gm and ascertained value of Rs. 16,10,43,792/, which were cleared for export by Customs under Shipping Bill No. 6530662 dt. 03.04.2018 of Shree Ganesh Jewels and handed over to the declared hand carrier Shri Preet Kumar Agarwal inside NSCBI Airport for taking outside India were clandestinely diverted from the airport by Shri Sanjay Agarwal with the help of his son Shri Preet Kumar Agarwal in the domestic area are liable for confiscation under Section 113(k) of the Customs Act, 1962. For their active involvement in the diversion of export goods, Shri Sanjay Agarwal and Shri Preet Kumar Agarwal and also the part played by them in duty payable on the primary gold, they appear to be liable to penal action under Section 114(iii) of the Customs Act, 1962.
(ii) The gold bangles weighing 54096 gms. were being exported for fulfilment of export obligation against purchase of 50 kg gold from State Trading Corporation of India without payment of applicable import duty as per Foreign Trade Policy. As it was found that the gold bangles were diverted in the domestic market instead of taking it to abroad, it is quite clear that the export obligation against them was not to be fulfilled within the due time of 90 Page 42 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB days as prescribed in the Foreign Trade Policy /Hand Book of Procedure. Further, the export obligation could not be fulfilled as the gold jewellery meant for export was diverted in the domestic market instead of taking it to abroad.
Thus, the non-fulfilment of export obligation occurred due to fraud committed by the exporter and others and not due to any bona fide reason. The exporter also mis-stated in their letter to STC that the airlines did not allow them to hand carry the gold which weighs nearly 50 kg. The gold was imported duty free in terms of exemption notification No. 57/2000-Cus dated 08.05.2000 by STC, Chennai against bond/bank guarantee executed with the proper Customs authorities. As such, the duty needs to be demanded from STC in terms of Section 28(4) of the Customs Act, 1962, along with applicable interest in terms of Section 28AA of the Customs Act. The amount is also demandable in terms of Section 143 (3) of Customs read with Customs notification No. 57/2000-Cus dated 08.05.2000 and circular No. 27/2016-Cus dated 10.06.2016. However, it may be mentioned that STC had already deposited Rs. 1,45,70,755/- as duty and interest payment on the 50 kg gold supplied by them to Shree Ganesh Jewels.
(iii) Shri Avinash Soni is the registered proprietor of Shree Ganesh Jewels and claimed that he is merely an employee of Shri Sanjay Agarwal. He also claimed that he was not aware of the illegal activities of Shri Sanjay Agarwal. In course of investigation, it was found that in the past, his name was mentioned as hand Page 43 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB carrier of gold jewellery in many a Shipping Bills. He himself admitted that many a times in the past he went to Dubai as hand carrier without any gold jewellery with him. In his statement, he claimed that on those occasions Shri Sanjay Agarwal told him that Customs has not given permission for export of gold, but as the airline ticket was already bought, he should proceed to Dubai. Shri Soni was involved in the trade for quite some times and he is also an intelligent person. It is not believable that he was unaware of the implication for such export on paper without actual carriage of gold jewellery. It appears that for the lure of earning money, he never raised any alarm about the illegal activities undertaken by Shri Sanjay Agarwal using his name. He also admitted that he had signed on the blank bank cheques of Shree Ganesh Jewels as per direction of Shri Sanjay Agarwal and handed over to him. Further, his two debit cards were also recovered from the wallet of Shri Sanjay Agarwal at the time of his interception at Kolkata on 04.04.2018. Shri Ajay Kumar Agarwal, proprietor of Kalpataru Jewellery & Export Corporation also submitted in his statement that he had also diverted gold jewellery in similar fashion with the help of, among others, Shri Avinash Soni also. After interception of Shri Sanjay Agarwal & others at Kolkata, Shri Soni also left his home at Hyderabad as per direction of Smt. Radhika Agarwal after accepting money and did not appear before the officers of DRI, Hyderabad. It thus appears that Shri Avinash Soni is also an active member of the syndicate Page 44 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB run by Shri Sanjay Agarwal and is liable to penal action under Section 114 (iii) of the Customs Act, 1962.
(iv) Further, Shri Sanjay Agarwal, Shri Preet Kumar Agarwal and Shri Avinash Soni, proprietor of Shree Ganesh Jewels appear to be liable to penal action under Section 114AA also, in as much as they knowingly and intentionally falsified the declarations in the form of Shipping Bill, Invoice and related documents submitted to Customs in relation to the purported export of 54096 gins of gold jewellery, when instead of taking the goods to Dubai, the goods were handed over by Shri Preet Kumar Agarwal to Shri Sanjay Agarwal, outside the airport. Had the intention been genuine and bona fide, they should have immediately reported the fact of not carrying of the goods to Customs, rather, deliberately & intentionally, Shri Preet Kumar Agarwal proceeded back to complete his immigration formalities, went past the same Customs office SDO, Departure), got the security done, before finally being intercepted at near the Boarding Gate. Thus the declarations made before the Customs earlier on and the material furnished to the Customs in support of those declarations became completely false and incorrect, deliberately & knowingly with an intent to defraud the state exchequer.
(v)The Customs officers viz. Smt. Champa Mukherjee, Appraiser, Shri Dhruvajyoti Roy, Deputy Commissioner, Shri Satya Gopal Mallick, Preventive Officer and Shri Pallav Page 45 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB Roychowdhury, SDO (Departure) all were found to have connived and deviated from the laid down procedure regarding export of gold jewellery on hand carry basis under manual Shipping Bills while discharging their official duties. And such connivance /deviation on their part helped Shri Sanjay Agarwal in diverting gold jewellery cleared for export to the domestic area.
(vi) Smt. Champa Mukherjee and Shri Dhruvajyoti Roy were found to have processed the subject manual Shipping Bill No. 6530662 dt. 03.04.2018 of Shree Ganesh Jewels without obtaining the mandatory permission from Commissioner (Airport). They also ignored the clear instructions given by the Joint Commissioner and Commissioner (Airport) earlier not to allow the exporter to file such manual Shipping Bill. Smt Champa Mukherjee, Appraiser was also found to have issued a letter to SDO (Departure), with a copy to exporter Shree Ganesh Jewels, to hand over the two sealed boxes containing gold jewellery for export to the hand carrier. The letter would have helped the exporter to get back the security amount from the nominated agency as on the previous occasions. But she herself admitted that she had neither examined the gold jewellery, scaled the boxes containing jewellery nor handed over those boxes to the Preventive Officer for escorting to SDO (Departure). It was also found that the examination order was given by her in the note sheet and not the back page of the duplicate copy of Shipping Bill, in complete violation of the Laid down procedure.
Page 46 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB Smt. Champa Mukherjee also attended DRI, Hyderabad in connection with investigation being carried out by them against PH Jewels and hence well aware of the fraud being committed by the firms of Sanjay Agarwal. Still, she processed the subject export consignment. Further, Smt. Champa Mukherjee and Shri Dhruvajyoti Roy tried to blame each other for the total breach of laid down procedure for clearance of such gold consignment, which is totally unacceptable. But it appears that they had jointly acted in collusion with the exporter by completely ignoring the direction given by their higher officers.
(vii) Shri Satya Gopal Mallick, Preventive Officer was found to have escorted Shri Preet Kumar Agarwal directly to the SDO office, which lay beyond the immigration area, without waiting for collection of boarding pass by Shri Preet Kumar or completion of his immigration formalities. If the immigration formalities of Shri Preet Kumar Agarwal had been completed before going to SDO office, then he could not have sneaked back to the departure terminal gate to deliver the boxes containing gold to his father.
(viii) Shri Pallav Roychowdhury, SDO was also found to have delivered the two sealed boxes containing gold to Shri Preet Kumar in the SDO office itself, instead of delivering the same in the security hold area. He did not also check the boarding pass of Shri Prest Kumar. Likewise, he did not also check his immigration stamp, before handing over the boxes. This lapse on his Page 47 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB part enabled Shri Preet Kumar to divert the export consignment. Further, the original note sheet regarding export clearance of Shipping Bill No. 6530662 dt. 03.04.2018 and bearing the signature of Preventive Officer, SDO (Departure) and Appraiser, and also all four copies of the subject Shipping Bill were recovered from the possession of Shri Sanjay Agarwal when the Customs copy should have been with the Customs officers. It thus appears that the note sheet and the Shipping Bills were handed over to Shri Agarwal after all Customs formalities were completed. Other than the Customs officers, no other person could have handed over the note sheet & all the four copies of Shipping Bill to Shri Sanjay Agarwal. In view of above, all the four Customs officers in question appear liable to penal action under Section 114(iii) of the Customs Act, 1962.
(ix) Shri Ajay Kumar Agarwal, brother of Shri Sanjay Agarwal and registered proprietor of Kalpataru Jewellers and Exports Corporation was also found to be an active member of the syndicate run by Shri Sanjay Agarwal to divert export consignment of gold jewellery so that gold purchased without payment of duty could be disposed of in the domestic market against huge profit margin. He had also admittedly diverted gold consignments in the past in similar manner. After interception of Shri Sanjay Agarwal and Shri Preet Kumar Agarwal, he came rushing into Kolkata to secure their release. He is thus an integral part of the syndicate behind the conspiracy to defraud the state exchequer, not just on the past occasions, but also with Page 48 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB respect to the attempted diversion of 54096 kg of gold jewellery on 04.04.2018. For the role played by him, Shri Ajay Kumar Agarwal appeared to be liable for penalty under Section 114(iii) of the Customs Act, 1962.
20.1. Accordingly, proposals were made in the above Show Cause Notice in respect of the following noticees asking them to show cause as to why: -
▪ Shri Sanjay Agarwal, Villa No. 41. Orion Vilias.
NSL Infrastructures, Raidurgam, Gachibowli, Hyderabad 500032, ▪ Shri Preet Kumar Agarwal, H No.-1-2-593/17, Domalguda, Gaganmahal Colony, Hyderabad- 500029. Telengana, and ▪ Shri Avinash Soni, proprietor Shree Ganesh Jewels, 5-9-235, Shop No. 7A. Lower Ground Floor, Sanali Mall, Abids, Hyderabad
(i) 1194 pcs gold bangles weighing 54096 gms and of ascertained value of Rs.16,10,43,792/- which were cleared for export under Shipping Bill No. 6530662 dt.
03.04.2018 but intercepted seized by DRI after diversion in the domestic area shall not be held liable for confiscation under Section 113(k) of the Customs Act, 1962.
(ii) Penal action shall not be taken against each of them for their omission and commission as discussed here in above in terms of Section 114(iii) of the Customs Act, 1962.
(iii) Penal action shall not be taken against each of them for their omission and commission as Page 49 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB discussed here in above in terms of Section 114AA of the Customs Act, 1962.
▪ Shri Ajay Kumar Agarwal, S/o Balkishan Agarwal, 306, Palm Meadows, Kompally Arca Secundrabad-500014
(i) Penal action shall not be taken against him for his omission and commission as discussed here in above in terms of Section 114(iii) of the Customs Act, 1962.
▪ State Trading Corporation of India Ltd., A-29, Thiru-Vi-Ka Industrial Estate, Chennai. Tamil Nadu 600032
(i) Customs duty amounting to Rs. 1,44,35,862/ on 50 kg duty free gold, imported under cover of Bill of Entry No. 5698275 dt. 23.03.2018, which was sold to Shree Ganesh Jewels shall not be demanded from and paid by them in terms of Section 28 (4) read with notification No. 57/2000-Cus dated 08.05.2000 read with circular No. 27/2016-Cus dated 10.06.2016 and also read with Section 143(3) of the Customs Act.
(ii) Amount of Rs.1,45,70,755/- already deposited by them under TR-6 challan No. 001994 dated 27.04.2018 shall not be appropriated against the demand made in (i) above.
▪ Smt Champa Mukherjee, D/o Late Bijoy Krishna Biswas, 159, Motijheel Avenue. Kolkata- 700074, ▪ Shri Dhruvajyoti Roy, S/o Late R. N. Roy, 1/45. Shiv Mandir Road. P. O Brahmapur, Kolkata 700096, Page 50 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB ▪ Shri Satya Gopal Mallick, S/o Late Gobinda Chandra Mallick. Mathkal, Bankimnagar, Kolkata 700065 and ▪ Shri Pallav Roychowdhury, S/o Late B K Roychowdhury, 28, Netaji Subhas Road, P. O. Nabagram, Hooghly
(i) Penal action shall not be taken against them for their omission and commission as discussed here in above in terms of Section 114(iii) of the Customs Act, 1962.
20. Thereafter, the matter was taken up for adjudication by the Ld. Commissioner of Customs, Airport & Air Cargo Complex, Custom House, Kolkata, who, vide the impugned Order-in-Original No. KOL/CUS/AIRPORT/COMMR/ADMN/22/2023 dated 31.07.2023, has passed the following order: -
"(i) I order confiscation of the consignment of 1194 pcs gold bangles weighing 54096 gms.
and of ascertained value of Rs. 16,10,43,792/-, which were cleared for export under Shipping Bill No. 6530662 dt. 03.04.2018 and subsequently seized by DRI after diversion in the domestic area under section 113(k) of the Customs Act, 1962. However, I give an option to Shree Ganesh Jewels to pay a redemption fine of Rs. 80,00,000/- (Rupees Eighty lakh only) in terms of the Section 125 of the Act ibid in lieu of the said confiscation.
(ii) I impose a penalty of Rs. 10,00,000/- (Rupees Ten lakh only) on Shri Sanjay Agarwal under Section 114(iii) of the Customs Act, 1962.
Page 51 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
(iii) I impose a penalty of Rs.5,00,000/- (Rupees Five lakh only) on Shri Preet Kumar Agarwal under Section 114(iii) of the Customs Act, 1962.
(iv) I impose a penalty of Rs.1,00,000/- (Rupees One lakh only) on Shri Avinash Soni under Section 114(iii) of the Customs Act, 1962.
(v) I impose a penalty of Rs.2,00,000/- (Rupees Two lakh only) on Shri Sanjay Agarwal under Section 114AA of the Customs Act, 1962.
(vi) I impose a penalty of Rs.25,000/- (Rupees Twenty Five Thousand only) on Shri Preet Kumar Agarwal under Section 114AA of the Customs Act, 1962.
vii) I impose a penalty of Rs.50,000/- (Rupees Fifty Thousand only) on Shri Avinash Soni under Section 114AA of the Customs Act, 1962.
(viii)I impose a penalty of Rs. 25000/- (Rupees Twenty Five Thousand only) on Shri Pallav Roy Chowdhury under Section 114(iii) of the Customs Act, 1962
(ix) I drop all other proceedings initiated vide the SCN No. DRI/KZU/AS/ENQ-28/2018 dated 29.03.2019."
21. Aggrieved from the said order, both sides are in appeal before us.
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22. The Ld. Counsel appearing on behalf of the appellants/noticees has submitted a list of events from the perspective of the aggrieved persons, leading up to the present dispute, in chronological order. For the sake of convenience, the said list is reproduced below:-
Date Event
March M/s Shree Ganesh Jewels (proprietor: Avinash
13-22, Soni) outrightly purchased around 68 kg of
2018 gold in 100 gm bars from Diamond India
Limited for re-export purposes under
Notification 57/2000 and Circular No. 27/2016 read with para 4.83 of Handbook of Procedures (2015-20) and paras 4.41 and 4.47 of FTP 2015-20.
April 2, An invoice was raised by Shree Ganesh Jewels 2018 on M/s. Jumeriates Gold Jewellery LLC, Dubai, for $2,213,425 (INR 14,19,91,214) against 100% advance payment of the same.
April 3, Preet Kumar Agarwal and his father, Sanjay 2018 Agarwal arrived in Kolkata from Hyderabad and filed shipping bill no. 6530662 for exporting gold jewellery at the Air Cargo Complex, NSCBI Airport, Kolkata.
April 4, Sanjay Agarwal and his son Preet Kumar 2018 Agarwal received the gold consignment (sealed boxes) from InterGlobe Aviation Ltd (IndiGo) at Kolkata NSCBI Airport and deposited them with the Group Appraiser of Customs at the Air Cargo Complex (ACC) for export.
The Group Appraiser and Shed Appraiser verified the consignment, appraised the goods, and sealed them in two boxes. The Preventive Officer (PO) was instructed to escort the sealed boxes to the Station Duty Officer (SDO) at the International Passenger Departure Terminal.
Page 53 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB The Preventive Officer (PO) escorted Preet Kumar Agarwal, along with the two sealed boxes, to the office of the Station Duty Officer (SDO) at the International Passenger Departure Terminal.
The Station Duty Officer (SDO) prematurely handed over the sealed boxes to Preet Kumar Agarwal without ensuring that immigration and boarding formalities had been completed Preet Kumar Agarwal proceeded to the Emirates Airlines check-in counter with the sealed boxes but was denied permission to carry the 54 kg consignment as hand baggage due to the airline's 7 kg limit. It is to be noted that version of events is disputed by the Department alleging that Preet Agarwal proceeded directly to the Airport Terminal Gate to hand over the said goods to Sanjay Agarwal. This allegation has been made purportedly on the basis of a CISF CCTV footage report, though such report has never been shared, nor has the CCTV footage been provided to the appellant in spite of its request for production by its reply dated 29.5.2023 On being unable to check in with the said goods as hand baggage, and being unable to re-enter the SDO office without passing through immigration, and with the Preventive Officer having left his vicinity, Preet Kumar Agarwal informed Sanjay Agarwal that the airline refused to allow the goods as hand baggage, and that he was stuck in the terminal with the said goods, being around 54 kg of gold jewellery.
Sanjay Agarwal reached the airport security gate, and instructed Preet Kumar Agarwal to hand over the said goods to him so that he could return it to the ACC. He also instructed Preet to meet the SDO and seek out his assistance by checking in, pass through Page 54 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB immigration in order to re-enter his office. Thus, at around 5:11 PM in the presence and with the leave of the security personnel at the airport terminal gate, Sanjay Agarwal obtained possession of the said goods from Preet Kumar Agarwal in an attempt to return the goods to the Air Cargo Complex, Customs for reprocessing/cancellation and/or storage. On reaching the customs office however, Sanjay Agarwal found that the ACC office had closed at around 6:00 PM. The Security officers present at the ground floor of the complex were unable to assist him, and did not grant him entry into the appraising section.
In a state of panic, and stranded with 54 kg of gold ornaments outside the airport terminal, Sanjay Agarwal arranged to ship the goods back to Hyderabad through IndiGo Cargo. The sealed boxes remained untampered and bore the customs seals.
In the meanwhile, Preet Kumar Agarwal reached the office of the SDO and informed him about the said goods not being checked in. The Directorate of Revenue Intelligence (DRI) arrived shortly thereafter, and intercepted Preet Kumar Agarwal, Sanjay Agarwal and seized the said goods. This event is also disputed by the Department inasmuch as they claim that Preet Agarwal was intercepted at Boarding Gate 11 attempting to depart for Dubai. The CCTV footage revealing the precise location of Preet Agarwal at the airport at the time of the interception, and his movement past or re-entry into the SDO office has not been disclosed as part of the RUD).
April 5, Goods were seized under Section 110 of the 2018 Customs Act through a Panchnama. Summons were issued to the aggrieved persons under Section 108, and statements were recorded under coercion. Notably, summonses were issued to the aggrieved persons even though were already under custody of the DRI. Both PA and SA were continuously under the custody Page 55 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB of the DRI from 4.4.2018 evening as per record of the instant case.
April 6, Preet Kumar Agarwal, and Ajay Kumar Agarwal 2018 were formally arrested under Section 104 of the Customs Act and remanded to judicial custody. They retracted their statements before the Chief Judicial Magistrate.
May 16, Avinash Soni was arrested and retracted his 2018 statement before the Magistrate, citing coercion and threats.
June 1, Preventive detention orders were issued 2018 against the appellant-exporter and others under the Conservation of Foreign Exchange and Prevention of Smuggling Act (COFEPOSA).
August The Advisory Board under COFEPOSA declined 16, 2018 to confirm the detention order against Preet Kumar Agarwal.
August The Delhi High Court quashed the COFEPOSA 27, 2018 detention order against the appellant March 11, Special Leave Petition filed by Department was 2019 dismissed by the Hon'ble Supreme Court March 29, Subject Show Cause Notice (SCN) was issued 2019 by DRI under Section 28 and Section 124 of the Customs Act May 29, Reply of the noticees to the Show Cause Notice 2023 submitted to the Adjudicating Authority July 31, The Adjudicating Authority passed an order 2023 confiscating the gold and imposing penalties on the noticees and others.
November The exporter filed the present appeal before 2, 2023 the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), seeking relief.
Page 56 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
23. The Ld. Counsel appearing on behalf of the exporters/noticees has made various submissions, which are summarized below: -
▪ Principal grounds and contentions
(i) At the outset, the said adverse findings and observations in the said impugned order in relation to the aggrieved persons are disputed in entirety. It is submitted that the said impugned order has been passed in an arbitrary and perverse manner, without a proper consideration of the records of the instant case, or the facts thereof, and without properly applying the relevant statutory provisions thereto. The said adverse findings and demands disputed by the aggrieved persons abovenamed, are baseless, and contrary to fact and law, and are liable to be set aside entirely.
▪ Procedural lapses causing alleged diversion not the fault of the appellants
(i) As will be apparent from the tabulated events, the gold jewellery being exported was manufactured out of the 68kg of gold purchased in 100 gm bars, from Diamond India Limited (DIL), a government-authorized nominated agency, under the provisions of Notification 57/2000 and Circular No. 27/2016 dated June 10, 2016. Shree Ganesh Jewels procured 68 kg of gold bars specifically for converting the same into the said goods, for purposes of export, ensuring compliance with the 90-day export period outlined in the Foreign Trade Policy. The fact of the gold being sourced from DIL and not Page 57 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB STCL or any other nominated agency is apparent from the Invoice dt. 3.4.2018.
(ii) Detailed records were maintained by Shree Ganesh Jewels, including invoices issued by Diamond India Limited, which confirm the legitimate purchase of the gold. These transactions are documented in the Show Cause Notice dated 29.3.2019 as well as the appellant's reply thereto dated 29.5.2023, substantiating that the gold from DIL was purchased lawfully with the intent for export. The consignment in question consisted of 54.096 kg of gold bangles, valued at $2,213,425 USD (approximately INR 14.19 crore) on a Free on Board (FOB) basis, destined for Jumeriates Gold Jewellery LLC, Dubai. A manually filed shipping bill (No. 6530662 dated April 3, 2018) was duly prepared, and together with supporting documents, including the invoice, packing list, and an undertaking letter dated April 4, 2018, were submitted to the customs authorities.
(iii) As maintained by the appellants in their reply dated 29.5.2023, the invoice explicitly declared that the imported gold was sourced from Diamond India Limited, with no ambiguity in its documentation. The shipping documents were marked appropriately as Customs Copy, Export Promotion Copy, Exchange Control Copy, and Exporter Copy to avoid any misuse or duplication. Customs officials at various levels verified and appraised the goods, ensuring they were properly handled at each stage. The Group Appraiser of Customs sealed the consignment in Page 58 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB two boxes, and these were verified by the Shed Appraiser before being handed over to the Preventive Officer (PO), being Satya Gopal Mallick, for escorting to the Station Duty Officer (SDO), being Pallav Roy Chowdhury. Sanjay Agarwal and Preet Kumar Agarwal were authorized by Shree Ganesh Jewels to handle the export, with authorization submitted to the Assistant Commissioner of Customs.
(iv) In spite of thorough procedural compliances on the part of the appellants, unforeseen lapses by customs officials and logistical challenges with the Emirates Airline disrupted the export process. Detailed records and shipping documents submitted reflect complete transparency and compliance with export regulations. In particular, it is maintained that owing to the PO having taken Preet Agarwal to the office of the SDO to introduce him to the SDO, no formal check-in procedure could be completed, and boarding pass from Emirates could not be obtained. The SDO having handed over the said goods without checking for boarding pass of Preet Agarwal, prior to boarding of flight, meant that he had to attempt to check in with the said gold consignment of 54 kgs. This was a natural consequence of the mistake of the SDO and PO. The PO has acknowledged that it was a mistake on his part during interrogation by the DRI and subsequently in his reply to the adjudicating authority. The adjudicating authority has expressly observed in the said impugned order in this regard that "I find that it is evident that diversion of the export consignment in the Page 59 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB instant case occurred due to the deviation from prescribed procedure and lapses committed at the last stage of the process of export." The said impugned order attributes the deviation due to "lack of proper care" by Pallav Roy Chowdhury, being the SDO as aforesaid. In his reply to the SCN as summarised in the said impugned order, it has been very clearly stated that he personally contacted the DRI on 4.4.2018 to inform them about the said consignment being in the possession of a person and requested the DRI to repossess such goods from him. In his submissions before this Tribunal at the hearing dt. 25.2.2025, written version whereof was shared with the aggrieved persons, the SDO has clearly conveyed that he contacted the DRI after being informed by Preet Agarwal that he was trying to return the said goods to the Department through his father, Sanjay Agarwal who was stranded outside the Air Cargo Customs, trying to return the said goods to the Customs authorities. Evidently, if the alleged diversion of the said goods has occurred, it has not happened on account of any wilful act, negligence or default on the part of the exporter herein or its agent.
▪ Relied upon statements either retracted or contradict diversion theory
(i) The said reply dated 29.5.2023 submitted by the appellants highlights the procedural lapses and admissions of fault/culpability by customs officials, which led to the said goods remaining within the DTA, and prevented the same from Page 60 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB being exported in the manner intended. The Preventive Officer, Satya Gopal Mallick, in his statement dated April 18, 2018, admitted that he escorted Preet Kumar Agarwal to the Station Duty Officer (SDO) without ensuring that boarding and immigration formalities were completed. This procedural lapse left the consignment in limbo at the airport. Similarly, Station Duty Officer Pallab Roy Chowdhury, in his statements dated April 4, 2018, and April 18, 2018, acknowledged that he handed over the sealed boxes of gold to Preet Kumar Agarwal without verifying whether the required formalities were completed. These admissions establish that the failure of the export process was due to lapses by the customs authorities, not deliberate diversion by the exporters as claimed by the DRI.
(ii) Additionally, the statements recorded from Sanjay Agarwal, Preet Kumar Agarwal, Ajay Agarwal and Avinash Soni under Section 108 of the Customs Act were obtained under duress and coercion. The said reply dated 29.5.2023 details how physical and psychological pressure was applied during the interrogation, leading to statements that were not voluntary. These statements were later retracted before the Additional Chief Judicial Magistrate (ACJM), indicating duress and coercion as the reason for the initial admissions. Avinash Soni, the proprietor of Shree Ganesh Jewels, was arrested by the DRI on May 14, 2018 at 6:45 AM and he too retracted his statement on May 16, 2018, explaining that he was made to sign on blank pages by the DRI. These retractions Page 61 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB weaken the credibility of the allegations made in the SCN and the said impugned order
(iii) The said reply dated 29.5.2023 to the Show Cause Notice also discusses the voluntary disclosure made by Preet Kumar Agarwal to the SDO, which contradicts the claim of diversion. When Emirates Airlines refused to accept the 54 kg consignment as hand baggage, Preet Agarwal, returned to the SDO to report the situation. This fact was acknowledged by the SDO before this Tribunal as aforesaid. It was submitted in the said reply dated 29.5.2023, that this was Preet Agarwal's first attempt to export a gold consignment by hand carriage. This act of transparency further indicates that there was no intention to divert the said goods on the part of the exporter or his agent.
▪ False Summons notices issued by DRI to make statements appear voluntary
(i) In this regard, it is to be noted further that the DRI purportedly issued 2 summons notices dated 5.4.2018 each for Preet Agarwal and Sanjay Agarwal for securing their attendance in spite of both parties being in the custody of the DRI since the evening of 4.4.2018 as maintained in the retraction statements of Preet Agarwal and Sanjay Agarwal dated 6.4.2018. The purported Panchnama dt. April 4, 2018 drawn up by Panchas Rudra Poddar and Biswajit Ghosh also indicates that the Panchnama proceedings allegedly commenced from 1810 hours and concluded at noon the following day Page 62 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB on April 5, 2018. The Panchnama indicates that Sanjay Agarwal and Preet Agarwal were questioned about the subject export indicating that they were detained overnight. The first summons notice dated 5.4.2018 required SA, PA's attendance at 8 AM and 8:30 AM respectively. Hence the statements would have been recorded while the Panchnama proceedings were going on. The second summons required the attendance of SA and PA at 1:00 PM on 5.4.2018, but the second statements recorded from them reveal that they were obtained on the next day on April 6, 2018, being the day they were formally arrested and produced before the ACJM. It is clear therefore, that SA and PA were under the custody of the Department, yet summons notices were prepared to show that they were not arrested. Such brazen attempt on the part of the DRI to suppress the fact of SA and PA being in their custody since the evening of 4.4.2018 till 6.4.2018 when they were produced before the ACJM, being a period of more than 24 hours only corroborates the claims of the aggrieved persons that statements were obtained from them under coercion and duress. Section 104(2) of the Act requires that a person arrested must be produced before the Magistrate "without unnecessary delay" and in any event, within 24 hours of arrest. "Arrest" for the purpose of the Act, as interpreted by the Bombay High Court in Suaibo Ibow Casamma v. Union of India, 1995 (80) ELT 762 (Bom.), in paragraphs 17 to 19 thereof, once a person is put under the complete control and custody of the authorities, Page 63 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB his arrest would be complete. "It is nobody's case that he was ever allowed to move out of the custody of the Customs officer". In the present case therefore, it is clear that the moment Preet Agarwal and Sanjay Agarwal, both residents of Hyderabad, were brought within DRI custody in Kolkata on 4.4.2018, they were put under their control and custody (ref. Jugeshwar Dayal v. CC, Patna, 2001 (134) ELT 253 (T), and Dinesh Bhabootmal Salecha v DRI, Mum, (2023) 3 Centax 250 (Bom)).
(ii) There is no explanation whatsoever why 2 summons notices would be issued to PA and SA on 5.4.2018 when they were not even released from DRI custody, and why they were produced before the Magistrate more than 24 hours later. It is also clear that the witnesses were kept in custody overnight on 4.4.2018 and 5.4.2018 even when they were not formally arrested until 6.4.2018. It is clear from the records thus, that the DRI officers have subjected Preet Agarwal and his father to duress and coercion, and obtained statements from them under seriously questionable circumstances in order to establish a case of conspiracy and deliberate diversion and smuggling of gold. It follows thus, that the summons notices, which were not even required to be issued, were prepared by the DRI in order to make it appear that SA and PA were not in their custody on 5.4.2018 and that their statements were voluntary in nature. In such questionably circumstances, and in the face of the stated retractions therefore, the statements obtained from the aggrieved persons on 5.4.2018 and 6.4.2018 ought to be rendered Page 64 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB unreliable and any inference drawn therefrom set aside.
(iii) The entire case of conspiracy in the present case is built upon retracted statements obtained in such questionable circumstances involving the issuance of unnecessary summons notices to persons while they were under arrest/in custody. The said statements of the PO and SDO would also indicate that they had absolutely no knowledge of any conspiracy and they had merely made a mistake in procedure.
▪ Arbitrary and unreliable seizure procedure followed by DRI
(i) Significantly, the validity of the panchnamas and the reliability of panchas/witnesses, are also questionable. The panchas through the said RTI application were revealed to be housekeeping staff and not actual witnesses to the events and had signed out at the time the Panchnama proceedings were purportedly going on. The procedural lapses and coerced statements relied upon by the DRI, as detailed in the said Reply dt. 29.5.2023, undermine the credibility of the case built against the exporter. In particular, as mentioned in the said reply dated 29.5.2023, and duly reproduced in the said impugned order, pursuant to an Application under the Right to Information Act, 2005 dated December 31, 2020, the sign-out times of the panchas from the airport were found to be prior to the time of the observations recorded in the Panchnamas. Rudra Poddar and Biswajit Ghosh Page 65 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB according to the Deployment Sheet of Upshot Utility Services, procured through RTI, shows that they signed at 9PM on 4.4.2018, yet they were claiming to be observing together with DRI officers from 6:10 PM on 4.4.2018 and past midnight, and into the next date, being April 5, 2018 when they cast their signatures on the Panchnama. The Deployment Sheet shows further, that they returned to their place of duty at the International Arrival (Wash Room Gents), at NSCBI Airport on 5.4.2018 at 7 AM, and signed out at 9PM. Likewise, the other Panchas, Firoz Molla, Suvendu Das, Ratan Biswas and Biswajit Chowdhury had all signed out at 7 PM according to the Deployment Sheets of Upshot Utility Services that contracted them at the said airport, before any detention or seizure/recovery was made, which they claimed to have witnessed.
▪ Non-supply of RUDs and Violation of Natural Justice principles
(i) By the said reply dated 29.5.2023, particularly paras 1.9, 1.10, 1.17, 1.18, 1.25 and 1.38 thereof, the appellants also strongly contended the failure of the Directorate of Revenue Intelligence (DRI) to provide relied-upon records such as CCTV footage, confidential CISF CCTV report, and other key documents. It points out that these records are critical to the adjudication process, as they allegedly form the basis of the allegations made against the appellants. Specifically, by the said reply dt. 29.5.2023, the appellants requested that the Page 66 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB CCTV footage of the said airport, which captures the movements of Preet Kumar Agarwal and Sanjay Agarwal on April 4, 2018, be shared with them, since it had not been produced with the Show Cause Notice in spite of being referred therein. The CCTV shared during the COFEPOSA proceeding by the Department was selective and not continuous and omitted significant time periods during which interactions took place between Preet Agarwal and the Airlines staff, as well as the SDO. It was highlighted by the appellant that this footage could corroborate their account of events, such as their attempts to rectify the procedural lapses aforesaid, and their efforts to return the goods to customs after Emirates Airlines denied the gold as hand baggage owing to the maximum hand baggage limit being 7kg (Briefcase or Garment Bag) + 7kg (carry on). The withholding of such evidence, it is submitted, violates the principles of natural justice, as it denied the appellants a fair opportunity to establish its case. The Commissioner, in spite of acknowledging the said reply dated 29.5.2023, has failed to comply with such request, and proceeded to pass the said impugned order holding that the CCTV footage was purportedly provided during the COFEPOSA proceeding, though such footage was not continuous and did not contain the vital recordings of Preet Agarwal's movements post check-in, that could have established and confirmed that he voluntarily visited the SDO's office to inform him of the mishap. Likewise, the confidential CISF report, though listed as part of the RUDs, was not actually provided to the Page 67 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB appellants prompting them to specifically request the same in the course of adjudication.
(ii) By the said reply dated 29.5.2023, the appellants also raised concerns about the confidential report from the Central Industrial Security Force (CISF) which was referenced in the Show Cause Notice but was not supplied to the appellant. This report purportedly contained details of Preet Kumar Agarwal handing over the goods to Sanjay Agarwal at the entrance of the airport terminal. This report would demonstrate that the transaction occurred transparently, under the supervision of CISF officers, and refute allegations of clandestine activity. Additionally, the said reply questioned why other records, such as the Joint Commissioner's alleged adverse note denying permission for hand-carry export or internal customs communications, had not been provided to the appellants during the adjudication.
(iii) The non-supply of these relied-upon records not only violates procedural fairness fundamentally vitiating the subject adjudication but also raises serious doubts about the case sought to be made out against the appellants by the DRI and the Adjudicating Authority. If the CCTV footage and confidential reports truly supported the DRI's allegations, they would have been shared as part of the relied-upon documents. The absence of these materials indicates that the withheld evidence likely undermines the DRI's narrative.
(iv) It is for such stated deficiencies in the case, that the appellant requested cross Page 68 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB examinations of various witnesses, including Champa Mukherjee (noticee no.6), Dhruvajyoti Roy (noticee no. 4), Satya Gopal Mallick (noticee no. 7), Pallav Roychowdhury (noticee no. 5), Ajay Kr. Agarwal (noticee no. 9), and the said panchas, Rudra Poddar, Biswajit Ghosh. In passing the said impugned order, the Commissioner has sought to justify denial of such cross examination on the erroneous and arbitrary basis that no reasons were conveyed by the appellants to justify their request for such cross examination.
(v)Evidently, the entire adjudication procedure was fraught with procedural deficiencies which fundamentally and permanently vitiated the subject impugned proceedings, and prevented the appellants from reinforcing their arguments, contentions and justifications in a timely manner. At this stage, it would be very difficult to get such witnesses to recall incidents that occurred in 2018, and the denial of its procedural rights, had substantially impaired and prejudiced its right to a fair hearing, thereby undermining and vitiating the said impugned order in its entirety.
(vi) No reliance therefore can be placed on the impugned order, that culminated from the stated procedural improprieties, the resulting prejudice and impairment whereof, caused to the appellants/noticees, cannot be repaired or reversed at this stage. The said impugned order is thus, for this reason alone, liable to be set aside.
Page 69 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB ▪ Denial of Cross Examination and violation of Natural Justice principles
(i) In view of the aforesaid, particularly given the questionable summons notices, RTI declarations indicating the absence of the Panchas at the time of the Panchnama proceedings on 4.4.2018 to 5.4.2018, the corroborative retractions by the aggrieved persons on the ground of coercion and duress, and the admissions of the SDO and the PO of their mistakes, it ought to have been apparent to the Commissioner, that there was sufficient basis for allowing cross examination of the Customs officers and Panchas, as demanded by the appellants by their reply dated 29.5.2023 in paragraph 1.38 thereof
(ii) In this regard, it is trite law, if there is substantial inconsistency in the relied upon evidence and retractions by key witnesses, absence of panchas during panchnama proceedings, and certain relied upon documents are not supplied or produced by the Department, there is adequate cause for permitting cross examination of witnesses. The case for conspiracy is also not apparent by the events on 4.4.2018, and was made out solely on the basis of witness statements recorded from Sanjay Agarwal, Preet Agarwal on 5.4.2018 and 6.4.2018, both of which were retracted at the earliest opportunity before the ACJM. The denial of cross examination is tantamount to a violation of the principles of natural justice in the present case, rendering the said impugned order and the findings Page 70 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB therein, illegal, invalid and void ab initio. Reliance in this regard is placed on the decision of the Supreme Court in Andaman Timber Industries v. CCE, Kolkata, 2017 (50) STR 93 (SC), as well as that of the Calcutta High Court in Ajay Saraogi v. Union of India, 2023 (386) ELT 333 (Cal).
▪ COFEPOSA proceedings dropped against Preet Agarwal. Detention set aside by Delhi HC in the cases of Ajay Agarwal and Sanjay Agarwal.
(i) Though a case of smuggling was sought to be made out against the aggrieved persons, the proceedings under The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 were dropped against Preet Agarwal (vide Order of the CEIB dt. 16.8.2015) and set aside by the Delhi High Court in respect of Sanjay Agarwal and Ajay Agarwal. The SLP before the Supreme Court was also dismissed.
(ii) In the case of Ajay Agarwal, it was specifically observed in paragraph 51 of its judgment dated 27.8.2018 by the Delhi High Court that he was not even present at the NSCBI Airport in Kolkata on 4.4.2018 when the said goods were handed over by Preet Agarwal to Sanjay Agarwal. The detention was found to be unsustainable against Sanjay Agarwal as well, and such persons were directed to be released.
Page 71 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB ▪ Arbitrary valuation of the said goods
(i) Furthermore, it is to be noted that though the invoice and shipping bill 6530662 dated April 3,2018 against which the said goods were sought to be exported declare a value of Rs. 14,19,91,214/-, such goods have instead been reassessed at Rs. 16,10,43,792/- on the basis of the purported valuation by M/s A. B. Kundu Jewellers, Kolkata, and M/s Prafulla K Pakhawala, both purported authorised assayers.
(ii) The samples of the said goods were also purportedly tested by the Customs Chemical Laboratory as indicated by the Test Report bearing Lab No. 135- 138/SZD(G)-51-54 dated 18.04.2018 & Lab No. 139-142/SZD(G)-55-58 dated 18.04.2018.
(iii) None of the Valuation Reports dated 5.4.2018 of the said authorised assayers or the laboratory report were shared with the appellants until after the Show Cause Notice was prepared and issued to them. No opportunity of retesting was offered to them in violation of Circular No. 30/2017-Cus., dated 18-7-2017, and there was also no scope for the appellants to verify the nature of valuation or raise any objections thereto or seek a revaluation.
(iv) Notably, the said Valuation Reports dated 5.4.2018 fail to explain any basis or methodology for the valuation and are prima facie inconsistent with each other. One box (Box 1) containing 580 bangles has been valued Page 72 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB at Rs. 8,30,34,484/- having weight of 27892 gms whereas another box (Box 2) containing 614 bangles (34 more bangles than box no. 1) has been valued at Rs. 7,80,09,308/- due to its weight being measured at 26204 gms. There are no details regarding the dimensions of the bangles and whether there is a size difference between the bangles in the two boxes, particularly since the box with fewer bangles weighed more than the box with more bangles. These bangles were all found to be made of 22 carat gold, to which a common rate of Rs. 2977 per gram was applied (though the invoice rate, appraised a day prior was Rs. 2624 per gram (approx.),. The said goods had clearly been appraised, and no objections were raised by the Department during the appraisement of the said goods on 4.4.2018 for purposes of export. Since the CRCL report is dated 18.4.2018, and the Valuation Reports dated 5.4.2018 precede the CRCL report by 13 days, the purity factor of 91- 92% could also not have been considered by the Valuers in preparing their reports on 5.4.2018. The valuation reports also do not indicate what pricing methodology they have followed and wherefrom they have sourced the rate for gold bangles of Rs. 2977 per gram. It is not plain if the price is tax inclusive, or if it is the retail price of similar goods in Kolkata, and what retail survey if any, was done to determine such rate. Hence the weight difference in the bangles is suspicious and is not explained from the reports. It has not also been explained in the said impugned order, how the price of the said goods and rate of gold was appraised and Page 73 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB accepted on 4.4.2018 but disagreed with the next day on the basis of valuation reports prepared purportedly by valuers who examined the said goods at the "Arrival Area of NSCBI Airport" and determined the carat and value of the consignment before any sample examination) at an airport area.
(v)That the said goods were appraised at Rs. 14,19,91,214/-, by the Appraising Officers on 4.4.2018 and only thereafter cleared for export at the declared invoice value. Within 24 hours of such appraisement, the valuation had changed so dramatically, that the said goods were by 5.4.2018 valued at Rs. 16,10,43,792/- with an increment of Rs. 1,90,52,578/- from the invoice value. Such dramatic rise in the valuation within 24 hours of appraisement has been sought to be explained by the Commissioner in the said impugned order in page 105 thereof, stating that "the enhancement of value occurred due to appreciation of the value of gold" from Rs. 2624 to Rs. 2977. No matter how inconceivable, if appreciation in the value of gold from the time of appraisement to the time of revaluation was in fact the only reason for the increment, the appellants cannot be alleged to have mis- declared the value of gold in the shipping bill drawn on 3.4.2018, and/or to have falsified any records or presented any incorrect declaration in the invoice, packing list, shipping bill or other accompanying documents that could potentially attract penalties under Section 114, 114AA of the Act, or could render the said goods liable for confiscation under Section 113 thereof.
Page 74 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
(vi) Likewise, the CRCL measures the purity of some samples at 92% and others at around 91%, and it is not clear what purity has been finally determined for the entire consignment, since as aforesaid, the Valuation Reports preceded the CRCL report by 13 days and could not have considered or realistically relied upon such purity values in any manner whatsoever. In any event, the gold purity declared for the entire consignment in the Shipping Bill was 92.385% at 22 carats, and is not markedly different from the samples tested to justify such a dramatic increase in course of revaluation.
(vii) The procedure for testing and valuation appears to be very arbitrary and the said relied upon reports themselves appear to be self- contradictory therefore.
(viii) It is submitted that even more significant is the fact that the Panchnama recording the valuation procedure has been prepared by the panchas, Rudra Poddar and Biswajit Ghosh, who were witnessing events from late evening of 4.4.2018 right up to the time of valuation the next day, on 5.4.2018, even though the said Deployment Sheets of Upshot Utility Services procured through RTI reveal that they signed out of the airport at 9 PM on 4.4.2018 itself, and had signed in for work the next day at the Gents Washroom and the Aerobridge at 7AM on 5.4.2018 at the NSCBI Airport. The valuation reports appear to have been signed by these Panchas, who were apparently not even present as per the RTI Reports, thereby raising serious Page 75 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB questions about the reliability of the valuation reports.
(ix) Further, it is also inconceivable that housekeeping staff adept at maintaining washrooms and aerobridges would have such a keen understanding of gold valuations, recording in their Panchnamas the weight of the gold bangles "sans samples" as 27892 gms and 26204 gms respectively valued at Rs. 16,10,43,792/-Given that the cross examination of such panchas was denied by the Commissioner, serious doubt is cast on the reliability of the Panchnama dated 5.4.2024 and the Valuation Reports prepared allegedly in their presence.
▪ No Diversion of goods, intentional or otherwise
(i) In view of the aforesaid, it is respectfully submitted that no diversion of the said goods was attempted by the appellants, contrary to what has been alleged. Rather, the appellants had sought to inform the authorities about the mishap, and remedy the situation. It was mentioned clearly in the reply dated 29.5.2023 that Preet Agarwal re-entered the office of the SDO on 4.4.2024 to inform him about Emirates Airlines preventing the said goods from being carried as part of his hand luggage. This is admitted by the SDO by his submission to the Tribunal as aforesaid. The fact of the SDO (Pallav Roy Chowdhury) personally contacting the DRI is admitted in his reply dated 22.4.2019 Page 76 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB as reproduced by the Commissioner in the said impugned order in page 77 thereof. Though the appellants-noticees insisted on the production of the complete CCTV footage particularly during the time post check-in of Preet Agarwal for his flight to Dubai on 4.4.2018, as requested by the said reply dated 29.5.2023, being the critical time during which Preet Agarwal met with the SDO, the same has never been shared with the noticees by the Department. The opportunity to cross examine the SDO to verify how he managed to learn of the purported diversion and if Preet Agarwal voluntarily approached him to share news of the stated mishap was also denied by the Commissioner to the appellant, preventing them from determining and/or establishing the truth of the events.
(ii) Significantly, as also apparent from the history of transactions produced with the Show Cause Notice it is apparent that Preet Agarwal had never previously hand-carried goods for purposes of export, and this was, as maintained in the said reply dated 29.5.2023, his first attempt at exporting the said goods.
(iii) In any event, where it is plain that the said goods remained within the DTA owing to lapses on the part of the SDO and the PO, and such lapse is being determined by the Adjudicating Authority as merely procedural and not tantamount to diversion, it is inconceivable how Preet Agarwal who was only complying with the instructions of the officers, could be deemed to have acted fraudulently and with intent to Page 77 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB divert the said goods into the DTA. It is respectfully submitted that when one party to the same transaction is found to have acted bona fide, and made a procedural error, the other party to the same transaction and subject to the consequences of that very mistake/error cannot simultaneously be found to have acted in a mala fide or fraudulent manner. Such observation on the part of the Commissioner appears to be prejudiced and unfair, and totally irrational. A syndicated, planned operation cannot be conceived out of procedural lapses that could not have been foreseen by anyone.
▪ Importer/Supplier of gold not made a party
(i) The said impugned order observes that State Trading Corporation of India Limited (STCL) had imported the gold out of which the said goods were produced for purposes of re-exportation. However, as apparent from the invoices dated March 13, 2018, March 16, 2018, March 22, 2018, it will be apparent that the said goods were sourced from the gold purchased from Diamond India Limited and not STCL as alleged in the impugned order. This supplier of the gold being Diamond India Limited and not STCL is also prima facie apparent on a perusal of the relied upon invoice dated 2.4.2018 which clearly states that the gold was "purchased from:
Diamond India Limited". It is inconceivable on what basis STCL was presumed to be the supplier when there is no document on record linking it with the said goods seized from the Page 78 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB appellants or the shipping documents procured thereagainst. The appellants had in a separate transaction sourced gold from STCL being a nominated agency, but the same had no connection with the said goods confiscated from the appellants. There is nothing in the Show Cause Notice or the said impugned order to indicate how and why STCL is involved in the present case, and why DIL was not made a party. Notably, the Commissioner has also observed in the said impugned order that he had no jurisdiction to adjudicate on matters pertaining to the gold imported by STCL.
▪ No basis for imposing penalties
(i) In view of the aforesaid, it is submitted that the conditions precedent to invoking Sections 113(k), 114(iii) and 114AA of the Act cannot be said to have been satisfied in the instant case.
(ii) In particular, Section 113(k) of the Act applies only to instances where exportable goods are not loaded onto the vessel on account of the "wilful act, negligence or default of the exporter, his agent or employee". In the present case, the oversight, shortcomings, or negligence, was entirely to the account of the Department as admitted by the respective officers, Pallav Roy Chowdhury, Dhruvajyoti Roy, Champa Mukherjee, and Satya Gopal Mallick. The goods were entirely in the custody of the Department and ought to have remained that way until Preet Kumar Agarwal boarded his flight. It was on account of the actions of the Preventive Officer, Page 79 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB that the boarding and immigration procedure was bypassed, and the failure of the SDO to retain the goods post completion of all formalities, that left Preet Kumar Agarwal stranded in the Departure Terminal at the said airport. There is no basis for confiscating the said goods therefore, the preconditions to Section 113(k) of the Act not being fulfilled in the present case.
(iii) In view of the inapplicability of Section 113(k) of the Act, there can also be no basis for invoking Section 114 of the Act. Even otherwise, as aforesaid, there has been no act or omission on the part of the appellants that would have rendered the said goods liable for confiscation.
(iv) As regards the proposed imposition of penalty under Section 114AA of the Act, it is to be appreciated that no false declaration of any sort has been made by the appellants, given the consistency of the shipping documents with the nature and characteristics of the said goods. It cannot also be established that there was any deliberate attempt to divert the said goods inasmuch as the failure to export the same occurred on account of the lapses of the Department as acknowledged in the said impugned order. As such, there appears to be no basis for invoking Section 114AA of the Act as no false and incorrect material of any sort has been submitted by the appellants and/or produced with the Show Cause Notice or the impugned order in relation to the said goods.Page 80 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB ▪ Improper determination of redemption fine
(i) Without prejudice to the aforesaid, further and in any event, the imposition of redemption fine of Rs. 80,00,000/- is arbitrary and without basis, and does not appear to be commensurate with the margin of profit. A perusal of the Shipping Bill dated 3.4.2023 and the Invoice dated 2.3.2024 shall reveal that the value addition is only to the extent of the making charges of Rs. 43,400.43, and that remaining value component of Rs. 2170021.59 of the said goods, is identical to the original value of gold sourced from Diamond India Limited as indicated in the said invoice dated 3.4.2023.
▪ Application of the No Litigation Policy in the case of Department's appeal
(i) All penalties imposed on the appellants disputed by the Department in its appeal are less than Rs. 50,00,000/- and therefore, attract the revised litigation policy enforceable in terms of CBIC Instruction dated 2.11.2023 bearing F. No. 390/Misc/30/2023-JC. Redemption Fine is not a penalty, but even otherwise, is imposable on goods and not persons, and can only concern the exporter and its agents, and not Ajay Agarwal, the respondent no. 9) Page 81 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB ▪ No existence of syndicate/conspiracy
(i) Further, in view of the aforesaid, it is submitted that there is no operation of any syndicate, and the appellants are not acting in collusion with each other to evade duty or to improperly export goods. There is no evidence to indicate that Avinash Soni is not the proprietor of Shree Ganesh Jewels or that Sanjay Agarwal is the de facto controller of such concern. Allegations to this effect are baseless and erroneous. Even otherwise, the alleged proximity to or purported influence of Sanjay Agarwal on the operations of Shree Ganesh Jewels does not establish that no genuine attempt was made by the appellants to export the said goods. Evidence of past exports was provided by the said reply dated 29.5.2023 and brought to the attention of the Commissioner. The procedural lapses that the Commissioner observes on the part of the customs officials in para 65.1.2 and para 65.3.2 in the impugned order, that led to the alleged "deviation" could not have been foreseen by any person including the persons making the errors, since these lapses were not deliberate as held by the Commissioner. It is inconceivable therefore, how the DRI could have had advance intelligence about the diversion, when the alleged event, as acknowledged by the Commissioner was a consequence of inadvertence. In the first paragraph of the Show Cause Notice dt. 29.3.2019, it has been claimed that as on 3.4.2018, the DRI had consignment and person-specific intelligence that the said goods under the said shipping bill would be diverted on 4.4.2018. Yet, they did not intercept Page 82 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB any of the appraising officers even after their office had closed on 4.4.2018, and did not detain Preet Agarwal until late in the evening. Given particularly that the SDO has claimed that Preet Agarwal prompted him to take steps to recover the said goods, it would have been necessary for the DRI to reveal the CCTV footage of Preet Agarwal's movement prior to or at the time of his interception, but such CCTV footage remains suppressed to date.
(ii) That a fraudulent attempt to divert goods cannot arise out of a mistake, and allegations to this effect being made against the appellants/noticees are without basis or reason. If a transaction is rendered a mistake for the Department, it should also be a mistake for the noticees. The same transaction cannot be labelled a mistake for the SDO, and an act of fraud by the exporter and his agent.
▪ Precedents
(i) In support of the stated contentions, reliance is placed on the following precedents:
a. Andaman Timber Industries v. CCE, Kolkata, 2017 (50) STR 93 (SC) b. DRI v. Mahendra Kumar Singhal, 2016 (333) ELT 250 (Del)Bikash Saha v. CC (Prev), Kolkata, 2020 (371) ELT 763 (Kol) c. Suaibo Ibow Casamma v. Union of India, 1995 (80) ELT 762 (Bom) d. Jugeshwar Dayal v. CC, Patna, 2001 (134) ELT 253 (T), e. Dinesh Bhabootmal Salecha v DRI, Mum, (2023) 3 Centax 250 (Bom) f. Ajay Saraogi v. Union of India, 2023 (386) ELT 333 (Cal).Page 83 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB 23.1. In view of the above submissions, the appellants/noticees have prayed for setting aside the said impugned order inasmuch as it seeks to confiscate the said goods and impose penalties upon the appellants/noticees, along with all demands and/or penalties made to/imposed upon the aggrieved persons.
23.2. Further, it is prayed by the noticees that, in the event the confiscation under Section 113(k) of the Act is found to be improper and illegal, the seized goods under Section 110 be allowed to be exported/re- exported or returned to the person from whose custody they were obtained or the agent appointed by the said exporter concerned, Preet Agarwal in particular.
23.3. The noticees/co-noticees have also prayed for dismissal of the appeal filed by the Revenue as being non-maintainable and/or having no merit whatsoever.
24. On the other hand, in respect of the appeal preferred by the Revenue, the Ld. Authorized Representative of the Revenue has urged the following grounds: -
(i) That the Adjudicating Authority had failed to consider the fact that Shri Dhruvajyoti Roy, Deputy Commissioner of Customs in his voluntary statement had himself accepted the fact that he had mis-read the Joint Commissioner's comment for filing of manual Shipping Bill and thought that the Commissioner had given his acceptance, which was unfortunate; that while approval of the Commissioner was available for only five consignments, he had given his consent on all Page 84 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB the Shipping Bills on the misapprehension that the procedure began with the AC's consent; that Shri Roy took the pretext of being new in the Customs formations and unaware of the Customs procedure, and ultimately absolved Shri Roy of all the charges terming the said lapse as merely procedural, when the amount of Customs Duty evasion involved in the impugned consignment was monumental.
(ii) That though Smt. Champa Mukherjee, Appraiser of Customs had admitted in her voluntary statement that in general, permission of Commissioner for filing of manual Shipping Bill was taken in each and every consignment, however the said manual S/B was processed without the approval of Commissioner as directed to her by AC (Export); that though she could not comment about an earlier consignment wherein Commissioner's permission dated 30.10.2017 in respect of 57797.7 gms. gold jewellery under S/B No. 6526374 dt. 26.10.2017 of Kalpataru Jewellers & Export Corporation, was used to clear another consignment of 10910 gms. gold under S/B No. 6528109 dt. 29.12.2017, which implied that the approval procedure was not followed by her and the consignment under the aforesaid S/B appeared to be diverted in the domestic area, the Adjudicating Authority had observed her lapse as procedural in nature.
(iii) That the Adjudicating Authority had failed to shed light into the fact that how letter dated 29.03.2018 was received at ACC from Shree Ganesh Jewels mentioning that Commissioner Page 85 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB had granted them permission for filing Shipping Bill for export of gold jewellery by personal hand carriage, when such permission was generally obtained on note sheet side of relevant file; that how the original note sheet of Customs in which the order was given by Group Appraiser to the Shed Appraiser for 100% examination of goods under S/B No. 6530662 dated 03.04.2018 and all the four copies of the Shipping Bill were found in the possession of Shri Sanjay Agarwal at the time of his interception by the DRI, which implied that the same was handed over to the exporter by any Customs officer.
(iv) That the Adjudicating Authority had failed to justify as to how such fraud which had been going on for a long time leading to substantial loss of government revenue had occurred due to deviation only at the last stage and not at several stages, in as much as, not only the SDO (Departure) had violated by not handing over the sealed package, containing jewellery meant for export, to the foreign bound passenger at the Security Hold area at the time of departure, but also the DC (Export) and Appraiser (Export) had not followed the laid down procedures. The entire responsibility for this diversion could not and should not have been only on the SDO (Departure), who was just one of the players in the entire ecosystem.
(v) That the adjudicating Authority had made a gross error of judgement by letting off Shri Sanjay Agarwal so cheaply, who had self- admittedly diverted gold meant for export in similar fashion on past four -five occasions as Page 86 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB well and where all diverted gold consignments were being exported in the name of Shri Ganesh jewels and that since October, 2017. Shri Agarwal had diverted about 500 kgs of gold in this fashion; that one consignment of gold bangles was diverted from Kolkata airport after completion export procedure and again on 17.01.2018, another consignment was diverted in a similar fashion. Shri Sanjay Agarwal had further recorded in his statement that when hand carrying of export consignment of gold bangles was stopped at Kolkata, he shifted to Hyderabad and had successfully diverted 50 kgs of gold bangles, which points out that Shri Sanjay Agarwal, was habitual offender and the master mind of the whole fraudulent operation. That the gravity of offences merited more stringent penal action both as personal penalty to all the noticees involved and as redemption fine, since Shri Sanjay Agarwal had perpetrated the fraud by putting in place a system of manipulating processing of export documents by ensuring hand carriage of gold bangles with the ulterior motive to divert the consignment and thus defrauding the exchequer of its legitimate dues.
(vi) That the Adjudicating Authority failed to penalise Shri Ajay Agarwal, who was the registered proprietor of Kalpataru Jewellers & Export Corporation, and was not only an active member of the syndicate run by Shri Sanjay Agarwal, but also an integral part of the conspiracy to defraud the state exchequer in the subject consignment of attempted diversion of 54096 gms. of gold jewellery on 04.04.2018.
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(vii) That the Adjudicating Authority had failed to realise that the examination order given by Smt. Champa Mukherjee was in the note sheet and not on the back page of the duplicate copy of the subject Shipping Bill in blatant violation of law and laid down procedure and that though she had attended DRI, Hyderabad in connection with the investigation being carried out by them against PH Jewels and hence was well aware of the frauds being committed and modus operandi being adopted by the firms of Sanjay Agarwal, still she had processed the subject export consignment.
(viii) That the Adjudicating Authority had penalised the kingpin of the syndicate, Shri Sanjay Agarwal and his son, Shri Preet Kumar Agarwal, paltry amounts under Sections 114(iii) and 114AA of the Customs Act, 1962, which should have been of appropriate quantum commensurate to the gravity of offence committed and the modus operandi adopted to defraud the state exchequer and which cannot be considered to have any deterrent effect on them.
(ix) That the Adjudicating Authority had also failed to rationalize the quantum of Redemption Fine imposed in lieu of confiscation, which appears to be incommensurate to the gravity of offence. It is well settled in law that RF and PP is within the discretion of the Adjudicating Authority, but such discretion is necessarily required to be exercised judiciously after taking into account the facts of the case and evidence placed before him and the amount of RF and PP Page 88 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB should be sufficient to wipe out the profit that would have been made in respect of the said goods and is also supposed to act as a deterrent in the future. In the instant case, the value of the seized gold jewellery at the time of seizure was Rs. 16,10,43,792/-, with a duty liability of Rs. 1,45,70,755/-. The total quantum of RF and PP imposed is only Rs. 99,00,000/- (Rs. 80,00,000/- + Rs. 19,00,000/-), which is not even 10% of the seizure value and also does not cover the duty liability on the primary gold, which had purportedly been used for the manufacture of the seized gold jewellery, and therefore, would have been part of the profit that the syndicate was intending to make by diverting the gold jewellery meant for export. The Adjudicating Authority was required to give proper, valid and cogent reasons for passing the order with regard to the quantum of RF and PP, which appears to be grossly inadequate, which is absent in the instant Order-in-Original and needs to be addressed and rectified.
24.1. Accordingly, the Ld. Authorized Representative of the Revenue has prayed for setting aside the impugned order by way of allowing the Revenue's appeal and for imposing higher redemption fine and higher penalties in respect of all the noticees considering the higher gravity of offence committed by the said persons.
24.2. He also prayed for dismissing the appeals filed by the exporters/noticees.
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25. In response to the appeal filed by the Revenue, the respondent, namely, Shri Dhruvajyoti Roy, has made the following submissions: -
(i) During the material time, he was posted at Air Cargo Complex as the Assistant Commissioner of Customs (Export Group) and the work of export group was to assess the value of the goods being exported on the basis of declaration made in the shipping bills.
(ii) Since the Shipping Bills were having export value more than Rupees 10 lakh, after appraisal by the Appraiser, he (Shri Dhruvajyoti Roy) had countersigned on it. It is submitted therefore that he had done his job honestly and no allegation has been raised in the above mentioned Show Cause Notice in this regard i.e. valuation of export goods.
(iii) This is an administrative issue and to be examined under the CCS(CCA) Conduct Rules, 1964 for any lapse. It is not a violation under the Customs Act, 1962, as permission has to be granted or not to be granted as per guidelines of CBEC.
(iv) He states that he has already submitted in my defence that the permission for filing of manual shipping bill dated 03.04.2018 was granted by the Commissioner as per CBEC Instruction in this regard and the direction of the Commissioner had been followed. In case of not granting of permission, the Commissioner had clearly mentioned the word "Permission not granted" / "Rejected", as in the case of Kalpataru Jewellers & Export Corporation. In case of granting of permission, the Commissioner used to put his signature only.Page 90 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB So, considering the Commissioner's signature as acknowledgement to the matter of filing manual shipping bill, he allowed the processing of the manual Shipping Bill No. 6530662 dated 03.04.2018, when it was put up before him on 04.04.2018.
(v) Furthermore, the instruction given by the Jt. Commissioner, "As there is EDI at ACC so permission for manual filing of Shipping Bill may not be given", is not correct, because, only in the case of EDI equipped port, a permission from the Commissioner for manual filing of shipping bill is required as per instruction of CBEC. In case of non-EDI equipped ports, all such documents are manually filed and Commissioner's permission is not required on consignment-to-consignment basis.
(vi) In the instant case, the export was being done through ACC, which is an EDI equipped port and so far, manual filing of shipping bill, Commissioner's permission is mandatory. Moreover, the export is being done through Hand Carry basis, where no airway bill is involved, so the shipping bill cannot be filed in the EDI systems. Therefore, in such instant case of export through hand carry basis, the only way to file shipping bill and process is manually. It can also be seen from the files that in similar situations, the same Jt. Commissioner had recommended for permission of filing manual Shipping Bills earlier and the same was approved by the Commissioner. Thus, it is clear that the Commissioner had allowed filing of manual shipping bill in spite of the Jt. Commissioner's note, which is technically Page 91 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB incorrect. When the file was put up before him (Shri Dhruvajyoti Roy) on 04.04.2018, and upon seeing the Commissioner's signature, it was thought that the permission for manual filing of shipping bill was approved by the Commissioner and so processing of the Shipping Bill was allowed on that basis. Hence it is contended that there is no lapse on his part on this count. Hence invocation of the provisions of the Customs Act, 1962 in the said Show Cause Notice for administrative issues is bad in law.
(vii) Connivance with the exporters for diversion of the export consignment to DTA is a serious charge and framing the said charge without any clinching evidence is not warranted. The SCN has not referred a single evidence in relation to connivence. There are several Supreme Court decisions, wherein the Hon'ble Apex Court has pronounced guidelines for establishment of connivance. The apex court has mentioned that all three following aspects should be presented to establish the "connivance".
a) Demand of gratification by the officer;
b) Acceptance or receipt of such gratification by the officer; and
c) Benefit to the person who is paying such gratification.
(viii) None of the above three aspects have been established by the investigating agency in the said Show Cause Notice. Therefore, allegation in respect of connivance with the exporters for diversion of the export consignment to DTA is not sustainable.
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26. Heard the parties and considered their submissions.
27. After hearing all the parties, we find that the case of the Revenue is that the DRI was having advance intelligence that Shri Sanjay Agarwal would divert an export consignment of gold jewellery in the domestic area after his son, namely, Shri Preet Kumar Agarwal, completes all export formalities at NSCBI Airport, Kolkata and hands over the said gold jewellery to him outside the Airport Terminal. This intelligence was known to the DRI on 03.04.2018 itself and the exporter filed the shipping bill on 03.04.2018 to export the consignment of gold bangles to meet out their export obligation. After completion of the formalities, the Preventive Officer (PO) accompanied Shri Preet Agarwal to the Office of the Station Duty Officer (SDO) for further completion of the formalities for export of the said consignment. Facts are not in dispute till this point.
28. The facts take diversion from this point onwards.
28.1. The version of the exporters, Shri Preet Kumar Agarwal and Shri Sanjay Agarwal, is that as Shri Preet Kumar Agarwal was not having the boarding pass and immigration clearance, therefore, he was unable to board the plane. Therefore, he came back to the boarding pass / check-in counter of the Emirates Airlines for issuance of boarding pass and at that time, he wanted to load his export consignment in his hand baggage, which was disallowed by the boarding staff of Emirates airlines for the reason that only 7 kgs. was permissible in hand baggage. Thereafter, he contacted his father, Shri Sanjay Agarwal, who asked him to give the container having the said gold Page 93 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB jewellery to him, who was standing outside the Airport. Shri Preet Kumar Agarwal thereafter had approached the SDO to explain the situation that the said goods were unable to be checked in, but at that time, the SDO called the DRI and he was arrested.
28.2. Whereas, the version of the DRI is that on an intelligence that the export consignment would be diverted, the DRI caught Shri Preet Kumar Agarwal while he was proceeding to Gate No. 11 of the NSCBI Airport while boarding the flight while having no jewellery in his hand.
29. As there were twisted facts from both the sides, to know the truth of the facts, the CCTV footage was very much relevant in order to ascertain as to whether the exporters were correct or the DRI was correct. However, admittedly, the CCTV footage was not placed before us and are not part of the relied upon documents. However, other CCTV footages have been relied upon by the DRI to establish their case. This indicates that there were some lapses in the investigation.
30. Moreover, we find that it is the case of the DRI that after taking Shri Preet Kumar Agarwal into custody while he was boarding the flight without jewellery, on his intimation that the said jewellery had been handed over to Shri Sanjay Agarwal who had booked the said jewellery in air cargo for Hyderabad, the flight was stopped by the DRI and Shri Sanjay Agarwal, who had boarded the plane, was apprehended by taking him out of the said flight. Here, the question arises that: if the DRI was having prior information on 03.04.2018 that diversion of export consignment would take place, then, when Shri Preet Kumar Agarwal handed over the consignment to Page 94 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB Shri Sanjay Agarwal outside the Airport, why did the DRI not apprehend Shri Sanjay Agarwal who was carrying the export consignment at the time when diversion of the goods was taking place? This raises a question mark on the version that the DRI was having prior knowledge of diversion of export consignment of gold jewellery.
30.1. We also take note of the fact that Shri Preet Kumar Agarwal had passed the security gate and immigration counter without having a boarding pass, to the SDO office and came thereafter, along with jewellery, to a high security zone where several CCTV cameras were installed, but no efforts have been made by the investigating team to know the truth as to how he entered or how he came back. This shows that there were lapses on the part of the investigation.
31. We also find that the investigating team has heavily relied on the statements recorded during the course of investigation. However, all those statements were retracted before the Additional Chief Judicial Magistrate. However, the procedure prescribed under Section 138B(b) of the Customs Act, 1962 that a statement relied during the course of proceedings is required to be examined in chief and thereafter be allowed for cross-examination, has not been followed in the present case. Therefore, in such circumstances, the statements recorded by the investigating team, which have been retracted before the Additional Chief Judicial Magistrate, have no relevance to implicate the exporters in this case.
31.1. Further, we find that Shri Sanjay Agarwal and Shri Preet Kumar Agarwal were already in the custody of the DRI on 04.04.2018 when Panchnama proceedings were going on. There was no requirement Page 95 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB to issue summons to the exporters on 05.04.2018 for appearance on 06.04.2018. This shows that the said summons have been issued to cover up other lapses in the investigation.
31.2. Further, we also find that the non-supply of Relied Upon Documents (RUDs) is in violation of the principles of natural justice.
32. We also take note of the fact that although COFEPOSA proceedings were initiated, the proceedings against Shri Preet Kumar Agarwal were dropped vide Order of the Central Economic Intelligence Bureau, COFEPOSA Wing dated 16.08.2015, who, as per the allegations, was the main person involved in diversion of the gold jewellery in question. When the COFEPOSA proceedings against the person who was involved in diversion of the gold jewellery in question as per the investigation have been dropped, the case against the co-exporters are also not sustainable, as has been held by the Hon'ble Delhi High Court in the said proceedings vide judgement dated 27th August, 2018. This fact also raises an eyebrow on the investigation conducted in this case.
33. Although there were several lapses during the investigation, it is a fact on record that the goods covered under the export consignment had been diverted before loading for export. In these circumstances, we hold that the provisions of Section 113(k) of the Customs Act, 1962 are attracted, which read as follows: -
"Section 113. Confiscation of goods attempted to be improperly exported, etc. -- The following export goods shall be liable to confiscation :-
...........Page 96 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
(k) any goods cleared for exportation which are not loaded for exportation on account of any wilful act, negligence or default of the exporter, his agent or employee, or which after having been loaded for exportation are unloaded without the permission of the proper officer;"
33.1. As per the above said provisions, any goods cleared for exportation which are not loaded for exportation on account of any wilful act, negligence or default of the exporter, his agent or employee or which having been loaded for exportation, are unloaded without the permission of the proper officer, are liable for confiscation. Admittedly, it is a case of negligence on the part of the exporters, being the circumstances at that time, the exporter was required to take more precaution but failed to do so and the goods cleared for exportation were not loaded for exportation.
34. Hence, we hold that the goods in question are liable for confiscation under Section 113(k) of the Act.
35. With regard to the imposition of penalties under Section 114(iii) of the Act, since the goods have been held liable for confiscation under Section 113(k) of the Act, we find that penalties under Section 114(iii) are imposable on the appellants/exporters.
35.1. Consequently, penalties on the appellants/exporters under Section 114(iii) of the Act are imposed as given below: -
Name Amount of penalty imposed under Section 114(iii) (in Rs.) Shri Sanjay Rs.2,00,000/- (Rupees Two Lakhs only) Agarwal Shri Preet Rs.1,00,000/- (Rupees One Lakh only) Kumar Agarwal Shri Avinash Rs.20,000/- (Rupees Twenty Thousand only) Soni Page 97 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
36. With regard to the imposition of penalty under Section 114AA of the Customs Act, we observe that the said provisions are not attracted in this case as penalty under Section 114AA can be imposed on a person who knowingly or intentionally makes, signs or uses, or causes to be made, signed or used any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of the Act. Admittedly, in this case, documents were not found to be false or fabricated. Therefore, we hold that provisions of Section 114AA are not attracted in the present case to impose penalty.
37. Now, the issue arises as to what should be the quantum of redemption fine to be imposed in this case. We find that the appellants-exporters have submitted that the value addition is only to the extent of Rs. 43,400.43 if making charges of the said jewellery after importation are taken into consideration. Thus, we are of the view that the redemption fine imposed on the appellant is on the higher side. Accordingly, we reduce the redemption fine imposed to Rs.15,00,000/- (Rupees Fifteen Lakhs only)
38. We further take note of the fact that the Revenue has also challenged the impugned order qua enhancement of redemption fine and penalties imposed on the exporters/noticees and dropping of proceedings against the other co-noticees, namely, Shri Dhruvajyoti Roy, Shri Pallav Roy Chowdhury, Smt. Champa Mukherjee, Shri Satya Gopal Mallick, M/s. State Trading Corporation of India Ltd. and Shri Ajay Kumar Agarwal.
Page 98 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB 38.1. We find that Shri Pallav Roy Chowdhury has not filed any appeal against the penalty of Rs.25,000/- (Rupees Twenty Five Thousand only) imposed on him under Section 114(iii) of the Customs Act, 1962. Therefore, the penalty imposed on Shri Pallav Roy Chowdhury under Section 114(iii) of the Act is upheld.
38.2. With regard to the other persons, namely, Shri Dhruvajyoti Roy, Smt. Champa Mukherjee, Shri Satya Gopal Mallick and Shri Ajay Kumar Agarwal, we have gone through the findings recorded by the ld. adjudicating authority in the impugned order. The relevant observations of the ld. adjudicating authority in the impugned order in this regard are reproduced below: -
"65.1 I find that Shri Dhruvjyoti Roy, DC is found to have ignored earlier approval of Commissioner (Airport) of not allowing Shree Ganesh Jewels to file manual Shipping Bill based on JC's noting that 'as there is ACC with EDI, manual permission may not be considered. For processing the subject manual Shipping Bill No. 6530662 dt. 03.04.2018 of Shree Ganesh Jewels no permission was obtained from the Commissioner (Airport). Same allegations are also made against Smt. Champa Mukherjee, Appraiser. Besides she was also found to have given the Examination Order on Note sheet instead of the back page of duplicate copy of Shipping Bill in violation of laid down procedure.
65.1.1 Shri Dhruvjyoti Roy DC (Export), has submitted that he misread/mis-interpreted the signature of Commissioner on the notesheet as approval for Export for the subject firm; that he was new to Customs and was not very familiar with Customs procedures. Smt Champa Mukherjee, Appraiser has submitted that she acted on the directions of her superior ie. DC (Export); that she has followed the prevalent practice in respect to Examination Order being given on the Note sheet instead on back page of the duplicate copy of Shipping Bill.Page 99 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB 65.1.2 I find that the lapses by DC and Appraiser, pointed out in the SCN are procedural in nature. Their actions per se have not helped in diversion of export consignment. I find that the processing of shipping bill manually itself is not illegal as the mode of hand carriage of the jewellery consignment is also permitted as per policy and circular. I find that there is no evidence of involvement of these officers in the act of diversion; rather they have processed the consignment for export. The modus operandi of the exporter in the instant case shows that the diversion occurred due to the gap/loophole/lapse at the last stage of handing over of consignment to the exporter for hand carriage just before boarding wherein the aforesaid two officers are not involved. I also find that there is no evidence of connivance of these officers with the exporter. Therefore, I find that these officers are not liable to penal action for rendering the impugned consignment liable to confiscation under section 113(k) of the Customs Act, 1962. The aforesaid officers acted without proper permission of their superior officer, and committed other procedural laspes (sic), which may have made them liable to disciplinary action, which is not the subject matter of instant proceedings.
65.2 I find that penal action has been proposed against Shri Satya Gopal Mallick, Preventive Officer. The allegations against him is that he escorted Shri Preet Kumar Agarwal directly to the SDO office, which lay beyond the immigration area, without ensuring that Boarding pass is taken by Shri Preet Kumar and completion of his immigration formalities; that if the immigration formalities of Shri Preet Kumar Agarwal had been completed before going to SDO office, then he could not have sneaked back to the departure terminal gate to deliver the impugned boxes containing gold bangles to his father.
65.2.1 I find that in his defence Shri Mallick has inter alia submitted that he was deputed to escort the two sealed boxes from ACC to SDO (Departure) office at Departure lounge of Integrated terminal; that accordingly, he took the two sealed boxes to SDO (Departure) office and handed over the same to SDO under proper receipt, that he followed the procedure as per Public Notice No. 36/2001 dated 30.07.2001; that his duty was to escort the goods and the procedure did not require him to verify Boarding Page 100 of 102 Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB pass or completion of immigration formalities during the process of escorting.
65.2.2 I find that Shri Mallick has performed his assigned task of escorting the consignment without any lapse and that it was not his responsibility to ensure completion of immigration or boarding pass. I find that there is no evidence of his connivance or deviation from prescribed procedure or law, which can be said to have led to diversion of the impugned consignment. Therefore, I find that he is not liable to penal action for rendering the impugned consignment liable to confiscation under section 113(k) of the Customs Act, 1962.
.
.
.
67. I find that Shri Ajay Kumar Agarwal has been made Noticee proposing penal action against him for his actions rendering the impugned goods liable to confiscation under section 113(k) of the Customs Act, 1962. I find that Shri Ajay Kumar Agarwal, brother of Shri Sanjay Agarwal and proprietor of M/s Kalptaru Jewellers came rushing into Kolkata after interception of Shri Sanjay Agarwal and Shri Preet Kumar Agarwal. In his statement recorded by the DRI officers, he confessed to have abetted and played an active role in past diversions of gold to evade Customs duty. Thus, he may be an integral part of the syndicate behind the conspiracy to defraud the state exchequer on the past occasions, which is being dealt in separate Show Cause Notice. However, in the instant case of diversion of live export consignment of 54.096 kg of gold jewellery covered under Shipping Bill No. 6530662 dt. 03.04.2018, his role has not been established. In view of the above, he can't be directly linked to confiscation of the Impugned live goods under section 113(k) of the Customs Act, 1962."
38.3. We do agree with the above observations made by the ld. adjudicating authority in the impugned order and therefore, we hold that the proceedings initiated against the said respondents have been rightly dropped.
Page 101 of 102Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB 38.4. Further, we find that the Revenue is in appeal against the dropping of proceedings against M/s. State Trading Corporation of India Limited, Chennai, Tamil Nadu. In this regard, we find that M/s. State Trading Corporation of India Ltd. is an importing agency who is allowed to import gold and is further entitled to clear the said gold in the domestic market in terms of Notification No. 57/2000-Cus. dated 08.05.2000, and they are not liable to pay duty at the time of importation showing fulfilment of export obligation against their purchase within three months thereof. Admittedly, M/s. State Trading Corporation of India Ltd. is not the importer in this case; the actual importer is M/s. Diamond India Limited, who has paid the duty, along with interest, as export obligation could not be completed by them. In these circumstances, we hold that no proceedings are sustainable against M/s. State Trading Corporation of India Ltd.
39. In the result, we pass the following order: -
(i) We uphold the order of confiscation of the consignment of 1194 pcs of gold bangles weighing 54096 gms. having an ascertained value of Rs.16,10,43,792/- cleared by diversion of the consignment in the domestic area, under Section 113(k) of the Customs Act, 1962.
(ii) We impose a redemption fine of Rs.15,00,000/- (Rupees Fifteen Lakhs only) under Section 125 of the Act for redemption of the goods confiscated on account of diversion of the export consignment.Page 102 of 102
Appeal No(s).: C/75358,75359,75403 & 75907/2024-DB
(iii) The penalties imposed on Shri Sanjay Agarwal, Shri Preet Kumar Agarwal and Shri Avinash Soni under Section 114(iii) of the Customs Act, 1962 stand reduced to Rs.2,00,000/- (Rupees Two Lakhs only), Rs.1,00,000/- (Rupees One Lakh only) and Rs.20,000/- (Rupees Twenty Thousand only), as discussed in paragraph 35.1 of this Order.
(iv) The penalty of Rs.25,000/- (Rupees Twenty Five Thousand only) imposed on Shri Pallav Roy Chowdhury under Section 114(iii) of the Customs Act, 1962 is upheld.
(v) No penalty is imposable on the
appellants/exporters/noticees under Section
114AA of the Customs Act, 1962.
(vi) We order that the gold jewellery,
which has been seized from the possession of Shri Sanjay Agarwal, is to be released to Shri Sanjay Agarwal on payment of redemption fine and penalties indicated at (ii) and (iii) supra.
(vii) No proceedings are sustainable against the other noticees to the Show Cause Notice dated 29.03.2019 issued in this case.
40. In these terms, the appeals are disposed of.
(Order pronounced in the open court on 18.03.2025) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd