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TMI Blog2007 (8) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total duty drawback of Rs.3,49,556/- in respect of three shipping bills and ordered recovery of the same together with interest; (e) confiscated goods exported under drawback claim with declared value of Rs.10,53,40,623/-, under the provisions of Section 113(d) and (i) read with Section 3(3) and 11(1) of the Foreign Trade (Development and Regulation) Act, 1992 read with Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993 read with Section 50(2) of the Customs Act; (f) redetermined PMV of goods exported under claim of DEPB by Tex Age under 11 shipping bills as Rs.24,45,965/-; (g) rejected total FOB value declared of Rs.6,86,56,854/- in respect of goods exported under claim of DEPB by Tex Age and redetermined the value as Rs.30,57,456/-; (h) rejected the entire DEPB credit of Rs.95,85,068/- claimed by Tex Age; (i) ordered confiscation of goods exported under claim of DEPB; (j) imposed penalties as under on the following persons :- (1) Tex Age Rs.1,10,00,000/- (2) Subhash Choudhary Rs.25,00,000/- (3) Satish Choudhary Rs.25,00,000/- (4) Om Prakash Jhunjhunwala Rs.2,00,000/- (5) Prithvi Singh Kuntal Rs.2,00,000/- (6) Deepak Khetawat Rs.2,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 From the foregoing paras it appeared that : I.(i) A massive export fraud, was effected by the firm M/s. Tex-Age controlled by Mr. Subhash Choudhary, under Duty Drawback and DEPB scheme. The readymade garments viz. ladies long dresses, exclusive mens trousers cotton knitted hosiery socks T-shirts denim jeans and knitted mens vests etc exported by the impugned firm were misdeclared to the extent of its value, thereby seeking substantially higher drawback and DEPB credit, than what was actually entitled. Mr. Subhash Choudhary controlling all activities of M/s. Tex-Age with active participation and financial support of his younger brother Mr. Satish Choudhary, planned and carried out the said fraudulent exports of readymade garments so as to defraud the Government exchequer. (ii) To give effect to these fraudulent exports, import Export Code (IEC) was taken in the name of the firm M/s. Tex-Age, a family concern of Mr. Subhash Choudhary. The entire business activities of M/s. Tex Age were controlled by Mr. Subhash Choudhary. The decisions pertaining to the procurement of goods, their prices, export rates, payments to suppliers, etc. were taken by Mr. Subhash Choudhary. Whereas, hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Al Maha Trading Est. was also operated by Mr. Navin Choudhary. (v) For effecting these exports from M/s Tex Age and other firms Mr. Subhash Choudhary procured various Ready Made Garments viz mens exclusive trousers ladies long dresses (i e ladies maxis/night gowns), mens T-shirts, knitted mens vests, knitted hosiery socks and shirting fabrics mainly from Mr. Sheetal Jain, Mr. Prithvi Singh @ Gulla and Mr. Vikram Sikaria @ Vicky of Kolkata, Mr. Subhash/Sanjay Makharia and through Mr. Rajesh Bhagat. The goods were also procured on buy back basis from one Mr. Kamruddin through Mr. Rajesh Bhagat. The details of the other supplier of RMGs were not divulged by Mr. Subhash 'Choudhary. The terms and the conditions for procurement of these RMGs were finalized by Mr. Subhash Choudhary. With the intention to suppress the actual purchase value of the export goods, the said purchases of RMGs were made without any documentation i.e. without cover of any purchase order, invoices, delivery challans and transport documents. However, after intervention by DTU, fake purchase bills were prepared on the directions of Mr. Subhash Choudhary by his employees and the same were submitted to the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared to the Customs "USS per piece". As per the statutory requirement, the Certificate of Origin was obtained from various Chambers of Commerce, for the clearance of goods at Dubai Port, on the basis of these freshly prepared invoices. This is apparent from some of the certificates of origins retrieved from Indo-Arab Chamber of Commerce, Mumbai, which clearly show the actual rates of exported goods and that the rates declared in the corresponding shipping bills were substantially inflated. These export invoices showing actual rates of the export goods, along with packing list and Certificate of Origin were then separately, sent through courier to Mr. Pankaj Jhunjhunwala for effecting customs clearances at Dubai port. Apart from this, Mr. Pankaj Jhunjhunwala would also receive export bills (consisting of original bill of lading, invoice of third party firm, etc.) from BOB, Deira, Dubai, which were sent by BOB, IBB, Mumbai for export realization. Mr. Pankaj would then handover the documents received by him through courier, along with the original bill of lading received from the bank, to their CHA M/s. Al Nakhota Cargo for clearing the goods from Dubai customs. After clearance f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were then sent by them to the over seas bank (i.e. BOB, Deira, Dubai) of the buyers for export realization. Further these 3rd party firms of Mr. Satish Choudhary transferred funds to M/s. Tex-Age in respect of exports bills negotiated by them. These payments made by the 3rd party firms were utilized by Mr. Subhash Choudhary to make payments to the so-called suppliers and to draw a large no. of "& Co" cheques in favour of various non existing firms in order to generate cash, which was further utilized by Shri Satish Choudhary to send remittances from Dubai. (xi) Mr. Pankaj Jhunjunwala based in Dubai, would receive cash in Dirhams from persons like Mr. Salam, Mr. Paicher and Mr. Zaida, which was deposited in the bank accounts of the above four overseas remit ting firms and the cash deposits were further utilized for sending remittances to M/s. Awin Exim Group of Companies. In some cases the cash received in Dirhams by Mr. Pankaj Jhunjhunwala was deposited in money exchange houses and it was further sent as an advance payment to M/s. Tex-Age against exports. These activities were carried out by Mr. Pankaj Jhunjhunwala statedly as per the fax messages/telephonic instructions/SMS sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash was subsequently utilized for sending the remittances against the fraudulent exports carried by M/s. Tex-Age. Thus the said firms appeared to have actively aided and abetted in the fraudulent exports of M/s. Tex-Age. (iii) Mr. Subhash Choudhary is the main brain behind the subject exports fraud. He with active co-operation and participation of his brother Mr. Satish ChoudharY hatched the entire conspiracy to export low quality RMGs from M/s. Tex-Age controlled by him by mis-declaring the value of the export goods. Mr. Subhash Choudhary effected such huge fraudulent exports without any purchase orders/export con tracts from any of the overseas firms and they were effected on the verbal Instructions given by Mr. Satish Choudhary and Mr. Navin Choudhary to Mr. Subhash Choudhary. Majority of the consignees and buyers declared by him in the shipping bills were fictitious and non-existing with apparent intention to deceive the Customs authorities into believing that the exports are destined to non-sensitive ports. All the goods exported were diverted and offloaded in Dubai by the four firms viz. M/s. Mohd Essa Al Marri Trading Co. LLC. M/s. Reem Al Maha Trading Estd. M/s. Babil Tex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd then Mr. Satish Choudhary arranged for delivery of this foreign exchange to Mr. Pankaj Jhunjhunwala through persons like Mr. Salam, Mr. Paicher and Mr. Zaida. He instructed Mr. Pankaj Jhunjhunwala to deposit the said cash in Dirham in the bank accounts of Dubai based companies viz. M/s. Mohd Essa Al Maim Trading Co. LLC, M/s. Reem Al Maha Trading Estd., M/s. Babil Textiles Trading Est. and M/s. Al Sambook Trading at Bank of Baroda, Deira, Dubai branch and the said funds were routed back to India by way of telegraphic transfers (T.T.), through banking channels as remittances against goods exported by gross overvaluation by the impugned firm of Mr. Subhash Choudhary. (v) Mr. Omprakash Jhunjhunwala, one of the Partners of the firms M/s. Awin Exim Co., M/s. Ceejay Exports and M/s. Ekta Exports was well aware that the foreign bill purchase credit limit given to their firms by the bank was being misused by Mr. Satish Choudhary by rotating the same to generate cash for arranging remittances by illegal means. He has also issued a number of cheques transferring the funds from M/s. Awin Group of Companies to the impugned exporting firm viz. M/s. Tex-Age. Thus it appeared that Mr. Ompraka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge of over-invoicing inter alia on the basis of statements of the three suppliers of the goods, Prithvi Singh Kuntal, Sheetal Jain and Kamruddin Shaikh and on the invoice submitted to the Indo-Arab Chamber of Commerce showing a lower value and also on the ground that compensatory payments were made in India, which resulted in part of the remittance received from Dubai against exports flowing back to the remitting firms. The Commissioner also relied upon the fact that the goods were originally shipped to non-existing firms in Netherlands but offloaded in Dubai and that the firms in Dubai were controlled by Satish Choudhary, brother of Subhash Choudhary of Tex Age. Hence these appeals. 4. We have heard both sides and record our findings herein below. 5. The fact that the goods were actually exported and that remittances equivalent to the export prices were realised, is not denied. The fact that payment was made by the appellants by way of "& Co." cheques is also not disputed. The declared PMV is sought to be discredited on the basis of statements of local suppliers like Prithvi Singh Kuntal, Sheetal Jain and Kamruddin Shaikh. However, we note that ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Pradeep Delia etc. and the cash so generated was returned to the appellants who used it to generate remittances from abroad. The further finding is that foreign bill purchase credit enjoyed by the discounting firms of Satish Choudhary (against which advance remittance was obtained) was rotated. However, the record does not bring out how the cash was so used to generate remittances, or how the cash was rotated. It is also not alleged that the remitting firms in Dubai made payments out of their own pocket and the allegation is that Dirhams were procured from local Indians like Salam, Paicher and Zaida in Dubai. There is no allegation of finding that these three individuals were under the control of the appellants and therefore, for the department to succeed in its allegation of over-invoicing and hawala, compensatory payments against supply of such Dirhams in India has to be established which has not been done and no one has been identified as the person or persons to whom such compensatory payments were made in India. We may also point out that the statement of Prithvi Singh Kuntal @ Gulla, one of the local suppliers, was recorded under coercion and was ret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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