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TMI Blog2017 (2) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. M. V. Ravindran, Member (Judicial) And Mr. Raju, Member (Technical) Shri J.H. Motwani with Chirag Shetty, Advocates, for appellant Shri C. Singh, Assistant Commissioner (AR), for respondent ORDER Per Raju These appeals have been filed by Pradeep Master Batches Pvt. Ltd. and Shri Pradeep Bhatnagar against confiscation of currency seized from the premises of the appellant under Section 121 of the Customs Act and imposition of penalty. 2. The appellant had exported certain goods under DEEC and had imported titanium dioxide as raw material for the same. On the basis of intelligence, the export containers were recalled and on examination, it was found that not only the said containers contained goods which were misdeclared during the export but also Indian currency. Consequently, searches were made and more currency was seized from the premises of Shri Pradeep Bhatnagar and a show cause notice was issued. 2.1 The appellant approached Settlement Commission and the Settlement Commission vide order dated 20.6.2001 gave its order in matters other than the case relating to confiscation of currency. 2.2 The Settlement Commission refrained from giving any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Hon ble High Court of Bombay, which was allowed by order dated 15.3.2016. Learned counsel for the appellants argued on the limited issue of confiscation of Indian currency amounting to ₹ 30 lakhs (out of ₹ 1.22 crores seized from the appellant s premises) under Section 121 of the Customs Act, 1962. The appellants also contested the imposition of penalty under Section 114 of the Customs Act, 1962. It was argued that the appellants are not contesting the confiscation of currency amounting to ₹ 66,99,000/- which was recovered from the export containers which was recalled by Revenue. It was argued that while in his statements dated 13.6.2000 and 7.7.2000, the co-appellant Shri Pradeep Bhatnagar has admitted that the said currency belonged to him, the said statements were retracted by letter dated 18.8.2000 addressed to the Additional Director General, DRI. He argued that in these circumstances, no reliance can be placed on the said statements. He argued that the impugned order wrongly relies on the said statements for imposing penalty under Section 114 of the Customs Act, 1962. The learned counsel relied on the decision of the Hon ble Apex Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant. He argued that once immunity from fine and penalty has been granted, then it is not open to Revenue to re-confiscate the sale proceeds of the goods on which immunity from fine was specifically granted by Settlement Commission. He argued that the goods in the instant case were imported by filing a bill of entry and were assessed by the Customs. In these circumstances, the goods cannot be called as smuggled goods. 4. Learned AR relies on the impugned order. He relied on the decision of the Tribunal in the case of Kanha Vanaspati Ltd. vs. CC, Kandla 2003 (157) ELT 659. In the said case, he argued that, the Tribunal has in identical circumstances held the sale proceeds of goods imported against bogus and forged advance licences can be considered as smuggled goods and the sale proceeds can be confiscated under Section 121 of the Customs Act. Learned AR also relied on the decision of the Hon ble Supreme Court in the case of Sheshank Sea Foods Pvt. Ltd. vs. UOI 1996 (88) ELT 626 (SC), to assert that the goods which are exempted from customs duty subject to a condition and if the condition is not observed, the goods become liable to confiscation. He further r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act, 1962. 5.1 The Settlement Commission vide its order dated 20.6.2001 gave the following findings:- The case of applicant is settled for an amount of ₹ 25,23,107/- out of which an amount of ₹ 13,52,419/- has already been paid and the balance amount of ₹ 11,70,688/- is to be paid within 30 days from receipt of copy of this order under sub-section (7) of Section 127C of the Customs Act, 1962. Fine and penalty The applicants have co-operated with the Settlement Commission and has made a full and true disclosure of their duty liability. This full and true disclosure of duty liability has been made at different stages including the stage of final hearing. In view of this, the Commission orders that immunity shall be given from imposition of fine and penalty to the applicants. Interest The applicant has fraudulently sold the imported titanium dioxide instead of utilizing the same in the manufacture of final product, as per conditions imposed in the licences issued to him and notifications issued in this regard. In view of this, the Commission imposes an interest of 10 per cent on the admitted duty liability from the date of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation. Section 121 allows confiscation of sale proceeds of any smuggled goods sold by a person having knowledge or reason to belief that the goods are smuggled goods. Smuggling has been defined under clause 39 of Section 2 of the Customs Act, which reads as follows:- Section 2(39) - smuggling , in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113. Smuggling has been defined to mean any act or omission which renders the goods liable to confiscation under Section 111 or 113. It can be seen that, to make an activity amount to smuggling, it is not necessary that the goods are confiscated. The definition makes any act which renders such goods liable to confiscation under Section 111 and 113, sufficient to make the activity smuggling. Moreover, Section 121 applies to sale proceeds of the smuggled goods sold by a person. In such circumstances, it is obvious that the goods are not available and therefore cannot be confiscated. Reading Section 121 harmoniously with the definition of smuggling as given in Section 2(39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent as desired and directed by the DRI officer involuntarily under coercion; (iii) He was arrested on 13.6.2000; (iv) On 19.6.2000, in Arthur Road Jail, an inmate whose identity is not known, approached him and threatened him that he should own up the currency found in the containers. The said person also informed him that there will be Indian currency to the extent of ₹ 19 lakhs. The said person also threatened him not to disclose to the Jailer or to DRI; (v) On 29.6.2000, another container was recalled and ₹ 19.5 lakhs was recovered from the said container; (vi) On 30.6.2000, his wife was called by DRI and her statement was recorded under threat and coercion; (viii) On 7.7.2000, again his statement was recorded under coercion and threat; (ix) On 11.7.2000, he was released on bail but he was directed to report to DRI for 20 working days. After about 37 days of release, the appellant filed the letter of retraction alleging coercion. He denied having any knowledge of the currency found in his export containers recalled for examination. In the retraction he argued that the export consignment was taken on pallets to Nhava Sheva port. He ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er held that the retracted statements are belated and therefore no credence can be kept on such retractions. We observe that the present appellant himself in his statement admitted that the confiscated currency of ₹ 8 lakhs were sale proceeds. His partner was absconding and therefore his statement was not recorded. Suresh Jain as well as Kisanlal Jain admitted to the fact that they were keeping sale proceeds of foreign marked gold and foreign currency in question in Vinay D. Shah s premises. The later person himself admitted that it was the case. The facts peculiarly known to the various persons involved in the sale of smuggled gold and foreign currency came out from their own versions. The appellants argument that the entire case was built on the statements of various persons is true. But there is no reason as to why these statements cannot be taken cognizance of particularly when they are corroborated with the statements of others. The claim that ₹ 8 lakhs represented proceeds of satta business is also not backed by any evidence. The fact that the appellant informed the income-tax department that ₹ 8 lakhs, which belonged to him, were seized by the customs autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the importer M/s. Sanghi Industries Ltd and penalties of ₹ 20 lakhs each have been imposed on the Managing Director and Director of the appellant firm. We are of the view that separate penalties - one on the importing firm and the other on the Directors of the company - are not warranted in the facts and circumstances of the instant case. Considering the totality of the facts and circumstances, we reduce the penalty on the appellant firm to Rs. Fifty lakhs (Rs. 50,00,000/-) and set aside the penalties on the Managing Director and Director of the appellant firm. Needless to say that the appellant is liable to discharge interest liability @ 24% starting from 15-11-1993 till the date on which the differential duty was discharged by the appellant firm. It can be seen from the above that the facts of the case are significantly different from the instant case. There is no bar on the imposition of separate penalty on the company and the director. In the case cited by the appellant, no penalty was imposed on the managing director and the director of the appellant firm in view of the facts and circumstances of the case. In the instant case, the director has played significan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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