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TMI Blog2022 (9) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... has funded the amount for smuggling of gold. On going through the statements of Shri Mehul Bhimani and Shri Jitendra Rokad recorded on 28.06.2019 and 29.06.2019 in impugned matter, it is nowhere found that the Appellant had knowledge about the use of fund in smuggling of gold. The Appellant himself has not financed the fund to Mehul Bhimani but on his garuntee it was financed by Shri Nilesh Dhakan. Except this the department nowhere produce any evidences to show that Appellant was involved in smuggling of gold activity. From the evidence available on record and statement of Appellant it is clear that he was in normal course lending the fund. However, the activity of financing of fund has been turned by the Ld. Commissioner into direct participation in the conspiracy to smuggle gold. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge on the part of the person has to be established. In the present matter department failed to do so - The Appellant had nowhere stated that this fund used by persons for import of smuggling of gold. During the investigation officers did not find any documents/ piece of paper or any other evidence against the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gold bars. The officers seized the said gold under Seizure memo dated 04.06.2019. Statement of Shri Jignesh Savaliya was recorded wherein he stated that the said gold bars were given to him by a person named Shri Lokesh Sharma and he was supposed to hand over the same to Shri Rutugna Trivedi outside the Airport terminal. The officers further carried out the investigation and the evidences in the form of statements of persons involved in smuggling of gold, documents recovered after searches carried out at various locations, documents recovered and retrieved from the Mobile phones of various persons involved in smuggling of gold, data storage devices recovered from the residence of Ms. Nita C Parmar and also the email recovered from account of Shri Jignesh Savaliya and Shri Jitendra Rokad reveal that a Gold smuggling racket was orchestrated and operated by Shri Rutunga Trivedi, his wife Smt. Hina Rutunga Trivediand their employee and key associate Ms. Nita C Parmar. This smuggling activity was aided by Shri Jignesh Savaliya, Asst. Duty Officer of M/s Global Ground India Pvt. Ltd., ground handling agency working at Sardar Vallabhvhai Patel International (SVPI) Airport, Ahmedabad, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 111 of the Customs Act, 1962. After following due process, the adjudicating authority vide impugned order dated 29-11-2021 confirmed the charges and demands proposed in Show Cause Notice. He imposed the penalty of Rs. 50,00,000/- under Section 112(b)(i) of the Customs Act 1962 on the appellant. Being aggrieved, the appellants preferred appeal before this Tribunal. 3. Shri Hardik Modh, Learned Counsel appearing on behalf of Appellant submit that Ld. Commissioner erred in imposing penalty on Appellant. He relied upon the statements of Shri Mehul Bhimani and Shri Jitendra Rokad recorded on 28.06.2019 and 29.06.2019. Upon perusal of these statements, nowhere it has been stated that the Appellant had knowledge about the use of the fund in smuggling of gold. Shri Jitendra Rokad in his statement dtd. 29.06.2019 stated that after deducting expenses, surplus profit was distributed among Shri Mehul Bhimani, Shri Jitendra Rokad and Shri Rutugna Trivedi on equal ratio i.e. 33% of profit each. Shri Jitendra Rokad nowhere in his statement stated that the Appellant had knowledge of use of the fund in smuggling activity or earned any profit out of this activity. 3.1 He also subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in India. During the course of recording his statement, the Appellant categorically stated that Shri Mehul Bhimani required funds in cash and therefore he arranged Rs. 1 crore for short period with interest. After one month, the amount was returned to the Appellant. Merely entry found on the document retrieved from Pen Drive of Ms. Nita Parmar, it does not mean that the Appellant financed Shri Rutugna Trivedi or any other persons for smuggling of gold into India or had knowledge about smuggling of gold into India. 3.5 He also submits that Ld. Commissioner heavily relied upon the documents retrieved from Pen Drive seized from residential premises of Ms. Nita Parmar on 26.06.2019. Basis on such documents it is held that the Appellant financed to Shri Rutugna Trivedi for smuggling of gold. The Appellant denied that he financed to Shri Rutugna Trivedi for smuggling of Gold. The Appellant is not concerned with the documents/ emails retrieved from Pen Drive seized from residential premises of Ms. Nita parmar. Even statements of Shri Mehul Bhimani, Shri Jitendra Rokad, Shri Rutugna Trivedi and Ms. Nita Parmar were recorded whereby they did not say that the Appellant had knowledge abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is greater; From the perusal of above provision, it will be seen that for imposition of penalty on a person under Section 112(b), the following conditions must be satisfied. (i) The person must have acquired possession of or must be in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which are liable for confiscation under Section 111 of Customs Act, 1962. (ii) The person must have knowledge or have reason to believe that the goods acquired by him or dealt with by him in the manner as mentioned above, are liable for confiscation under Section 111 i.e. he has knowledge or has reason to believe that any one or more of the contraventions mentioned in Clause (a) to (p) of Section 111 have been committed in respect of the imported goods acquired or dealt with by him. For imposition of penalty under Section 112(b) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gold. It is also pertinent to note that Shri Jitendrakumar Dhanjibhai Rokad and Shri Mehul Rasikbhai Bhimani were also involved in financing the activity of gold smuggling. Such circumstantial evidence is a pointer that Noticee 18 had provided funds of Rs. 1 crores to Shri Rutugna Arvindkumar Trivedi. In the light of the above documentary evidence and discussion , I find that Noticee No. 18 has knowingly funded an amount of 1 Crore to Shri Rutugna Arvindkumar Trivedi in the activity of smuggling of gold. I have already come to the conclusion that such gold is covered under the category of prohibited goods and is liable for confiscation in terms of the provisions of Section 111 of the Customs Act, 1962 in my discussion at paras 119.20 to 119.20.8 hereinabove. Therefore, I find that Noticee No. 18 has concerned himself in selling or purchasing and dealing with any goods which he knew were liable to confiscation and thereby, rendered himself liable to penalty in terms of the provisions of Section 112(b)(i) of the Customs Act, 1962. 5.2 We find that role of the Appellant in the whole episode has been derived only from the printout sheet retrieved from the pen-drive seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wise account for the same. Mostly this amount was given for 1-2 months and I have received back full amount alongwith interest and no amount is pending with them now. On being asked I state that I don t have any other business relations with Shri Mehul Bhimani and Shri Jitendra Rokad. Now, on being asked about one Shri Rutugna Arvindbhai Trivedi, I state that I don t know him personally, but it was informed by Shri Mehulbhi that he (Mehul Bhimani) and his friend Jitendra Rokad used to invest with him in his company Nivid Cadillac at Dubai. On being specifically asked regarding interest rate charged by me, I state that we generally charge interest rate ranging between 18-24% per annum. Further, on being specifically asked I state that I have not dealt in gold with Shri Mehul Bhimai, Jitendra Rokad Rutugna A Trivedi anytime. On being further asked I also state that I don t recall any other payment made to Shri Mehul Bimani, Jitendra Rokad. 5.3 The above statement clearly reveals that the Appellant has not financed to Shri Rutugna Trivedi as held in the impugned order. Since Shri Mehul Bhimani required the fund, the Appellant provided Rs.1 crore in cash in 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of the Appellant on 03.09.2019, the investigating authority did not record statement of Shri Mehul Bhimani and Shri Jitendra Rokad to ascertain the correct facts. 5.9 Similarly, statement of and Shri Rutugna Trivedi and Ms. Nita Parmar was recorded on 14.10.2019 wherein they were not even questioned related to the sheet retrieved from the pen-drive recovered from her residence regarding sheet in dispute. 5.10 The above facts stated by the Appellant in their statement nowhere disputed by the department. From the evidence available on record and statement of Appellant it is clear that he was in normal course lending the fund. However, the activity of financing of fund has been turned by the Ld. Commissioner into direct participation in the conspiracy to smuggle gold. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge on the part of the person has to be established. In the present matter department failed to do so. From the above statement of Appellant it is also clear that he had not confessed in his statement that he had knowledge about use of the funds provided to Shri Mehul Bhimani for smuggling of gold. The Appellant had nowhere stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet recovered from the third party and statements of third party. The said printout at the most shows that Shri Rutugna Trivedi has borrowed money from the appellant, this is not under dispute. Now how that borrowed money was accounted for by borrower and use thereof is not relevant to the appellant. Moreover we also observed that during the investigation statements of Ms. Nita Parmar, Shri Mehul Bhimani, Shri Jitendra Rokad and Shri Rutugna Trivedi were recorded whereby they did not say that the Appellant also involved in alleged activity of gold smuggling or Appellant had knowledge about smuggling of gold into India or financed them for smuggling of gold. From the above-reproduced section 112(b) it can be seen that penalties can be imposed only if the individual is in knowledge of the act of smuggling. Further, for imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge on the part of the person has to be established. In the present matter department failed to do so. During the investigation officers did not find any document/ piece of paper or any other evidence against the Appellant to show that the Appellant had financed the money for smuggling of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 shall be liable Rule 209A of the Central Excise Rules, 1944: Rule 209A. Penalty for certain offences. Any person who acquires possession of, or is any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater. Rule 26 of the Central Excise Rules, 2002 Rule 26 came to enacted which came in force with effect from 1st March, 2007. Rule 26 reads as under : Rule 26. Penalty for certain offences. - (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tilal Thakkar and Co 2006 (195) ELT 9 (Bom.) held that for imposition of penalty under Rule 209A of the Central Excise Rules, 1944, the person must have dealt with excisable goods with knowledge that they are liable for confiscation. 5.16 Similarly, in the case of R.C. Jain Vs. Commissioner of Central Excise and Service Tax 2016 (334) ELT 115, the Hon ble Tribunal held that penalty under Section 112(b) of the Customs Act cannot be imposed if the assesse has not dealt with or transported goods physically in any manner. 5.17 The Tribunal in the case of D. Ankneedu Chowdhry Vs. Commissioner of Customs 2004 (178) ELT 578 held that in any other manner dealing with used in Section 112(b) of the Customs Act has to be read ejusdem generis with the preceding expression in the clause viz. carrying, removal or depositing etc. It is held that accordingly to the above doctrine, meaning of expression in any other manner of dealing with should be understood in sense similar or comparable to how preceding words viz. carrying, removing, depositing etc. are understood. In other words, in any other manner dealing with of the goods is also to some physical manner of dealing with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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