9911796707
TMI Blog2012 (10) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, although circumstances may raise grave suspicion, I am unable to hold that the appellant was aware that the licences were fake, forged or fictitious. Efforts made by DRI officers to locate Shri R.K. Gupta, has not resulted in any fruitful result. The appellant during the course of his interrogation, also disclosed the names of one Shri K.D. Sharma and Shri Nitin Rastogi as the persons who used to buy licences from Shri R.K. Gupta. These persons have also admitted the same. Not only that, he also disclosed the case file number where Shri R.K. Gupta has filed anticipatory bail in Sessions Court of Delhi. Shri R.K. Gupta’s affidavit was also on record. No evidence of further sincere investigations on all these evidences by DRI is forthcoming. - it is seen that no serious efforts to trace Shri R.K. Gupta, by taking help of Shri Nitin Rastogi, Shri K.D Sharma. the court records in the Court of District Sessions Judge, Delhi are forthcoming from the records. It therefore appears that no serious efforts were made to locate Shri R.K. Gupta Solely on the basis of the appellant’s oral statement, it cannot be established that he was aware that no goods would be cleared but only pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to export final product. However, investigations conducted by the department revealed that the final product was being cleared by the said 100% EOU in the local market and physical exports were shown only on paper, as against certain advance licences and ARO, without actually exporting the goods. Accordingly, extensive investigations were conducted by Revenue by recording the statements of various persons, which led to the fact that such advance licences and advance release orders were fake and forged. On the basis of the same, the proceedings were initiated against number of persons, which inter alia resulted in confirmation of demand against 100% EOU and imposition of penalty upon the present appellant. The penalty stand imposed on the appellant on the finding that he was concerned in procuring the forged advance licences and AROs and as such aided and abetted the 100% EOU in committing fraud. 3. As we are dealing with the appeal of the present appellant only, challenging imposition of penalties upon him, reference would be made by us only to the statement recorded which has bearing in the present case. It is seen that the statement of Shri Manoj Omprakash Goyal, Director of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here are some units at Muradabad and Kanpur who had advance licences of textile company, were not in a position to make import and were interested in getting material against ARO. He further intimated Shri R.C. Jain that these AROs could be used by a textile company, particularly 100% EOU for fulfilling their export obligation. It was also told by Shri Makkar that if the suppliers were not genuine, then the AROs could fetch 30-35% premium. 7. As a result, statement of Shri Makkar was recorded deposing that he was in the business of sale and purchase of licences on commission basis and he knew Shri R.C. Jain. He further stated that Shri R.C. Jain approached him and enquired about the advance licences and ARO for use by 100% EOUs in textile sector; that Shri Jain told him that they could sell these licences and AROs at a high premium to the 100% EOU; that he made enquiries from various persons in the licence business; that he came in contact with one M/s. Raj Kumar Gupta, who was in the business of sale and purchase of advance licences; that Shri Raj Kumar Gupta provided advance licences and AROs of textile product at a premium of 30% of ARO value; that he was to get ₹ 1 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked by CBI; that he was also supplying licences to one Shri K.D. Sharma. On the above basis, Revenue entertained a view that the appellant along with Shri Raj Kumar Gupta was a person engaged in providing advance licences to 100% EOU, who were mis-utilising the same and as such, he had aided and abetted 100% EOU. Accordingly, vide show cause notice dated 9-12-2003, proceedings were initiated inter alia, against the appellant; along with other notices for imposition of penalty, which resulted in passing of the present order by Commissioner vide which, apart from confirming demand against 100% EOU, penalties also stand imposed, inter alia, on the present appellant. 10. Learned advocate Shri G.B. Yadav appearing for the appellant submits that even according to the Revenue s own case, the appellant acted as a broker for sale of advance licences/ARO between Shri R.K. Gupta and Shri R.C. Jain. It is not even the Revenue s case that he knew either Shri Rajesh Hundia or Shri Puneet Rungata through whom licences were ultimately sold to 100% EOU. It is not the Revenue s case that the disputed licences were sold by the appellant to Shri Manoj Goyal or Shri Omprakash Goyal, Director of 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that it has come on record that the licences were bought and sold on commission of 30-35% which on the face of it is on the higher side, thus indicating that the person dealing in the said licences were aware of the fact of their mis-utilisation. Further, Shri R.K. Gupta from whom the appellant bought the licences is not available and has not been found by DRI at the address disclosed by Shri Makkar. As such, it comes out clearly from record that Shri Makkar is the person who is a mastermind of the fraud and is the main conspirator of the scam for fabricating advance licences/ARO in the name of fictitious companies at Muradabad and Kanpur. Accordingly, he supports the imposition of penalty upon present appellant. 12. Commissioner while disclosing the appellant s role has observed as under : I find that Shri Tejinder Singh Makkar, Shri R.K. Gupta @ Shankarlal Agarwal, Shri R.C. Jain and Shri Puneet Rungata of M/s. Puneet Enterprises had entered into a conspiracy to facilitate the evasion of Customs and Central Excise duty. They arranged for fake advance licences/advance release orders. All of them were aware that these licences/AROs were fake as these were not obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be a ploy to delay the adjudication proceedings. In this regard, I examined the request in light of the statements of Shri Makkar dated 11-5-2001, 31-8-2001, 18-8-2003, 30-9-2003, 5-11-2003 in which he had given detailed information regarding the role played by him in the case. It is also seen that a large number of documents were shown to Shri Makkar while recording his statements. It is seen from his above statements and role played by him that alleged offence committed by him is elaborated in said statements and very little reliance has been placed on the statements of the persons sought to be examined. As such, I have rejected the request for cross examination by him. In this regard, I also rely on the judgments in case of Laxmi v. CC, Lucknow [2001 (138) E.L.T. 1090 (Tri.-Del.)], wherein it is held that denial of permission of cross examination of co-noticees does not violate principles of natural justice. I also rely on decision in case of M/s Fortune Impex v. CC, Calcutta [2001 (138) E.L.T. 556 (Tri.-Kolkata)] wherein it is held that the cross examination of witness, wherever necessary, has to be allowed in departmental proceedings. But it is not required that in each a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a does not exist and as such the appellant s claim that he has bought the licences from Shri R.K. Gupta has to be rejected. It is seen that the appellant during the course of interrogation, also disclosed the names of one Shri K.D. Sharma and Shri Nitin Rastogi as the persons who used to buy licences from Shri R.K. Gupta. These persons have also admitted the same. Not only that he has also disclosed the case file number where Shri R.K. Gupta has filed anticipatory bail in Sessions Court of Delhi. Shri R.K. Gupta s affidavit is also on record. All these evidences which have not been further investigated by DRI, show that Shri R.K. Gupta is not a fictitious person. We also note that there is no evidence on record to show that it is the present appellant who had either himself forged the advance licences or has pumped the same into the market. The expressions - fake, forged or fictitious - nowhere come on record in the statements of either of the persons, including the present appellant. It nowhere stand admitted by the appellant that he was aware of the fact of said licences being forged. 14. The contention of the learned SDR is that all these licences were bought and sold at exor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the same are not being reproduced. However, wherever necessary, the facts would be elaborated to support the conclusions. 19. I propose to deal with arguments advanced by the learned advocate, Shri J.B. Yadav, appearing for the appellant one by one. 19.1 Even according to the Revenue s own case the appellant acted as a broker for sale of advance licences/ARO between Shri R.K. Gupta and Shri R.C. Jain. It is not even the Revenue s case that he knew either Shri Rajesh Hundia or Shri Puneet Rungata through whom licences were ultimately sold to 100% EOU. It is not the Revenue s case that the disputed licences were sold by the appellant to Shri Manoj Goyal or Shri Omprakash Goyal, Director of 100% EOU or he was either known to them. In these circumstances allegations that the appellant aided and abetted the evasion of duty by 100% EOU cannot be upheld. According to the facts that emerging from various statements, Shri R.C. Jain was the father-in-law of Shri Rajesh Hundia and he introduced Shri. R.C. Jain to Shri Puneet Rungata. Shri Rajesh Hundia was the friend of Shri Puneet Rungata and on a request made by Shri Rajesh Hundia to introduce Shri R.C. Jain to some 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were issued against both of them. Shri Makkar also stated that Shri R.K. Gupta who is in the business of sale and purchase of advance licences is known to him and told Shri R.C. Jain that he would be able to provide advance licences and AROs of textile products for use by EOUs at a premium of 30% of the ARO value. He clearly stated that all of them namely himself, Shri R.K. Gupta, R.C. Jain and Shri Hastimal Jain knew that no goods were being sent by EOUs to the advance licence holders but only paper transactions were being made and this was the reason why they were getting 30% as premium. The above discussion clearly shows that all the persons concerned and involved in the transactions namely Shri Manoj Goyal or Shri Omprakash Goyal, Directors, of 100% EOU, Shri R.C. Jain, Shri Rajesh Hundia and Shri Puneet Rungata knew that 100% EOUs would not be sending any goods but only would be paying the premium with. Another important point that goes against Shri Makkar is the contents of his statement on 30-9-2003. In this statement he stated that first of all he used to get the licences from Shri R.K. Gupta as per the requirement of Shri R.C. Jain for Surat based 100% EOUs which were h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant did not know that the licences were forged and only after the investigation was started by the DRI he came to know. This submission is contrary to the conclusions that emerge from the records and the facts brought out : (i) The licences and the AROs were supplied for a premium of 30% with a clear understanding that no supplies would be made and there would be only paper transactions. Will any prudent man would part with his advance licence and ARO if he is not going to receive any goods but has to fulfil the obligations if he is a genuine person and the licence is genuine. The very fact that the advance licence/AROs were being provided for a premium of 30% would show that Shri Makkar was aware that either the advance licences/ AROs were forged or they were obtained by fraudulent means by persons who were non-existent or who could not be traced so that no action can be taken at a later date. (ii) Shri Makkar had told Shri R.C. Jain that AROs could be used by textile companies particularly EOUs for fulfilling their export obligations and if the suppliers were not genuine AROs could fetch 30 to 35% premium. The intention was to find suppliers who were not genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Road, Mahal Sarai, Moradabad. Mobile No. 9837102349 was found to be a cash card and the service provider M/s. Escotel informed that no incoming or outgoing calls were made from the mobile number. On 25-10-2001 DRI, Ahmedabad received an affidavit affirmed before a notary in Moradabad by a person claiming to be Rajkumar Gupta. This was also verified and on enquiry it was found that neither the clerk of the notary nor the notary knew the whereabouts of the person who had got the said affidavit notarized. Both the address mentioned in the affidavit were found to be non-existent/incomplete and were not traceable even after making enquiries with the local post office and municipal office. Six summons were issued to Shri R.K. Gupta but all of them were returned with remarks left, locked, tried hard but could not trace/locate, not claimed, hence returned . The Senior Superintendent of Police had informed DRI that allegation made by Shri Makkar that Shri R.K. Gupta had filed a complaint/FIR was also false. In paras 21.3 and 21.4 efforts made by the DRI to locate even Shri Makkar for recording statement have been explained which shows how much efforts the investigating offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eavy premium. Shri R.K. Gupta seems to be the mastermind and it is quite possible that he has not given the correct address to any of the others. It has to be noted that Shri R.C. Jain also had sent the premium directly to Shri R.K. Gupta on some occasions. The fact that Shri Manoj Goyal or Omprakash Goyal or Shri Puneet Rungata or Shri Rajesh Hundia did not khow Shri Makkar also does not help his case. Shri Makkar knew to whom advance licences/AROs have been supplied since he got all the documents from the 100% EOUs for the purpose of getting endorsements by sending the same to Shri R.K. Gupta. What we are concerned is whether Shri T.S. Makkar knew that his activities were facilitating diversion of imported/indigenous goods obtained duty free by 100% EOUs or not and not whether the 100% EOUs and others knew that Shri T.S. Makkar was the one who had supplied advance licences/AROs to them. Therefore the fact that none of the 100% EOUs or some of the others have not named Shri Makkar does not help him at all. Therefore the fact that Shri R.K. Gupta was not traced is not relevant and does not help Shri Makkar. 19.4 The learned advocate submitted that these advance licences/AROs wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd he relied upon several decisions of the Tribunal in support of his contention. 1. 2004 (165) E.L.T. 206 (Tri.-Del.) in the case of Kamdeep Marketing Pvt. Ltd. v. C.C.E., Indore 2. 2004 (178) E.L.T. 578 (Tri.-Chennai) in the case of D. Ankineedu Chowdary v. C.C.E., Chennai. 3. 2007 (217) E.L.T. 506 (T-LB) in the case of Steel Tubes of India Ltd. v. C.C.E., Indore. 19.5.1 In cases like this where imposition of penalty has to be considered, it would not be appropriate to go only by precedent decisions. The issue of reliance upon various precedent decisions has been considered by the Mumbai Bench of the Tribunal, in their Order No. A/14/09/EB/C-II in the case of M/s. Spie Capag S.A., dated 20-1-2009 [2009 (243) E.L.T. 50 (T)]. The relevant portion of the paragraph is reproduced below :- A decision is an authority for what it decides and not what can logically be deduced therefrom. The ratio of any decision must be understood in the background of the facts of the case. A case is only an authority for what it actually decides and not what logically follows from it. Even a difference in one fact can make a world of difference and the outcome may be totall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax collected with interest at the rate of 10% per annum to the first respondent at an early date, and not later than four months from the date of communication of this order. It is ordered accordingly. If, however, the amount is not paid within the aforementioned period, the outstanding amount shall carry interest @15 % per annum. 19.5.3 The above observations of the Hon ble Supreme Court have been reproduced to show that the legal provisions, especially penal provisions, have to be interpreted in such a manner that people who have paid the tax honestly and obeyed the law should not feel that those who are defaulters would be better placed than them. The decisions cited by the learned advocate are proposed to be discussed keeping the observations of the Hon ble Supreme Court and also the Tribunal reproduced above. 19.5.4 The Larger Bench in Steel Tubes of India Ltd. case was dealing with a situation where an assessee was only issuing invoices but there was no movement of any goods whatsoever. That is not the situation in this case. In this case goods have actually been sold by the 100% EOU in the market and therefore there is actual movement of goods. In the case of D. Ankin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 112(a) or 112(b) of the Customs Act. In that case the Tribunal had concurred with the findings of the authorities below that the appellant was liable for penalty under Section 112(a) or 112(b) of the Customs Act. In this case also, the detailed discussion shows that the appellant had conspired with Shri R.K. Gupta, Shri R.C. Jain and 100% EOUs and others which resulted in diversion of duty free imported goods/duty free indigenous goods by 100% EOU. 19.6 Before I conclude, I have to note that Hon ble Supreme Court in Sachidananda Banerjee, A.C.C., Calcutta v. Sitaram Agarwala reported in 1999 (110) E.L.T. 292 (S.C.) had considered the provisions of Section 167(81) of the Sea Customs Act, 1878. The Section as it existed read as under :- If any person knowingly, and with intent to defraud the Government if any duty payable thereon, or to evade any prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing or in any manner dealing with any goods which have been unlawfully removed from a warehouse or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will depend on the facts found in each case whether it can be said that any person was concerned in dealing with such goods. We shall therefore confine ourselves to the facts of the present case and see whether on these facts it can be said that Sitaram was in any way concerned in any manner dealing with the goods. Now the evidence which has been accepted by both the courts is that Sitaram had gone with a large sum of money to purchase the gold which was known to be smuggled and to have been imported into India against the restrictions imposed on the import of gold. It has also been proved that Sitaram did so after previous arrangement with the Chinese accused. If the constable who was following Sitaram had not interfered the deal would have gone through and Sitaram would have paid the money and purchased the smuggled gold. This was a case therefore where by means of previous arrangement with a person in possession of a smuggled article, the intending purchaser had gone to purchase it and the deal did not go through only because the police intervened. In such circumstances whereby previous agreement or arrangement a person goes to purchase an article which he knows to be smuggled i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he set aside. It has to be noted that the Hon ble Supreme Court was dealing with criminal prosecution and not mere penal provision in a quasi judicial proceedings. The Hon ble Court has explained the words in any way concerned in any manner dealing with prohibited goods to have a very wide import. This is contrary to the observations of the Tribunal in Steel Tubes of India case wherein the words or in any other manner deals with any excisable goods has been held to be read as an extension of the activities enumerated in the rule. The Hon ble Supreme Court has held it to mean otherwise. The Court went on to discuss the meaning of dealt with and observed that to have something to do with, to concern oneself, to treat, to make arrangement, to negotiate with respect to something . The observations of the Hon ble Court discussing the meaning of the Section clearly show that the activities of the appellants are clearly covered by the provisions of Section 112(b) of Customs Act, 1962 and Rule 209A of C.E. Rules, 1944 which are pari materia with Section 167(81) of Sea Customs Act, 1878. The only difference being Section 112(b) and Rule 209A do not have rigorous requirements as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke, forged or fictuous as held by Member (Technical) or it has to be held that Shri T.S. Makkar was not aware of this fact as held by learned Member (Judicial)? (ii) Whether it can be held that all the evidences relating to Shri R.K. Gupta have not been further investigated by DRI as held by learned Member (Judicial) or whether it has to be held that DRI had made serious efforts to trace him as held by Member (Technical)? (iii) Whether in the facts and circumstances of the case it has to be held that the appellant was not aware of misuse of the licences by M/s. Kay Bee Tex Spin Ltd. for showing fictitious export and therefore appellant cannot be held to be aiding and abetting the said 100% EOU as held by learned Member (Judicial) or it has to be held that Shri T.S. Makkar was aware that no goods would be cleared but only paper transactions will be made and therefore he could be said to be aiding and abetting duty evasion as held by Member (Technical)? (iv) Whether in the facts and circumstances of the case, it can be said that Shri T.S. Makkar did not deal with the goods and therefore is not liable to penalty in view of the decision of the Tribunal-LB in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion between the learned Member (Judicial) and the learned Member (Technical) of the regular Bench, which considered the appeal in the first instance. The essential facts of the case have been given in sufficient detail in the orders passed by the learned Member (Judicial) and the learned Member (Technical)? 28. I proceed to answer the points of difference as follows - 1st point : Whether in the facts and circumstances, it has to be held that Shri T.S. Makkar was aware that the licences were fake, forged or fictitious as held by Member (Technical) or it has to be held that Shri T.S. Makkar was not aware of this fact as held by learned Member (Judicial). 29. There is no dispute on the fact that there exists no direct clinching evidence, oral or documentary, proving awareness on the part of the appellant that the licenses were fake, forged or fictitious. Therefore, what is to be considered is whether the circumstances would suggest such awareness of the appellant on the test of preponderance of probability. In para 19.2 the learned Member (Technical) has recorded his findings on this point while holding that the appellant was aware about the fake, forged or fictitious na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igated by DRI as held by learned Member (Judicial) or whether it has to be held that DRI had made serious efforts to trace him as held by Member (Technical)? 31. Member (Judicial) on this point held that the efforts made by DRI officers to locate Shri R.K. Gupta, has not resulted in any fruitful result. The appellant during the course of his interrogation, also disclosed the names of one Shri K.D. Sharma and Shri Nitin Rastogi as the persons who used to buy licences from Shri R.K. Gupta. These persons have also admitted the same. Not only that, he also disclosed the case file number where Shri R.K. Gupta has filed anticipatory bail in Sessions Court of Delhi. Shri R.K. Gupta s affidavit was also on record. No evidence of further sincere investigations on all these evidences by DRI is forthcoming. In para 19.3 the learned Member (Technical) has culled out the efforts made by the DRI. After recording that the appellant informed in his statement dated 5-11-2003 regarding filing of anticipatory bail by Shri R.K. Gupta in the Court of District Sessions Judge, Delhi along with case number of the same, the learned Member also examined whether the fact that Shri R.K. Gupta was not trace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether in the facts and circumstances of the case, it can be said that Shri T.S. Makkar did not deal with the goods and therefore is not liable to penalty in view of the decision of the Tribunal-LB in the case of M/s. Steel Tubes of India Ltd. as held by learned Member (Judicial) or it has to be held that he is liable to penalty having dealt with the goods as held by Member (Technical)? 35. It is trite that to attract penalty, the penal provisions would require strict interpretation. Even if the present appellant dealt with the licences, he has not dealt with any goods in any manner nor is there any such allegation. Without dealing with the goods in any manner whatsoever, in the facts of the instant case, the ratio laid down in the Larger Bench decision of this Tribunal in case of M/s. Steel Tubes of India Ltd. v. CCE, Indore as reported in 2007 (217) E.L.T. 506 (T-LB) would be a binding precedent, wherein it was held that penalty is imposable under Rule 209A only if excisable goods are dealt with by the person concerned with knowledge of liability of confiscation, and that even where any person has issued only invoices without actual movement of the goods, the said rule cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the said case it was held that respondent Sitaram was concerned in dealing with the goods, as he with previous agreement or arrangement went to purchase an article which he knew to be smuggled, notwithstanding that the act stopped at an attempt to purchase. In these circumstances even though Sitaram had not come into actual possession of the smuggled gold before the police intervened, there was no doubt that he was concerned in dealing with prohibited goods. The Hon ble Supreme Court therefore was of opinion that the Hon ble High Court was in error in holding simply because the purchase was not complete that Sitaram was not concerned in dealing with the smuggled gold which was found with the Chinese accused. It is not the case of the Revenue that similar fact situation arises in the present appellant s case. Even the ratio laid down in binding precedents of this Tribunal and the Larger Bench, is in no way contrary to what the Hon ble Supreme Court has held in Sachidananda Banerjee s case. In the instant case, neither the appellant dealt with the goods, nor had agreed to deal with the goods in any manner whatsoever so as to attract penalty under Rule 209A. 39. Since, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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