Customs, Excise and Gold Tribunal - Mumbai
Philip Fernandes vs Commissioner Of Customs, Airport on 16 July, 2002
Equivalent citations: 2002(146)ELT180(TRI-MUMBAI)
ORDER Jyoti Balasundaram, Member (J)
1. The brief facts of the case arc that on 15-3-1998 a passenger Shri Philip Fernandas while departing for Dubai by flight No. EK503, was intercepted by Air Intelligence Unit Officers in the departure lounge of CST Airport, Mumbai after his clearance through Customs. On enquiring in the presence of panchas as to whether he was carrying any foreign currency on his person or in his baggage he replied in negative. Search of his person did not yield anything incriminating; however, search of his handbag resulted in the recovery of 6,345/- UAE Dirhams and 107 US $, equivalent to Indian Rs. 69,162/-. Search of the checked in baggage (1 black coloured 'Echolac' - zipped shoulder bag) which was retrieved from the Airlines and identified by the passenger, led to the recovery of one polythene wrapped packet (sealed with adhesive tape) containing US $ 1,74,450/-, UAE Dirhams 1,04,000/-, Kuwait Dinars 3,765/-, Omani Riyals 660/-, Bahrain Dinars 830/- and Qatar Riyals 17,200/-.
2. Shri Philip Fernandes in his statement recorded under Section 108 of the Customs Act, 1962 on 15-3-1998 deposed that he was working in Abu Dhabi as an engineer for the National Drilling Company for the last 18 months; that his work schedule involved four weeks work and four weeks off during which he gets a paid ticket to Bombay. Regarding assorted foreign currencies under seizure Mr. Philip stated that the same was purchased by him from one Shri 'Paras' of Fort area in a span of 25 to 30 days at different rates. The telephone numbers of Shri Paras, as stated by Philip were 2690727 and 2614168. Mr. Philip further stated that in all he paid approximately Rs. 86 lakhs to Shri Paras and that the said amount of Rs. 86 lakhs was received by him from one Shri Nilesh Popat from time to time for purchasing the said foreign currency from illicit market; that he was instructed by Nilesh Popat to carry the subject foreign currency to Dubai and from there to send the entire amount to Shri Kirit Popat, brother of Nilesh Popat in Los Angeles (UA); that Shri Nilesh Popat had promised him to give a sum of Rs. 1 lakh in Dubai after completion of the deal; that he accepted this illegal job for the monetary consideration of Rs. 1 lakh as he was in great debt. He added that he had travelled very frequently in the last 18 years and was aware that exporting foreign currency without any valid permission from the Government of India amounts to smuggling and was an offence. Further, on being shown the statement of Shri Nilesh Popat he corrected himself and stated that Shri Nilesh Popat had paid him only Rs. 85,49,000/- where as he was carrying foreign currency worth Rs. 86,44,140/-, the difference in amount was his profit.
3. On the basis of the evidence furnished by Philip Fernandes, Mr. Nilesh M. Popat was apprehended and his statement was recorded under Section 108 of the Customs Act, 1962 on 16-3-1998 in which he inter alia stated that he under the telephonic instructions from his brother Shri Kirit M. Popat (who was a diamond dealer in USA), collected Rs. 85,49,000/- (in 8 to 10 instalments) from one Mr. Praveen Kheni and had given the same to Philip Fernandes; that the amount given to him was to be covered into foreign currency from an unauthorised person named 'Paras' known to Philip Fernandes. Mr. Nilesh M. Popat further identified Mr. Philip Fernandes as the same person to whom he had given Rs. 85,49,000/-.
4. On the basis of evidence furnished by Shri Nilesh Popat, Shri Praveenbhai Kheni was summoned and his statement was recorded on 16-3-1998 under Section 108 of the Customs Act, 1962 in which he inter alia deposed that he was having a diamond export firm in the name of 'Kantilal and Co.'; that he had business dealings with Mr. Kirit Popat of Los Angels, USA; about 4-5 months back he had exported diamonds to two concerns viz. M/s. Penal (New York) and M/s. Essa Diamonds (Los Angeles) on 90 days credit. As both these firms had defaulted in making the remittances of the foreign exchange and since he was being pressurised by the Bank authorities, he planned to make an arrangement on his own for sending the foreign exchange to USA for getting back the remittances. He explained his problem to Shri Kirit Popat who agreed to his proposal and sent the remittance against the above said export consignments of diamonds to USA; Shri Kirit Popat remitted approximately 2,04,000/- US $ against his documents and instructed him to pay the Indian equivalent of Rs. 85 lakhs to his brother Nilesh Popat in Mumbai. Accordingly, he paid Shri Nilesh Popat in all Rs. 85,49,000/-; that Rs. 49,000/- was the amount he was supposed to pay to Shri Kirit Popat for supply of poor quality diamonds. Shri Praveenbhai Kheni further identified Nilesh Popat as the same person whom he had given Rs. 85,49,000/- in instalments as per the instructions of Nilesh's brother viz. Kirit Popat who stays in USA.
5. S/Shri Philip Fernandes, Nilesh M. Popat and Praveenbhai Kheni were arrested on 16-3-1998. All of them retracted their statements in the Court and the same were duly rebutted by the department and were taken on record by Court. Shri Paras could not be apprehended and hence his evidence could not be brought on record. The enquiries made regarding the telephone numbers of Shri Paras as given by Mr. Philip, revealed that the same were owned by one Shri Babulal Nemchand Jain who was dealing in automobiles spares from his shop named as M/s. Paras Scooter Parts and no one by name 'Paras' was available at the said shop.
6. Show cause notice dated 10-9-1998 was issued requiring Philip Fernandes, Shri Nilesh Popat, Shri Praveenbhai M. Kheni and Shri Paras to show cause to the Commissioner of Customs, Airport, NIPT, Sahar, Mumbai - 400099 as to why the said assorted foreign currencies equivalent to INR 86,44,140/- should not be confiscated under Section 113(d) and (h) of the Customs Act, 1962 and penalty should not be imposed on them separately under Section 114 of the Customs Act, 1962.
7. After considering the case record as well as oral and written submissions by and on behalf of the noticees, the adjudicating authority (Commissioner of Customs, CSI, Airport) ordered confiscation of assorted foreign currencies under seizure under Section 113 of the Customs Act, 1962 but allowed Mr. Philip Fernandes an option to redeem the same on condition to henceforth deposit or credit the same in his NRE bank account that he is operating in India, on payment of a fine of Rs. 10 lakhs in lieu of confiscation of the same. Further a personal penalty of Rs. 5 lakhs was imposed on Mr. Philip Fernandes under Section 114 ibid. The proceedings against all the remaining noticees viz., Mr. Nilesh M. Popat, Mr. Praveenbhai Kheni and Mr. Paras were ordered to be dropped.
8. Shri Philip Fernandes has filed the appeal No. C/337/2000-Mum. against the confiscation and penalty while the Revenue has filed the appeal No. C/106/2001-Mum. seeking absolute confiscation of seized foreign currency and penal action against Philip Fernandes. Appeals C/282/2001-Mum. and C/283/2001-Mum. have been filed by the Revenue against the droppings of penal proceedings against Shri Nilesh Popat and Praveenbhai Kheni respectively.
9. We have heard Shri V.S. Nankani, learned Advocate for Shri Philip Fernandes and Shri Praveenbhai Kheni, Shri M.R. Kotwal, learned Advocate for Shri Nilesh Popat and Shri R.K. Pardeshi, learned DR, for the Revenue.
10. We find that the submission that foreign currencies were legitimately acquired and imported by Philip Fernandes into India has been accepted by the adjudicating authority after due verification of the certificates issued by M/s. Thomas Cook A1 Rostamani, Dubai certifying the exchange of currencies for Shri Philip Fernandes. The Commissioner has referred to the confirmation letter dated 25-3-1998 issued by the moneychanger of issue of foreign exchange receipt No. 1227, dated 10-2-1998 to Shri Philip Fernandes. There is no material placed on record by the Revenue to disprove the authenticity of the moneychanger's certificate.
11. The learned DR made an attempt to argue that the currency recovered from Shri Philip Fernandes was not the same which he might have brought into India with him from Dubai. However, we see no force in this plea for the reason that no such plea has been raised in the appeal of the Revenue and further there is no basis for that submission.
12. The Revenue urges us to discard the bank statement produced by Shri Philip Fernandes as proof of substantial withdrawals and the certificate of the money changer on the ground that the same were not forwarded with the covering letter confirming the contents thereof and further for the reason that the same were not received in response to the department's letter. These two reasons are no ground for us to doubt the veracity and authenticity of the moneychanger's certificate, all the more when the adjudicating authority caused enquiries to be made and has accepted the certificates only after satisfying himself on verification. We also note that Philip Fernandes had retracted his statement on 16-3-1998 itself i.e., immediately after his statement was recorded under Section 108 of the Customs Act, 1962 on 15-3-1998 and that he had written a letter to the department on 24-4-1998 explaining that he was a man of means being an engineer with the National Drilling Company, Abu Dhabi since 1980 and drawing a salary of more than Rs. 1.50 lakh per month; that he had lend 8 lakhs UAE Dirhams to one Mr. Jimmy Johnson for purchase of water well drilling rig from USA; that Mr. Johnson returned 8,30,000/- Dirhams (capital with interest); that he used a sum of 7,17,202/- Dirhams to buy assorted foreign currency from Thomas Cook and that he brought foreign currencies to India on 11-2-1998 in order to make payment of Rs. 74,65,000/- to purchase ground floor and basement of a commercial complex at Mumbai as his wife had entered into an agreement on 6-2-1998 with Laxmi Builders and Developers for purchase of the said premises; that the builder subsequently cancelled the agreement and therefore he was to take the money back to Dubai and he was in fact taking it back on 15-3-1998 when it was seized. Shri Philip Fernandes has produced before the Commissioner a certificate dated 30-6-1995 from National Drilling Company, Abu Dhabi showing his employment with the Company for over 15 years, copies of bank's statements showing substantial withdrawals, the foreign exchange receipt and certificates issued by the moneychanger; copy of agreement for purchase of the commercial premises and correspondence between the builder and Mrs. Fernandes showing cancellation of the agreement as enclosures to the letter dated 29-4-1998. Although the Revenue disputes receipt of this letter on 27-4-1998 which Shri Fernandes claims was the date of its receipt we find from the original shown to us shows the date of receipt as 27-4-1998. Further copy of this letter was sent to the department again in July, 1998 and on 21-8-1998 prior to the issue of the show cause notice in September, 1998. No arguments are put forth by the learned DR to dislodge the findings of the Commissioner on the basis of the above documentary evidence. The plea of the learned DR is based upon the detailed statement of Shri Philip Fernandes and statements of Shri Nilesh Popat and Shri Praveenbhai Kheni. We find that in addition to the retraction of Shri Philip Fernandes on 16-3-1998, there is one more reason to doubt the inculpatory statement of Shri Fernandes and that the statement of Shri Nilesh Popat which was recorded on 16-3-1998 is stated to have been shown to Shri Philip Fernandes at the time of recording his initial statement on 15-3-1998, which is an impossibility. It is in the statement of Shri Nilesh Popat that Shri Prav-inbhai Kheni comes into picture. Shri Popat has retracted his statement on 3-5-1998 where he has specifically mentioned about Shri Fernandes's claim of licit acquisition of the foreign currencies seized from him on 15-3-1998. In the present case documentary evidence in the form of certificate of Thomas Cook Al Rostamani, Dubai certifying purchase of foreign currencies in Dubai by Shri Fernandes runs contrary to the oral evidence in the form of statements of Shri Fernandes, Shri Nilesh Popat and Shri Praveenbhai Kheni. It is well settled that when the statements recorded under the provisions of Section 108 of the Customs Act, 1962, (which are retracted), are inconsistent with the documentary evidence, the documentary evidence is to be preferred. This is the view expressed by the Tribunal in the case of R.P. Industries v. Collector of Customs - 1996 (82) E.L.T. 129. Although in that case the documentary evidence was seized during the search that would not alter the position in this case since the documentary evidence in the form of moneychanger's certificate submitted to the department before the issue of the show cause notice has been verified and found to be genuine and correct. The same view has been taken in final Order Nos. CI/2874 & 2875/WZB/2001, dated 19-9-2001 [2002 (140) E.L.T. 225 (T)] in the case of Kishin Shewaram Loungani and Anr. v. CC, Mumbai.
13. We also find that Shri Praveenbhai Kheni has retracted his statement and his claim of duress during the recording of his statement is borne out by his admission to hospital on 16-3-1998 and his medical examination on 18-3-1998. We therefore uphold the finding of the Commissioner that Shri Fernandes brought seized currency into India from Dubai legally. The lapse on the part of Shri Fernandes is his failure to declare the currency in the currency declaration which renders the currency liable to confiscation. However, since the import of the currency was not prohibited subject to restriction and the currency was not liable to duty and the lapse on the part of Shri Philip Fernandes was technical in nature, we are of the view that the fine calls for reduction from Rs. 10 lakhs to Rs. 1 lakh. We order accordingly. We also set aside the penalty imposed upon Shri Philip Fernandes. The appeal No. C/337/2000-Mum, is allowed partly.
14. As regards the Revenue's appeal against Shri Fernandas it fails in view of our findings in appeal C/337/2000-Mum, Further no special circumstances have been shown to exist so as to warrant absolute confiscation. In the case of Felix Dores Fernanda v. CC, Mumbai - 2000 (118) E.L.T. 639 (T) -2000 (91) ECR 514 where the Tribunal upheld the confiscation of foreign currency acquired illegally, redemption of the foreign currency on payment of fine in lieu of confiscation was permitted in the light of earlier Government of India orders allowing such redemption. The above order has been followed in the case of Kishin Shewaram Loungani and Anr. v. CC, Mumbai, in final Order Nos. CI/2874 & 2875/WZB/2001, dated 19-9-2001 [2002 (140) E.L.T. 225 (T)]. In the light of the above we see no substance in the Revenue's prayer for absolute confiscation and for imposition of penalty upon Shri Philip Fernandes and therefore dismiss appeal C/106/2001-Mum.
15. Once we have accepted that there was only a failure on the part of Shri Philip Fernandes to declare foreign currency carried by him, which is a technical lapse, there is no ground for imposition of penalty on Shri Nilesh Popat and Shri Praveenbhai Kheni against whom the charge and finding is that of conspiracy to smuggle foreign currency out of India through Shri Philip Fernandes. We therefore uphold the findings of the Commissioner who has dropped penal action against these two persons and reject the appeals No. C/282/2001-Mum. and C/283/2001-Mum.
16. In the result while appeal No. C/337/2000-Mum. is partly allowed the remaining three appeals are dismissed.