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TMI Blog2022 (4) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... sed under Section 114(i) of the Customs Act, 1962 read with Section 13 of the Foreign Exchange Management Act, 1999 on Sh. Pawan Kant Munjal, being the beneficial owner. b.) In respect of illicit export of currency equivalent to Rs. 3,72,64,700/-, details of which were found in pen drive recovered from the office of M/s SEMPL, fine of Rs. 9.25 lakhs under Section 125 of the Customs Act,1962 and penalty of Rs. 95,00,000/- under Section 114(i) of the Customs Act, 1962 are imposed on Sh. Pawan Kant Munjal, being the beneficial owner. c.) In respect of illicit export of currency equivalent to Rs. 21,35,25,172 - through travel cards issued in the name of various employees of M/s SEMPL and carried by Sh. Amit Bali, fine of Rs. 50,00,000/- under Section 125 of the Customs Act, 1962 and penalty of Rs. 5,35,00,000/- under Section 114(i) of the Customs Act, 1962 are imposed on Sh. Pawan Kant Munjal, being beneficial owner. d.) In respect of illegal export of foreign currency equivalent to Rs. 13,90,20,8971- carried by Mr. Amit Bali in past, fine of Rs. 35,00,000/- under Section 125 of the Customs Act 1962 and penalty of Rs. 3,50,00,000/- under Section 114(i) of the Customs Act, 1962 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of such services by such third party service providers settles their invoices in INR in India. 2.7. That some of the specialist third-party service provider used by HMC in relation to travel, event management and logistics arrangements in the past are as follows: (a) M/s Showtime (b) M/s Unbound (c) M/s Salt Experience and Management Pvt. Ltd. [the SEMPL] 2.8. Appellant being the Chairman, Managing Director and CEO of HMC is required to attend several of the said the engagements / meetings, which are organized by HMC, whether within and/or outside of India. The frequency of the foreign trips are subject to the business requirements of HMC and the Appellant had travelled abroad several times during the last few years. Appellant has a dedicated secretarial team of persons, who provides assistance to the Appellant on a daily basis in organizing and scheduling the engagements of the Appellant. Appellant confirms the meeting dates and a blue-print of the meeting / events / conferences that the Appellant is required to attend for the business purposes of HMC and then the CEO Office / relevant department, for and on behalf of the Appellant, usually coordinates with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts against the services provided by SEMPL (including SEMPL Travel Coordinators) within India and / or outside of India have been made by HMC in favour of SEMPL in India in Indian Rupees either through Cheque and/or NEFT against the invoices raised by SEMPL in favour of IIMC SEMPL, being a specialist third party provider in travel, event management and logistics arrangements, is required to ensure that all payments pertaining to travel / event management / logistics arrangements within India or outside India are in full compliance with all applicable rules and regulations as applicable (including Customs Act, 1962, Foreign Exchange and Management Act). SEMPL is an independent third party service provider, as such the Appellant and/or HMC is neither obligated nor required under any law to ensure that whether or not SEMPL is in contravention of applicable laws or enquire as to how and in which manner SEMPL is settling payments of its vendors / suppliers within India or outside of India. 2.14. As per the Company's policy, the HMC during the official trip of the Appellant on its behalf in the year 2018 (in and around September) sought the professional services of SEMPL in ordinary cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt on several past occasions, and failed to declare it to customs on all occasions. xxxxxx. 58.6 It is clear that Mr. Amit Bali (Noticee No. 2) was the one required to approach customs authorities in the course of his departure for international destinations to declare any currency in excess of the prescribed amount. This he admittedly failed to do in respect of the currency seized from him. xxxxxxxx. Mr. Bali's inculpation rests heavily on recovery of forex from his possession. He might have been carrying out a business function of behalf of M/s SEMPL on the day of his interception and on all previous occasions, but he was in undeniably in possession of forex, and that makes him liable. I find his actions to be willful. xxxxxxxxxx 58.10 One can now turn to examine the rule, if any, of Mr. Pawan Kant Munjal. I might as well start with the concept of beneficial owner, which has been relied upon to implicated Mr. Pawan Kant Munjal, Noticeee No. 5. The concept is relatively recent in Customs law in India, having been introduced into law only in the year 2017 (section 3A of the Customs Act). The case, as we note from the circumstances, was booked in 2018. As a result of its rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEMPL, cannot be said to become the "beneficial owner" of M/s SEMPL in any which way." (emphasis supplied) 5. The Department filed an appeal before the Commissioner (Appeals), who by order dated 17.07.2019, modified the order passed by the Additional Commissioner and the relevant findings recorded by the Commissioner (Appeals) are as follows: "6.4 The Respondent in his defence has mainly relied upon the argument that the concept of beneficial owner does not apply in this case. In terms of Section 2(3A) of the Customs Act, 1962 beneficial owner means any person on whose behalf the goods are being imported or exported or who exercises effective control over the goods being imported or exported. From the facts of this case and statement of various persons it is clear that the Mr. Amit Bali and/or other employees of SEMPL did not carry the subject foreign currencies for their own benefit or to further the business SEMPL but the same were exported from India for use and on behalf of the Respondent. The Respondent has-cited the judgment of Sunil B. Naik vs. Geowave Commander 2018 (5) SCC 505 to Bistinguish the requirements for being a beneficial owner. However, the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds is available, as in the present case, the concept of 'beneficial owner'cannot be applied. The Commissioner (Appeals) has, therefore, wrongly applied the concept of 'beneficial owner'in the present case and passed an order against the appellant; (ii) In the facts and circumstances of the case it is more than apparent that forex in excess of the prescribed amount was recovered from Amit Bali and in fact this finding was also recorded by the Additional Commissioner, which finding has not been disturbed by the Commissioner (Appeals); (iii) The entire case against the appellant is mischaracterization of 'beneficial owner'based on the use of the foreign exchange in the past as well as the intended use during the visit to London and Baltimore on 20.08.2018; (iv) The use of the foreign exchange including foreign currency is directly linked to the purpose for which the same is drawn by the event management company SEMPL from authorised dealers. It is a matter of record, proven beyond doubt, particularly by the nine statements, each of Hemant Dahiya and K.R. Raman that SEMPL acquired foreign exchange from authorised dealers from time to time. Such acquisition and/or drawl from excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Act as the issue relates to export of baggage; (ii) As per section 2(3A) of the Customs Act, the appellant was the beneficial owner of foreign currency which was meant to be used for his personal expenses while abroad as per his requirement and direction; (iii) Even in the first statement recorded on 20.08.2018 under section 108 of the Customs Act, Amit Bali had clearly stated that the seized foreign currency belonged to the appellant; (iv) The entire money which was carried by Amit Bali was to be used by the appellant mainly for his personal use; (v) SEMPL had a yearly turnover of Rs. 200 crores and between 2014 and 2018 it had business of Rs. 785.96 crores from HMC and that to without any written contract; (vi) It is a fact that the appellant was known to Hemant, (Director of SEMPL) and Amit Bali before inception of the company and SEMPL provided personal assistant to the appellant on all his foreign travels; (vii) Foreign currencies were issued in the name of employees of SEMPL to be handed over to Amit Bali to meet the expenses of the appellant. Therefore, the foreign currencies were exported /attempted to be exported in violation of regulation 7(2)(b) of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an that when the 'owner'of the goods is available, the concept of 'beneficial owner'under the deeming fiction of section 2(3A) of the Customs Act would not be applicable. 16. The Additional Commissioner, as noticed above, in the order dated 19.11.2019 examined the concept of 'beneficial owner'and noticed that this concept was invoked because the foreign currency was not recovered from the possession of the appellant. The Additional Commissioner held, after examination of the statements recorded under section 108 of the Customs Act, that HMC was a mere recipient of the services provided by SEMPL and against such services invoices were raised by SEMPL; and when the appellant was not even aware that any cash was carried by Amit Bali, the appellant cannot be said to be the 'beneficial owner'. However, the Commissioner (Appeals), in the order dated 30.07.2021, concluded from the said statements that Amit Bali did not carry the foreign currency for the benefit of SEMPL, but the same was exported from India on behalf of the appellant for use of the appellant. 17. It would, therefore, be necessary to examine the contractual arrangement between HMC and SEMPL and the statements of various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my mobile to arrange a tour programme and expenses for his coming scheduled tour. He has told me on mobile to arrange 5 days tour for London and 5 days tour for New York. Later on Sh. Hemant Dahiya has also informed me about the same telephonically. Question 5:- What was the purpose of visit of Sh. Pawan Kant Munjal to London and New York? Answer:- Sh. Pawan Kant Munjal has to attend some business meeting in London and New York. Question 6:- Did you have kept the said foreign currency in your hand baggage? Answer:- Yes, I had kept the said foreign currency in my hand baggage. Question 11:- Why this time you were carrying such a huge amount of foreign currency? Please explain. Answer:- This time the tour is comparatively longer and we did not done any online booking in respect of hotels, taxis and other expenses. So we are carrying the huge amount of foreign currency for bearing all these said expenses. Question 12:- Who used to give you foreign currency for all your previous abroad visits with Sh. Pawan Kant Munjal? Answer:- Sh. Hemant Dahiya used to give me foreign currency for all my previous abroad visits with Sh. Pawan Kant Munjal. 12.09.2018 Question 1:- Pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Pawan Munjal (appellant) 20.08.2018 Question 1:- What was the purpose of your visit to London? Answer: I had meetings with some business clients at London. Then after I had the plans to visit to Baltimore for some business meetings. Question 2:- Who was travelling with you during the trip to London? Answer: Mr. Amit Bali was assisting me during my business travel to London. Question 5:- Were you aware that Mr. Amit Bali was carrying Foreign Currency? Answer: No, I was not aware about the above said fact. 27.03.2019 Question 10: Please see the statement dated 20.08.2018 of Mr. Amit Bali and state that why did he stated that the seized foreign currency belonged to you? Answer: I don't have any knowledge about why Amit Bali made such claim. I reiterated that the said seized foreign currency did not belong to me. Statement of Hemant Dahiya (Director of SEMPL) 20.08.2018 Question 4:- Were you aware about the visit of Sh. Pawan Kant Munjal to London? Answer: Yes, I had the knowledge about his upcoming visits in London, where he had some meetings about technology briefing and further he had the plans to visit Baltimore in US for meeting with distributors of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Analysis (JCA) to the finance department requesting for approval of cost and release of funds. Question 7:- Had Client Servicing Team of your company sent Job Cost Analysis (JCA) to Finance department for organizing the upcoming event at London and USA for your client M/s Hero Motocorp Limited this time? Answer: No, this time Client Servicing Teams of our company hadn't sent Job Cost Analysis (JCA) to Finance department. For our regular clients we generally do not insist for JCA instantly and it may be received later to avoid delays in the service to clients. Question 9:- How and when you got the information about the foreign visit of Mr. Pawan Kant Munjal dated 20.08.2018 and related information about his meetings? Answer: On 17.08.2018 i.e. on Friday I have received a call from the Client Servicing Team of our company regarding the request for funds to organize some events for our client M/s Hero Motocorp Limited abroad in recent future. Question 12:- Have your company got foreign Currency exchanged of 50,409 USD, 30745 Euros and 25030 Pound Sterling from any authorised currency dealers in the name of Mr. Amit Bali? Answer: No, recently we had not purchased any curren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the company by way of purchase in the given name, who were to travel, out of the funds of the company. Sometimes, these travel cards, issued in name of other employees, were also given to Mr. Amit Bali, by the cashier on my approval and this used to be in the knowledge of Mr. Hemant Dahiya also. However, I was not aware whether team members, in whose names the forex travel cards were purchased, travelled abroad or not and Mr. Hemant Dahiya should be aware about the same as he used to decide the team travelling abroad in relation to a project. Question 3: Who decides the expenses which were to be made by those forex cards including those purchased in names of other employees of M/s. SEMPL, who did not even travel abroad for the events for which the said cards were issued in their name but were carried by Amit Bali? Answer 3: My job was to arrange the forex travel cards depending upon expense requirements communicated to me by Mr. Hemant Dahiya, MICE team and Mr. Amit Bali; however, the exact expenses to be made through those forex cards is decided by Mr. Hemant Dahiya, Amit Bali or the client for whom the event is being organised. Statement of Girijesh Kashmira (cashier) 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 108 of the Customs Act. 21. The statement made by Amit Bali needs to be examined first. In the statement recorded on 20.08.2018, when asked whether the said recovered currency belonged to him, Amit Bali stated that the recovered currency belonged to the appellant and was handed over to him (Amit Bali) by Hemant Dahiya to look after the expenses of the appellant. He further stated that the bag from which the currency was recovered belonged to him. It is this statement wherein Amit Bali stated that the recovered currency belong to the appellant that the concept of 'beneficial owner'has been drawn, though it needs to be noted that at the same time Amit Bali had stated that the currency was handed over to him by Hemant Dahiya who is one of the Director of SEMPL. Infact, to the next question Amit Bali stated that the currency was received by him at his office on 19.08.2018. Amit Bali further stated that he was carrying the currency since SEMPL could not do online booking for hotels, taxies and other expenses and this amount was to be utilized for the purpose. In the statement made on 28.09.2018 Amit Bali was again asked whether the said currency was declared by him and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his statement made on 21.08.2018 stated that on 17.08.2018 he had received a call from the Client Servicing Team regarding the request for funds to organize events for HMC abroad. He further stated that the unused currency handed over by the staff of SEMPL when returning from foreign events got accumulated in the office and the same was given to Amit Bali to meet the expenses. Regarding the amount of foreign currency he stated that since information regarding the event was received on 17.08.2018, it was not possible to make online transactions for bookings and others expenditure and so it was decided to give the foreign currency kept in the company account to Amit Bali. This currency was handed over to Amit Bali by Girijesh Kashmira, Cashier of SEMPL. To the query as to whether the payments for the events that are organised are received, K.R. Raman stated that bills are raised in respect of the expenses together with the service charges and the payment is made to SEMPL through NEFT/Cheques. 25. Girijesh Kashmira, Cashier of SEMPL, in his statement made on 28.09.2018 stated that it he had handed over the foreign currency to Amit Bali. He clarified that the said foreign currency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities. The meetings and events would benefit SEMPL and its business and it would not be correct to hold the appellant as the 'beneficial owner'. 30. This apart, the acquisition and drawl of foreign exchange is integrally connected to the purpose of use thereof and the examination of the use and purpose would fall within the domain of the authorities that regulate the acquisition and/or drawl of foreign exchange and not within the jurisdiction of the Customs Authorities, which are concerned only with the carrying out of India of the foreign exchange. The acquisition, possession, retention and use of foreign exchange may fall within the jurisdiction of an authority under FEMA. 31. Learned authorised representative appearing for the department has raised a primarily objection that the appeal before the Tribunal is not maintainable under section 129A of the Customs Act for the reason that the first proviso to section 129A provides that no appeal shall lie to the appellate Tribunal and the appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order, if it relates to any goods imported or exported as baggage. It would, therefore, be necessary to reprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had filed an application for rectification of mistake in the final order dated 15.05.2002 passed by the Tribunal for the reason that the Tribunal had no jurisdiction to decide a matter relating to confiscation of currency seized in view of the provisions of section 129A (1) of the Customs Act. This contention of the revenue was not accepted by the Tribunal and the relevant portion of the order is reproduced below: "2. xxxxxxxxx. I agree with the appellants'contention that the provisions of Section 2(22) of the Customs Act which defines the goods makes a clear distinction between the baggage and currency. If the Indian Currency is included in the expression 'baggage', there was no need to define the currency separately. I also find force in the appellants'contention that the charges against the appellants are under the provisions of Section 113(d) i.e. for misdeclaration. As such, I hold that the Tribunal was having jurisdiction to decide the matter. No merits are found in the Revenue's application and miscellaneous application is accordingly rejected." 36. Thereafter, the matter was carried to the High Court by the Revenue and the Calcutta High Court in Commissioner of Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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