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TMI Blog2017 (8) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... ies prohibited by the Law. The justification given on behalf of GAIL for the impugned banning order, that the petitioner is liable to be banned as the Petitioner has failed to produce the Tax Paid invoices or explain their absence is not sustainable. GAIL has failed to show that there was any requirement for the petitioner to have produced the tax paid invoices at the time of execution of the work and if so, then why was a completion certificate issued in the year 2006, certifying the successful completion of the work. The fact that GAIL has issued the completion certificate shows that GAIL was satisfied that all was in order and the contract has been completed to their satisfaction as per its terms and conditions. Having accepted the successful completion of the contract, GAIL cannot seek to reopen the same and impose an obligation on the petitioner to now produce documents in support of the equipment purchased and used in the contract. More so, when there were no issues for nearly six years from the date of acceptance of successful completion of the contract. Since the very foundation of the Show Cause Notice and the banning order does not exist, the impugned order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.07.2012, i.e., after a period of nearly six years of the completion of the contract on 03.08.2006, a show cause notice was issued by GAIL to the petitioner contending that a false completion certificate had been issued by the petitioner in favour of M/s. Elgin Electronics to the effect that M/s. Elgin Electronics had executed work in the sum of ₹ 1.27 crores as against the actual work executed of ₹ 1 crores. It was contended that the said certificate was submitted by M/s. Elgin Electronics alongwith their bid for a contract with CPWD. 7. It was further contended in the show cause notice that being the main contractor, the petitioner had failed to check and point out fictitious documents submitted by M/s. Elgin Electronics towards supply of audio-visual equipment in the contract which were claimed by the Directorate of Revenue Intelligence to be smuggled goods and for which an investigation was carried out by the Directorate of Revenue Intelligence. 8. It was pointed out in the show cause notice that the petitioner was guilty of abetment of smuggling and other nefarious activities prohibited by law. The petitioner was called upon to show cause as to why action s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he had admitted that M/s. Elgin Electronics had supplied imported microphones for Gail project without issuance of proper invoices. It was contended that the said fake and fabricated invoice was used as a smokescreen for supply of illicit imported microphones for the Gail Project without issuance of proper invoices. 14. It was contended that the petitioner had not submitted any evidence to rebut their complicity before the Directorate of Revenue Intelligence or to establish that the audio-visual equipment, supplied to GAIL, were procured illegally. 15. Further, with regard to the certificate for the amount of ₹ 1.27 crores, attention was drawn to the statement of Mr. Pranesh Gupta of the petitioner, wherein, he had denied the issuance of the certificate in the sum of ₹ 1.27 crores and had stated that only a work of ₹ 1 crore was outsourced/subcontracted by the petitioner to M/s. Elgin Electronics. It was thus observed that the petitioner had not disclosed true and correct facts in the reply relating to the certificate. 16. By order dated 19.09.2013, WP(C) 5011/2013 was disposed of and the order dated 01.08.2013 was set aside permitting GAIL to pass a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded, a completion certificate was duly issued. No objection was raised by GAIL at the time of the execution of the contract. Once GAIL was satisfied about the due execution of the contract, the completion certificate had been issued. 22. It is contended that there is no material to connect the petitioner with any smuggling activity. It is further contended that the investigation was not with regard to any conduct of the petitioner. The investigation further did not relate to the transaction of the year 2006 between the petitioner and M/s. Elgin Electronics and was restricted to the material/equipment seized at the premises of M/s. Elgin Electronics and an invoice for the year 2009. 23. Learned counsel for the petitioner submits that since the petitioner was not allegedly connected with any smuggling activity of M/s. Elgin Electronics and on successful completion of the work, was issued a completion certificate as far back as in the year 2006, the petitioner could not have been debarred on account of any conduct of M/s. Elgin Electronics. Further, it is submitted that as M/s. Elgin Electronics was one of the registered vendors of GAIL, the contract was sub-contracted to M/s. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts therein that M/s Elgin Electronics had executed a work of ₹ 1.27 Crores which is contrary to the actual work of ₹ 1.00 Crore. The same was used and submitted by Elgin Electronics alongwith their bid in bagging contract from CPWD. This is also corroborate by the fact that, in a statement recorded with Directorate of Revenue Intelligence on 5.7.10, your Shri Pranesh Gupta, partner of M/s Gupta Brothers (India) confirmed that M/s Gupta Brothers (India) had executed a job at GAIL through M/s Elgin for an amount of approximately ₹ 1.00 crore and further no other job was sublet to M/s Elgin. From the above, you have refuted your own completion certificate of ₹ 1.27 crores issued to M/s Elgin. 2. Being the main contractor of the contract, you failed to check and point out fictitious documentation submitted by M/s Elgin towards supply of audio visual equipment in the contract which have been claimed to be smuggled goods, which was investigated by Directorate of Revenue Intelligence. Therefore, you are guilty of abetment of smuggling and other nefarious activities prohibited by the Law, which calls for banning all future business with your firm o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsible citizen of India. I was told that the matter under investigation of smuggled goods was for mobile phones. I once again confirm that no mobile phones were used for the above referred contracts. 3. We have paid the agencies the entire amount and there are no dues balances to be paid. 4. The matter should be perused with M/s. Elgin Electronics for production of original certificates referred above and a copy of chart sheet filled by the Directorate of Revenue Intelligence indicating the products smuggled. As the undersigned during the investigation by the Directorate of Revenue Intelligence was informed that the matter of smuggled goods was related to only mobile phone handset. 5. We once again reiterate the mobile phone as mentioned in the charge sheet were not used in the above stated to works executed by M/s Gupta Bros. (India) for which the undersigned is authorized signatory. 6. We vehemently, deny the baseless allegations which are not based on the facts. We request that before any further frivolous and baseless allegations are made against M/s Gupta Bros. (India) or the undersigned the matter may be independently investigated by authorized repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had taken place between M/s. Gupta Bros.(India) and M/s. Elgin Electronics on the basis of aforesaid invoice and the amount of ₹ 1 Crore was paid to M/s. Elgin Electronics against the contract for installation of audio visual systems related to GAIL project. Further, in the statement of Sh. Sumit Gupta of M/s. Elgin Electronics recorded on 21.08.2009 (RUD-12) in continuation of his earlier statement -15.07.2009 by DRI wherein he admitted that the said invoice was fake and they had supplied imported microphones for GAIL project at Noida on account of M/s. Gupta Bros.(India) without issuing proper invoices. In view of the aforesaid admitted statements your contention that M/s. Elgin Electronics stated in their reply to their show cause that M/s. Elgin Electronics purchased the same from the local market with tax paid invoices appears to be contrary and therefore could not be accepted. 2) Further, in pursuance of Hon ble Court order dtd.19.09.2013, a hearing was held on 25.09.2013 at GAIL s Corporate Office at New Delhi wherein besides other discussions, you were asked to show/submit bills raised by M/s. Elgin Electronics on M/s. Gupta Bros. (India) towards the supply of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) Further, being main contractor you have failed to fulfill your obligation in terms of clause no.37.1(iii) of GCC of contract document to prevent the act of tax evasion made by your sub-contractor M/s. Elgin Electronics as established by DRI in their investigation report. 5) Please note that GAIL which is a public sector undertaking cannot do business with a party which is involved in supply of illicit imported microphones to GAIL. GAIL has lost the confidence reposed in M/s. Gupta Bros.(India). In view of the above, your written submission dtd.05.10.13 has no merits. You are thus guilty of fraudulent acts in supply of smuggled goods to GAIL. GAIL(India) Limited has decided to ban M/s. Gupta Bros.(India) with immediate effect from participation in the bidding process for any of GAIL s tender in future due to involvement in the fraudulent activities in execution of the contract against LOA no.GAIL/C-167/5600000189/HSB dated 28.11.2005 for the job of renovation of GTI, Noida. Consequently, M/s. Gupta Bros.(India) are barred from participation in the bidding process for any of GAIL s tender in future and there will be no further business dealing with M/s. Gupta Bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate seizure memos, all dated 05.01.2010, on the reasonable belief that the goods had been imported without payment of customs duty and were thus liable for confiscation under Section 111 of the Customs Act, 1962. ***** ***** ***** 7. Shri Sumit Gupta S/o Shri S.C. Gupta, Proprietor, M/s. Elgin Electronics in his statements dated 15.07.2009 21.08.2009 , recorded under Section 108 of the Customs Act, 1962, interalia, stated that he was fully satisfied with the contents of panchnama proceedings held on 13.07.2009 at his residence and office premises; that his firm dealt in the business of sale, supply and installation, of Audio Visual Equipments for stadium, halls, conference rooms etc. by way of tenders apart from the sale of these goods on retail basis; that their major customers were Vigyan Bhavan, NTPC, GAIL etc. and they are importing the goods from the companies like DIS based in Denmark, Rane based in USA and Yamaha based in Japan. He also promised to produce the Bills / Invoices / Bill of Entries in respect of the goods detained at the said premises; that his father, Sh. Suresh Chand Gupta was proprietor of M/s Elgin Electronics; that he was looking after all day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e phones valued at ₹ 63,25,305/- and the statement dated 21.08.2009 of Shri Sumit Gupta recorded under Section 108 of Customs Act, 1962. Shri Pranesh Gupta acknowledged in his statement that the impugned retail invoice was fabricated fake and no transaction of any goods or any amount had taken place between M/s. Gupta Bros. (India) and M/s.Elgin. Electronics on the basis of the aforesaid invoice. The payment of approx. ₹ 1 crore made by his firm to M/s. Elgin Electronics was against the contract for installation of Audio Visual Systems related to the GAIL project. ***** ***** ***** 15. Therefore, (a) Sh. Suresh C hand Gupta, Proprietor, M/s. Elgin Electronics,1683/2, J,K. Building, Bhagirath Place, DeIhi-6 and, (b) Sh. Sumit Gupta, Manager of M/s Elgin Electronics, 1683/2, J.H Building, Bhagirath Place, Delhi-6 were called upon to show cause as to why (i) The P A Systems Parts and others goods collectively valued at ₹ 77,16,288/- seized under Seizure Memos all dated 05.01.2010, which were smuggled into India with an intention to evade payment of Customs duty should not be confiscated under Section 111(a), (b), (d) and (1) of the Customs Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty of ₹ 2,00,000/-( Rupees Two Lacs only) on Shri Suresh Chand Gupta, proprietor, M/sElgin Electronics, under Section 112(b)(ii) of the Customs Act,1962. c) I impose penalty of ₹ 2,00,000/-( Rupees Two Lacs only) on Shri Sumit Gupta, Manager, M/s Elgin Electronics, under Section 112(b)(ii) of the Customs Act, 1962. 40. The proceedings and order of Directorate of Revenue Intelligence that has formed the very basis of the impugned order dated 21.10.2013 leading to the banning of the Petitioner is based on the goods imported by M/s Elgin Electronics, which were detained under Panchnama dated 13.07.2009. The Proceedings were undertaken on the reasonable belief that the said goods had been imported without payment of customs duty and were thus liable for confiscation under Section 111 of the Customs Act, 1962. 41. The investigation and proceedings were conducted qua the goods that had been detained. The invoice dated 31.03.2009 which created a link between the petitioner and detained goods was admitted by M/s Elgin Electronics to be a fabricated and fictitious invoice. It had come out in evidence recorded by Directorate of Revenue Intelligence that no tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibited by the Law, does not exist. 47. GAIL has not referred to any documentation that was submitted by the Petitioner or M/s Elgin Electronics to GAIL, at the time of execution of the work, which has been found to be fictitious. There was no investigation done by Directorate of Revenue Intelligence with regard to the equipment used for the project of GAIL. There is no finding that the equipment used for the GAIL project is smuggled or that the petitioner is guilty of abetment of smuggling and other nefarious activities prohibited by the Law. 48. The justification given on behalf of GAIL for the impugned banning order, that the petitioner is liable to be banned as the Petitioner has failed to produce the Tax Paid invoices or explain their absence is not sustainable. 49. GAIL has failed to show that there was any requirement for the petitioner to have produced the tax paid invoices at the time of execution of the work and if so, then why was a completion certificate issued in the year 2006, certifying the successful completion of the work. The fact that GAIL has issued the completion certificate shows that GAIL was satisfied that all was in order and the contract has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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