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TMI Blog2024 (7) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ve perused all the SCNs and find that there is an Annexure to each of the SCN. Annexure list the documents which have been relied upon and include statements, documents seized specifying the premises from which recovery was made, bank draft, diary marked M with specific page therein, fax message and transcript of bank account. Since the documents recovered and seized were referred in the various statements which have been relied upon, we are unable to agree to the proposition that unless the documents are specifically pointed out in the Annexure to the SCN the same will be vague and baseless. Appellant pleaded that the statements made by the co-noticees cannot be relied upon - We do not intend to rely upon the statements of the co-noticees. However, the evidential value of the documents seized from their premises will remain intact in so far as these have significance for the case against the Appellant and have been referred by him in his statements. Request for the cross examination of various witnesses - We do not find that the denial of cross examination of the witnesses caused prejudice to the interest of the Appellant. The documents which were relied upon to establish charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FERA for an amount of Rs. 1, 80, 000/-. SCN III relating to acquisition of US $ 19, 000 by the Appellant and placing the same to the credit in NRE account, of Shri Ritesh Shah, his cousin, who was a non-resident - We find from the Annexure to the SCN III dated 11.08.1995 that among the documents received from Canara Bank were transcript of the NRE Account No. 50459, Bank Account opening form, copy of power of attorney of Shri Shailesh V. Shah, credits slips and the letters of Shri Shailesh V. Shah. In his statement the Appellant refused to comment on letter written by him to Canara Bank for issuing draft of US$ 8200 to M/s Indukern Chemie AG, Switzerland. Ld. Adjudicating Authority made certain logical observation in this regards. In the absence of any explanation by the Appellant the charge against him of contravention of Sections 8 (1) and 9 (1) (e) of FERA invoked in SCN III dated 11.08.1995 stands established. SCN IV wherein Appellant has been charged for attempting to make payment of US$ 8200 by issuing instructions to Canara Bank to make draft in the name of M/s IndukernChemie AG, Switzerland.Ld - In view of the documents received from Canara Bank and there being no expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against him in SCN II dated 11.06.1996. The amount of pre-deposit of Rs. 1, 70, 000/- made on 14.05.2018 with the Respondent Directorate is to be refunded within three months. - JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN And SHRI BALESH KUMAR : MEMBER For the Appellants : Mr. T. Sundar Ramanathan , Ms. Sukanya Viswanathan , Advocates For the Respondent : Mr.Mahip Datta Parashar , Mr. Surender Kumar , Advocates ORDER This Order disposes of the two Appeals Nos. FPA-FE-408/MUM/2001 and FPA-FE-365/MUM/1997filedby the Appellant Shri Shailesh V. Shah against the Impugned Orders Nos. SDE/PKA/26-32/B/99 dated 30.03.1999 and ADJ.46-57/B/SDE/PKA/97 dated 31.03.1997 respectively. In the Impugned Order dated 30.03.1999, seven Show Cause Notices (SCNs) were disposed of with the imposition of total penalty amounting to Rs. 50, 79, 500/- on the Appellant, besides penalties on other noticees and confiscation of US$ 8200 seized from Canara Bank. The contraventions of Sections 8 (1), 9 (1) (a), 9 (1) (c), 9 (1) (d) 9 (1) (e) r/w Section 64 (2) of The Foreign Exchange Regulation Act, 1973(FERA) were held established against the Appellant. In the Impugned Order dated 31.03.1997 one SCN issued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has been made out against the Appellant in the absence of any adverse finding by the Customs Department. The Appellant had imported the goods after clearance from the Customs. He argued that the case of under invoicing could only have been made if there was contemporaneous evidence to show for a number of other importers that they imported comparable quantities at higher prices than the Appellant. He submitted that the Appellant could not be held responsible for alleged under invoicing of imports by Suru Pvt. Ltd., Alcon Pharmaceuticals and Centaur Chem as all the documentary evidence would show that the imports were undertaken by these entities, which were in no way controlled or managed by the Appellant. He concluded by reiterating that there is no evidence on record to show contraventions of Sections 8 (1) and 9 (1) (a) of FERA by the Appellant as there is nothing on record which brings out that the Appellant otherwise received or remitted foreign exchange. He pleaded to allow the two Appeals. 6. Ld. Counsels for the Respondent pleaded that the Impugned Orders are well reasoned and speaking. They argued that the Appellant had in his own statements while explaining the document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Carbamezapine and the charge of under valuation in imports of Carbamezapine against the Appellant relate to this later period. They therefore pleaded to dismiss the Appeals. 9. We have carefully considered the rival submissions and the material on record. We find that the Impugned Order dated 30.03.1999 has disposed of seven SCNs. In each of the SCN the penalty has been imposed on the Appellant. We intend to examine each of the SCN and the findings of the Ld. Adjudicating Authority thereupon. 10. With respect to the contention that the statements of the Appellant were recorded under duress and were retracted at the earliest opportunity, the Ld. Adjudicating Authority made the following observations in the Impugned Order dated 30.03.1999: One of the important points raised on behalf of Shri Hemraj Karunakar and Shri Shailesh Shah is that their statements were recorded by the officers of Enforcement Directorate under force, threats and coercion after prolonged detention in the office of the Department and hence they cannot be considered as voluntary and true. This was particularly stated to be in view of almost immediate retraction of their statements filed by them in the court/off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving on those taxes and customs duties etc. and then he says he is not educated but does not know how to read and write English well i.e. atleast has a working knowledge of English. The statement written in a language understood by him admittedly and giving details and facts known to him only which have subsequently been admitted has to be a voluntary one only and admissible as evidence. 11. We do find from perusal of the statements of the Appellant that the details of his family were disclosed which could have only been in personal knowledge of the Appellant. He further stated about his sister Ms. Seema Shah living in USA. He gave details of eight firms where his family members were partners or directors. On his request he was allowed to rest on 05.08.1994 and he continued statement on 06.08.1994. He gave details of the imports of Carbamezapineincluding the rates which varied from US$ 30 to US$ 35 per kg.He admitted having imported 22, 530 Kg of Carbamezapine in the name of Ms. Centaur Chem Bombay from August 1993 to July 1994. He admitted that under valuation of US$ 1, 14, 150 happened for the said consignments. He also narrated that the said difference was paid by his sister res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inducement, threat, coercion or by any improper means then statement must be rejected brevimanu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise, etc. to establish that such improper means has been adopted. However, even if the maker of the statement fails to establish his allegations of inducement, threat, etc. against the officer who recorded the statement, the authority while acting on the inculpatory statement of the maker is not completely relieved of its obligations in at least subjectively applying its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down that the authority or any court intending to act upon the inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same in writing. It is only on this principle of law, this Court in several decisions has ruled that even in passing a detention order on the basis of an inculpatory statement of a detenu who has violated the provisions of the FERA or the Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not survive. In view of the aforementioned observations, we do not intend to rely upon the statements of the co-noticees. However, the evidential value of the documents seized from their premises will remain intact in so far as these have significance for the case against the Appellant and have been referred by him in his statements. 15. With regard to the request for the cross examination of various witnesses, the Ld. Adjudicating Authority made the following observations: Another important point raised on behalf of these of various noticees is the request for the cross examination of various witnesses mentioned in their replies to the SCNs. After considering the facts and circumstances as also evidence on record, I am of the considered view that there is no merit in such requests for cross examination of any of the witnesses listed by them. I am also of the considered view that the principles of natural justice do not require the adjudicating officer to afford cross examination of the officer before whom the statements were recorded and otherwise with whom the statements were recorded and otherwise with whom any enquiry was made, as a matter of routine. All the relevant materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady observed that we do not intend to rely upon the statements of the co-noticees. We thus note that the failure to permit the Appellant to cross-examine does not call for reversal of the Order and de novo enquiry. 17. It is on record that the Appellant in his statements admitted entering into an understanding with Shri Kartik Mistry, proprietor of M/s Centaur Chem whereby the entire cost of the imports was to be borne by the Appellant who also undertook responsibility for the sale of the imported Carbamezapine. He had entered into such an arrangement since the office of M/s Centaur Chem in Daman did not attract sales tax or octroi. The profit was to be shared between the Appellant and Shri Mistry on fifty-fifty basis. He in statements gave the details of 32 imported consignments of Carbamezapine. He categorically stated that for these 32 consignments imported between August 1993 and July 1994 there was under valuation to the extant of US$ 5 to 6 per kg and therefore total under valuation was 1, 14, 150 US$. He denied having done any under invoicing in the remaining consignments imported on previous occasions in the name of other companies. He specified box files E F as containing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respect to SCN II dated 11.08.1995 the following: Shri Shailesh Shah has categorically admitted having paid various amounts to different persons, mostly based in Kerala, on the instructions of his brother-in-law Shri Prakash C. Shah of M/s. Seema International, New York. Enquiries made by the Dept. through their Trivandrum office with these recipients confirmed the said averments made by Shri Shailesh Shah. The diary marked M seized from the business premises of the said Shri Shailesh indicates the name of one Mrs. Vimla D souza as the person who received Rs. 31, 000 from Shri Shailesh Shah. In her statement dtd 12.01.95 given under Section 40 ibid the said Smt. D‟ Souza admitted having received the said amount of Rs. 31, 000/- from the said Shri Shailesh Shah in the month of Nov./ Dec. 1992 on behalf of her cousin Gavinia of New York, USA. As far as the residential status of the said Shri Prakash Shah as a non-resident is concerned, the same is not in doubt. It has again been confirmed by the said Shri Shailesh Shah has further submitted that the amount of Rs. 150, 000 utilised by him and the instructions to make payments to various persons were received by him from Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of US $ 19000 deposited in NRE A/c. has been bifurcated into US $ 10, 000 and US $ 9, 000 clearly to avoid the question of production of Currency Declaration Form for having declared the said amount at the time of arrival in India. 24. We find from the Annexure to the SCN III dated 11.08.1995 that among the documents received from Canara Bank were transcript of the NRE Account No. 50459, Bank Account opening form, copy of power of attorney of Shri Shailesh V. Shah, credits slips and the letters of Shri Shailesh V. Shah. In his statement the Appellant refused to comment on letter written by him to Canara Bank for issuing draft of US$ 8200 to M/s IndukernChemie AG, Switzerland. Ld. Adjudicating Authority made certain logical observation in this regards. In the absence of any explanation by the Appellant the charge against him of contravention of Sections 8 (1) and 9 (1) (e) of FERA invoked in SCN III dated 11.08.1995 stands established. 25. With respect to SCN IV dated 11.08.1995 wherein the Appellant has been charged for attempting to make payment of US$ 8200 by issuing instructions to Canara Bank to make draft in the name of M/s IndukernChemie AG, Switzerland.Ld. Adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority. However, we do not find the abetment charge to be proved against the Appellant as there is no evidence on record to establish that he aided and assisted the bank and its officials to indulge-in the said contraventions. 28. We find that with respect to SCN I dated 11.08.1995, the Ld. Adjudicating Authority imposed penalty of Rs. 40, 00, 000/- on the Appellant for contravention of Sections 8 (1) and 9 (1) (a) of FERA for an amount of US$ 462, 110. However, since we have held that the charge is established to the extent of US $ 1, 14, 150 the amount of penalty imposed is not justified. We have also found that the charge of abetment against the Appellant invoked in SCN VII dated 11.08.1995 is not established. 29. Appeal No. FPA-FE-365/MUM/1997 is against the Impugned Order dated 31.03.1997. In this Impugned Order, only oneSCNII dated 11.06.1996 relates to the Appellant. The Appellant has been charged for the contravention of Sections 8 (1) 9 (1) (a) of FERA for the acquisition otherwise of US $ 48, 060 and for making payment of the said amount to M/s IndukernChemie AG, Switzerland without general or special exemption of the RBI. The Appellant was charged for the import of 1703 k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of his statements, it is obvious that wherein he shared the profits in undervaluation of the import of Carbamezapine in the name of M/s Centaur Chem he had stated as much. He denied his role categorically in the case of imports of other companies. There is no reason to doubt the veracity of the denials made by the Appellant in his statements, particularly so when his admissions have been accepted as true and voluntary. We therefore do not find that the charges invoked against the Appellant in SCN II dated 11.06.1996 are established. 33. With reference to the discussions in paragraph 26 afore, we note that the Appellant has expired and is represented by his legal heirs that ishis widow namely Ms. Lina Shah and his three daughters namely, Ms. Sunayana Sailesh Shah, Ms. Shaili Bimal Shah and Ms. Sulsa Shah. We reduce the consolidated penalty amount for SCNs I to VI dated 11.08.1995 which have been dealt with in the Impugned Order dated 30.03.1999 to Rs. 10, 00, 000/- (Rupees Ten Lakhs Only). The amount of pre-deposit of Rs. 10, 00, 000/- already made by the Appellant is to be adjusted against the reduced penalty amount. The confiscation of US$ 8200 under Section 63 of FERA for contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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