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TMI Blog2016 (9) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... ural justice affecting the process of fair trial. The case laws relied upon by the ld. CA are on the value of retracted confession and it has been held by the Hon’ble Supreme Court in Vinod Solanki v. UOI [2008 (12) TMI 31 - SUPREME COURT] that the burden is on the prosecution to show that the confession is voluntary in nature and not obtained as the outcome of threat, etc. In Piyush Saxena v. Enforcement Directorate [2009 (12) TMI 514 - HIGH COURT OF DELHI] has held that once the retraction of a confessional statement takes place the burden to prove that the statement was voluntary is on the prosecution. While in Vinod Kumar Sahadev v. UOI [2009 (12) TMI 514 - HIGH COURT OF DELHI] held that once the alleged statement was retracted the allegations of force and duress the onus to prove that the statement was voluntary shifts to the Government. The statement of the two noticees lose their sanctity in view of the retraction on the very next day and which was illegally rejected by the Investigating Officer and the Adjudicating Authority without any discussion or consideration relied on the rejection by the Investigating Authority and did not examine the veracity of the statements. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued to M/s. Mittal Ispat Ltd., Chennai, M/s. Sharda Casting Ltd., Chennai, P. Suryanarayanan, D. Venktateswara Rao, employees of the said two companies and also to Rajeev Gupta, Director on the ground that said two companies along with their aforesaid employees and Rajeev Gupta, Director of the two companies had made payments totalling to ₹ 1,62,62,388/- as per instructions from abroad in consideration of foreign exchange acquired by the foreign companies towards the differential amount of under-invoicing of imports made by the said two companies, which amounted to contravention of Section 3(d) r/w Section 42(1)(2) of FEMA, 1999. Vide letter dated 29-7-2004 and 30-7-2014 noticees requested for copies of relied upon documents, statements and books. The Department informed the noticees to collect the same from the office of the Deputy Director, Directorate of Enforcement, Chennai and as no reply was received the Adjudicating Authority decided to hold the Adjudication proceedings and the case was fixed for personal hearing on 10-1-2005 vide call notice dated 29-12-2004 which was duly served to all the noticees. Vide letters dated 31-12-2004, noticees informed that they ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was also observed that the copy of the complaint was also furnished to the appellant and there was no breach of the provisions of the Act and Rules. Therefore, the appeal was dismissed. The case was again fixed for personal hearing on 4-10-2006. However, nobody appeared on behalf of the noticees. Through a communication dated 29-9-2006 the counsel informed that the order of Hon ble Madras High Court has been challenged before Hon ble Supreme Court through SLP No. 10226/2006 and 10297/2006 and the Hon ble Supreme Court was seized of the matter, therefore, adjournment was sought. It has been stated in the Adjudication Order that on 3-1-2007 the SLP came up before Hon ble Supreme Court in which it was held that the petitioner was entitled to raise all the contentions in the SCN including the contention that the notice in question did not satisfy the requirement of sub-rule (2) of Rule 4 of FEMA Rules. The Hon ble Supreme Court also observed that it would not be necessary to go into the question raised by counsel for the petitioner at this stage and with these observations the SLP was dismissed. 5. The case was listed again for personal hearing on 25-10-2007 vide letter dated 21- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was imposed upon P. Suryanarayanan and D. Venkateswara Rao under Section 13 of FEMA for the alleged violations and also a penalty of ₹ 10 lakhs was imposed against Rajeev Gupta for the alleged contraventions. The amount of ₹ 1 lakh seized from the table drawer of P. Suryanarayanan and ₹ 8 lakhs seized from Mohd. Ummer was directed to be confiscated under Section 13(2) of FEMA, 1999. 8. Aggrieved from the Adjudication Order Appeal No. 276/2003 has been filed by M/s. Mittal Ispat Ltd., Appeal No. 277/2008 has been filed by M/s. Sharda Castings Ltd. and Appeal No. 278/2008 has been filed by Rajeev Gupta. A report was demanded from the Registry as to whether co-noticee P. Surayanarayanan and D. Venkteswara Rao, against whom also penalties were imposed have preferred appeals against the Impugned Adjudication Order or not. In compliance the Registry has reported that no appeals could be found in the Register of Institution of Appeals on behalf of the said two appellants. 9. Ld. Chartered Accountant appearing for the appellants has contended that the appellant companies were engaged in the manufacture of MS Ingots in Pondicherry since July, 1988 and the factory wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Sahadev v. Union of India, 2009-TIOL-465-HC-DEL-FEMA = 2014 (304) E.L.T. 335 (Del.) and Vinod Solanki v. Union of India, 2009-TIOL-01-SC-FEMA = 2009 (233) E.L.T. 157 (S.C.) = 2009 (13) S.T.R. 337 (S.C.). Lastly it has been submitted that the penalties imposed are arbitrary and excessive and without any justification and the appellants have been illegally held guilty. There is contradiction of allegations and the case of the respondent in vogue and there is no clarity of facts. It is not clear whether foreign exchange was received by the appellants or by the sellers. The order for confiscation is also illegal. The amount confiscated has no relevance or connection with the case and therefore the confiscation order is also liable to be set aside. The appeal are liable to be allowed. 10. Ld. legal consultant has defended the impugned order and has submitted that M/s. Mittal Ispat Ltd. and M/s. Sharda Castings Ltd. were technically different entities but factually they were the creation in two different names for the purpose of earning foreign exchange illegally by under-invoicing the imports. Submission is that the records seized from the possession and the statements of the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that D. Venkateswara Rao had also received certain amounts during his absence. The amount of ₹ 8 lakhs recovered from the possession of H.M. Mohammed Ummer was given by P. Suryanarayanan to the said person and another payment of ₹ 8 lakhs was made to M/s. New National Jewellery, Chennai, which establishment was raided on 2-5-2003 in which it was admitted that ₹ 10 lakhs was received by [National] Jewellery and also receipt of ₹ 2 lakhs on 29-4-2003 was acknowledged as per the instructions of one Muthulingam. Submission is that payments were made as per the foreign instructions by both P. Suryanarayanan and D. Venkateswara Rao. Note book marked A contains details of imports made from 1999 to 29-4-2003. The statement of P. Suryanarayanan is corroborated by the statement of D. Venkateswara Rao. D. Venkateswara Rao has also explained that the seized documents sheet No. 2 to 4 of pad No. 2 marked B from his table drawer contains details of amounts totalling to ₹ 43,98,125/- and also amount of ₹ 43,85,000/-. Submission is that on the basis of names figuring in the documents marked C and D also follow up action was taken against Narendra Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as contained in the SCN were explained and in view of the legal issues having been settled by the Apex Court, the Adjudicating Authority decided to deal with the case on the basis of available evidence. It has been pleaded that copy of the complaint was also annexed with the SCN which provided all the details and therefore, there was no occasion for repetition of the contentions in the SCN and the complainant was aware of the complete case. There was no vagueness. We are of the view that merely enclosing the copy of the complaint with the SCN cannot be said to be compliance of the legal requirement. Enforcement Directorate is obliged to establish that the defence was not prejudiced in any way. Further explaining the appellants the charges levelled against them during Adjudication Proceedings also does not validate the SCN as they were deprived to challenge the issuance of SCN effectively. The proceedings consequently are vitiated. 13. The case of the Enforcement Directorate merely rests upon the statements of the co-noticees P. Suryanarayanan and D. Venakteswara Rao, who, as per the report of the Registry have not filed appeals against the Impugned Adjudication Order. It may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imports made from 1999 to 29-4-2003. During the second week of December, 2002 he made payments of ₹ 8 lakhs in cash to H.M. Mohd. Ummer as per the instructions received from the seller from abroad, amount was received for making payments from the factory of M/s. Mittal Ispat Ltd. at Pondicherry and the payments was in connection with the material imports i.e. differential amount in the under-invoicing. He has also disclosed the mobile number of Rishi and Sandeep mentioned in the seized documents. 15. D. Venakteshwara Rao is alleged to have stated in his statement that he joined as Liaison Officer in 2000 with M/s. Mittal Ispat Ltd. and the company is looked after by Branch Manager P. Surayanarayanan. He is reported to have admitted that pages 2 to 4 of the seized essar quality slip pad 2 marked as D were written by him and P. Surayanarayanan has written page 2 of the said pad and as per the said pad he received an amount totalling to ₹ 43,98,125/- and made payments totalling to ₹ 43,85,000/- as per the directions of the appellant Rajeev Gupta as conveyed through P. Surayanarayanan. The details of the receipts and payments have been given. He has also given d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the statement of the key witnesses P. Surayanarayanan and D. Venkateshwara Rao that the payments were made as per the instructions from abroad in consideration of the foreign exchange acquired by the sellers abroad towards differential amount of under-invoicing of imports made by the appellants M/s. Mittal Ispat Ltd. and M/s. Sharda Castings Ltd. However, there is no evidence on record to substantial the allegations that the payments were made as per the instructions from abroad in consideration of the foreign exchange acquired by the sellers abroad towards differential amount of under-invoicing. 17. It has been argued by the ld. CA that the Customs Authorities have not reported under-invoicing of the consignments received which was the Competent Authority in this context. In para 37 of the Impugned Order the Adjudicating Authority has recorded the competent quotation by [sic] in this context that I also find that S/Shri P. Suraynarayanan and D. Venakteshwara Rao had retracted their statements vide letters dated 30-4-2003 sent to the complainant alleging that they were forced to write their statements under threat and coercion. However, after examining the said letters th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquire any asset available in India by any person as has been stated by the Adjudicating Authority in para 38 of the Impugned Order. It is also not clear as to how the Foreign Exchange (differential amount as alleged) was unauthorisedly acquired by the appellants company and how. It has also come (sic) that the Foreign Exchange was unauthorisedly acquired by the suppliers companies abroad. Thus there is no clarity of allegations imputed by the respondents. 19. It has been mentioned in para 17 of the Impugned Order that the case was fixed for personal hearing on 25-10-2007 and vide letter dated 21-10-2007 the Advocate of the noticees intimated that in view of Duserra festival and the forthcoming Deewali festival he was not in a position to appear for the hearing and requested for an adjournment of the hearing to any date after 8-11-2007. It has also come that he informed that the two employees P. Surayanarayanan and D. Venaketeshwara Rao have resigned and left and in the circumstances he will not be representing them any more. It has also come in para 18 of the Impugned Order that the case was fixed for personal hearing on 12-11-2007. On which date Sh. V.S. Thiageswaran, advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held by the Hon ble Supreme Court in Vinod Solanki v. UOI that the burden is on the prosecution to show that the confession is voluntary in nature and not obtained as the outcome of threat, etc. In Piyush Saxena v. Enforcement Directorate the Hon ble Delhi High Court has held that once the retraction of a confessional statement takes place the burden to prove that the statement was voluntary is on the prosecution. While in Vinod Kumar Sahadev v. UOI the Hon ble Delhi High Court has held that once the alleged statement was retracted the allegations of force and duress the onus to prove that the statement was voluntary shifts to the Government. The statement of the two noticees lose their sanctity in view of the retraction on the very next day and which was illegally rejected by the Investigating Officer and the Adjudicating Authority without any discussion or consideration relied on the rejection by the Investigating Authority and did not examine the veracity of the statements. In view of the above discussions the impugned order is devoid of merits and cannot stand judicial scrutiny resultantly appeals are liable to be allowed and the impugned order is liable to be set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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