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TMI Blog2024 (9) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... e case is based on the oral statement of different persons recorded u/s 37 of FEMA, without any corroborative documentary evidence, or when any witnesses summoned and examined before the Adjudicating Authority on oath. Tribunals and Adjudicating Authorities are quasi-judicial bodies, which mostly adopts summary procedure for conducting the proceedings and the same cannot be equated with regular Courts. Moreover, the tribunals are not bound by the procedure laid down in Civil Procedure Code, 1908. In the present case apart from the statement of the witnesses recorded during investigation u/s 37 of FEMA, there is huge documentary evidence, which corroborates the same, as pointed out by respondent in the preceding para. As per the allegation against the appellant Suresh Saluja @ Pappy Saluja, he made the bogus purported exports (of sub-standard goods) to Russia with inflated invoices for the purpose of obtaining export benefits under DEPB and Duty Drawback Schemes - Said consignments never reached Russia, as per investigation conducted by DRI, however, appellant procured the remittances through unauthorised channels. As also revealed during investigation that appellant Suresh Saluja i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is at liberty to file reply on merits to the grounds of SCN. It is made clear that nothing expressed herein will affect the right of any party in the Adjudication proceedings. Further, Ld. Adjudicating Authority will be at liberty to examine and cross-examine any witness on oath, if so required, in the interest of justice. - RAJESH MALHOTRA , MEMBER ; SINGLE BENCH For the Appellant : Mr. Deepak Gupta, Advocate For the Respondent : Mr. Surender Kumar, Advocate ORDER Present appeal under Section 19 of Foreign Exchange Management Act, 1999 is filed by appellant for quashing of communication/order dated 08.02.2018 whereby, Learned Adjudicating Authority has declined for cross-examination of the witnesses, namely, Kabul Singh, Balwant Singh Maan, Dr. Naginder Khera, and Investigating Officer. 2. On 16.01.2011, a complaint u/s 16(3) of Foreign Exchange Management Act, 1999 in case F. No. T-3/08/CP/JL/06/AD-AKK filed by Assistant Director, Directorate of Enforcement before Special Director, Adjudicating Authority, Chandigarh, wherein it is stated that- on 28-10-2005, the officials of Punjab Police, Police Station, Nihal Singhwala, District Moga, seized an amount of Rs.59,75,000/-incri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of documents running into pages 1 to 95 and a diary containing pages 1 to 45 were seized. Preliminary statement of Shri Suresh Saluja was recorded during the course of search on 24-04-2006 under Section 37 of Foreign Exchange Management Act, 1999 read with section 132 of Income Tax Act, 1961. In his statement, Shri Suresh Saluja(herein appellant) stated that he is an Indian citizen having an Indian passport no. A6372121 issued on 29-09-1998 by Passport Office, Chandigarh his date of birth was 29-08-1958. He was having mobile no. 9814000091 and telephone no. 324536 installed at his residence. He was doing the business of export of garments in the name of his firms namely- M/s. Shivam Overseas and M/s. Rimps Exports. Both firms are at Hajuri Road, Madhopuri Chowk, Ludhiana and permanent address of both these firms is of Baddi (H.P). Presently these firms are closed. He was partner in both these firms. These firms exported readymade woolen garments to Moscow (Russia). In the year 2004-05 income of M/s. Shivam Overseas was about Rs.50 lacs. After that he has not done any business in these firms. The bank accounts of M/s. Shivam Overseas are with Canara Bank, Bharat Nagar Chowk and Cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business Kant, Moscow 61,42,500 M/s Shivam Overseas 10.06.2003 Total 3,67,57,960 Details of amount credited by TTs in account No. 0000706167 of M/s Shivam Overseas Bade with Citi Bank, Ludhiana furnished vide their letter dated 20.09.2006 are as under: S. No. Date Amount of TT in INR 1. 19.09.2002 7,30,000 2. 12.10.2002 22,00,000 3. 01.11.2002 14,50,000 4. 07.12.2002 20,00,000 5. 09.08.2003 20,00,000 6. 09.08.2003 2,50,000 7. 12.08.2003 8,06,499 8. 13.08.2003 8,06,499 9. 21.08.2003 35,04,459 10. 26.08.2003 7,40,000 11. 01.10.2003 17,57,971 12. 06.10.2003 26,50,000 13. 08.04.2004 50,000 14. 17.06.2004 3,50,000 15. 01.07.2004 5,04,482 16. 01.07.2004 5,04,000 17. 01.07.2004 4,99,500 18. 01.07.2004 4,99,100 19. 01.07.2004 4,97,000 20. 20.07.2004 5,42,000 21. 05.08.2004 17,71,917 Total 2,41,13,427 Details of Foreign Exchange credited in account of M/s Shivam Overseas with State Bank of Bikaner and Jaipur, Madhopuri Chowk, Ludhiana furnished vide their letter dated 19.09.2006 on account of export proceeds: - S. No. Name of Overseas buyers Date Amount in USD Amount in INR 1. M/s OOO Marillon 2000, Moscow 25.07.2003 19,970 9,21,339 2. M/s OOO Marillon 2000, Moscow 29.07.2003 14,972 6,89,46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statement was recorded under Section 108 of the Customs Act, 1962 on 15.06.2005, wherein he stated that M/s. Shivam Overseas was started in the year 2002 and the said firm was manufacturing readymade garments for export at Baddi (H.P.) and this firm was purchasing raw material from Ludhiana based firms as under: (i) M/s. Swastik Traders, Hazuri Road, Ludhiana. (Mr. Bhatia was the concerned person) (ii) M/s. Anubhav Fabrics (iii) M/s. Rahul Fabrics, New Madhopuri, Ludhiana (iv) M/s. Rose Marrie Knitt., Sunder Nagar, Ludhiana (Mr. Bhatia was the concerned person) (v) M/s. Roopika Fabrics (vi) M/s. Malwa Cotton who were supplying Sewing Thread (vii) M/s. Anupama Fabrics, Sunder Nagar, Ludhiana etc. Shri Suresh Saluja was dealing mainly with local suppliers at Ludhiana and he was looking after the work of production of readymade garments at Baddi. The exports were being looked after by Shri Suresh Saluja. He never visited Russia. Shri Saluja was receiving orders from overseas buyers. They used to export their goods through ICD, Tuglakabad and Mumbai Port. The readymade garments exported consisted of cotton T-Shirts and Track Suits and no exports were made to any other country than Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs were M/s. Preet Fabrics, Jalandhar; M/s. Roopika Fabrics; M/s. Rahul Fabrics; M/s. S.Kumar and Company; M/s. Anupama Fabrics; M/s. Crystal Knit Fab; M/s. Pradhan Fabrics; M/s. Anubhav Fabrics; M/s. Arvind Sales Corporation; M/s. Bhagwati Trading Corporation; M/s. Shakti Industrial Corporation. The average price of T-Shirts manufactured by them was Rs.300/- approx. and that of Track Suits was from Rs. 800/-to Rs. 1000/-. They received payments in Indian rupees and as well as dollars. Statement of Davinder Kumar of M/s. Bharat Fabrics has been recorded under Section 108 of the Customs Act, 1962 on 01.12.2005, wherein hestated that in the year 2003, he started a firm in the name of M/s. Bharat Fabrics as a proprietorship firm from a rented premises at Gali No.2 Sardar Nagar, Basti Jodhewal, Ludhiana. The said firm was opened on the directions of Shri Suresh Saluja. The current account of M/s. Bharat Fabrics was got opened in the State Bank of Bikaner and Jaipur, Madhopuri; account no.14131150 of M/s. Bharat Fabrics was got opened in Bank of Punjab, Chaura Bazar, Akal Market, Ludhiana. Shri Suresh Saluja got his signatures on all the cheques books issued by the Bank of Punjab in bla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act, 1962 on 07.05.2005, wherein, he stated that he visitedMoscow in the year 1995 in search of work. The market for the Indian Hosiery goods was declining day by day due to its poor quality and were sold at a very cheap rate such as at 1 US $ and T- Shirts at 1.25 US $. The whole business of M/s. Classic Impex Ltd., Moscow, Russia was handled by S/Shri Sunil Duggal and Gaurav Duggal. Shri Rajeev Bajaj S/o Shri Madan Lal R/o Gobind Colony, Street No.10, Jamalpur, Ludhiana, Prop. of M/s. Shiv Shakti Industrial Corporation, M/s. Bhagwati Trading Corporation both situated at SCO No.42, Aman House Link Road, Ludhiana, suppliers of knitted fabrics to M/s. Shivam Overseas, was examined and his statement was recorded on 18-06-2005 wherein, hestated that both the firms were started for the purpose of issuance of only invoices of fabrics to M/s. Duggal Exports, without supplying any fabrics and he was getting Rs.0.25 per Rs.100/- of sale value of the invoice. Shri Suresh Saluja was a close relative of Duggals, who introduced him to Shri Suresh Saluja and asked him to issue invoices to firms of Shri Saluja without sending any goods and he would be paid at the rate of Rs.0.25 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember, 2004 in the name of his wife. He had no firm in the name of M/s. Rahul Fabrics.He had not received any payment from M/s. Shivam Overseas Baddi.He had no bank accounts in Citi Bank, Ludhiana. He was shown of account opening form of M/s. Rahul Fabrics opened in Citi Bank, Ludhiana. He put his signatures on the same and stated that the signatures on the said form were not his. Investigations of M/s. Anubhav Fabrics and M/s. Anupama Fabrics situated at 449/3 New Lajpat Nagar Noorwala Chowk, Ludhiana revealed that Shri Vijay Kumar Magoo was the Prop. of these two firms. Statement of Shri Vijay Kumar Magoo, Prop. of M/s. Ketan Fabrics, Ludhiana was recorded under Section 108 of the Customs Act, 1962 on 17-01-2007, wherein, he stated that neither these firms, nor the address of the firms belong to him. M/s. Anubhav Fabrics and M/s. Anupama Fabrics opened in his name were fake firms and he did not have any link with these firms. Both firms were opened by Pappy Saluja. He did not have any bank account in State Bank of Bikaner and Jaipur, Madhopuri and Citi Bank, Ludhiana and that he never supplied any material to the units of Pappy Saluja. Perusal of letter dated 22-03-2007 of Centur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 2007, Shri Suresh Saluja @ Pappy Saluja, Partner of M/s. Shivam Overseas made payments to the persons in India for the credit of the persons resident outside India to the tune of Rs. 54,20,00,000/-(Rupees Fifty-Four Crores Twenty Lacs only) as detailed in paras no.3,4 and 6 above in the aforesaid manner. From the foregoing, facts and evidences on record, it appears that the above said M/s. Shivam Overseas and its Partners, S/Shri Suresh Saluja @ Pappy Saluja and Harish Batra acquired foreign exchange in India to the tune of US $ 2,62,700 as per details in paras 15 and 16 above in the aforesaid manner and deposited the same in bank account no. 99058 on 07-08-03 with Bank of Punjab, Kalsi Nagar, Ludhiana through fake/forged CDF(Currency Declaration Forms) in the aforesaid manner. From the foregoing, facts and evidences on record, it appears that the above said M/s. Shivam Overseas and its Partners, S/Shri Suresh Saluja @ Pappy Saluja and Harish Batra unauthorisedly acquired foreign exchange outside India to the tune of/equivalent to Indian Rupees 11,75,52,227/- US $ 4,38,660 (4,98,32,820 +3,67,57,960+2,41,13,427+68,48,020=11,75,52,227/- US $ 4,38,660) (Rupees Eleven Crores seventy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Canada beside others. On 20.06.2007, the Respondent recorded statement of S. Balwant Singh Mann, NRI, resident of Canada under Section 37 of the Act, wherein he stated that Suresh Saluja (herein appellant) was his agent who sent him list and details of exporters to whom he sent foreign remittances by TTs from Canada and he sent more than 50 crores to the appellant from 2002 to 20.06.2007 in the name of different Companies. He further stated that Suresh Saluja received amounts in India and distributed the same, as per his instructions to different persons in India. On 10.11.2005, the Respondent recorded statement of S.Kabul Singh an employee of S. Basant Singh under Section 37 of the Act, wherein he stated he brought Rs. 1,20,00,000/- from Suresh Saluja (herein appellant) during year 2004 for distribution. On the basis of above statements, on24.04.2006, the Respondent searched the residential premises of the Suresh Saluja/appellant and seized documents and diary. The Respondent also recorded statement of the present appellant under Section 37 of the Act read with Section 132 of the Income Tax Act, 1961, wherein he stated that he was doing business of export of garments from his firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itnesses is declined. The relevant excerpts of communication/ order are as under: With regards to your preliminary objections filed by way of interim reply dated 09.12.2015, it is informed that your request for summon and cross-examination of Sh. Kabul Singh, Balwant Singh Mann, Dr. Naginder Khera Investigating Officer is hereby not accepted being devoid of any merit. During the arguments Learned Counsel for the appellant contended that whole case of respondent ED is based on the statement of the said three persons, and hence, their cross-examination is essential to highlight the truth. He stressed that cross-examination is a valuable right of the appellant and also an integral part and parcel of the principal of natural justice. In support of his contention, he relied upon the judgment of Hon'ble High Court of Bombay in case Lalit Kumar Modi v. Special Director, Directorate of Enforcement, Mumbai 2018, TIOL-2054-SC-MUM-FEMA, wherein it is held that - 39. In the facts and circumstances before us, we have found, from a perusal of the show cause notices and the complaint, based on which they have been issued, that the adjudicating authority expressly relies upon these statements, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein it is held that- 28. The legal position that would follow is that normally if the credibility of a persons who has testified or given some information is in doubt or if the version or the statement of the person who has testified is in dispute normally right to cross-examination would be inevitable. If some real prejudice is caused to the complainant, the right to cross-examine witnesses may be denied. No doubt, it is not possible to lay down any rigid rules as to when in compliance of principles of natural justice opportunity to cross-examine should be given. Everything depends on the subject matter. In the application of the concept of fair play there has to be flexibility. The application of the principles of natural justice depends on the facts and circumstances of each case. 34. However, other than the three witnesses no grounds are made out to cross-examine any other person. The request of the appellant to cross-examine Shri Rajeshwar Singh, Assistant Director, the complainant based on material gathered by the respondent. No purpose would be served by putting him to cross-examination as is sought by the appellants. Though we have allowed the appellant to cross-examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is based on documentary evidence, apart from the statements of the witnesses recorded under section 37 of FEMA, 1999. He pointed out that the appellant pressed for cross- examination of the threeprivate witnesses, namely, Kabul Singh, Balwant Singh Maan, and Dr. Naginder Khera. He pointed out that Shri Balwant Singh Maan is NRI and resident of Canada. It is practically not possible to procure his presence during the adjudication proceedings for the purpose of cross-examination. He pointed out that Shri Kabul Singh is an employee of Basant Singh, whose statement was recorded by ED, wherein he stated that during the year 2004, he had brought the funds totaling to Rs. 1,20,00,000/- for the purpose of distribution, from the present appellant, who is resident of Ludhiana. He pointed out that his employer Basant Singh was apprehended by police on 28.10.2005 by Punjab Police of P.S. Nihal Singhwala, with cash of Rs. 59,75,000/- along with incriminating documents, one currency note- Irani Riyals 10,000/-, which were seized along with his two mobile handsetsand one Esteem Car bearing No.PB-29-F- 5131.Accordingly, he submitted that cross examination of Basant Singh is not going to serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assy of India, Trade Wing, Moscow, it is reported that M/s OOO Business Kant, Moscow, a buyer of M/s Shivam Overseas was registered at the said address, but the said company has not conducted any import/export operations during the relevant period i.e. 2001 to 2003 with M/s Shivam Overseas. He further pointed out that High Commission of India, London vide letter dated 29.06.2006 intimated that as per Finnish Customs Authority, they could not find any export from India to Russia via Kotka Port,in Finland. He further pointed out that DRI Ludhiana conducted investigation against M/s Shivam Overseas proprietorship firm of Suresh Saluja and it is revealed that sub-standard and spurious goods were procured from the market and thereafter, bogus export was made on inflated invoices and thereby claimed huge benefits under DEPB and Duty Drawback Schemes. He pointed out the said export consignments never reached Russia, but appellant was able to procure the remittances against the alleged exports through unauthorized channels to falsely show the same as export proceeds. Ld. Counsel for responded contended that during investigation statement of Harish Batra and Suresh Saluja partners of M/s Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradhan Fabrics could not be traced and the account opening form of the said firm in State Bank of Bikaner Jaipur was introduced by Shri Ramdas Saluja father of Suresh Saluja. He argued that M/s Rahul Fabrics M/s Rupika Fabrics have same address as of M/s Leena Knitwears of Anil Katyal. Anil Katyal during interrogation stated that he has not opened the said two firms and he does not know who is running the same. However, he stated that he never sold any material M/s Shivam Overseas. He never received any payment from Shivam Overseas. However, after going through the account opening form of M/s Rahul Fabrics, he revealed that said signatures were appended by him at the instance of Suresh Saluja. Sh. Vijay Kumar Maggu, proprietor of M/s Ketan Fabrics stated that M/s Anubhav Fabrics M/s Anupama Fabrics does not belong to him. He never supplied any material to Shivam Overseas. The bank account of these two fake firms were not opened by him and the same are fake firms opened by Pappy Saluja. Ld. Counsel for respondent further pointed out the letter dated 22-03-2007 of Centurian Bank of Punjab, Ludhiana, which reveals that in account no. 99058 of M/s. Shivam Overseas payments to the tune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forged CDF(Currency Declaration Forms) in the aforesaid manner. He contended that from the evidence on record, it is also clear that the above said M/s. Shivam Overseas and its Partners, S/Shri Suresh Saluja @ Pappy Saluja and Harish Batra unauthorisedly acquired foreign exchange outside India to the tune of/equivalent to Indian Rs. 11,75,52,227/- (4,98,32,820+3,67,57,960+ 2,41,13,427 +68,48,020=11,75,52,227/- (Rupees Eleven Crores seventy-five lacs fifty two thousand two hundred twenty seven only)) US $ 4,38,660 (USD Four Lac Thirty Eight Thousand Six Hundred Sixty Only) and transferred and deposited the same in different bank accounts through TTs/LCs as per details in paras 7, 8, 9 and 10 of SCN. Prayer is accordingly made to dismiss the present appeal being devoid of any merits and thereby direct the appellant to join the adjudication proceedings. 5. After hearing the rival submissions, I have given my thoughtful consideration to the same. As per Section 16 (5) of Foreign Exchange Management Act, 1999, Every Adjudicating Authority shall have the same powers of a Civil Court which are conferred on the Appellate Tribunal under sub Section (2) of Section 28 . Now coming to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the statements of the appellants, and the documents seized in the course of the search of their premises. But there is no dispute that apart from what was seized from the business premises of the appellants, the adjudicating authority also placed reliance upon the documents produced by Miss Anita Chotrani and Mr Raut. These documents were, it is admitted disclosed to the appellants who were permitted to inspect the same. The production of the documents is not subjected to cross-examination. Such being the case, the refusal of the adjudicating authority to permit cross-examination of the witnesses producing the documents cannot even on the principles of the Evidence Act be found fault with. At any rate, the disclosure of the documents to the appellants and the opportunity given to them to rebut and explain the same was a substantial compliance with the principles of natural justice. That being so there was and could be no prejudice to the appellants, nor was any demonstrated by the appellants before us or before the courts below. The third limb of the case of the appellants also in that view fails and is rejected. Similarly, in the present case apart from the statement of the witn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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