Custom, Excise & Service Tax Tribunal
Shri Anil Gadodia vs New Delhi(Prev) on 28 February, 2020
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CUSTOMS EXCISE & SERVICE TAX APPLELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
COURT NO. IV
Customs Appeal No. 52231 of 2019
(Arising out of CC-A-CUS-D-II-PREV-410-2019-20, Dated-14/06/2019 passed by the
commissioner of Customs, Central Excise & Service e Tax Appeals)
M/s. ANIL GADODIA ........Appellant
882-a, KEDAR BUILDING, GHANTA GHAR,
OLD SUBZI MANDI, DHELHI-110007
VERSUS
C.C-NEW DELHI (PREV) ........Respondent
Preventive New Custom House, Near Igi Airport, New Delhi-Delhi APPEARANCE:
Shri. A.K. Prasad, Advocate for the Appellant Shri. Rakesh Kumar, Authorised Representative for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) Final Order No. 50471/2020 DATE OF HEARING: 19.02.2020 DATE OF DECISION: 28.02.2020 RAMESH NAIR The brief facts of the case are that the DRI on 28.09.2013 detained 5 export consignments of M/s. Eurro Exports at CFS, Mundra, declared to contain marble slabs. Out of 5 containers, in the 4 containers a total of 14.25 MTs of red sanders were found concealed behind crates containing 93.31MTs of marble slabs. Since, export of red sanders was prohibited as per Foreign Trade Policy during the relevant period, the red sanders as well as the marble used for concealing the red sanders were seized. In follow up action, searches were conducted at various premises and some more goods including red sanders and documents were seized. As per details given below:-
I) From the residence-cum-business premises of the appellant at Delhi 75.808 Kgs of brown colour sandalwood and 23.03 Kgs of red sanders valued at Rs.98,838/- were detained on 28.09.2013. Indian currency of Rs.14.50 Lakhs was detained from the premises and an
2|Page C/52231/2019 additional cash of Rs 10 Lakhs from a person named Shiv Kumar who had just arrived at the premises. The detention was subsequently converted to seizure on 14.03.2014.
II) 31.633 MT of red sanders, white wood logs, white wood powder, red wood powder, brown wood powder, etc were seized from godown of the appellant in Wazirpur Industrial Area, Delhi. III) Some documents were seized from the resident of one Shri May Ranjan, New Delhi.
IV) Indian Currency of Rs.4.20 Lakhs and some documents were seized from the residence in New Delhi of one Mr. Yodying @ Chan. V) 8.02 MT of red sander logs and some saw-dust were seized from the godown of Shri Daljeet Singh, New Delhi.
VI) Some documents were also recovered from the residential premises of Shri Daljeet Singh at New Delhi, on 28.09.2013, which were formally seized on 14.03.2014.
VII) A laptop was resumed from the residential premises of one Shri Saurabh Chopra on 29.09.2013 which was later formally seized on 14.03.2014.
2. During the course of investigations statements of various persons were recorded by DRI, the detail of same are as under:-
i) Shri Rameshwar Sharma, Proprietor, Euro Exports- statements dated 28.09.2013 and 29.9.2013 recorded at Jaipur.
ii) Shri. Anil Gadodia, Proprietor of M/s Jiwan International, a dealer in sandalwood chips, powder and red sanders- statements dated 28.09.2013, 29.09.2013 and 15,07,2014.
iii) Shri Mayur Ranjan[@ Vijay, a Chinese interpreter and a tour guide working freelance, statements dated 28.09.2013 and 29.9.2013
iv) Shri Daljeet Singh working with a Cargo Moving Company-
statements dated 28.09.2013, 29.09.2013 and 18.07.2014
v) Mr. Yodying @ Chan, a permanent Bangkok resident, statements dated 28.09.2013 and 29.09,2013.
vi) Shri Shiv Kumar engaged in the business of wooden mala statement dated 28.09.2013.
vii) Shri. Kamal Negi a freight forwarder - statements dated 29.9.2013, 19.03.2014 and 19.08.2014.
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viii) Shri. Saurabh Chopra owner of freight forwarding company, M/s Krishna Logistics-statement dated 29.09.2013 and 31.07.2014.
ix) Shri Vinod Saini, a CHA-statement dated 14.11.2013.
3. During the relevant period the red sanders were listed under Appendix II of the CITES (Convention on International Trader in Endangered Species of Wild Fauna and Flora) and as per Foreign Trade Policy-2009-2014 export of the same, in any form, was prohibited. The department was, therefore of the view that Shri. Rameshwar Sharma with the help of Shri. Anil Gadodia (the appellant) and others were attempting to illegally export 14.25 MTs of red sanders through CFS Mundra. In respect of the goods seized at CFS Mundra on 28.09.2013 a separate show cause notice has been issued under F. No. 34/11/2013-DZU dated 19.03.2014 alleging that Shri. Anil Gadodia (the appellant) had attempted to export prohibited goods and was therefore, liable for panel action. In respect of the follow up action resulting in town seizers of various quantities of red sanders, the show cause notice dated 28.08.2014 in the present case had been issued alleging the appellant had attempted to export out of India red sanders which was prohibited for exports. The seized red sanders were proposed to be confiscated under Section 113 of the Customs Act, 1962, and the seized Indian currency was proposed to be confiscated under section 121 of Customs Act, 1962. The show cause notice also proposes panel action against the appellant and other persons under Section 114 of the Customs Act, 1962. After considering the appellants submissions the Learned Joint Commissioner of Customs adjudicated the show cause notice whereby imposed a penalty of Rs. 10 lakhs on the appellant and ordered confiscation of 23.03 Kgs of red sanders seized from the residence-cum-business premises of the appellant on 28.09.2013 and 750 kgs of red sanders seized from the godown of the appellant at Wazirpur Industrial Area, Delhi. The adjudicating authority did not confiscate 75.808 Kgs of goods seized from the residence-cum-business premises of the appellant on 28.09.2013 as they were found to be sandal wood and not red sanders. Quantity of 20.223 MTs of goods seized from godown was also not confiscated, on the ground that it was found to be sandalwood and not red sanders, 10.660 MTs out of total 11.411 MT seized of red sanders was also not confiscated as it was found to be duly reflected in the recorded stock of appellant in the godown Wazirpur Industrial Area. Being aggrieved by the Order-In-Original the appellant filed an appeal before
4|Page C/52231/2019 the Learned Commissioner (Appeals) on 28.03.2017 but the same was dismissed. Hence, the present appeal.
4. Subsequently, on 21.04.2017, the department also filed appeal against the same impugned order dated 31.01.2017, challenging that portion of the order directing release of 10.660 MTs of red sanders, out of 11.411 MT seized from the appellants godown on Wazirpur Industrial Area. The Learned Commissioner (Appeals) vide Order-In-Appeal dated 19.11.2019 remanded the matter to the adjudicating authority for denovo decision.
5. Shri. A.K. Prasad, Learned Counsel appearing on behalf of the appellant made the following submissions:-
A) There is no dispute on the fact that the impugned order relates to town seizures and not any seizure in and around the Customs station.
During the relevant period only export of red sanders was prohibited. There was no restriction in possession of and trade of red sanders within India. Hence, by no stretch of imagination it can be said that the goods seized in New Delhi from the residence-cum-business premises or the godown of the appellant were attempted to be exported from Mundra CFS which is located in State of Gujarat. B) The department has not been able to establish that the appellant had filed or was in process of filing any export documents in respect of the goods seized in Delhi.
C) The two statements dated 28.09.2013 and 29.09.2013 of the appellant had been retracted on 30.09.2013, on the first available opportunity when he was presented before the judicial magistrate after his arrest. Hence, these two statements lose their evidentiary value. The 3rd statement of the appellant recorded on 15.07.2014 makes no reference to the earlier two retracted statements and is exculpatory. The statements of other persons which have been relied upon by the department were also retracted.
D) In any case none of the statements could be relied upon as the witnesses were neither examined by the adjudicating authority nor their cross-examinations were allowed which is a statutory and mandatory requirement as per Section 138B of Customs Act, 1962. E) The fact that the adjudicating authority has refrained from confiscating 10.660 MTs of red sanders which were recorded in the stocks of the appellant in his Wazirpur Industrial area godown, is an admission on the record of the department that mere possession and trading in red sanders, within India, is not an offence under the Customs Act, 1962.
5|Page C/52231/2019 F) The adjudicating authority has confiscated 750 Kgs of red sanders on the basis of a report dated 04.02.2015 of a Technical institute. This report was prepared prior to issue of show cause notice, hence, the same is not report as an RUD. The same was also not supplied to the appellant, therefore, firstly the said report could not have been relied upon, and secondly any decision on the basis of said report is clear contravention of the principles of natural justice. G) In a similar situation DRI had seized some red sanders from the appellant's godown on 24.11.2011. In the said case the matter was decided by the Commissioner (Appeals), IGI Airport, New Delhi, vide his order-in-Appeal No.CC(A)Cus/328/2014 dated 29.05.2014. in favour of the appellant holding that goods seized in India, away from any port of export, cannot lead to the conclusion that goods were attempted or intended to be exported. The said Order-in-Appeal has been accepted by the department. Following the same ratio, the present appeal needs to be allowed.
H) The other show cause notice dated 24.03.2014 arising out of the detention of the seizure of 14.25 MTs as red sanders in four containers at CFS Mundra on 28.09.2013, was eventually decided in favour of the appellant vide CESTAT, Ahmedabad Final Order No. A/10098- 10100/2016 dated 12.02.2016 holding that the appellant could not be said to have attempted to exports the goods in the containers or abetted the same. The evidences relied in the said case were identical to the evidences relied upon in the present proceedings including the retracted statements of the various persons. When even in respect of red sanders seized within the port premises, the appellant has been held not to be involved in any activity of either export or attempt to export the red sanders, how can the appellant be charged with similar offences in respect of red sanders found in the business premises or godown of the appellant far away from any Customs stations. I) An excess of 750 Kgs red sanders and saw dust etc was allegedly found by the department at godown of the appellant which has been confiscated as being not reflected in the records. The appellant submits that before the adjudicating authority, as well as the appellate authority it was submitted that goods were seized on 28.09.2013 whereas the weighment was done on 01.08.2014 that is after period of more than 10 months. During the intervening period rain water had seeped into the godown and soaked the wooden logs and saw dust increasing its weight. Therefore, the excess weight found was notional
6|Page C/52231/2019 and not real. In any case, this excess has no bearing of the contravention of any provisions of the Customs Act, 1962. As there is no evidence this alleged excess stock cannot be said to have been attempted to export.
J) There is also no evidence to show that the Indian Currency of Rs.
14.50 Lakhs seized from the appellants' premises were sale proceeds of any smuggled goods. The appellants were registered for trading domestically in red sanders and these were sale proceeds of local sale and duly reflected in their books of account. A Chartered Accountant's Certificate as also cash book of account and ledger were also furnished which the adjudicating authority ignored without any basis. K) The Indian currency of Rs. 10 Lakhs was seized at the residential-cum-
business premises of the appellant from the possession of one Shri Shiv Kumar Jogi. This amount could not have been confiscated without issuing any show cause notice to shri. shiv Kumar.
L) The appellant submits that in view of the above, no case is made out either for confiscation of the red sanders and cash seized at the various premises of the appellant or for imposing any penalty on the appellant.
M) Their further submission is that the export of red sanders is no longer prohibited w.e.f 18.02.2019 as per the Foreign Trade Policy (DGFT's Public No. 74/2015-20 dated 18.02.2019).
N) It is also submitted the second Order-In-Appeal dated 19.11.2019 is ab-initio void since it has been issued in the context of Order-in- Original dated 31.01.2017 which does exist and has already merged with the 1st Order-in-Appeal dated 14.06.2019 (impugned order), which is presently under challenge in this Appeal. Hence, once the present Appeal is decided the same will be brought to the notice of the adjudicating authority to drop the denovo proceedings.
5.1 In supports of his above submission, he placed reliance on the following judgment:
2000 (122) E.L.T. 641 (S.C.) Swadeshi Polytex Ltd. Versus Collector of Central Excise, Meerut 2002 (143) E.L.T. 21 (S.C.) Lakshman Exports Limited Vs. Collector of Central Excise 2010 (260) E.L.T. 514 (All.) Commissioner of Central Excise, Meerut-I Vs. Parmarth Iron Pvt. Ltd.
2014 (300) E.L.T. 25 (Guj.) Mahek Glazes Pvt. Ltd. Vs. Union of India
7|Page C/52231/2019 2015 (324) E.L.T. 641 (S.C.) Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II 2016 (332) E.L.T. 416 (Del.) Flevel International Vs. Commissioner of Central Excise 2016 (339) E.L.T. 249 (Mad.) Karan Traders Vs. Joint Commissioner of Central Excise, Salem 1996 (81) E.L.T. 276 (Tribunal) Arsh Casting Pvt. Ltd. Vs. Collector of Central Excise, Chandigarh 2004 (168) E.L.T. 494 (Tri.-Del.) Rama Shyama Papers Ltd. Vs. Commissioner of Central Excise, Lucknow 2015 (317) E.L.T. 721 (Tri.-Del.) Kusum Ingots & Alloys Ltd. Vs. Commissioner of Central Excise, Indore 2019 (6) TMI 977-Calcutta High Court Sampad Narayan Mukherjee Versus Union of India 2013 (294) E.L.T. 353 (Del.) Basudev Garg vs. Commissioner of Customs 2009 (233) E.L.T. 157 (S.C.) Vinod Solanki Vs. Union of India 2016 (333) E.L.T. 250 (Del.) Directorate of Revenue Intelligence Vs. Mahendera Kumar Singhal 2018 (359) E.L.T. 717 (Tri.- Hyd.) Gudiseva Vasuki Vs. Commr. of C. Ex. & S.T., Hyderabad-Iii 1983 (13) E.L.T. 1637 (S.C.) State of Maharashtra Vs. Mohd. Yakub And Others 2005 (186) E.L.T. 293 (Tri.-Kolkata) Commissioner of Customs (Prev.) Kolkata Vs. Md. Abdul Salam 2003 (161) E.L.T. 1047 (Tri.-Kolkata) Collector of Customs (Prev.) West Bengal Versus Kamala Ranjan Saha 1989 (39) E.L.T. 183 (Ori.) Ramakrishna Aggarwal Versus Collector of Central Excise & Customs, Orissa 2004 (171) E.L.T. 65 (Tri.-Kolkata) Md. Latibur Rahaman Versus Cmmr. Of Cus. (Prev.), west Bengal, Kolkata 1987 (28) E.L.T. 489 (Tribunal) Bhanabhai Khalpabha 1 Patel Versus Collector of Customs & Central Excise 1986 (26) E.L.T. 766 (Tribunal) K. Babu Rao And Others Versus Collector of Customs, Cochin 1985 (21) E.L.T. 353 (Mad.) Ranjit Export Private Ltd. Versus Collector of Customs, Madras 2016 (338) E.L.T. 113 (Tri.-Del.) Commissioner of Central Excise, Delhi-I Vs. Kuber Tobacco India Ltd
8|Page C/52231/2019 1992 (57) E.L.T. 284 (Tribunal) Kashmiri Versus Collector of Customs 2018 (362) ELT 961 (Chh.) Hi Tech Abrasives Ltd. Vs. Commissioner of Central Excise, & Customs Raipur
6. Learned Authorized Representative appearing on behalf of the Revenue reiterates the finding of the impugned order which is related to confiscation of the goods and cash. He further submits that there is strong evidence against the appellant in support of the offence of the appellant i.e. attempt to export of prohibited goods in the form of various statements of various persons.
7. As regard, the appellant's claim that the statements were retracted , he submits that there is a catena of judgments where in the court held that retraction statements has to be made before the same authority before whom earlier statements under Section 108 of the Customs Act were made. He placed reliance on the judgment of Sidhharth Shankar Roy-2013 (291) ELT 244 (Tri.-Mumbai). He further submits that it was proved beyond doubt that the illegal sale was made by Shri. Anil Gagodia for exports to the exporter, Shri. Chan on behalf of Shri. Lin from Hongkong. The sale of the prohibited goods is covered for the purpose of export of prohibited goods. As even in the statute of Customs Act, 1962, as per Section 14 the terms sold for export is liable for confiscation. As regard the cross examination sought by the appellant, he submits that the courts have held that where allegations found on noticee not only upon the statements but on other materials as well, it is for the adjudicating authority to take a call as to whether cross examination of the persons shall be permitted. In this case not only the call details between the appellant and the exporter, the self confessional statements, his own admission of enquiry about the safe transaction of the prohibited good to Hongkong and dealing with only in cash without any invoices and no sale/purchase but supply/obtaining has been used by all the noticees including the appellant. On the issue related to confiscation of the 4 containers at port, he submits that the Hon'ble Tribunal with all respect has not gone into the role of different noticees along with the appellant here who is in hand and gloves with other noticees, these an attempt to export. He further submits the aforesaid judgment of the Hon'ble Tribunal was appeal against before the Gujarat High Court and the same has been admitted. In support of his above submissions, he placed reliance on the following case laws:-
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Sidhharth Shankar Roy-2013 (291) ELT.244 (Tri. Mumbai)
Vinod Solanki-2009 (233) ELT 157 (S.C)
Telestar Travels Pvt Ltd.-2013 (289) ELT 3 (S.C)
Shamshuddin M.A. Kadar-2010 (259) ELT 44 (BOM.)
Collector of Customs (PRE)-1997 (89) ELT 478 (Cal.)
Harminder Singh Chadha-2018 (362) ELT 98 (Del.)
Manidhari Stainless Wire Pvt. Ltd-2018 (360) ELT 255 (A.P.)
A.K. Subramani-2017 (358) ELT 77 (Mad.)
Sanco Trans Ltd-2017 (350) ELT 521 (Mad.)
T. Manivannan-2017 (348) ELT 513 (Tri. Chennai)
8. We heard both the sides and perused the records. We find that in the present case the appellant was penalized under section 114 of Customs Act, 1962 and the goods i.e. Red Sanders were confiscated and Cash of Rs.24.50 Lakhs was also confiscated/seized from the appellant. Shri Anil Gadodia. The entire case against the appellant was made out by the department on the charge that the appellant have attempted to export the prohibited goods namely Red Sanders which were kept in the premises of the appellant. For making such charge the revenue has heavily relied upon various statements of various persons. We find that almost all the statements were retracted in writing, the details of same is as under:-
1) The statement of Shri. Rameshwar Sharma, Proprietor, Euro exports dated 28.09.2013 and 29.09.2013 were retracted on 29.01.2014.
2) The statement of Shri Anil Gadodia, Proprietor of M/s. Jiwan International, dated 28.09.2013, 29.09.2013 was retracted on 30.9.2013.
3) The statement dated 28.09.2013 of Shri Mayur Ranjan, a Chines interpreter and a tour guide working freelance was retracted on 11.10.2013.
4) The statement dated 28.09.2013 & 29.09.2013 of Shri. Daljeet Singh working with a Cargo Moving Compay were retracted on 06.11.2013.
5) The statement dated 28.09.2013 and 29.09.2013 of Mr. Yodying@ Chan, a permanent Bangkok resident, were retracted on 14.10.2013.
6) The Statement dated 29.09.2013 of Shri. Kamal Negi a freight forwarder was retracted on the same day that is on 29.09.2013. 10 | P a g e C/52231/2019
7) The statement dated 29.09.2013 of Shri Saurabh Chopra owner of freight forwarding company, M/s. Krishna Logistics, was retracted on 10.10.2013.
8.1 In view of the above facts, most of the statements recorded under section 108 of Customs Act, 1962 were retracted. The appellant despite the fact that the statements were retracted also requested for cross-examination of the persons whose statements were relied upon under section 138(B), however, the Learned Adjudicating Authority has not acceded to the request of the appellant and rejected the Cross-examination. It is a settled law that even any statement the Adjudicating Authority, intend to rely upon and the same is disputed by the person against whom the said statement is likely to be used, it is necessary for the Adjudicating Authority to grant the cross examination of such witnesses in terms of section 138(B) of the Customs Act, 1962 which is reproduced below:-
"138B. Relevancy of statements under certain
circumstances.--
(1) A statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains,--
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice."
8.2. From the reading of the above section 138(B) it clearly comes out that even without asking for cross examination it is incumbent on the Adjudicating Authority to examine the witness before relying upon his statement for the Adjudication process. Therefore, in the present case in one hand most of the statements were retracted and over and above the appellant requested for cross examination. The Adjudicating Authority is duty bound under the statute to grant the cross examination. In absence of cross examination of the witnesses the statements given by them has no evidentiary value and same cannot be relied upon against the appellant. This issue has been considered time and again by the various courts. In the case 11 | P a g e C/52231/2019 of Parmarth Iron Pvt. Ltd. (supra), the Allahabad High Court held that if Revenue chooses not to examine any witnesses in Adjudication, their statements are not considerable as evidence. If the statements have been relied, then persons whose statements relied upon have to be made available for cross examination for evidence to be considered. In the case of Andaman Timber Industries (supra), the facts of the case was that the Revenue had issued a Show Cause Notice of under valuation by the appellant only on the basis of statements of two witnesses. Request of appellant seeking cross examination not dealt with in order. The Hon'ble Court held that by not granting the cross examination of witnesses, Principles of natural justice violated making Order nullity. In the case of Flevel International (Supra) the Hon'ble Delhi High Court dealing with the case where either no serious attempts made for cross examination of witness or denial of right to cross examination, the Hon'ble Court held that denial of right to cross examination of the witness is a serious infraction on the part of the department. Simply stating that cross examination of larger number of persons would have taken to case is non ending process cannot be a justified reason to deny that opportunity to appellant. It was also held that authority wrongly proceeded on the basis that there was no right of cross examination overlooking the circumstances mention in Section 9D of Central Excise Act, 1962.
8.3 In view of the above judgments it is settled that when the appellant sought for cross examination of the witness and if the request is not acceded to the adjudicating authority should not have relied upon the statements of such witness. The appellants case is on better footing as their request for cross examination is reinforced with the retraction of the most of the statements, therefore, since the adjudicating authority has not granted the cross examination, all the statements have no evidentiary value and case could have been decided without the support of such statements.
9. In the present case except statements there is no evidence to show that the goods allegedly kept with intention to attempt the export thereof. No peace of document which show that the red senders stored were meant for export it is undisputed fact that the appellant is a licensed trader of red senders who purchase the red senders in Government auction and trade within the country, therefore, by any stretch of imagination it cannot be construed that the goods laying with the appellant were attempted to the export.
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10. In our view, in order to establish that there is attempt to export it is necessary that either the goods have entered into port area or if it is outside port area there should be some documents such as invoice/shipping bill/LR for transportation of goods to the port etc. In the present case goods were lying much away from the port area i.e. the goods were lying at Delhi whereas it was alleged that the goods supposed to be exported from Mundra port. In absence of any such evidence and with facts that the appellant is engaged in the trading of red senders domestically, there is no support of any evidence, in the allegation of the Revenue that the goods red senders attempted to export as prohibited goods. The appellant also submitted that even in case of goods found loaded in the container at port, the appellant was exonerated from any alleged wrong doing. It was also submitted that the same statements were relied upon in the case of seizure of four containers and in the present case. Though the said case has a persuasive value but in the present case we have given independent finding as above that the statements firstly retracted and secondly without cross examination cannot be used as evidence. We are therefore of the view that the entire case made out only on the basis of statements which we held that the same do not have evidentiary value. The Revenue could not establish a case of attempt to export the prohibited goods. Therefore entire action is illegal and without authority of law.
11. As per our above discussion, the confiscation of red senders, cash seized during the investigation are not sustainable, hence, the confiscation is set aside. Consequently the penalty imposed on the appellant is also set aside. The appeal is allowed.
(Pronounced in the open court on 28.02.2020) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Prachi