Custom, Excise & Service Tax Tribunal
Shri Anil Gadodia vs Commissioner Of Customs, Mundra on 12 February, 2016
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.C/10170/2016-DB, C/10181-10182/2016-DB; C/Early Hearing / 10076,10077/2016
[Arising out of OIA-MUN-CUSTM-000-APP-287-15-16, dt.25.01.2016, passed by Commissioner of Customs (Appeals),, Mundra]
1. Shri Anil Gadodia
2. Shri Rameshwar Sharma,
3. Shri Suresh Sharma Appellants
Vs
Commissioner of Customs, Mundra Respondent
Represented by:
For Appellant: Shri Pradeep Jain, Shri Hardik Modh, Shri Ashish Batra Advocates For Respondent: Dr. J. Nagori, A.R.(Additional Commissioner) For approval and signature:
Honble Mr. P.K. Das, Member (Judicial) Honble Mr. P.M. Saleem, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. P.M. SALEEM, MEMBER (TECHNICAL) Date of Hearing/Decision: 12.02.2016 Order No. A/10098-10100/2016, dt.12.02.2016 Per: P.K. Das These appeals are arising out of a common order and therefore all are taken-up together for disposal. The Hon'ble Supreme Court by Order dt.14.12.2015 in W.P. (Criminal) No.201/2015 (Anil Gadodia Vs U.O.I.) directed the Appellate Authority to hear the appeal and dispose of the same expeditiously. On 9th Feb. 2016, Appeal No.C/10170/2016 of Shri Anil Gadodia was listed in the regular list. The other two appeals were listed for hearing of application of Early Hearing of appeals. As the appeal of Shri Anil Gadodia was taken up for hearing, the other two appeals of the co-appellants were also called for regular hearing.
2. The relevant facts of the case, in brief, are that M/s Eurro Exports, Prop. Shri Rameshwar Sharma, (hereinafter referred to as the exporter) cleared 5 (five) consignments from their factory at Jaipur for export through Mundra port. The exporter filed 5 Shipping Bills Nos. 7656093 dt.25.9.2013, 7615545 dt.23.9.2013, 7628969 dt.24.9.2013, 7616229 dt.23.9.2013 and 7630622 dt.24.9.2013, declaring the goods Indian Polished Granite Slabs in respect of Shipping Bill dt.25.09.2013 and in other Shipping Bill Albeta Marble Slabs, through their Customs House Clearing Agency (CHA). Acting upon the intelligence, on 28.09.2013, the officers of the Directorate of Revenue Intelligence (DRI) called back the 5 containers attempted to be exported and examined the goods in presence of two independent witnesses, under Panchnama dt. 28.9.2013. It was found that the said 5 containers contained 93.31 MT of Marble Slab and all the containers except Shipping Bill dt.25.09.2013, also stuffed with total quantity of 14.25 MT of Red Sanders logs. During the course of investigation, it was found that the exporter attempted to export Red Sanders logs illegally, which is prohibited by Convention of International Trade in Endangered Species of Wild Flora and Fauna (CITES) and as per Import-Export Policy (2009-2014). As a follow-up action, it was found that the exporter and its employee Shri Suresh Sharma, were supplying Red Sanders to the Customer representative Shri Yodying, through the brokers, Shri Mayur Ranjan and Shri Anil Gadodia and all are actively involved in the illegal procurement and export of Red Sanders, a prohibited goods. The officers recorded statements of the said persons, amongst others and also seized records and documents. The officers also seized the Red Sanders and the Marble Slabs alongwith containers.
3. A show cause notice, dt.24.3.2014 was issued proposing to confiscate the seized goods and to impose penalties under the various provisions of Custom Act 1962 (in short Act 1962) on the appellants herein and others. The Adjudicating Authority confiscated the quantity of 14.25 MT of Red Sanders under the provisions of Section 113(d), 113(f), 113(i) and 113(k) of the Act 1962 for violation of Section 50 and 51 of the Act 1962 read with Section 3(3) of FDR Act, Rule 14(2) of Foreign Trade (Regulations) Rules 1992 and Appendix II of CITES. It has also confiscated 93.31 MT of Marble Slabs as per provision of Section 119 of the Act, 1962, with option to release the same on payment of redemption fine of Rs.25 lakhs to the exporter. It has imposed penalty of Rs.7,12,50,000/- each on Shri Mayur Ranjan@Vijay and Shri Yoding@Chan respectively under Section 114AA of the Act 1962. Penalties on Shri Ramehwar Sharma, Proprietor of M/s Eurro Exports, Shri Suresh Sharma, employee of the exporter and Shri Anil Gadodia were dropped. Revenue filed appeal before the Commissioner (Appeals) against the Appellants herein, for non-imposition of penalties by the Adjudicating authority. By the impugned order, the Commissioner (Appeals) imposed penalty on Shri Rameshwar Sharma proprietor of the Exporter of Rs.50 lakhs each under Sections 114 and Section 114AA of the Act 1962 separately. It has also imposed penalty on Shri Suresh Sharma employee of the exporter of Rs.2,50,000.00 each under sections 114 and 114AA of the Act 1962 separately. A penalty of Rs.50 lakhs was imposed on Shri Anil Gadodia under Section 114AA of the Act 1962. Hence, all the appellants filed these appeals before this Tribunal.
4. The appeals were heard at length on 9th, 10th, 11th and today i.e. 12th February, 2016. Shri Pradeep Jain with Shri Ashish Batra, learned Advocates are appearing on behalf of Shri Rameshwar Sharma and Shri Suresh Sharma. Shri Hardik Modh, Ld Advocate is appearing on behalf of Shri Anil Gadodia.
5. The learned Advocates on behalf of Shri Rameshwar Sharma and Shri Ashish Batra, submit that the Adjudicating Authority rightly dropped the penalty after examination of the records thoroughly. He submits that the exporter is a well reputed firm for export of the Marble slabs since last 13 years with unblemished records and obtained certificates from various authorities for performance and transparent records. In the present case, the appellants cleared the Marble Slabs from their factory in 5 containers procured from the Freight Forward Agency. As per the long standing practice, the Marble Slabs were loaded in the containers and cleared from the factory in buffer containers without sealing the same. The appellant had no knowledge of the alleged loading of Red Sanders in the containers. There is no evidence that the appellants had loaded Red Sanders in the containers. It is submitted that on 28th Sept 2013, the DRI officers visited the factory premises of the exporter and recorded the statements of Shri Rameshwar Sharma and illegally taken into their custody and recorded statements on 28.9.2013 and 29.9.2013. It is submitted that the proprietor of the exporter was arrested on 29th Sept, 2013 and he has retracted statement before the Ld.C.M.M.(Eco.), Jaipur on 29.01.2014 from the Jail. Similarly, the statements of Shri Suresh Sharma was recorded on 4th Oct. 2013 and 30th Oct. 2013 and thereafter the statements were retracted by Shri Suresh Sharma, on 29th January 2014 before the Ld.CMM (Economic Offence), Jaipur.
6. The learned Advocates submit that there is no recovery of single gram of Red sander from the factory of the exporter and any other premises of the Appellants. There is no irregularity found in the accounts of the exporter. The Red Sanders were loaded in the containers, after the clearance of the goods of from the factory of the exporter. Thus, it is established that the appellants had not loaded the Red Sanders in the containers. The Commissioner (Appeals) proceeded on the basis of the statements of co-accused, which were also retracted by them and no further statements were recorded after the retraction. The Ld. Advocate relied upon various case laws.
7. Regarding the appeal of Shri Suresh Sharma, the Ld.Advocates submit that the appellant was an employee of the exporter and on 10.09.2013 resigned from the export firm, as evident from the Application dt.29.01.2014, filed before the ld.C.M.M., Jaipur. There is no material available that the appellant has gained anything for the alleged smuggling of Red sander. He further submits that the Commissioner (Appeals) had imposed penalty on the appellant on the basis of the statements, which were retracted immediately and it has no evidentiary value. He categorically submits that the appellant was not present, when the goods were loaded at their factory. It is submitted that without prejudice, the amount of penalty in both the Appellants are excessive.
8. The learned Advocate appearing on behalf of Shri Anil Gadodia reiterates the findings of the Adjudicating authority. He particularly drew the attention of the Bench the Para 13.3 and 13.4 of the impugned order. He submits that the Commissioner (Appeals) accepted that the CHA or any other persons had not stated that the appellant had loaded Red Sanders in the containers and made such goods available to M/s Euro Exports. It is observed by the Commissioner (Appeals) that it is not the case of the Department that the appellant was actually involved in clearing the goods from Jaipur or in export such goods. He particularly drew the attention of the Bench to Para 13.3 and 13.4 (last three lines) of the impugned order. None of the ingredients to invoke Section 114 AA of the Act 1962 is available against the appellant. Even, the words causes to be made in Section 114AA has to be direct or indirect nexus with the export of goods. In the present case, there is no evidence that the appellants were involved in illegal export of goods. The Commissioner (Appeals) observed that the entire case was made out on the basis of statements, which were retracted. So, it has no evidentiary value. He relied upon the decision of the Honble Supreme Court in the case of Vinod Solanki Vs UOI 2009 (233) ELT 157 (SC), Shafeek P. K. Vs CC, Cochin 2015 (325) ELT 199 and A. Tajudeen Vs UOI - 2015 (317) ELT 177 (SC). He further submits that statements of co-accused as relied upon. cannot be considered as evidentiary value, because of the oral statement. He relied upon the decision of Honble Supreme Court in the case of Harischaran Kurmi Vs State of Bihar - (1964) 6 SCR 623 : AIR (164) SC 1184 : (1963) 52 ITR 443 (1964) 2 Cri Lj 344.
9. Without prejudice, he submits that even the appellant supplied the Red Sanders to M/s Eurro Exports, there is no material that the appellant had involved in the export of goods. Penalty under Section 114AA of the Act, 1962 is not warranted for supply of the goods within the country. He relied upon the decision of the Tribunal in the case of S. P. Bhal Vs. CC (Imp.) Mumbai 2015 (319) ELT 157 (Tri- Mum). The Commissioner (Appeals) erroneously proceeded on the basis of mobile calls but there is no material available of any conversation on this issue, therefore such evidence cannot be sustained. He relied upon the decision of the Tribunal in the case of Shafeek P. K. Vs. Commissioner of Customs, Cochin (supra). He produced the letter dt. 8th Oct. 2013 of the DRI officer, where it is stated that the retraction is nothing but afterthought. It is submitted that the investigating officers has acted as Adjudicating Authority, which is not permissible under the law. He submits that the appellant retracted the statements by letter dt.30.09.20913, addressed to the Additional Director General, DRI, from jail custody as revealed from the letter dt. 8.10.2013 of the DRI officers. The DRI officers searched the office, residence and godown of the Appellant on 28th Sept. 2013. But, the stock register was lying in the office, which was not disputed, as revealed from the Panchnama. The documents recovered from the other two Chinese persons cannot be relied upon, as the Chinese persons had retracted the statements as revealed from the appeal filed by the Revenue before the Commissioner (Appeals). They had not replied to the show cause notice and therefore, such documents cannot be relied upon. He submits that the appellant had not supplied that Red Sanders in dispute to the exporter or any other person.
10. Dr.J. Nagori, the learned Authorised Representative appearing on behalf of the Revenue reiterates the findings of the Commissioner (Appeals). He submits that Commissioner (Appeal) had given detailed findings of the involvement of the exporter in the smuggling of Red Sanders. It is apparent on the face of record that the DRI officers detected five containers loaded with Red Sanders and the exporter filed the shipping bills mis-declaring as Marble Slabs. Thus, that the goods are liable to confiscation under various clauses of the Section 113 of the Act, 1962. Accordingly, imposition of penalties under Section 114 and Section 114 AA of the Act are warranted.
11. He submits that the exporter had not denied the preparation of the shipping bills and ownership of the seized goods. It is submitted that there is no evidence that the Customs Officers at Port ever examined export of goods. It is submitted that even the statements were retracted, it would not loose the evidentiary value as per Section 138 B of the Customs Act 1962, as the statements were voluntary nature and corroborated with the circumstantial evidence. He drew the attention of the Bench to the Para 13.4 of the impugned order, where the Commissioner (Appeals) discussed circumstantial evidence in detail. The retraction of the statements was replied by the DRI Officers immediately. He also relied upon the decision of the Honble Supreme Court in the case of Vinod Solanki (Supra) as the retraction of the statement is not sufficient as the Court is obliged to examine the pros and cons of circumstantial evidence and confessional statements.
12. He submits that Shri Suresh Sharma employee of the exporter, had admitted in his statement that he has prepared the challans for the containers, which were loaded with Red Sanders. He submits that he was aware of the loading the Red Sanders as evident from the statements. So, penalty on the appellant is justified.
13. Regarding the appeal filed by Shri Anil Gadodia, the Ld.Authorised Representative submits that it is clear from the statements of the co-accused that the appellants actively involved in smuggling export of Red Sanders. It is submitted that the appellant supplied Red Sanders to the exporter and he has received the payment from the Chinese persons, which is evident from their statements and therefore, no record was found from the godown of the appellant. He submits that Commissioner (Appeals) rightly observed that the appellant was in association with the co-accuseds, which is evident from the mobile call records and other records.
14. Heard both the sides and perused the records.
Re: Appeal No.C/10170/2016-DB (Shri Anil Gadodia):
15. The Adjudicating authority dropped the penal proceedings against the Appellant. By the impugned order, the Commissioner (Appeals) imposed penalty of Rs.50 lakhs under Section 114AA of the Act, 1962. The Appellant was holding licence to deal in the trading business of Red Sander. On 28.09.2013 and 29.09.2013, the DRI officers recorded the statements of the Appellant alongwith other co-noticees. According to the Revenue, the Appellant was the mastermind in the entire transaction and he supplied the Red Sanders which have been seized in the export containers. The Adjudicating authority observed that other than the statements of the co-noticees, there are no other evidences which could connect the Appellant with the alleged offending goods. It has been alleged that the Appellant was present with the co-noticee Shri Rameshwar Sharma at Chandwaji Tower. None of the transporters and CHA in their statements referred the name of the Appellant. The findings of the Adjudicating authority are reproduced below:-
126. I observe that Shri Anil Gadodia had no stake in these containers. Further, at no point of time, the investigation has alleged that the containers were got stuffed by him and had any role in booking of container, stuffing of the containers, transportation of containers at the port, appointment of CHA, declaration before the customs etc. It is the matter on record that he was also not named by the CHA or any clearing persons. Further, it has not been brought on record any evidence which shows the involvement of Shri Anil Gadodia in relation of smuggling of the Red Sanders wood.
127. It is the matter of fact on record that statement of Anil Gadodia was retracted at the first available opportunity. It is also found that Anil Gadodia was neither a proprietor of partner or anything to do with M/s Eurro Exports or their business. It is fact that Anil Gadodia has not been made as an exporter but what has been alleged is that he had supplied the material namely red sander which in fact had been attempted to be exported out of India. And, further earlier also he had supplied such material. As per the defence pleaded by Anil Gadodia in his reply, he has pleaded that no act u/s 50 & 51 of the Customs Act, can be attributed to the applicant and in the absentia of such act penalty cannot be imposed. Similarly, it has been argued that he has been dealing with the red sander and other sanders wood for last several years in the name and style of his firm M/s Jiwan International and he has been purchasing the said goods under the auction held by the various Govt. Authorities in the state of Andhra Pradesh, Tamil Nadu etc. It is also observed that in the surprise search by the DRI no incriminating documents were recovered which shows the involvement of Shri Anil Gadodia in relation to the smuggling of Red Sander Woods.
128. It is also on records that other than the Statements of the co-noticees there is no other evidence which could connect Shri Anil Gadodia with the alleged offending goods. The reliance on the presence of noticee at Chandwa ji Tower where the other noticee Rameshwar Sharma was stated to be present is only basis to connect the applicant with the alleged transaction. These facts have not been corroborated from any material evidence as to how the material supplied by Anil Gadodia have reached into the factory of noticee M/s Eurro Exports. As it is already held that no goods have been packed in the factory of M/s Eurro Exports, therefore, it is not clear as to how Anil Gadodia have transported the goods if that has to be presumed that the goods found in the container have been supplied by Anil Gadodia.
129. Statement of none of the transporters have been there on record stating that the goods transported by Anil Gadodia to port at Mundra or to the factory of M/s Eurro Exports. In fact, it has been found and also submitted that in one of the similar cases like that of the present case, proceedings were initiated against the noticee by Delhi DRI. However, in view of the provisions of Section 50 and 51 of the Customs Act, the ld. Commissioner (Appeals) vide its Order dt.29.05.2014 has been placed to drop the proceedings, vide OIA No.CC(A)CUS/328/ 2014 dt.29.05.2014 issued from F.No.Appl/DLH/CUS/D-II/Prev/2014.
130. It has also been argued that no appeal against the said order has been preferred by Department and that order has been accepted. The principle of judicial discipline applies in the present case and in the absensia of any positivie over act qua the noticee the proceedings of any penalty cannot be initiated against him, accordingly, I drop the proceedings against him.
16. By the impugned order, the Commissioner (Appeals) strongly relied upon the statements, which were retracted subsequently. The relevant portion of the findings of the Commissioner (Appeals) in respect of imposition of penalty on the Appellant are reproduced below:-
13.3 As regards the finding that Shri Anil Gadodia was not named by the CHA or any clearing persons, I find that Shri Gadodia arranged for red sanders and made such goods available to M/s Eurro Exports. Even in the Show Cause Notice, it is not the case of the Department that Shri Anil Gadodia was actually involved in clearing the goods from Jaipur or in export of such goods because the case against him is engaged himself in an organized crime of smuggling of Red Sanders to Mr.Lin of China with the help and association of other syndicate members Shri Mayur Ranjan, Shri Yodying, Shri Rameshwar Sharma & others and it was Shri Rameshwar Sharma who was exporting such offending goods in the guise of marbles for monetary consideration with help and aid of this supplier. The transporters, CHA and such other agencies were arranged by Shri Rameshwar Sharma/Suresh Sharma and therefore the CHA or any clearing persons not naming Shri Anil Gadodia is not an evidence on which the Adjudicating authority can give him clean chit from the involvement in smuggling of red sanders by the Respondent No.1 Shri Rameshwar Sharma. The observation in para 126 of the impugned order that Shri Gadodia had no stake in the containers is meaningless because it is established by various evidences that red sander wood was supplied by him to the Respondent No.1 knowingly that they were to be smuggled.
Another reason for holding that Shri Anil Gadodia was not involved in relation to smuggling of Red Sander is that he was neither a Proprietor or Partner of M/s Eurro Exports and he had no interest in their business. But, the Adjudicating authority failed to consider that Shri Gadodia knew that such goods, being prohibited, cannot be exported from India, and he also knew that Red Sander woods cannot be supplied by him to any person like Shri Rameshwar Sharma who was engaged in exports. It is on record that earlier also, inquiry initiated against him for supplying Red Sander woods for illegal exports and even though enquiry may be pending or some order may have been passed in his favour in any such past cases, the fact remains that the dealings of Shri Anil Gadodia have not been clean. Pendency of any investigation for past supplies of the same goods would certainly create a cloud about the dealings, and he was not having anything to do with M/s Eurro Exports business is not a ground on which the Lower Authority could have held in his favour. As a licenced dealer of restricted goods like Red Sander woods, he was aware that such goods cannot be provided to any exporter when export of such goods was prohibited and therefore, not having any interest in the business of the exporter is irrelevant in the overall facts of the case.
13.4 The Adjudicating authority has relied upon various case laws for holding that retracted statements cannot be relied upon as sole basis without any corroborative evidence. He has also held that initial statements of all persons including Shri Rameshwar Sharma, Shri Anil Gadodia, Shri Mayur Ranjan, Shri Suresh Sharma, Shri Yodying, etc, were retracted at the first available opportunity. Since the statements were thus retracted, the Adjudicating authority has discharged them, but here also, I find that there is an error because the statements recorded by the investigating officers cannot be straightaway discarded only because they were retracted later on. It is true that a retracted statement has to be taken with a pinch of salt and it cannot be relied upon as a conclusive evidence against the person who made such statement, but the facts of this case are very different. In addition to the statements of all the persons when the smuggling racket was admitted by all of Shri Rameshwar Sharma, Shri Anil Gadodia, Shri Mayur Ranjan, Shri Suresh Sharma, Shri Yodying etc, there are other evidences and circumstances also which lend credibility to the admissions of these persons made before the investigating officers under Section 108 of the Customs Act. The other attending circumstances are just ignored by the Adjudicating authority.
17. We find that the Commissioner (Appeals) heavily relied upon the statements of Shri Anil Gadodia, the Appellant herein, recorded on 28.09.2013 and 29.09.2013 and the Appellant was arrested immediately. By letter dt.30.09.2013, the Appellant informed the Additional Director General, D.R.I. that he was taken in custody by the D.R.I. officers from Four Point Hotel at Jaipur on early morning of 28.09.2013 and he was kept in unauthorized custody and on 29.09.2013 evening, he was arrested. It was also stated that during the unauthorized custody, statements on 28.09.2013 and 29.09.2013 were recorded under duress, which were not given voluntarily. The Appellant retracted the statements. The Commissioner (Appeals) observed that the DRI investigating officers have replied to retraction of statements to the Appellant that the retraction statements were not believable. In this context, we find that by letter dt.08.10.2013, the investigating officer replied to the retraction of the statement of the present Appellant. For the purpose of proper appreciation of the case, we reproduce below the letter dt.08.10.2013 as under:-
Govt. of India
Directorate of Revenue Intelligence,
Regional Unit,
2, Raj Bhavan Road, Civil Lines, Jaipur
Phone 2223600, 2223700, Telefax 2223699
F.No.840/PR/19-XXIII/2013/1771 Dated: 08.10.2013
To
Shri Anil Gadodia,
Presently under Judicial Custody & ldged in Central Jail,
Jaipur
Through Jail Superintendent, Central Jail, Jaipur
Gentleman,
With reference to your letter dated 30.09.2013 addressed to the Additional Director General, Directorate of Revenue Intelligence, Delhi Zonal Unit, New Delhi, wherein, it has been alleged that the officers of the DRI, Jaipur kept you in unauthorized custody and forcefully recorded your statements.
In this regard, it is to inform you that you were lawfully summoned to appear on 28.09.2013 and subsequently on 29.09.2013 under Section 108 of the Customs Act, 1962. Further, you had tendered statements dated 28.09.2013 & 29.09.2013 voluntarily. This fact has also been mentioned in the said statements.
Thus, it appears that the said retraction is nothing but an afterthought and an alibi to defend yourself.
Sd/-
(J.C. Gupta) Senior Intelligence Officer, Directorate of Revenue Intelligence, Regional Unit, Jaipur.
18. On perusal of the above letter, it is seen that the investigating officer acted as an Adjudicating authority and decided that the statement was voluntarily tendered. It is also observed that the retraction is nothing but an afterthought. We are unable to accept such conduct of the investigating officers. It is well settled that the investigating officer cannot act as an Adjudicating authority. The investigating officer holds a pivotal roll. He is to find truth and not necessarily to rope in the noticee by any means. It is not his duty to fill in any gap in the enquiry proceedings and anyhow give a finding in favour of the Department. The investigator has to proceed to gather evidence by way of seized records, depositions, ascertain the facts of the case, and thereafter the charges are to be framed. Investigating officer must maintain his impartiality and the decision making process is in the domain of the Adjudicating authority. We find that after recording the statements of the Appellant, who was arrested and in Central Jail, Jaipur, the investigating officer had decided that the retraction is an afterthought and had not taken any further statement and proceeded on the basis of the statement of co-accused. In the case of Tejwal Dyestuff Industries Vs CCE Ahmedabad 2007 (216) ELT 310 (Tri-Ahmd), the Tribunal observed that confessional statement would not put an end to the investigation and the Revenue officer should be careful that they are not tricked out of regular and detailed investigation by making strategic confession which are retracted by them. The relevant portion in the case of Tejwal Dyestuff Industries (supra) is reproduced below:-
54. It appears that, having obtained? confessional statements the Revenue Officers did not carry out the detailed investigation into the relevant aspects of the case, particularly, the Bank accounts of Bhimanis and the working of the assessees factory. Recording of the confessional statement would not put an end to the investigation and the Revenue Officers should be careful to ensure that they are not tricked out of a regular and detailed investigation by making strategic confessions which are retracted by preparing affidavits soon after they are made and which affidavits are again strategically withheld from the Revenue Officers, so that they become complacent and do not carry out a fuller investigation. It appears that the Revenue Officers in the present case have fallen victim to this type of strategic confessional statements which have been retracted soon after they were made in the affidavits which were withheld by the deponents till the proceedings came up before the Commissioner, by which time the damage of not a making fuller investigation, thinking that the confessional statements are made and not retracted, was already done. In the present case, the Appellant took a definite stand that he is a licence holder for storage and selling of the Red Sander. There is no material available on record directly or indirectly that the Appellant supplied the Red Sander to the exporter. The investigating officer also had not interrogated him further to establish the truth. So, the Commissioner (Appeals) erroneously proceeded on the basis of replies of DRI officers on retraction of statement.
19. The Commissioner (Appeals) also observed that though the statements were retracted, not a single person has explained in the retraction how the containers are tampered after they were handed over by the exporter and who was interested in such tampering or substitution of the goods. It is further observed that mere retraction by way of denial of the statement recorded under Section 108 of the Act, 1962 is not enough for rejecting the admissibility of the statement. We find that the Appellant retracted the statements from Jail. It is the duty of the investigating officer to enquire thoroughly who has loaded the Red Sander in the container. The Appellants claimed their innocence in the alleged offence and it is the duty of the investigating officer to establish the truth. So, the findings of the Commissioner (Appeals) cannot be sustained.
20. The Hon'ble Supreme Court in the case of Vinod Solanki (supra), held that mere retraction of confession may not be sufficient to make the confessional statement irrelevant for the purpose of the proceedings in a criminal or quasi-criminal case, but there cannot be any doubt whatsoever that the Court is obligated to take into consideration the pros and cons of both the confession and retraction made by the accused. The issue is what would be effect of a retracted statement for the purpose of levy of penalty under Section FEMA, 1973. In that case, on or about 25-10-1994, the office premises of the appellant was searched. Recovery of Indian currency amounting to Rs. 2,65,000/- was made. He was thereafter detained. On the next two succeeding dates, i.e., on 26-10-1994 and 27-10-1994, he allegedly made two statements before the Authorities under the Act, disclosing that all the transactions in the name of M/s. Sun Enterprises, Ahmedabad and M/s. Suraj Enterprises, Bombay relating to import of goods had been made by him and no import of goods had taken place in the name of the said firms. He is stated to have confessed that he was responsible for remittance of the foreign exchange worth US Dollars 11,400 and US Dollars 22,830. In view of the said purported confession, he was arrested for alleged violation of the provisions of Section 8(3) and Section 9(1)(a) of the Act. The statements were retracted on 28.10.1994 before the ld.C.M.M. The relevant portions in the case of Vinod Solanki are reproduced below:-
34.?A person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction. With a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession which has since been retracted, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such.
35.?In the instant case, the Investigating Officers did not examine themselves. The authorities under the Act as also the Tribunal did not arrive at a finding upon application of their mind to the retraction and rejected the same upon assigning cogent and valid reasons therefor. Whereas mere retraction of a confession may not be sufficient to make the confessional statement irrelevant for the purpose of a proceeding in a criminal case or a quasi criminal case but there cannot be any doubt whatsoever that the court is obligated to take into consideration the pros and cons of both the confession and retraction made by the accused. It is one thing to say that a retracted confession is used as a corroborative piece of evidence to record a finding of guilt but it is another thing to say that such a finding is arrived at only on the basis of such confession although retracted at a later stage.
36.?Appellant is said to have been arrested on 27-10-1994; he was produced before the learned Chief Metropolitan Magistrate on 28-10-1994. He retracted his confession and categorically stated the manner in which such confession was purported to have been obtained. According to him, he had no connection with any alleged import transactions, opening of bank accounts, or floating of company by name of M/s. Sun Enterprises, export control, Bill of Entry and other documents or alleged remittances. He stated that confessions were not only untrue but also involuntary.
21. The Commissioner (Appeals) proceeded on the basis of call data and details were brought on record by the D.R.I. officers. Further, the statement of co-accused Shri Mayur Ranjan implicated the Appellant. Furthermore, the Appellant was having permit or licence for trading of Red Sanders and the huge stock was found unaccounted in godown. The learned Advocate submits that as revealed from the Panchnama that stock register was lying in their office, which was not examined by the officers. In any event, the unaccounted stock would not construe that the Appellant exported the Red Sanders, and if any irregularity in the account would adjudicated by the Licencing authority and not the Customs authority. The evidence of call data has no force as there is material available in record of conversation of the Appellants for smuggling of goods. The Tribunal in the case of Shafeek P.K. (supra) observed that the Adjudicating authority relying on call data records showing telephone talk of the Appellant in Dubai with co-accused in India for smuggling of Red Sander would not be enough to conclude that the Appellant is involved in smuggling as the subject matter of conversation was not coming out from record.
22. The Commissioner (Appeals) observed that the Appellant had not asked for cross examination of the co-accused as per Section 138 B of the Customs Act, 1962. The learned Advocate categorically submitted that they requested for cross examination of the co-accused before the Adjudicating authority. It is particularly submitted that Shri Mayur Ranjan and Shri Yodying were absconded after release from the jail and not appeared before the Adjudicating authority. The Commissioner (Appeals) imposed penalty on the basis of statements of the co-accused, who had retracted the statements and such statements are uncorroborative nature. The Hon'ble Supreme Court in the case of Haricharan Kurmi (supra) observed that the value of co-accused statements was extremely weak and there would be no conviction without the fullest and strongest co-relation on material particulars. In the present case, there is no fullest and strongest corroboration on material particular available in the statement of co-accused and therefore, the imposition of penalty on the Appellant is not warranted on the basis of such statement. The Hon'ble Supreme Court in the case of Haricharan Kurmi (supra) discussed the evidentiary value of the co-accused as under:-
15. The statements contained in the confessions of the co-accused persons stand on a different footing. In cases where such confessions are relied upon by the prosecution against and accused person, the court cannot begin with the examination of the said statements. The stage to consider the said confessional statements arrives only after the other evidence is considered and found to be satisfactory. The difference in the approach which the court has to adopt in dealing with these two types of evidence is thus clear, well understood and well established. It, however, appears that in Ram Prakash case, some observations have been made which do not seem to recognize the distinction between the evidence of an accomplice and the statements contained in the confession made by an accused person. An examination of the reported decisions of the various High Courts in India, said Imam, J., who spoke for the Court in that case, indicates that the preponderance of opinion is in favour of the view that the retracted confession of an accused person may be taken into consideration against a co-accused by virtue of the provisions of Section 30 of the Act, its value was extremely weak and there could be no conviction without the fullest and strongest corroboration on material particulars. The last portion of this observation has been interpreted by the High Courts in the present case as supporting the view that like the evidence of an accomplice, a confessional statement of a co-accused person can be acted upon if it is corroborated in material particulars. In our opinion, the context in which the said observation was made by this Court shows that this Court did not intend to lay down any such proposition. In fact, the other evidence against the Appellant Ram Prakash was of such a strong character that this Court agreed with the conclusion of the High Court and held that the said evidence was satisfactory and in that connection, the confessional statement of the co-accused person was considered. We are, therefore, satisfied that the High Court was in error in this case in taking the view that the decision in Ram Prakash was intended to strike a discordent note from the well-established principles in regard to the admissibility and the effect of confessional statements made by the co-accused persons.
23. The Commissioner (Appeals) observed that the other persons involved in this case are Shri Mayur Ranjan and Shri Yodying, who were found to be involved in smuggling by the Joint Commissioner. These two persons have also initially admitted about the illegal smuggling and their role, but they have also retracted their statements in October 2013, but till the Joint Commissioner has held them guilty of illegal activity under the Act, 1962, then the same yardstick should apply to the Appellant. We find from the Adjudication order that these two persons have not submitted any defence in response to the allegation made against them in the Show Cause Notice either in writing or orally. In this context, the Adjudicating authority imposed penalty on these two persons. On a query from the Bench, the learned Advocate submits that both the persons were absconded after the release from the Jail. There is no scope for verification of the documents from the possession of these two persons. Further, there is no scope for cross examination of these two persons. Hence, the imposition of penalty on the Appellant on the basis of statements of these two persons cannot be sustained.
24. The learned Authorised Representative for the Revenue submitted that the Appellant causes to make illegal export of Red Sander and therefore, it would come within the purview of Section 114AA of the Act, 1962, which reads as under:-
Section 114AA.?Penalty for use of false and incorrect material. - If a person 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 this Act, shall be liable to a penalty not exceeding five times the value of goods. The expressions causes to be made if read with in the transaction of any business for the purposes of the Act, shall be liable to a penalty not exceeding five times the value of the goods in Section 114AA of the Act, 1962 make it clear that if a person knowingly or intentionally causes false and incorrect material in the transaction of any business, penalty would be not exceeding five times of the value of goods. So, the words causes to be made would have some nexus with the transaction of the goods of any business. In the present case, we find that there is no material available that the Appellant was involved in preparation of documents or signed by him relevant to export of goods. The Appellant is a licence holder for storage and selling of Red Sander within the Country. Commissioner (Appeals) also observed that the Appellant was not actually involved in clearing of the goods from Jaipur or in export of goods. There is no material available that the Appellant had supplied the Red Sander knowingly for export of the goods. The Tribunal in the case of S.P. Bahl (supra) held as under:-
7.?From the perusal of the above sections, it can be seen that penalty under Section 114(i) can be imposed on the person whose act renders the goods liable for confiscation. In the present case the role of the appellant, that too as per the statement of Shri Pradeep Dhond is that the appellant supplied the goods only in domestic area i.e. out of Customs area. It is undisputed position that during the movement of goods outside Customs area can not be liable to confiscation. Therefore, even if it is accepted that the appellant has supplied the goods to Shri Pradeep Dhond but at a place outside Customs area, the said goods is not liable to confiscation. Hence, the penalty upon the Appellant is not sustainable.
8.?The penalty under Section 114AA can be imposed if a person 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 Customs Act. On careful perusal of the records, it is observed that investigation could not bring any document prepared by the appellant or signed by him relevant to the export of goods. As discussed above the export was made by Shri Pradeep Dhond and the appellant was not found to be involved in export of goods though the goods was supplied by him to Shri Pradeep Dhond outside Customs area.
25. The Commissioner (Appeals) observed that the Appellant earlier also implicated on the alleged smuggling of Red Sander. In this context, the learned Advocate drew the attention of the Bench to OIA No.CC(A) Cus/328/2014, dt.29.05.2014 passed by Commissioner of Customs (Appeals), New Delhi against M/s Jiwan International, Proprietor Shri Anil Gadodia, the Appellant herein. In that case, the Commissioner (Appeals) set aside the Adjudication order and allowed the appeal filed by the Appellant. In that case, the Commissioner (Appeals) observed that the Appellant had not made any entry of goods for export under Section 50 of the Act, 1962 and the Appellant had not carried out/entered the goods in Customs area in order to export the same. The Adjudicating authority admitted in the Adjudication order that the goods were seized from the godown and had not been entered electronically or manually for export. Further, the trading of Red Sander in India is neither restricted nor prohibited. In fact, various Government agencies are selling Red Sander wood through auction. After considering the above findings of the Commissioner (Appeals) in that case, we do not find any force in the findings of the Commissioner (Appeals) in the present case. So, imposition of penalty on the Appellant cannot be sustained.
Re: Appeal No.C/10181/2016-DB and C/10182/2016-DB (Shri Rameshwar Sharma and Shri Suresh Sharma):
26. In the case of Shri Rameshwar Sharma, the Commissioner (Appeals) imposed penalty of Rs.50 lakhs each under Sections 114 and 114AA of Customs Act, 1962 separately. In the case of Shri Suresh Sharma, the Commissioner (Appeals) imposed penalty of Rs.2.50 lakhs each under Sections 114 and 114AA of Customs Act, 1962 separately. In both the cases, the Adjudicating authority dropped the penal proceedings against the Appellant.
27. Shri Rameshwar Sharma, is the Proprietor of M/s Eurro Exports. On 28.09.2013, the officers of the Directorate of Revenue Intelligence (DRI) examined the 5 containers at Mundra Container Freight Station, attempting to export by M/s Eurro Exports vide Shipping Bills No.7656093, dt.25.09.2013, 7615545, dt.23.09.2013, 7628989, dt.24.09.2013, 7616229, dt.23.09.2013, and 7630622, dt.24.09.2013 respectively, were called back. The shipping bills were filed by CHA M/s Mahendra Shipping Agencies on behalf of the exporter. The goods were declared Indian Polished Granite Slabs, Albeta Marble Slabs in the shipping bills. After examination of the containers, nothing illegal was found in Shipping Bill No.7656093, dt.25.09.2013. But, in other containers, it was found stuffed with Red Sander wooden logs wrapped in HDPE fabric concealed and covered with slabs from four sides. On 28.09.2013, the DRI officers seized 14.25 MTs Red Sander and the declared goods. The export of Red Sander from India is prohibited. The Red Sander is listed under Appendix-II of the CITES (Convention of International Trade in Endangered Species of Wild Fauna and Flora) and as per Import-Export Policy 2009-2014, export of the same in any form is prohibited. The DRI officers visited the premises of the exporter at Jaipur and conducted search operation and also recorded statement of Shri Rameshwar Shama, Proprietor of the Export firm on 28.10.2013 and 28.10.2013. They have also recorded the statement of Shri Suresh Sharma, employee of the export firm. They had admitted the involvement of the export firm in illegal export of Red Sander. As a follow up action, the officers recorded the statements of Mr. Yodying, Mr.Mayur Ranjan and Mr.Anil Gadodia, who were found actively involved in the illegal procurement and fraudulent export of Red Sander wood. The Proprietor of M/s Eurro Exports was arrested by the officers of DRI in connection with the seizure of 14.25 MTs of Red Sander at CFS Munda from the containers of M/s Eurro Export.
28. Show Cause Notice dt.24.03.2014 was issued, proposing the confiscation of the seized goods viz. Red Sander and Marble Slabs and also to impose penalties on the Appellants herein amongst others. The Adjudicating authority confiscated the 14.25 MTs of seized Red Sander absolutely and also confiscated 93.31 MTs of Marble Slabs and a redemption fine of Rs.25 lakhs was imposed. The Adjudicating authority observed that it has not been established that Red Sander was stuffed by export firm or its proprietor Shri Rameshwar Sharma or its employee Shri Suresh Sharma. It is further observed that the export firm was not concerned with the recovery of 14.25 MTs of Red Sander. They are not responsible for the quantity of Red Sander found in said container meant for export of Marble Slab. The findings of the Adjudicating authority are reproduced below:-
118. From the facts narrated above, the investigation agency could not establish or show any evidence whatsoever against the noticee that he has dealt or has kept the wooden logs of Red Sander in his consignments which are seized at the port. From the series of events, it is clear that the goods were beyond the control of the noticee and at the time when the goods were received in the Customs Area and were checked by the Customs authority and confirmed about the contents as declared that is marble slabs and therefore, subsequent recovery of wooden logs, could only lead one conclusion that same were incorporated and substituted after the buffer containers were handed over to the CFS.
119. It is also matter of record that the Applicant have never came to the Port as per the investigation as he was apprehended in Jaipur itself on 28th September, 2013 when the container was recovered at the port found to contain wooden logs of Red Sanders. The investigation has not been done against the person who probably had kept the said Red Sanders wood logs in the container after knowing the difference in weight and number of packages exported by M/s Eurro Exports. The allegation that forklift found in the factory premises of the noticees at Jaipur was used for stuffing Wood into the container is also not been verified and believed since the activity of the noticee from last several years as cleared from the documentary evidence placed before this office shows that the noticee was all through out involved in export of the Marble Slabs only. It is for that purpose the crane was required to carry out his activities at his factory. Further, the search conducted on 28th Sept, 2013 itself has not resulted in recovery of single small piece of wood (left over wood) had even been shown to have been recovered from the godown and it seems improbable that in case somebody is packing huge quantity of goods (Red Sanders) in his factory in the containers, it is highly improbable that no recovery or evidence of left over wood or even small pieces of wood could not be found from such area.
29. By the impugned order, the Commissioner (Appeals) observed that the Adjudicating authority has relied upon the statements of the transporters in different context, but failed to appreciate that even the transporters have not reported any complaint of the opening of lock of the containers and about replacement and substitution of goods after the trailer left Jaipur. The Appellant had not filed any complaint or FIR or taken any such action of their goods were stolen away on the way and some other goods were replaced by some one. It is further observed that the Adjudicating authority relied upon the various case laws for holding that the retraction statement cannot be relied upon as sole basis without any corroborative evidence. It is observed by the Commissioner (Appeals) that the Adjudicating authority ignored the corroborative fact, circumstances and evidence insofar as Customs documents of the export firm were recovered from the residential premises of Shri Mayur Ranjan. It is revealed from the call data and the details were brought on record by DRI that the Appellants were involved in the smuggling with co-appellants and others. It is observed that the statements were retracted by these persons and DRI investigating officer have promptly replied to those persons, why their retraction was not believable. The Commissioner (Appeals) held that the Adjudicating authority has not given the due weightage to the statements of the Appellants and the co-appellants and others, because the statements recorded initially gives the details of how all the transactions were agreed and carried out by them.
30. The learned Advocates Shri Pradip Jain and Shri Ashish Batra argued the matter at length. It is submitted that M/s Eurro Export is a reputed export firm and earned huge foreign exchange by exporting the Marble Slabs. They are holding un-blemished record till date. The loading of the Red Sanders in the export container was without their knowledge as evident from the record and circumstantial evidences. It is submitted that the DRI officers immediately searched their business premises on 28.09.2013 and no incriminating documents was found. The CHA and the transporter had not mentioned their names for loading of the goods. It is submitted the entire case was made out on the basis of statements of co-accused, which were retracted and has no evidentiary value as settled by various decisions of Hon'ble Supreme Court and the Tribunal.
31. We find that the exporter can book the containers for stuffing the export goods in their factory mainly under two procedures. First, they can adopt the procedure related to self sealing wherein they declare that the goods have been stuffed by them and sealed by them. Another procedure is that they can get the goods stuffed in containers in their factory in presence of Central Excise or Customs officers, wherein the officers supervise the stuffing and then seal the container with one time seal supplied by the Shipping Line and Central Excise and Customs. The other alternative course is that the exporter can send the goods to the Port/Inland Container Depot/Container Freight Station, where the goods are examined by the Customs officers and are allowed to be exported or otherwise according to the nature of the goods. In the present case, the Appellant booked the containers from OAC India through M/s IAL Logistics (India) Ltd, Jaipur and stuffed the material in their factory and sent to Mundra Port without sealing. Shri Digpalsinh Bhupatsinh Sodha, Proprietor of the CHA firm M/s Fortune Shipping Services, in his statement dt.11.10.2013 stated that the forwarders sent the containers from Jaipur, they usually sent their goods by trucks and alongwith them they also bring suppliers invoice attached with the lorry receipt; that the forwarders send the export details by email to him before the arrival of the goods; that one of the type of exports opted by the forwarder is when the goods is sent within the container stuffed at the factory, but without line seal, Excise seal or any other seal, this is known as buffer containers, as it is shown as being stuffed at CFS but the same were already stuffed at the factory of the Exporter, then the shipping bill is filed and 2nd type of exports opted by the forwarder is where the goods arrive by the trucks and the same is stuffed at the CFSs at Mundra and then export Customs documents i.e. Shipping Bill is filed.
32. On perusal of the records, we find that the Customs officers had recorded in the Shipping Bills that the goods were not examined by them. The Commissioner (Appeals) also observed that there is no evidence of weighment of the cargo at the Port. So, the contention of the learned Advocate that there is difference between the weighment of the containers at their factory and at the port, is without any substance. We have noted that the Customs officers had not verified the containers. The only submission of the learned Advocate is that a practice of the exporter to deliver the goods in buffer container. In our considered view, if the Appellant cleared the export materials without sealing the containers, the burden of proof heavily lies with them that the offending goods were not loaded by them. In the present case, the Appellants failed to prove that the offending goods were not loaded by them. In this context, we find from the impugned order that Shri Mangi Lal Lohiti, Proprietor of M/s Lahoti Impex and Director of M/s Indo Sino Impex P. Ltd, in his statement dt.09.10.2013 recorded under Section 108 of Customs Act, 1962 stated that Shri Rameshwar Sharma used to come with transport on which partly filled containers were loaded and in these partly loaded containers, he himself used to get the goods stuffed in the containers with the help of crane and labour, that the crane and labour were also arranged by Shri Rameshwar Sharma..; in addition the partly stuffed goods wre packed in wooden boxes with lassing and were not visible. Hence, the penal provisions would be invoked against the Appellant. This fact was not disputed by the Appellants and the presumption would be in favour of the Revenue.
33. The other aspect of this matter is that the Adjudicating authority confiscated 93.31 MTs of Marble Slabs under the provisions of Section 119 of the Act, 1962. It provides any goods used for concealing smuggled goods shall also be liable to confiscation. The Appellant had not filed any appeal against the confiscation of the said goods by the Adjudicating authority. Thus, the Appellant had not disputed the confiscation of the declared goods. Section 50 of the Act, 1962 provides entry of goods for exportation. Sub-section (2) of the Section 50 provides the exporter of any goods, while presenting the shipping bill or bill of export, shall at the foot thereof make and subscribe to a declaration as to the truth of the contents. We find that the Appellant is the exporter and filed shipping bills, which were found attempted to export the Red Sander, prohibited under the Act, 1962 and other laws, by mis-declaring the description of the goods in the shipping bills and therefore, imposition of penalty under Section 114 of the Act is justified.
34. It is also noticed that the Appellant knowingly or intentionally used the shipping bills which is false or incorrect particular and separate penalty is liable to be imposed under Section 114AA of the Act, 1962. We have also noticed that Shri Suresh Sharma, employee of the export firm had knowingly involved in smuggling of Red Sander and therefore, imposition of penalty is warranted. In our view, the order of the Commissioner (Appeals) against the Appellants herein, are liable to be upheld for the above reasons. However, the submissions of the learned Advocates that the quantum of penalties are excessive, are required to be considered.
35. In view of the above discussion, in Appeal No.C/10170/2016, we restore the Adjudication order and set aside the penalty imposed by the Commissioner (Appeals). In Appeal No.C/10181/2016-DB and C/10182/ 2016-DB, we uphold the impugned order subject to reduce the penalty to Rs.40 lakhs (Rupees Forty Lakhs only) each under Sections 114 and 114AA of the Customs Act, 1962 separately on Shri Rameshwar Sharma and the penalty on Shri Suresh Sharma is reduced to Rs.2 lakhs (Rupees Two lakhs only) each under Sections 114 and 114AA of the Customs Act, 1962.
(Dictated & Pronounced in Court)
(P.M. Saleem) (P.K. Das)
Member (Technical) Member (Judicial)
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