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TMI Blog2014 (4) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... zed were not proved in accordance with law. It appears that there was no independent investigation undertaken by the ED. In order to prove under-invoicing, the value of contemporaneous import made from Hong Kong, and not from Singapore, had to be looked into. Moreover, these documents were not authenticated, as required by Section 72 FERA read with Foreign Exchange Regulations (Authentication of Documents). This Court in M/s. Jain Engineering v. ED [2014 (3) TMI 678 - DELHI HIGH COURT] held that documents received from abroad cannot be relied upon without authentication. The failure of the ED to comply with the above legal requirements rendered the seized documents inadmissible in evidence. Without the ED discharging the initial burden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and imposing a penalty of ₹ 1,50,00,000 on the Appellant. The AT found that the charge for contravention of Sections 8 (1) read with 9 (1) (a) FERA was established but the one under Section 9 (1) (c) was not. However, the penalty amount, as levied by the SD in the AO, was maintained. 3. The common facts related to both the appeals are that between 10th and 12th December 1996, the Directorate of Revenue Intelligence (?DRI?) conducted searches at the residential/business factory premises of M/s. Connectronics and Cables (P) Ltd. (?M/s. CCPL?), M/s Wings Electronics of Mr. Aneesh Chawla, Mr. V.K. Chawla and the premises of M/s. Vinay Electronic Corporation (?M/s. VEC?) at Delhi and Noida and seized certain documents. Following up on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 42 consignments declared before the Hong Kong Customs authorities was HKD 55,81,246 as against HKD 23,40,024, the value declared in the invoices and that the difference in value worked out to USD 4,18,222. It was further alleged that the Appellant had made payment of 2,79,000 to M/s. Pearl towards the differential value without any general or special permission of the Reserve Bank of India (?RBI?) and the remaining amount of USD 1,39,222 was acknowledged as a debt creating a right in favour of M/s. Pearl to receive the said payment, thereby contravening Sections 8 (1), 9 (1) (a) and 9 (1) (c) FERA. 6. In both the SCNs, the stand taken by the Appellant was that he did not, in his statement under Section 40 FERA, admit to any under-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the ED itself did not conduct any independent investigation but simply used the documents received from the DRI. It was pointed out that the AOs were based on the photocopies of letters of the Consulate General and Hong Kong Customs which were not admissible in evidence. 9. The AT, in its impugned order, placed reliance on the statement of Mr. Puri and held that it proved that there had been under-invoicing of the imports. It was held hat a presumption could be drawn against the Appellant under Section 114 of the Evidence Act, 1872 since no seller would part with goods without receiving the proper consideration. It was held that the burden was on the Appellant to discharge an adverse inference arising from such presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, in the present case the AT erred in holding that the statement of Mr. Puri under Section 108 of the CA corroborated the documents seized by the ED. 13. As far as the statement of Mr. Handa under Section 40 FERA is concerned, it seen that he did not inculpate either himself or the Appellant. He did not admit that either he or Mr. Chawla were actually responsible for under-invoicing. A careful perusal of the statement shows that he surmised that the differential amount ?might have been paid by Shri V.K. Chawla? and that he himself was not aware of such payment being made. Therefore, there is no credible evidence to show that the Appellant was responsible for under-invoicing, if any, of the imports. 14. The AO passed by the SD as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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