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2024 (7) TMI 116 - AT - FEMAOffence FERA - confiscation of US 8200 seized from Canara Bank - Penalty imposed - charge of under invoicing of the imports - seven SCNs issued - As argued SCNs were vague and baseless since these advert to seized documents without specifying the description and the contents of the documents - Appellant argued that the charge of under invoicing of the imports allegedly made against the Appellant has not been established - contention that the statements of the Appellant were recorded under duress and were retracted at the earliest opportunity - HELD THAT - As already noted the contents of the statements made by the Appellant as well as the circumstances under which he tendered his statements in the preceding paragraph. We therefore agree with the Ld. Adjudicating Authority that the statements made by the Appellant were true and voluntary. Validity of SCN(I) - We do not find that the SCNs were vague and baseless. We have perused all the SCNs and find that there is an Annexure to each of the SCN. Annexure list the documents which have been relied upon and include statements, documents seized specifying the premises from which recovery was made, bank draft, diary marked M with specific page therein, fax message and transcript of bank account. Since the documents recovered and seized were referred in the various statements which have been relied upon, we are unable to agree to the proposition that unless the documents are specifically pointed out in the Annexure to the SCN the same will be vague and baseless. Appellant pleaded that the statements made by the co-noticees cannot be relied upon - We do not intend to rely upon the statements of the co-noticees. However, the evidential value of the documents seized from their premises will remain intact in so far as these have significance for the case against the Appellant and have been referred by him in his statements. Request for the cross examination of various witnesses - We do not find that the denial of cross examination of the witnesses caused prejudice to the interest of the Appellant. The documents which were relied upon to establish charges against the Appellant were supplied to him as part of SCNs and for which he got opportunities to rebut and explain. We have already observed that we do not intend to rely upon the statements of the co-noticees. We thus note that the failure to permit the Appellant to cross-examine does not call for reversal of the Order and de novo enquiry. Case of under invoicing - Where the goods have escaped the levy of customs duty and discovery thereof, is made subsequent to the customs clearance, the reliance on the valuation of contemporaneous imports may not be necessary in the face of other evidence. In the present case there are evidences on record which are documentary in nature and explained through the statements of the Appellant with respect to the under invoicing of the import of 32 consignments of Carbamezapine by M/s Centaur Chem which were handled by the Appellant. Moreover, from the documents which are part of the Appeal Paper Book as pointed out by the Ld. Counsel for the Respondent, there was a sharp decline in the CIF value of Carbamezapine imported by the Appellant in the years 1993 and 1994 in comparison to imports of years 1991 1992.No cogent explanation for the said decline has been given. We therefore find that the charges of contravention of Sections 8 (1) and 9 (1) (a) of FERA invoked in SCN are proved against the Appellant to the extent of US 1, 14, 150. We also note that there is acknowledgment of debt by the Appellant to his sister abroad in contravention of Section 9 (1) (c) of FERA invoked in SCN V dated 11.08.1995. Validity of SCN II - As categorically admitted having paid various amounts to different persons, mostly based in Kerala, on the instructions of his brother-in-law - We find that the Appellant referred in his statement to fax message from James Mathew, New York to his brother-in-law Shri Prakash C. Shah who was also resident abroad in his statement. The fax message was recovered during the search of his premises. The message was forwarded by his brother-in-law to the Appellant. It had instructions for making payment of specified amounts to certain parties. The Respondent Directorate obtained confirmation of such payments from the recipients. He also referred to a specific page of seized diary marked M.Therefore, the charge invoked in SCN II dated 11.08.1995 stand proved against the Appellant for contravention of Section 9 (1) (d) of FERA for an amount of Rs. 1, 80, 000/-. SCN III relating to acquisition of US 19, 000 by the Appellant and placing the same to the credit in NRE account, of Shri Ritesh Shah, his cousin, who was a non-resident - We find from the Annexure to the SCN III dated 11.08.1995 that among the documents received from Canara Bank were transcript of the NRE Account No. 50459, Bank Account opening form, copy of power of attorney of Shri Shailesh V. Shah, credits slips and the letters of Shri Shailesh V. Shah. In his statement the Appellant refused to comment on letter written by him to Canara Bank for issuing draft of US 8200 to M/s Indukern Chemie AG, Switzerland. Ld. Adjudicating Authority made certain logical observation in this regards. In the absence of any explanation by the Appellant the charge against him of contravention of Sections 8 (1) and 9 (1) (e) of FERA invoked in SCN III dated 11.08.1995 stands established. SCN IV wherein Appellant has been charged for attempting to make payment of US 8200 by issuing instructions to Canara Bank to make draft in the name of M/s IndukernChemie AG, Switzerland.Ld - In view of the documents received from Canara Bank and there being no explanation from the Appellant available on record, the charges invoked under SCN IV VI stand established. The confiscation of US 8200 under Section 63 of FERA for contravention of Section 9 (1) (a) r/w 64 (2) of FERA is not intervened with. Charges invoked in SCN VI for contravention of Sections 6 (4) (5) r/w 68 (1) of FERA by the Canara Bank and its officials which have been confirmed by the Ld. Adjudicating Authority - The Appellant who was charged for the abetment of the aforementioned contraventions u/s 64 (2) of FERA has been held guilty by the Ld. Adjudicating Authority - we do not find the abetment charge to be proved against the Appellant as there is no evidence on record to establish that he aided and assisted the bank and its officials to indulge-in the said contraventions. Penalty imposed - SCN I Adjudicating Authority imposed penalty of Rs. 40, 00, 000/- on the Appellant for contravention of Sections 8 (1) and 9 (1) (a) of FERA for an amount of US 462, 110 - However, since we have held that the charge is established to the extent of US 1, 14, 150 the amount of penalty imposed is not justified. We have also found that the charge of abetment against the Appellant invoked in SCN VII dated 11.08.1995 is not established. Charges invoked against the Appellant in SCN II - There is no reason to doubt the veracity of the denials made by the Appellant in his statements, particularly so when his admissions have been accepted as true and voluntary. We therefore do not find that the charges invoked against the Appellant in SCN II dated 11.06.1996 are established. With reference to the discussions, we note that the Appellant has expired and is represented by his legal heirs that ishis widow namely Ms. Lina Shah and his three daughters namely, Ms. Sunayana Sailesh Shah, Ms. Shaili Bimal Shah and Ms. Sulsa Shah. We reduce the consolidated penalty amount for SCNs I to VI dated 11.08.1995 which have been dealt with in the Impugned Order dated 30.03.1999 to Rs. 10, 00, 000/- (Rupees Ten Lakhs Only). The amount of pre-deposit of Rs. 10, 00, 000/- already made by the Appellant is to be adjusted against the reduced penalty amount. The confiscation of US 8200 under Section 63 of FERA for contravention of Section 9 (1) (a) r/w 64 (2) of FERA is not intervened with. We set aside the Impugned Order with respect to the Appellant in so far as the charges have been invoked against him in SCN II dated 11.06.1996. The amount of pre-deposit of Rs. 1, 70, 000/- made on 14.05.2018 with the Respondent Directorate is to be refunded within three months.
Issues Involved:
1. Validity of statements recorded under duress. 2. Vagueness and baselessness of Show Cause Notices (SCNs). 3. Reliance on statements of co-noticees. 4. Denial of cross-examination of witnesses. 5. Establishment of under-invoicing charges. 6. Contravention of Sections 8 (1), 9 (1) (a), 9 (1) (c), 9 (1) (d), and 9 (1) (e) of FERA. 7. Confiscation of US$ 8200. 8. Charges of abetment against the Appellant. Detailed Analysis: 1. Validity of Statements Recorded Under Duress: The Appellant argued that statements recorded on 05.08.1994 and 06.08.1994 were under duress and retracted on 08.08.1994. The Tribunal noted that the statements were in the Appellant's handwriting and language, explaining documents seized from his premises. The Tribunal found no evidence of duress, deeming the statements voluntary and true. This aligns with the Supreme Court's stance in Vinod Solanki Vs Union of India and K.T.M.S Mohamed Vs. Union of India, where retracted statements can be relied upon if corroborated by independent evidence. 2. Vagueness and Baselessness of Show Cause Notices (SCNs): The Appellant claimed the SCNs were vague as they did not specify the description and contents of the documents. The Tribunal found each SCN had an annexure listing the relied-upon documents, including statements and seized documents. Thus, the SCNs were not vague or baseless. 3. Reliance on Statements of Co-noticees: The Appellant contended that co-noticees' statements, which were retracted, should not be relied upon. The Tribunal agreed, noting the Adjudicating Authority dropped charges against a co-noticee due to lack of corroboration. However, the evidential value of documents seized from co-noticees' premises remained intact if referred to by the Appellant in his statements. 4. Denial of Cross-Examination of Witnesses: The Appellant argued that denial of cross-examination violated natural justice. The Tribunal, referencing Telstar Travels Private Limited & Ors. V. Enforcement Directorate, found that since the documents were disclosed and the Appellant had the opportunity to rebut them, there was no prejudice. Thus, denial of cross-examination did not warrant reversal of the order. 5. Establishment of Under-Invoicing Charges: The Appellant denied under-invoicing, arguing there was no adverse finding by Customs. The Tribunal found documentary evidence and the Appellant's statements corroborated under-invoicing of 32 consignments of Carbamezapine. The Appellant admitted to under-invoicing by US$ 114,150, paid by his sister in the USA, to save on customs duty. 6. Contravention of Sections 8 (1), 9 (1) (a), 9 (1) (c), 9 (1) (d), and 9 (1) (e) of FERA: - SCN I: The Appellant admitted under-invoicing of US$ 114,150, establishing contravention of Sections 8 (1) and 9 (1) (a). - SCN II: The Appellant paid Rs. 1,80,000 to various persons based on instructions from his brother-in-law abroad, contravening Section 9 (1) (d). - SCN III: The Appellant deposited US$ 19,000 in his cousin's NRE account, contravening Sections 8 (1) and 9 (1) (e). - SCN IV & VI: The Appellant attempted to make payments of US$ 8200 and US$ 9800 using his cousin's NRE account, contravening Section 9 (1) (a) r/w 64 (2). - SCN V: Acknowledgment of debt to his sister abroad contravened Section 9 (1) (c). 7. Confiscation of US$ 8200: The Tribunal upheld the confiscation of US$ 8200 under Section 63 of FERA for contravention of Section 9 (1) (a) r/w 64 (2). 8. Charges of Abetment Against the Appellant: The Tribunal did not find sufficient evidence to prove the Appellant abetted contraventions by Canara Bank and its officials, thus not establishing charges under Section 64 (2). Conclusion: - Appeal No. FPA-FE-408/MUM/2001: Partly allowed. The penalty reduced to Rs. 10,00,000, adjusted against the pre-deposit. Confiscation of US$ 8200 upheld. - Appeal No. FPA-FE-365/MUM/1997: Allowed. The Impugned Order dated 31.03.1997 set aside, and the pre-deposit of Rs. 1,70,000 to be refunded within three months.
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