2018 (5) TMI 791 - AT - Customs

Smuggling - Absolute confiscation of red sanders - illegal export - confiscation of pin insulators used to conceal the red sander wood for illegal export, with imposition of redemption fine - confiscation of Indian currency being the sale proceeds of the contraband goods - imposition of penalties. Held that - The DRI has carried out elaborate investigation into the working of the entire syndicate comprising of Sh. A. T. Maideen, Sh. C. Sekhar and Sh. N. C. Chalathambi who were engaged in the illegal export of red sanders wood. The DRI officers have recorded the statement of Sh. A. T. Maideen on several consecutive dates i.e. 27th, 28th and 30th November, 2011. From the record we find that he has retracted only the statement recorded on 27.11.2011 but not the other statements - It is settled position of law that the retracted statement does not lose its relevance as evidence in departmental proceedings unless sufficient materials are available to take on record, that such statement has been forcibly taken from the accused. In his statements Sh. Maideen has given the detailed account of the modus operandi orchestrated by him in league with Sh. Sekhar, Chalathambi and others. According to the modus-operandi admitted, red sanders was purchased by Sh. A. T. Maideen from Andhra Pradesh and supplied to Sh. N. C. Chalathambi and Sh. Sekhar and stored at their godown at Delhi. From such godown the contraband is illegally exported through various ports - It is further seen that the syndicate has been carrying out such illegal export repeatedly and Sh. A. T. Maideen has also been booked in earlier smuggling cases and imprisoned under COFEPOSA repeatedly - The Indian currency of ₹ 8.5 lakhs has been admitted to be the sale proceeds and illegal exported goods. The impugned orders are upheld - appeal dismissed - decided against appellant.

Summary

Issues:
1. Smuggling of Red Sanders wood prohibited for export.
2. Involvement of syndicate in illegal export.
3. Confiscation and penalties imposed on individuals and companies.

Detailed Analysis:
1. The case involved the smuggling of Red Sanders wood, a prohibited item for export as per Import Export Policy. The Directorate of Revenue Intelligence conducted searches and seized incriminating documents and a significant amount of Red Sanders wood from various locations. The investigation revealed a Chennai-based syndicate engaged in the illegal export of Red Sanders wood.
2. M/s Bhatinda Ceramics Private Limited was found to be involved in the illegal export scheme. The containers loaded with ceramic goods were fraudulently replaced with Red Sanders wood enroute, and the syndicate members were responsible for orchestrating the substitution. The customs officers at ICD Ludhiana failed to detect the contraband during the initial examination, leading to its discovery later at Mundra Port.
3. Various penalties and confiscations were imposed as per the adjudicating authority's order, including the absolute confiscation of Red Sanders wood, penalties on individuals like Sh. N. C. Chellathambi, Sh. C. Sekhar, M/s Bhatinda Ceramics, and others, along with the confiscation of cash proceeds. The appeals challenging these penalties were heard and decided by the Appellate Tribunal CESTAT NEW DELHI.

Detailed Analysis by Issue:
1. The smuggling of Red Sanders wood was uncovered through investigations by the Directorate of Revenue Intelligence, implicating a syndicate in the illegal export activities. The modus operandi involved sourcing the wood from Andhra Pradesh, storing it in a godown in Delhi, and then exporting it through deceptive means. The involvement of key individuals like Sh. A. T. Maideen, Sh. N. C. Chellathambi, and Sh. C. Sekhar was established through statements and evidence gathered during the investigation.
2. M/s Bhatinda Ceramics Private Limited was found to have participated in the illegal export scheme by allowing the substitution of Red Sanders wood in containers meant for export. The company and its director, Sh. Bhushan Aggarwal, faced penalties under relevant sections of the Customs Act. However, upon review, the Appellate Tribunal found that they had no direct role in the substitution of goods and set aside the penalties imposed on them.
3. Other parties involved, such as M/s Sunrise Freight Forwarders Pvt. Limited, Sh. Vikram Singh Negi, and Sh. Amardeep Singh Panesar, were also penalized for their roles in facilitating the illegal export. The Tribunal considered factors like the customs examination process and the level of involvement of each party before deciding to uphold or set aside the penalties imposed on them. Additionally, the penalties on Sh. A.T. Maideen, Sh. N.C. Chellathambi, and Sh. C. Sekar were upheld based on the evidence presented, including statements and the established modus operandi of the syndicate.

In conclusion, the judgment by the Appellate Tribunal CESTAT NEW DELHI addressed the issues of smuggling, syndicate involvement, and penalties in a thorough manner, considering the evidence and roles of each party involved in the illegal export of Red Sanders wood.