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TMI Blog2020 (6) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital Goods, by over invoicing the value of the same by submitting fabricated documents to Chennai Customs authorities, suppressing goods/machinery imported back to India through Tuticorin Port under 100% Export Oriented Unit (100% EOU) scheme for manufacture of Iron Oxide of electronic grade without paying custom duty by falsely declaring the capital goods as imported from USA instead of furnishing the real description and nature of machinery to Tuticorin Customs by further over invoicing the said capital goods and also evaded customs duty and thereby caused wrongful loss to the Government of India to the tune of Rs. 31.10 crores approximately. Who filed the complaint. Therefore, the Director General of the Directorate of Revenue Intelligence, New Delhi filed a complaint before the respondent. On the basis of the said complaint, the respondent registered a case in RC No.6(E)2000/CBI/EOW/Chennai. The respondent, after completion of investigation filed charge sheet before the learned Additional Chief Metropolitan Magistrate (E.O.I) FAC, Chennai, who took cognizance in E.O.C.C.No.5 of 2004 for the offences under Sections 120B r/w 420, 467, 468 and 471 IPC and Sections 132 and 135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd machinery. A1, A2 and A3 are no more and case is abated as against them. For the other accused cases are being splitted. This Court had discharged some of the accused and now there could be no inference in what manner there was conspiracy between ORJ company and its two directors with the other accused. The trial Court without considering all these aspects, mechanically dismissed the discharge petition by extracting some portion from charge sheet, enlisting the witnesses and documents. Hence, the order of the lower Court warrants interference of this Court and hence, he prayed for setting aside the order of the trial Court. In support of his contention, he relied upon the following decision of the Hon'ble Apex Court and this Court:- 1. Akhil Ali Jehangir Ali Sayyed Versus State of Maharashtra reported in (2003) 2 Supreme Court Cases 708, in which it is held that "when a benefit was grated in another appeal to any of the other co-accused, the same benefit shall be extended." 2. Dr.Lakshmana Prakash Versus the State, rep. by the Inspector of Police (L & O), G-3 Kilpauk Police Station, Chennai reported in 1999 SCC Online Mad 208, wherein this Court held as follows:- "3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing relevant documents and the remittance to their authorized dealer Standard Charted Bank had made all transactions through the Bank of Madura Ltd. Without obtaining any permission from RBI, Al approached Bank of Madura to arrange lease finance for the capital goods to be imported by A6. The total cost of the project was Rs. 4820/- lakhs towards land, building, plant and machineries etc. A12, A13 and A14 had discussions with A1 and as per the instructions of Al, A7 on behalf of A6 company, submitted all documents to Bank of Madurai Ltd., for arranging lease finance. The allegations in the charge sheet are specific and there were sufficient evidence with regard to the criminal conspiracy between the petitioners/accused and the other accused for misappropriation of foreign funds and there are sufficient oral and documentary evidence to prove the offences and hence, he prayed for dismissal of the revision petition. 8. This Court considered the rival submissions and perused the materials available on records. 9. The undisputed fact is that there are totally 17 accused in this case, in which the 1st petitioner is the company viz., M/s.ORJ Electronics Oxides Limited, represented by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des manufactured by A6/M/s.ORJ Electronics Oxides Limited. Thereafter, M/s.ORJ Jaffer Batcha/A7 executed a bond with Development Commissioner of Madras Export Processing Zone on 07.03.1996 for setting up 100% EOU. The bond for customs duty was executed for the import of capital goods in accordance with the provisions of Section 142 of Customs Act, 1962 and under Section 11 of the Central Excise and Salt Act, 1944. The Assistant Development Commissioner, MEPZ, Chennai had given required attestation on 13.03.1996 to import capital goods. After obtaining attestation, the 2nd petitioner submitted a letter dated 06.05.1996 to Reserve Bank of India, Exchange Control Department (ECD), Chennai seeking approval for NRI Equity Participation. 12. Pursuant to this, RBI granted permission with terms and conditions. The 1st petitioner company instead of filing relevant documents and the remittance to their authorized dealer i.e., Standard Chartered Bank, Royapettah High Road, Chennai had conducted all transactions through the Bank of Madura Limited without obtaining any permission from RBI. On 27.06.1996, the Assistant Development Commissioner MEPZ allotted IE CE code to 1st petitioner for carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignments of the CIF value of US $ 7.2 million and cleared the goods without payment of customs duty as per the license for EOU. It was later found by the Directorate of Revenue Intelligence (DRI) who conducted search at the factory premises of M/s.ORJ Electronic Oxides Limited/A6 on 20.05.1999 that a large scale abuse of benefits given to the company under 100% EOU scheme and evasion of custom duty by the petitioner and the modes apprehendi had been adopted by A3 with A9, A10, A11. For the consignment ought to have been dealt through, the authorized bank, State Bank of India. Instead it was dealt through M/s.Sundaram Finance, who entered into a lease and finance. The transaction which was routed through Bank of Madura. 15. In this case the conspiracy link has been cut. The prime conspirator and the beneficiaries have been relieved from the case, either the case against them was abated or quashed by this Court. The offences alleged against the petitioners is a chain of events and they cannot be prosecuted for isolated incident when the chain link at the beginning and the end have been snapped. This Court while quashing the proceedings against some of the accused by order dated 17.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of one Shri.N.M.Parthasarathy and the goods were supposedly exported India by IPTE, USA of which Shri.N.M.Parthasarathy is the mandate holder. Sale proceeds of relevant of the relevant machinery were deposited by IPTE, USA into the account of ETKIF, America inc. USA held in M/s.Bank of Madura Ltd. Shir.N.M.Parthasarathy is the vicepresident of ETKIF, America inc. USA. Consideration for the alleged supply of software pertaining to online support of the production process was paid by to ETK Export Consultant, Chennai of which the same Shri.N.M.Parthasarathy is the proprietor. The capital goods imported by M/s.Bank of Madura vide bill of entry No.346 on 27.05.1997 at Tutitcorin port and given on these two O.R.J Electronics Oxides Limited, Pudukottai. (i) One fludised bed with the Titaniam stabilized body ASTM 430 Micro Processor and Programme Controller, Venturi Scrubber code VSI valued at US $ 765000 (ii) One Wet air auxiliation equipments (observer) for recovery of chemical (HCL) and heat code No.A1-2000 LPH valued at US $ 435000 (iii) Twenty four concentrating solar collectors for concentrating Fe C12 liquors valued at US $ 600000 Total CIF value of plant & machinery imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from this FCNR deposit account were to M/s.ORJ Electronics Oxide Ltd, Pudukottai (US $ 2389000). Thus, as can be seen the US $ 7200000 paid by M/s.Bank of Madurai Ltd. towards sale consideration for imported plant and machinery was distributed as follows: To IPTE, USA US $ 410,000 To ETK Export Consultant, Chennai US $ 600,000 To M/s.ORJ Electronics Oxide Ltd, Pudukottai US $ 3,591,000 Balance FCNR deposit in the name of ETKIF, America Inc, USA along with interest thereon US $ 3,125,000 Thus M/s.Bank od Madura Ltd. did not loose sight on control of the funds as all accounts were maintained in its own bank, nor did it dispossess itself the power to operate the funds. The transfer of foreign exchange to the account of M/s.ORJ Electronics Oxide Ltd, Pudukottai (US $ 3,591,000) were to be used by the lessor to meet its liability of payment of lease rentals payable to the lessor bank. Another sum of US $ 3,125,000 available in FCNR deposit in the name of ETKIF, America Inc, USA along with interest thereon is also under lien of the lessor bank (as security for payment of lease rentals payable by M/s.ORJ Electronics Oxide Ltd, Pudukottai). Thus, the lessor bank ensured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd itself to the assessee account. Further, during the year of account relevant to the assessment year 1998-1999, the assessee did not commence business production other than trial production which met miserable exploding accident of the machinery. Therefore, the proceedings initiated under Section 147 of the Income Tax Act, 1961 for the assessment year 1998-1999 is hereby quashed." 18.Further in the collateral proceedings the Customs, Excise of Service Tax Appellate tribunal in Appeal Nos.C/516/2006 & C/31/2007 has held as follows:- "17. We have considered arguments from both sides on this issue. We are of the view that the impugned orders cannot be called vague in terms of fixing the duty liability in respect of both the importers in each case. Further, we find nothing wrong in fixing the duty liability jointly and severally on two persons, who are jointly the importers in the eyes of the Customs law. M/s.SFL and M/s.ICICI Bank have to be considered as importers and libale to pay duty as they were the owners of the goods having retained such ownership during import as well as afterwards till repayment of such amounts. In the eyes of the customs law, bring owners, they were im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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