Delhi High Court
Sanjeev Kumar Gupta vs Commissioner Of Customs on 15 February, 2001
Equivalent citations: 2001IIIAD(DELHI)275, 2001CRILJ1963, 90(2001)DLT643, 2001(58)DRJ15, 2001(75)ECC36, 2002(143)ELT268(DEL)
ORDER
S.K. Agarwal J.
1. In this petition under section 438 of Code of Criminal Procedure, 1973 (for short Cr.P.C.) the petitioner is seeking pre-arrest bail, in the case under section 135 of the Customs Act, 1962 (for short the Act), inter alia, pleading that he is innocent, no offence against him is made out and that he apprehends unnecessary harrasment. Respondent has opposed the same on the ground that offences committed are serious and grave which require petitioner's custodial interrogation for proper investigations.
2. It is pleaded that the petitioner is doing business of export of garments under the name and style of M/s SRFM Exports (India), M/s Suneja International (India) and M/s Jai Shree Exports (India); that total remittances earned by him in the last two years are more than rupees four crores and remittances of about US $ 1,50,000 are still awaited; that he had been getting duty draw back in accordance with law. He has nothing to do with any fictitious firm and that no offence is made out against him under section 135 of the Act, as there is no allegation of evasion of duty. It is alleged that from the search of his business premises and home nothing incriminating was recovered; that he is suffering from several lethal illnesses, namely ischemic heart disease, diabetes and hypertension for which he is undergoing treatment at Escorts Hospital and Apollo Hospitals. It is further pleaded that statements of Sita Ram, Sunil Kumar, Laxmi Narayan, Bhagwati Prasad, Yashpal etc., are not admissible against him which they have already retracted and that he joined investigations on number of dates whenever he was asked.
3. Prosecution allegations in brief are: that petitioner floated three fictitious firms through dummy proprietors, namely, (i) Sanjeev Garments (India) (ii) Mandra Exports (India) and (iii) M/s. Future to export over-invoiced garments and fraudulently claim duty drawback benefits from the Government; that he has already obtained duty draw back to the tune of Rs.2.07 crores showing exports by these dummy firms. Rs.12.9 crores is yet to be received from abroad for the export shown by these firms. The petitioner used to get blank "self" cheques and other documents signed from such dummy persons and used to withdraw duty draw back amount from these accounts himself. During investigations Mr. Vijay Chauhan and Mukesh Sharma, proprietors of Shashi Hi-Fashions Garments and V.T.S. Exports (India) also named the petitioner alleging that he had fraudulently obtained duty draw back of Rs.63.61 and Rs.55 lacs respectively by showing exports in the name of these two firms. It is alleged that a sum of Rs.17.60 crores is yet to be recovered from abroad in respect to the various firms qua which petitioner has already obtained duty draw back to the tune of Rs.4.11 crores. It is further alleged that the investigations are still in progress and the amount of duty draw back availed fraudulently and the remittances from foreign countries are likely to increase substantially. Yashpal, co-accused in the case is in custody since 12th August, 2000; statements of Ms. Kalpana Ghosh and several other witnesses including the supplier of sub-standard goods at Jaipur show that the petitioner is main accused. The grant of pre-arrest bail to the petitioner is strongly opposed.
4. I have heard learned counsel for the parties and have been taken through record.
5. Learned counsel for the petitioner argued that assuming prosecution allegations to be true for the sake of argument, no offence under section 135 of the Customs Act is made out. The Custom authorities at best may be entitled to recover duty draw backs allegedly obtained by the petitioner as per procedure prescribed under section 142 of the Act read with Rule 16 and 16A of Customs and Central Excise Duty Draw Back Rules, 1995. Learned counsel for respondent argued to the contrary. In order to appreciate the rival contentions, reference to relevant provisions of Customs Act and Foreign Exchange Regulation Act is necessary.
6. Section 135 of the Customs Act provides punishment for evasion of any duty or violation of the prohibition contained in the Act. It reads as under:-
"135. Evasion of duty or prohibitions.-
(1) Without prejudice to any action that may be taken under this, Act, if any person-
(a) is in relation to any goods in any way knowingly concern in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods, or
(b) XXXX"
(2) XXXX (3) XXXX
7. This section and the scheme of the Act makes a clear distinction between dutiable goods or goods which are chargeable to duty, on which duty has not been paid and goods, import or export of which is subject to any prohibition, contained under the Customs Act or any other law. In respect of these two classes of goods section 135(1)(a) envisages three situations (i) where the goods are dutiable and duty is not paid (ii) where the import or export of goods is prohibited under the Customs Act. (iii) where the import or export of goods is prohibited by some other law.
8. Section 11 of the Customs Act empowers the Central Government to prohibit by notification either absolutely or subject to the condition importation or exportation of goods of any description for the purposes referred therein.
9. Section 50(2) of the Customs Act provides that the exporter of the goods while presenting shipping bill or bill of export shall at the foot thereof make a declaration as to the truth of its contents. It reads as under :-
"50. Entry of goods for exportation.-
(1) XXXX (2) The exporter of any goods, while presenting a shipping bill or bill of export, shall at the foot thereof make and subscribe to a declaration to the truth of its contents."
10. Section 67 of the Foreign Exchange Regulation Act, 1973 (for short FERA) provides that restriction imposed by or under section 13, Clause (a) of sub-section (1) of section 18, 18A and Clause (a) of sub-section (1) of section 19 of the Act, shall be deemed to have been imposed under section 11 of the Customs Act. Under section 18 of FERA exporter has to furnish to the prescribed authority a declaration in the prescribed form supported by such evidence or material which among others shall include the amount representing the full export value of the goods. It reads as under:-
"18. Payment for exported goods.-
(1)(a) The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or (hereafter in this section referred to as export) of all goods or of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars which, among others, shall include the amount representing -
(i) the full export value of the goods; or
(ii) XXXX (2)to (10) XXXXX
11. Thus by virtue of section 67 of FERA prohibitions contained in section 18(1)(a) of FERA becomes a prohibition imposed under section 11 of the Customs Act.
12. Law in this regard is well settled by the Supreme Court decision in South India Coir Mills vs. Addl. Collector, Customs AIR 1976 SC 481. The Supreme court while interpreting the provisions of sections 12 and section 23A of the Foreign Exchange Regulation Act, 1947 which are equivalent to section 18(1)(a) and section 67 respectively of the FERA, held as under:-
"By virtue of section 23A of the Foreign Exchange Regulation Act the prohibition imposed under Section 12(1) of that Act becomes a prohibition imposed under Section 11 of the Customs Act. And if the goods were attempted to be exported contrary to the said prohibition the goods became liable to confiscation under Section 113(d) of the Customs Act. Consequently, the person attempting to export the goods also became liable to pay penalty under Section 114."
It was further held :-
"Apart from the furnishing of the declaration containing the true statement in all material particulars the exporter under the amended Section 12(1) is also required to affirm in the said declaration, i.e., in the document or the paper containing the declaration that the full export value of the goods will within the prescribed period be paid in the prescribed manner."
13. Therefore, misdescription of the goods or the value of the goods to be exported prima facie makes such goods prohibited in terms of section 18(1)(a) and section 67 of FERA read with section 11 and 50(2) of the Customs Act. Section 113 of the Act provides for confiscation of such goods and Section 114 of the Act provides for penalty for attempt to export improperly. The expressing words "without prejudice to any action that may be taken under this Act" used in Section 135 of the Customs Act clearly indicates that if any person is knowingly concerned with any fraudulent evasion of duty or prohibitions, also become liable for prosecution and punishment under the Act. Prosecution of the accused is in addition to confiscation and penalty under the Act. Thus, if an duty is payable under the Act, the same can be recovered in accordance with section 142. Similarly, Rules 16 and 16A of the Customs and Central Excise Duties Draw Back Rules, 1995, framed in exercise of power under section 75 of the Customs Act, 1962 and section 37 of the Central Excise and Salt Act, 1944 provide for repayment of erroneous or excess payment of duty draw back and also for recovery of amounts of duty draw back where the export proceeds are not realised. Rules dealing with recovery of amount of duty draw back envisage genuine firms doing real business. It does not include any fraudulent evasion of duty or prohibitions under the Act. A person is said to have done anything fraudulently if he does that with an intent to defraud but not otherwise. The requisite guilty knowledge or mensrea under clauses (a) and (b) of Section 135(1) of the Customs Act can be established by circumstantial evidence. Here the petitioner is alleged to have floated fictitious firms with dishonest intention to obtain the duty draw back. In my view on the facts alleged, offence under section 135 of the Act is prima facie made out.
14. Learned counsel for the petitioner in the alternative argued that Foreign Exchange Regulation Act (FERA) has since been repealed and therefore, no offence under the Act is made out. There is no merit in this argument as well. FERA was repealed and Foreign Exchange Management Act, 1999 (FEMA) came in force on 1st June, 2000. Sub-section 4 of section 49 of FEMA provides that any offence committed under the repealed Act (FERA) shall continue to be governed by the provisions of repealed Act; sub-section 3 of Section 49 of FEMA provides that no court shall take cognizance of an offence or adjudicate upon under the repealed Act after the expiry of period of 2 years from the date of commencement of this Act. Therefore, to the offences alleged provisions of FERA 1973 would apply.
15. It is pertinent to note here that as the petitioner denied his connection with the said three fictituous firms. On 24th November, 2000 when the matter came up for hearing the petitioner was shown a photocopy of the cheque of M/s. Mandra Exports (India) by the Investigating Officer in the court be denied his signatures on the cheque and made the following statement:
"I am the petitioner in the present case. I have been shown photocopy of the back of cheque No.002252 dated 9.12.1999 of Punjab National Bank, New Delhi amounting to Rs.7,50,000/- issued for M/s. Mandra Export India. I have not signed on the back side of the cheque.
R.O. & A.C. sd/- November 24, 2000" Judge
16. In view of the above statement, petitioner was granted interim protection against arrest. Senior Scientific Officer, F.S.L. Delhi was directed to compare the disputed signatures of the petitioner marked Q1 and Q2 on the said cheque vis-a-vis his signatures on the admitted documents, including the vakalatnama filed in court. The handwriting expert vide his report dated 4th December, 2000 has opined that the signatures on the said cheque (marked Q1 and Q2) are that of the petitioner. The statement made by the petitioner on oath stands belied by opinion of handwriting expert. The application of the petitioner for grant of pre-arrest bail is liable to be rejected on this ground also.
17. Lastly, it was also argued that the petitioner is a sick and infirm person; papers regarding his past medical history have been placed on record. On the strength of these medical reports of cardiologists it was argued that even on medical grounds petitioner is entitled to anticipatory bail. The Apex court while rejecting similar contentions in the case of Directorate of Enforcement vs. Ashok Kumar observed that it is not unusual that the persons involved in economic offences particularly those living in affluent circumstances, are afflicted by conditions of cardiac instability. Therefore the authorities dealing with such persons must adopt adequate measures to prevent deterioration of their health during the period of custodial internment.
18. As noticed above, in this case there are allegations that the petitioner floated dummy firms and obtained blank cheques signed from such persons at the time of opening of the bank accounts in the name of such firms. Those persons have already been interrogated and they have made statements against the petitioner. Although the petitioner claims to have joined investigations, after he was granted interim protection on 24.11.2000, but looking into the nature of allegation, investigation required to be carried out, gravity of offence and his conduct a prima facie case, requiring petitioner's custodial interrogation is made out. Considerations which should normally weigh with the court while dealing with the prayer for pre-arrest bail are entirely different from the post-arrest bail applications. In a recent decision by the Supreme Court in Enf. Officer, TED vs. Bher Chand Tikaji Bora 2000 (121) ELT 7 (SC) it was observed :-
"The criteria and questions to be considered for exercising power under Section 438 of Cr.P.C. has been recently dealt with in Dukhishyam Benupani, Asst. Director Enforcement Directorate vs. Arun Kumar Bajoria 1998 SCC (Crl.) 261. The white collar criminal like the respondent against whom the allegation is that he has violated the provisions of the Foreign Exchange Regulation Act is a menace to the society and therefore, unless he alleges and establishes in the materials that he is being unnecessarily harassed by the investigating agency, the court would not be justified in invoking jurisdiction under Section 438 Cr.P.C. and granting anticipatory bail."
19. Petitioner has not been able to allege and establish any material showing that he is being unnecessarily harassed by the investigating agency. In this case there are grave allegations involving huge amount of foreign exchange. In my view grant of anticipatory bail would hamper proper and effective investigations.
20. For the foregoing reasons, I find no merit in the petition and the same is dismissed.