Customs, Excise and Gold Tribunal - Mumbai
Joe Felix D'Souza, Deepak Dialani, ... vs Commissioner Of Customs ... on 25 March, 2004
Equivalent citations: 2004(177)ELT950(TRI-MUMBAI)
ORDER Jyoti Balasundaram, Member (J)
1. After hearing both sides for some time on the applications for waiver of pre-deposit of duty and penalties we find that it was possible to dispose of the appeals themselves as the principal grievance of Shri Deepak Dialani, on whom duty demand has been confirmed in addition to penalty, and of Joe Felix D'Souza and Prashant Nahata, is that of failure of principles of natural justice. Hence after waiving pre-deposit we proceed to hear and dispose of the appeals with the consent of both sides.
2. Vide the impugned order the Commissioner (Appeals) has:
(a) held that computer parts and peripherals valued at Rs. 7,62,86,258/- supplied by Shri Dialani to 4 computer manufacturing companies, namely, M/s. Zenith Computers Pvt. Ltd. and M/s. Minicomp Pvt. Ltd. and M/s. Tangerine Informatics and M/s. Melstar Information Technologies Ltd., were liable to confiscation as the goods were smuggled into India; but since goods were not available for confiscation she has imposed a penalty of Rs. 2.5 crores on Shri Dialani in terms of Section 112(a) and (b) of the Customs Act, 1962;
(b) confirmed a duty demand of Rs. 5,50,17,719/- as payable by Deepak Dialani under Section 28(2) of the Act;
(c) She has also imposed penalties on co-noticees as under:
i. Shri Prashant @ Parag Nahata, employee of Deepak Dialani - Rs. 50 lakhs. ii. Ms. Veena Hiranandani, niece of Shri Deepak Dialani - Rs. 25 lakhs. iii. Joe Felix D'Souza, carrier of smuggled goods into India - Rs. 5 lakhs. iv. Shri Balasubramniam, another carrier - Rs. 5 lakhs. v. M/s. Zenith Computers Ltd. - Rs. 50 lakhs.
vi. Shri Rajkumar Saraf, Managing Director of Zenith Computers Ltd. - Rs. 5 lakhs;. vii. M/s. Minicomp Computers Ltd. - Rs. 25 lakhs.
viii. Shri K.R. Seth, Managing Director of Minicomp Computers Ltd. - Rs. 5 lakhs.
3. The case of the department in brief is that Shri Deepak Dialani along with several other persons is running a ring of importers who used to smuggle computer parts, peripherals, etc., supplied to them in Hong Kong by Shri Prakash Dialani (brother of Deepak Dialani) in their personal luggage; that Prakash Dialani also used to courier such goods to Deepak Dialani, which was cleared by mis-declaration of the contents thereof and without payment of duty; the goods so smuggled then supplied to various computer manufacturing companies under invoices/bills of 13 fictitious/bogus companies; that payment towards supply made under the bills/invoices of such companies were received by cheques which were then encashed through billing and payments deposited in accounts maintained by the fictitious companies and that cash was withdrawn from these accounts subsequently.
4. We find that after the receipt of the show cause notice dated 21-28/12/1998 Shri Deepak Dialani requested that he be furnished with copies of the documents referred to in the show cause notice but this was not done; that since copies of documents as requested were not supplied, the Commissioner of Customs passed written orders in April, 2001 directing the DRI to handover the copies of the documents to the appellants immediately; that on 09/10/2001 the appellants filed a supplementary reply pointing out the relevance of each and every documents required and also giving parawise reply to the show cause notice (this was before the Commissioner who took over from his predecessor); once again the adjudicating authority was transferred and the appellants therefore once again explained before the successor adjudicating authority as to the necessity of being given copies of the documents as requested; and the appellant also submitted the list of witnesses whose cross-examination was sought by him. In June, 2002 once again the Commissioner passed an order directing DRI to furnish copies of the documents necessary to meet the requirements of principles of natural justice. The Commissioner who passed the present adjudication order assumed charge thereafter; the appellant appeared before him on 24/07/2002 and once again reiterated the necessity for copies of documents.
5. Another hearing took place in September, 2002 during the course of which the Commissioner informed the appellants that the DRI has sent a few documents such as copy of passport of Joe Felix D'Souza and these documents were forwarded under the cover of a letter dated 01/10/2002 and on 14/10/2002; the counsel for the appellant responded to the receipt of the documents, that the copies of the passports do not show that Joe Felix D'Souza has travelled outside India after 1992 (the present case cover the period from 1993 onwards) and that therefore the statement of Joe Felix D'Souza that he had smuggled in computer parts and peripherals and that Shri Deepak Dialani is contrary to documentary evidence. The impugned order has been passed without supply of the copies of documents forming the basis of the finding of involvement of Deepak Dialani. The following are some examples of the documents not furnished to Deepak Dialani but relied upon by the Commissioner:
i. Bills, vouchers, delivery challans, etc., referred to in the statements of the officers of Zenith Computers, Minicomp, Melstar and Tangerine for concluding that the appellants sold the smuggled computer parts to these companies;
ii. Statements dated 19/11/1996 of Rajesh Jain, employee of Deepak Dialani, for co-relating entries in the notebook seized from the residence to those in the bills seized from M/s. Minicomp.
iii. Cheque favouring Welcome Trading Company issued by M/s. Tangerine Informatics for concluding that Dialani has supplied computer parts to Tangerine Informatics.
iv. Documents seized from the Adarsh Nagar residence of Rajesh Jain to show the connection between Rajesh Jain, preparation of bills, delivery challans, etc., and Deepak Dialani in connection with supply of computer parts to computer manufacturing companies.
6. We also note that Deepak Dialani has claimed that documents seized from the residence were not furnished to him. We also note that he filed an FIR after recording of his statement on 09/02/1998 complaining that he was assaulted by the DRI officers, that medical examination was carried out under orders of the Chief Metropolitan Magistrate and the complaint has been registered and is pending before the Ballardpier Court. As regards the cross-examination, Deepak Dialani has sought cross-examination of 17 persons including Shri Joe Felix D'Souza and Shri Balasubramaniam who are co-noticees. The plea that cross-examination of those persons is required as their statements are not corroborated merits acceptance particularly noting that contradictions in several material particulars in many of the statements were pointed out by Deepak Dialani before the adjudicating authority in view of the written submissions listing out certain contradictions. Some of the examples of contradictions highlighted in the written submissions are:
i. In his statement dated 24/07/1998 Joe Felix D'Souza had stated in his 1987 he started making trips abroad and that the goods were supplied to him abroad by Prakash Dialani, brother of Deepak Dialani, while during 1987 to 1989 Prakash Dialani was a student in India.
ii. In the statement dated 16/12/1997 Shri Jayachandran, Purchase Manager of Zenith Computers has stated that Prashant alias Parag Nahata and Deepak Dialani sought supply of goods at Goa factory while no statement of any person working at the Goa factory evidencing receipt of goods at Goa has been recorded and mere is no evidence in the form of RG-23 or Form IV register showing receipt of goods in the Goa factory.
iii. In the statement dated 16/04/1998 Shri Jayachandran has stated that Deepak Dialani has stated that Deepak and Parag Nahata had informed him that they were marketing computer parts and peripherals while in his statement dated 14/11/1996 he had stated that they were not concerned about the importation as along as they are getting the bills.
iv. Contradictions in the statement of Rajesh Jain, Prakash Nihalani, Parag Nahata, A.K. Mohile, Purchase Manager of M/s. Minicomp Computers and others were also pointed out before the adjudicating authority.
7. As far as Shri Prashant alias Parag Nahata is concerned, he has pointed out, over and above challenging the finding against him, that he was not called for any hearing before the adjudicating authority, who passed the impugned order. As to Joe Felix D'Souza it is pointed that he retracted his statements dated 27/04/1998 and 28/04/1998 on the very next day, namely, 29/04/1998, but the Commissioner has not considered his retraction.
8. As for Zenith Computers the plea raised before us is that there is no material on record to bring out knowledge on their part that they were purchasing smuggled goods.
9. In the light of the above discussion on non-supply of documents to Deepak Dialani and denial of the right of cross-examination we set aside the impugned order and remand the case to the jurisdictional Commissioner of Customs for fresh decision after supply of documents relied upon against the Deepak Dialani in the impugned order and supply of 67 documents requested by him and after permitting cross-examination of 17 persons, as per the list given by him, referred to in para 39.1 of the imputed order. Fresh orders shall be passed after extending a reasonable opportunity of hearing to all the above named appellants.
10. In the result the appeals are allowed by way of remand.