9911796707
TMI Blog1998 (3) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that on specific information to the effect that contraband goods such as bearings, etc. are smuggled along with the declared item, 'Gambier' in the Container No. GSTU 4544667, the movement of the said container was monitored discreetly and necessary follow up action was taken to secure the documents and the goods. 2. Enquiries revealed that the relevant Bill of Entry No. 56720, dated 21-12-94 (I.M. No. 976/94, Line No. 397) was already filed on 21-12-94 by the Custom House Agent, M/s. Madras International Supping & Clearing Agency, 81, Linghi Chetty Street, Madras-1 on behalf of M/s. Sargam Enterprises, 53, III Main Road, Jawahar Nagar, Madras 600 082 and it was found that the Bill of Entry was already assessed to duty by the concerned assessing Group 21-12-94 and duty amount of Rs. 5,39,356/- was also paid on 22-12-94 vide Cash No. HD 1202146 even before the arrival of the vessel. It was also seen that duplicate open order was given for the examination of the cargo. The Bill of Entry was hence collected, for further investigation. SIIB officers of this Custom House also visited discreetly the addresses available in the documents; to locate the importers. However the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in the Bill of Entry (53, III Main Road, Jawahar Nagar, Madras 600 082) revealed that it was only a residential premises. Neither the firm nor its proprietor on record, Shri S. Somasundaram were available. Further, the address furnished was found to be a residential premises and in no way related to the importers on record. Efforts were made to locate the importers and to get their residential address. 8. Pursuant to the efforts made, a copy of the application filed by the importers with the Joint Director General of Foreign Trade, Madras for allotment of the Import Export Code No. was collected. The same was perused and it was noticed that in the said application, the office address is in agreement with the address given in the Bill of Entry. On further perusal of the application, it was found to contain the residential address as at 12, I Main Road, Jawahar Nagar, Madras-85. Enquiries made at the address revealed that the same was occupied by one M/s. North West Madras Benefit Society and not related to the importers. 9. The Import Export Code No. 0494008644 allotted to M/s. Sargam Enterprises, was found to have been cancelled by JDGFT vide their circular No. 5/IE/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quiries it was found that Shri S. Somasundaram, Proprietor on record of M/s. Sargam Enterprises, 53, III Main Road, Jawahar Nagar, Madras-82 was not available in the said address. The residential address furnished by Shri S. Somasundaram (12, I Main Road, Jawahar Nagar, Madras-85) was also found to be not related to the importer. Enquiries made at the premises of Shri Kamlesh M. Sanghvi, introducer of Shri S. Somasundaram located at 27, Kalappa Achari Street, Madras-3 revealed that it was an earlier address of Shri Kamlesh Sanghvi. 12. Further enquiries made at 27, Kalappa Achari Street, Madras-3, the address given in the Bank documents for Shri Kamlesh M. Sanghvi, revealed that the building is owned by Shri P.M.A. Ramadas Chetty of M/s. P.M.A. Metals and Alloys 102, Naniappan Naicken Street, Madras-3, Shri P.M.A. Ramadas Chetty vide letter dated 22-5-1995 has stated, inter alia, that he is owner of the building; that Shri Mulvantrai V. Sanghvi and his son Shri Rohit Kumar M. Sanghvi were the tenants in the II floor of the building from 21-4-1977 to 7-11-1992 and that Shri Kamlesh M. Sanghvi is the second son of Shri Mulvantrai M. Sanghvi who left the family in 1980. Enquirie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia that one Shri Gulabchand (Sanghvi) came and met him at his office in the beginning of 1993 and requested him to clear the consignments of some companies for which he would bring and give the documents; that Shri Gulabchand (Sanghvi) used to give him documents for import clearance in respect of the following firms, viz., (a) M/s. Sagar Supplies, (b) M/s. Srinivasa Agencies, (c) M/s. Manek Traders, (d) M/s. Kiran Trading and (e) M/s. Sargam Enterprises, all based at Madras; that he knew Shri Gulabchand (Sanghvi) and that he did not know the proprietors of the above firms. Regarding handling of the documents, he stated that after getting the documents from Shri Gulabchand (Sanghvi) he would get the bills assessed and used to collect the duty amount by way of Pay Order from Shri Gulabchand (Sanghvi); that as per the request of Shri Gulabchand (Sanghvi) he used to arrange for the destuffing of the containerised cargo at 83, SIDCO, Industrial Estate, Ambattur, Madras-58; that he did not know whether the said premises is owned by the importers and that he had cleared four consignments of M/s. Sargam Enterprises in the past. Regarding the subject import by M/s. Sargam Enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and father-in-law who expired on 19-12-1994 and 26-12-1994 respectively. Shri Kannan further sought apology for the mistake committed. He further added that only Shri Sanghvi gave the documents in respect of the subject import. To certain specific questions Shri Kannan replied stating that it was Shri Sanghvi who represented the five firms for giving documents relating to imports; that he did not know the details such as address etc., of Shri Sanghvi; that these firms are owned by Shri Ishwarlal Surana and Shri Mardia and he heard that both these persons are in Vishranthi Apartments, Vepery, Madras. Finally Shri Kannan stated that he made several attempts to contact S/Shri Sanghvi, Iswarlal Surana and Mardia and found that they are still absconding. 17. Shri D. Kannan in his further statement dated 6-1-1995 stated inter alia that Shri Sanghvi used to come to his office to deliver import documents for clearance of import goods in respect of M/s. Sargam Enterprises and other firms; that Shri Sanghvi used to contact their office till delivery of the goods; that after payment of duty by way of Bankers pay order and examination of the goods, the containers, after executing a bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said premises; that he had visited the said premises along with Customs Officer and found that no such companies/persons exist in the said addresses and that he had taken steps to find out Shri Somasundaram and Shri Sanghvi of M/s. Sargam Enterprises to produce before the Department. 22. Shri D. Kannan also stated, vide his further letter dated 20-3-1995, that he along with officers of Customs visited the premises of Shri Ishwarlal Surana and Shri Raichand Mardia and found that they had left for Rajasthan 3 months back and not yet arrived and that steps taken by him to find out S/Shri Somasundaram and Sanghvi also proved futile. 23. Enquiries were made at the premises of Shri Ishwarlal C. Surana and Shri Raichand G. Mardia revealed that they were at large. Statements were recorded from Shri Dharmendra Surana, S/o Shri Ishwarlal C. Surana and Shri Manish Mardia, S/o Shri Raichand G. Mardia. Shri Dharmendra Surana in his statement dated 28-12-1994 has stated, inter alia, that he is the Managing Director of two limited companies viz., M/s. Surana Holdings Pvt. Ltd., and M/s. Surana Agro Exports Pvt. Ltd., in which his father, Shri Ishwarlal C. Surana and Shri Gulabcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, they did not turn up. Again summons were issued on 22-5-1995. 27. Shri Raichand G. Mardia surfaced on 25-5-1995 and appeared before the Department. In his statement dated 25-5-1995 he has stated, inter alia, that he couldn't appear before the Department, as he had left for Rajasthan in the first week of January and returned only on 25-5-1995; that previously he was one of the partners in M/s. Mardia Metal Enterprises, Madras, M/s. Padmavathi Metals and Alloys (P) Ltd., that at present he is one of the partners of M/s. Decofloor at 10/10B, Ambattur Industrial Estate, Madras, which is engaged in the import of plastic scrap and processing to produce plastic granules; that Shri Ishwarlal C. Surana is the other partner of M/s. Decofloor and that he used to do import clearance through M/s. Madras International Shipping and Clearing Agency, Madras. 28. In his further statement on 26-5-1995, Shri Raichand G. Mardia has stated, inter alia, that he knows Shri Kamlesh Sanghvi; that Kamlesh Sanghvi was previously staying at Jawahar Nagar and he doesn't know Sanghvi's present whereabouts. He also added that the factory at 10/10B, Industrial Estate, Ambattur, Madras, is owned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and had good relationship with Shri Kannan. About his acquaintance with Shri Kamlesh Sanghvi, he told that Shri Sanghvi was staying at Jawahar Nagar, Perambur, Madras-82 and that the property at 10, 10/B, Ambattur Industrial Estate, belongs to M/s. Deco Floors, in which he himself is one of the partners, and said that the premises has been rented out to Shri Kamlesh Sanghvi. When asked about his non-appearance before the Department, despite several summons, he stated that since he left for Rajasthan in the last week of December, 1994 he could not appear. When confronted with his earlier statement wherein he stated that he had left for Rajasthan in the month of January, 1995 he admitted that he had left for Rajasthan only in the last week of December, 1994. When enquired about his relationship with Shri Raichand Mardia, he told that Shri Mardia is his business partner and his best friend. Shri Surana was informed that Shri Kannan in his statements has stated that he and Shri Raichand G. Mardia visited Shri Kannan's office and requested for early clearance of the consignment covered by Bill of Entry No. 56720, dated 21-12-1994. In the light of the above position, Shri Ishwarl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to impersonation. 33. On comparison of the signatures appearing in the bank documents viz. specimen signature card and Account opening application and the signatures appearing on the declaration forms accompanying the Bill of Entry, on the reverse of original Bill of Lading and authorisation letter, it is very clear that the signatures made as "S. Somasundaram" are different. 34. Enquiries with Shri D. Kannan of M/s. Madras International Shipping & Clearing Agency, Custom House Agent revealed that the documents relating to the clearance of goods imported by all the five firms including M/s. Sargam Enterprises were used to be handed over by Shri Sanghvi, but he failed to disclose the address of Shri Kamlesh M. Sanghvi. According to Custom House Agent Shri Sanghvi used to handover the documents and duty amount after assessment. The Custom House Agent has identified Shri Kamlesh M. Sanghvi as representative of above firm owned by S/Shri Raichand G. Mardia and Ishwarlal C. Surana. Even Shri Kamlesh M. Sanghvi who was identified by the Custom House Agent as the representative could not be traced by the Department despite several efforts made in this regard. As the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed examination it was found that there were 214 bags of gambier inside the container as against the declared quantity of 200 bags. In addition to the gambier, there were bearings, worth Rs. 1,194 crores concealed along with the gambier in the gunny bags in the middle to rear portion of the container in 63 gunny bags. The bags stacked in the front portion of the container contained only gambier. This shows that but for the specific information and detailed examination, the fraud committed cannot be detected in the normal course. Thus, this is a clear case of concealment and smuggling of high value bearings in the guise of gambier. The persons, namely, S/Shri Ishwarlal C. Surana, Raichand G. Mardia, D. Kannan, Kamlesh M. Sanghvi and S. Venkatesh have planned, conspired and arranged to clear the bearings by way of smuggling without payment of huge duty. These goods valued at Rs. 1,194 Crores (Market Value) were not declared in the Bill of Entry, and smuggled into India by way of concealing the same along with the gambier in 63 gunny bags (62 bags contained 2 packets of bearings and 1 bag contained 1 packet of bearings, totalling 125 packets of bearings), with a deliberate intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subject importing, M/s. Sargam Enterprises with the residential address of Shri Kamlesh M. Sanghvi. Shri Kamlesh M. Sanghvi as admitted by his brother and father, is working with Shri Ishwarlal C. Surana as an employee. Shri Kamlesh M. Sanghvi being a employee of Shri Ishwarlal C. Surana caused to open the account in the name of M/s. Sargam Enterprises with Punjab National Bank, Park Town, Madras-3 with the help of Shri Venkatesh. Shri Kamlesh M. Sanghvi has a separate account of his own in the same branch of Punjab National Bank and enquiries with the Bank revealed that Shri Sanghvi used to maintain and monitor the account of M/s. Sargam Enterprises with the help of Shri Venkatesh. (vii) As an employee of Shri Ishwarlal C. Surana, Shri Kamlesh M. Sanghvi handled the import documents. During the course of his employment only, the documents for the clearance of the subject consignment were handed over to Shri D. Kannan of M/s. Madras International Shipping and Clearing Agency, 81, Linghi Chetty Street, Madras-1. Shri D. Kannan and his assistant Shri K. Yuvaraj had identified Shri Ishwarlal C. Surana and Shri Raichand G. Mardia as the real owners of M/s. Sargam Enterprises, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Shri Kamlesh M. Sanghvi. (x) It is further stated that Shri Raichand G. Mardia and Shri Ishwarlal C. Surana are the real owners of the goods covered by Bill of Entry No. 56720, dated 21-12-1994. Shri Kamlesh M. Sanghvi acted as a front man in the game plan of S/Shri Raichand G. Mardia and Ishwarlal C. Surana in the smuggling of bearings valued at Rs. 1,194 Crores in guise of and along with gambier. Shri S. Venkatesh, brother-in-law of Shri Kamlesh M. Sanghvi, allowed himself to be used and impersonated as "S. Somasundaram" and abetted in the act of smuggling. (xi) Shri D. Kannan has stated that the documents relating to the present consignment were handed over by Shri Sanghvi (Kamlesh M. Sanghvi) representative of Shri Raichand G. Mardia and Shri Ishwarlal C. Surana, who are the owners of the goods covered by the Bill of Entry No. 56720, dated 21-12-1994. The last two visited Kannan's office and requested for the early clearance of the subject goods. Shri Raichand G. Mardia and Shri Ishwarlal C. Surana by their above detailed acts of omission and commission rendered the goods covered by the Bill of Entry No. 56720, dated 21-12-1994 liable to confiscation under Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a firm rendered itself liable to penalty under Section 112(a) of the Customs Act, 1962. 36. Thereafter, after further investigations, show cause notice was issued to M/s. Sargam Enterprises, Madras, S/Shri Raichand G. Mardia, Ishwarlal C. Surana, Kamlesh M. Sanghvi, S. Venkatesh and M/s. Madras International Shipping and Clearing Agency, calling them to show cause as to why : (a) the bearings under seizure valued at Rs. 1,194 crores which were not declared, smuggled into India, concealed in the gunny bags containing gambier should not be confiscated under Section 111(i), (l) and (m) of the Customs Act, 1962; (b) the said bearings of value of Rs. 1,194 crores, should not be confiscated under Section 111(d) of the Customs Act, read with Sections 3(3) and 7 of the Foreign Trade (Development and Regulation) Act, 1992; (c) the 214 bags of gambier under seizure of a declared CIF value of Rs. 8,21,562/- used for concealment for the purpose of smuggling of bearings should not be confiscated under Section 119 of the Customs Act, 1962; (d) the bearing packages found along with the gambier in the gunny bags, the said gambier in the packages thereof should not be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to a finding that Raichand Mardia and Ishwarlal Surana are the real owners of the goods covered under the Bill of Entry dated 21-12-1994. They pointed out that on mere presumptions and conjectures the findings could not be arrived by the adjudicating authority. So also they pointed out that there is no evidence to show that Shri S. Venkatesh, brother-in-law of Kamlesh Sanghvi allowed himself to be used and acted as Somasundaram and abetted the offence. They further pointed out that the statement of D. Kannan from the beginning is contrary in nature and no reliance could be placed on his statement to find them guilty. On the whole, it was their contention that the whole finding against the appellants is based on presumptions and assumptions and not on any reliable evidence. 38. It was further pointed out that there are absolutely no evidences to show that M/s. Sargam Enterprises, a fictitious firm was floated at the instance of the appellants Raichand Mardia and Ishwarlal Surana. These are all presumptions of the adjudicating authority without any evidence on record. They further pointed out that the findings in the adjudication order that Venkatesan was in active associatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be acted upon. It was further pointed out that the statement of Yuvaraj who was working in the appellants' office was also obtained under threat on 28-12-1994 and 26-4-1995. Those statements not being voluntary, cannot be acted upon. It was further pointed out that the appellants had retracted all those statements obtained from him. The appellants had also stated these facts in their reply to the show cause notice. Therefore imposition of penalty on the appellants is arbitrary and unreasonable. The appellant has no mens rea and the penalty cannot be imposed without any mens rea. He further relied on the decision reported in AIR 1975 SC 175 and stated that in order of constitute abatement, the abettor must be shown to have intentionally aided to the commission of the crime. It was therefore pointed out that mere proof of a crime is not sufficient to the appellant as an abettor. He further relied on the decision of the Hon'ble Supreme Court reported in AIR 1977 SC 666 in the case of Trilok Chand Jain v. State of Delhi wherein the Hon'ble Supreme Court held that the offence of abatement and intention should be proved and it must be established that the appellant had aided in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of Raichand Mardia and Ishwarlal Surana is that they have denied about the employment of Kamlesh with them. It was pointed out that they have produced the records to show that he was not employed by them. But the fact remains that the father, and brother of Kamlesh Sanghvi have clearly stated that Kamlesh was working with Ishwarlal Surana. The appellants have not cross-examined the father and brother of Kamlesh Sanghvi. There is also no motive for the father and brother of Kamlesh to say a false statement before the authorities. Therefore the stand of Ishwarlal Surana that Kamlesh was not employed with him is a false statement; which is one of the considerations to be taken into account while assessing the evidence in this case. 42. The Hon'ble Supreme Court in the case of D. Bhoormull reported in 1983 (13) E.L.T. 1546 (S.C.) = 1985 ECR 2284 (SC) has clearly held that the Department is not expected to prove its case with mathematical precision. These principles are to be borne in mind while assessing the evidence in this case. 43. It is further seen that the investigations reveal that M/s. Sargam Enterprises was a fictitious firm. The person who represented the propri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that they knew D. Kannan of Madras International Shipping and Clearing Agency and they were clearing the imported goods through Kannan only. Ishwarlal Surana in his statement also confirms that Kamlesh Sanghvi was in touch with him up to December, 1994. Coupled with this, the false denial of Ishwarlal Surana that Kamlesh Sanghvi was not employed by him is another circumstance which strengthens the case of the Department. 46. It is further seen that both Ishwarlal Surana and Raichand Mardia had admitted that they knew Kamlesh Sanghvi and their godown at 10/10-B, Ambattur Industrial Estate, Madras. They had also stated that they had rented it to Shri Kamlesh Sanghvi. Ishwarlal Surana in his statement also confirmed that he knew that Kamlesh Sanghvi was staying at 53, III Main Road, Jawahar Nagar, Madras-82, and this premises is the premises of M/s. Sargam Enterprises. Ishwarlal Surana also had admitted that he knew the father and brother of Kamlesh Sanghvi and had given their names before the officers who recorded the statements. Kamlesh Sanghvi and Raichand Mardia had also confirmed that they knew D. Kannan. 47. In this connection it is further to be noted that D. Kan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petitioner is involved in the passing of foreign currency out of India. 4. It must be remembered that the statement made before the Customs officials is not a statement recorded under Section 161 of the Code of Criminal Procedure, 1973. Therefore, it is a material piece of evidence collected by Customs officials under Section 108 of the Customs Act. That material incriminates the petitioner inculpating him in the contravention of the provisions of the Customs Act. The material can certainly be used to connect the petitioner in the contravention inasmuch as Mr. Dudani's statement clearly inculpates not only himself but also the petitioner. It can, therefore, be used as substantive evidence connecting the petitioner with the contravention by exporting foreign currency out of India. Therefore we do not think that there is any illegality in the order of confiscation of foreign currency and imposition of penalty. There is no ground warranting reduction of fine." 49. It is therefore seen that this statement of the co-accused clearly goes to show Ishwarlal Surana and Raichand Mardia requested him for early clearance of the goods. He also stated that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral respects as already discussed by us. 50. It is further seen that Yuvaraj, an executive of Madras International Shipping and Clearing Agency in his statement dated 28-12-1994 and 26-4-1995 corroborated the version of Kannan to the effect that Kamlesh Sanghvi, Raichand Mardia and Ishwarlal Surana had come to their office and requested for early clearance of the goods covered by Bill of Entry 56720, dated 21-12-1994. Therefore the fact that all the three persons came to Kannan is clearly established which go to show that it was Ishwarlal Surana and Raichand Mardia who are the actual owners of M/s. Sargam Enterprises. Any one of the statements or one of the circumstances may not by itself be sufficient to prove the case against these appellants. But the totality of all the above statements which connects one statement with the other is sufficient to hold that it was Raichand Mardia and Ishwarlal Surana who are the persons who floated M/s. Sargam Enterprises and they were the persons who were pressing Kannan for early clearance of the goods in question. The very fact that they denied about their connection with Kamlesh Sanghvi, which is found to be false, is another circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained by any inducement, threat, coercion or by any improper means, that statement must be rejected brevi manu. 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 have 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 his obligation at least subjectively to apply its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down to this 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 that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investigation in the case progressed. He pleaded that the Bill of Entry for the goods was filed in the name of M/s. Sargam and the same was signed by one Shri S. Somasundaram. After duty had been paid and examination of the goods had been ordered on intelligence a detailed check revealed the concealment of ball bearings in the consignment which was declared as for Gambier. The first statement was recorded from Shri Kannan as the proprietor of clearing agents on 28-12-1994. In this statement Shri Kannan stated that the documents in question i.e. B.E. and other papers for the goods were handed over by one Shri Gulabchand and on being confronted with him he recognised also the said person. Statement was thereafter recorded from him i.e. Gulabchand on 30-12-1994 and he denied the version of the clearing agent and any connection with the goods. On 4-1-1995 he pleaded another statement was recorded from Shri Kannan, Proprietor of the clearing agency and he named another person i.e. Sanghvi who later was identified as one Kamlesh Sanghvi as the one who handed over the documents. He pleaded that the said Kamlesh Sanghvi was not traced and was never produced. The companies whose docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urana also he pleaded appeared on 31-5-1995. The statement was recorded from him and thereafter on 1-6-1995 and 14-6-1995 when further statement were recorded from him. He pleaded the statement given was exculpatory. He pleaded he was confronted with the statement of Shri Kannan and his statement in regard to the assertion of Shri Kannan his having visited him (Kannan) cannot be taken as implicating him (Surana). 59. The ld. Advocate pleaded that Shri Kannan had been changing his version as in his first statement he confirms that Shri Gulabchand handed over the papers for the importation in question and later on in his subsequent statement he brought in the name of Sanghvi and later on only on 25-4-1994 he mentioned that both Mardia and Surana the appellants herein visited his office and requested for early clearance of the goods in question. He pleaded that Shri Kannan's employee likewise first recognised Gulabchand and later changed his version that it was Sanghvi who gave the papers. He pleaded that as could be seen from the statement of Yuvaraj he accepts whatever Kannan said. He pleaded that both of them were cross-examined and they have stated that their statement was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conceded that Shri Kamlesh Sanghvi was working with Shri Surana, nothing has been brought on record to say that the work he was assigned related to the goods in question. He pleaded that none of the persons other than Shri Kannan as it is has made any reference to Shri Mardia. He has pleaded that even Shri Kannan has not stated that the goods belonged to Shri Surana and Mardia. He pleaded that Shri Sankaran, grandfather of Shri Venkatesh has not stated that Shri Venkatesh acted at the behest of Surana or Mardia. He pleaded that the lower authority had approached the whole issue with prejudice and absence of the appellants and their non-availability has been misread. He pleaded the appellant Surana when he appeared before the authorities stated that he had gone to Rajasthan and this fact of his having gone out of Madras in the last week of December, 1994 was confirmed by his son Shri Dharmendra Surana in his statement before the authorities. He pleaded that for the first time his name was mentioned or he was implicated only in January, 1995 and there was no need for him to disappear in December for the reason of the importation of the goods. He pleaded as it is there is no at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notice. He pleaded that as held by the Hon'ble Supreme Court in the case of Bhoormull in the case of smuggling the case need not be proved to a mathematical precision. He pleaded that non-implication of appellants by Srinivas Agencies proprietor grandfather of Shri Venkatesh does not make a difference to the case. He referred to the decision of Hon'ble Supreme Court [1996 (83) E.L.T. 258 (S.C.) = = 1996 (62) ECR 366] to say that statement of co-accused was admissible. 66. The ld. Advocate for the clearing agent Shri Jayaraj pleaded that the charge against the appellant firm that it acted as an agent for the fictitious firm. He pleaded earlier consignments had been cleared for the said firm. He pleaded that on investigation by the departmental officers the appellants had the import and export code allotted to them in August, 1994 and computer of the customs accepted the Bill of Entry. The appellant he pleaded had no information about the cancellation of this code. He pleaded that no knowledge has been attributed to the appellant regarding smuggling. He pleaded that the person who gave the appellants documents for clearance namely Shri Kamlesh Sanghvi escaped and no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the ld. lower authority in the imputations in para 55 there is no charge of smuggling against the appellant. He pleaded that the findings of the ld. lower authority that he filed the documents for a fictitious firm is not to say that he had knowledge about the firm being fictitious. He pleaded that the Bill of Entry particulars were entered in the computer by Customs authorities had been accepted by the computer. He pleaded there is no finding nor an inference can be drawn that the appellants intentionally aided in the commission of the offence to hold the appellant as abettor. In this connection he cited the judgment of the Hon'ble Supreme Court reported in AIR 1975 SC 175. He pleaded that suspicion cannot constitute proof for penalising the appellant and cited the judgment of the Hon'ble Allahabad High Court reported in 1978 Cr CJ 1690 (DB) and also the judgment reported in 1971 (27) STC 337 (All). He pleaded intention to aid the crime is gist of the abetment and cited the judgment of the Hon'ble Supreme Court reported in AIR 1977 SC 666. He pleaded in the facts of the case benefit of doubt should go to the appellant in the absence of any clinching evidence to hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was asked by the officers from Shri Kannan as to which firm to his knowledge belonged to them and on what basis he was making this statement about ownership of one firm by Shri Mardia and Surana. In the statement of 6-1-1995 the information elicited from Shri Kannan was about the five firms for which papers were brought by Shri Sanghvi. These five firms are shown at S. Nos. 1 to 5 in the opening paragraph of the statement as under : 1. Sargam Enterprises, 53, IIIrd Main Road, Jawahar Nagar, Madras - 600 082. 2. Manek Traders, 103/A.M.T.H. Road, Villivakkam, Madras - 600 049. 3. Sagar Suppliers, 51, East Park Road, Chenoy Nagar, Madras - 600 030. 4. Srinivasa Agencies, B-12, 1st Main Road, Jawahar Nagar, Madras - 600 082. 5. Kiran Trading Company, 76, T.S. Krishnan Moogapur, Madras 600 101. The name of the proprietors who signed for these firms were indicated in the statement as under: "For Sargam Enterprises, the Proprietor was signed as S. Somasundaram. For Manek Traders, the Proprietor was signed as S. Venkatesh. For Srinivasa Agencies, K.P. Sankaran has signed as Proprietor. For Kiran Trading Company, S. Kumar has signed as Proprietor. All the above p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he name of Shri Surana and Mardia in his statement of 4-11-1995 by stating to a query from the officers as under : Qn. Furnish the details about the owners/directions of 5 companies namely (1) Kiran Trading Co. (2) Srinivasa Agencies (3) Sargam Enterprises, (4) Sagar Suppliers (5) Manek Traders, Mr. Sanghvi, used to Represent. Ans. The above said 5 companies Mr. Sanghvi used to represent. One owned by Mr. Ishwarlal Surana and Mardia. I have heard that both the above persons are residing at Vishvasanthi Appt., Briethapet Road, Vepery. I don't know any other details other than the above. and after stating the above he added as under : I submit that I have made several attempts to contact Mr. Sanghvi, Ishwarlal Surana and Mr. Mardia and found out that they are still absconding. The above statement given by me is true and voluntary and I undertake to appear before you as and when required. It is significant that he on his own stated that Shri Surana and Mardia were absconding. On what basis he said that when no question in regard to them was put to him and when the authorities themselves were graping to ascertain the identity of the persons who were responsible for the smu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri Sanghvi was the person who handed over the papers he stated likewise. He has in this regard stated as under : "I wish to state that since our Proprietor Shri D. Kannan, had identified the person on 28-12-1994 and I also identified the person as confirmed by Mr. D. Kannan. Since Shri Kannan is the person who actually deals with the Importers what he has stated but the mistake in identification in his statement dated 4-1-1995 should be correct. I am always on field work and on 28-12-1994 I, identified the person after Shri Kannan identified him. Actually the person I saw on 28-12-1994 at your office had come and met Mr. Kannan in our office for Import clearance and I have also seen him hence I identified him. However the said persons names and representing firms are not known to me. Hence "the person represented M/s. K.K. Metal and M/s. Padmavathi Metal" according to Mr. Kannan is correct." His evidence therefore on his own showing is not reliable. He has also resiled from this position in cross-examination. 71. The other evidence which has been relied upon by the ld. Collector to hold against the appellants is the letters of father and brother of Shri Kamlesh Sanghvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Kamlesh was doing the work for five different firms. The statement of his father and brother and veracity thereof has to be read in the above background. It goes to show that they made a statement without full knowledge of what Shri Kamlesh was doing. Their evidence as relied upon cannot be accepted as sufficient in itself to establish connection of employee and employer between Shri Kamlesh and Shri Surana and it is not safe to rely on their evidence as being corroborative in nature. What remains to be looked is the statements of appellants. Shri Mardia has given an exculpatory statement and so has Shri Surana. The only piece of evidence there is on being confronted with the statement of Shri Kannan's acceptance that they had known him. This is explained by their version that they had made earlier clearances through him. This position is not controverted by the revenue. The other evidence of Shri Kannan that they had visited him and requested him to get the clearance of the goods early. Shri Surana has stated in his statement on 14-6-1995 to a query as to the above that he might not have asked for the above clearance. The words as above are of dubious import. These do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, 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, -- (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding five times the value of the goods or one thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods to a penalty not exceeding five times the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage in the declaration made under Section 77 (in either case hereafter in this section referred to as the declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d himself and the appellant in passing of foreign currency out of India, i.e., to Hong Kong. It was accordingly held that the contravention was established. It is contended that the statement of co-accused could be used only to corroborate other evidence as one of the circumstances under Section 30 of the Indian Evidence Act. But it cannot be used as substantive evidence without corroboration from other independent evidence. Except the statement of Dudani, there is no other independent evidence. Mr. Dudani's evidence cannot be pressed into service to arrive at the conclusion that the petitioner is involved in the passing of foreign currency out of India. 4. It must be remembered that the statement made before the Customs officials is not a statement recorded under Section 161 of the Criminal Procedure Code, 1973. Therefore, it is a material piece of evidence collected by Customs officials under Section 108 of the Customs Act. That material incriminates the petitioner inculpating him in the contravention of the provisions of the Customs Act. The material can certainly be used to connect the petitioner in the contravention inasmuch as Mr. Dudani's stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants. I therefore order setting aside the order of levy of penalty against the appellant. 78. As to the clearing agent it is seen that the charge as framed in the show cause notice as seen from para 35 of the impugned order is in the following terms : "The persons, namely, S/Shri Ishwarlal C. Surana, Raichand G. Mardia, D. Kannan, Kamlesh M. Sanghvi and S. Venkatesh have planned, conspired and arranged to clear the bearings by way of smuggling without payment of huge duty." The conspiracy as alleged on the part of the clearing agent along with other two has not been established as such in the finding portion of the order. The planning of import by three and thereafter arranging import by them and arrangements made by three together are not discussed by the ld. lower authority. What emerges from the facts as narrated in the order-in-original so far as the role of clearing agent is concerned are that he received the papers for clearance from Shri Kamlesh Sanghvi and filed the same. The Bill of Entry was accepted when the particulars were fed into the computer and thereafter it was processed and the duty was paid and examination of goods ordered by the authorities. The good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to be guilty of first pointing out the wrong person who handed over the papers or having been slow in coming forward with all the details. However it is seen the investigating officers also asked him question, which elicited only limited information and they did not elicit the details about certain aspects as were discussed in earlier paras in the discussion of the evidence in the case of the other two persons. This cannot lead to adverse inference for the purpose of levy of personal penalty for reason of abetment under Section 112. The case law cited by the ld. Appellant's, Advocate is relevant. There is no attribution that for processing the clearance of the consignment, the appellant had been paid any disproportionate compensation for arranging the clearance. His connection with Shri Surana and Mardia has been shown to be a business relationship for reason for clearance work done for their firms in the past. It has been attributed by the ld. Commissioner that he had the knowledge of ownership of the goods. What has to be shown is that he had the knowledge of the importation of contraband and which has not been done. He does not inculpate himself. In the above view of the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantly shifts his stand on who is the importer; (b) he does not explain when Surana and Mardia came to his office and what does he mean by early clearance when duty was already paid. 84. The ld. Advocate further argued that the department's case was that statement of Kannan was corroborated by his employee K. Yuvaraj. However, while in his 1st statement he identified Gulabchand who gave documents, but in his second statement he said it was Sanghvi. He further stated that he goes by what his employer says. Thus he changed his version as per Kannan and his deposition was mere hearsay and unreliable. Being "His Master's Voice" he was not an independent witness. 85. The another undisputed facts were the address of M/s. Sargam and Shri Srinivasan's whereabouts; that Kamlesh Sanghvi and his wife were tenants up to May, 1994, that the Bank A/c was operated by Somasundaram who is none other than Venkatesh - brother-in-law of Sanghvi. In this connection he referred to paras 25 & 32 of the Tribunal's order on record so far. It is also admitted that the Bank Account was opened on introduction by Sanghvi and that address thereof could be traced back to where Sanghvi and family r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rother Member (J) in his order above. He submitted that these were the following main grounds on which the Hon'ble Member (J) had levied penalty; (a) In para 41 ibid, the question of no C/E of Rohit Sanghvi and his father has been raised; (b) Certain case laws have been cited, including those in para 42 ibid; (c) K. Sanghvi has nexus with Surana/Mardia in view of testimony of Rohit Sanghvi, in his statement dt. 26-5-1995 - para 43 ibid; (d) M/s. Sargam is a fictitious firm and hence real importers are Surana and Mardia; (e) "False denial" of nexus by Surana - paras 44 & 45 ibid; and (f) Other conclusion in paras 46 to 51 ibid. 92. Ld. Advocate then argued on these as follows : (a) Letter of B.R. Sanghvi (father) was a suo motu letter and not a statement under S. 108 of CA/62 in response to a summons, so it had no evidentiary value by itself and hence there was no need to C/E its author during adjudication proceedings. (b) Letter of Rohit Sanghvi similarly necessitated no C/E. As regards statement of Rohit Sanghvi that Kamlesh Sanghvi worked for Surana, in view of arguments at para 11 above, this was not good evidence, particularly as it conflicted with other d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncern with the goods. So the case law stands distinguished. (h) Ld. Advocate then argued against the conclusion of Hon'ble Member (J) in paras 44/45 ibid that there was "false denial" by Surana regarding his relationship with Sanghvis. He submitted that this conclusion is without any basis. Surana did say that he knew Sanghvi as a tenant. The capacity in which he was known is clarified by Surana and there is no rebuttal thereof on record. (i) With respect to paras 47 & 48 of Hon'ble Member (J)'s order, ld. Advocate argued that Naresh Sukhawani case cited was not applicable because therein Dudani's statement was inculpatory of both himself and another. In this present case Kannan does not implicate himself. Further Kannan's testimony, as argued above, was unreliable. Nowhere has Kannan stated that he knew that there was a conspiracy to smuggle Ball-bearings. Thus, facts being different, the case law cited is not applicable here and statement of Kannan cannot be read through this judgment. (j) Expanding his arguments on the value of Kannan's statements he referred to the cross-examination of Kannan wherein he has deposed that he was under tremendous pressure by the officers wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not in equitable frame of mind when statement recorded as his mother had died on 13-12-1994, father-in-law on 25-12-1994 and, officers threatened him to give statement between 27-12-1994 and 29-12-1994. So, he has discharged onus to show coercion. (e) In para 53, Hon'ble Member (J) has raised issue of "active participation" of Kannan in conspiracy. This is a new ground as S.C.N. only charges him with acts of commission or omission and Order-in-original also adjudicates only to that extent. Tribunal cannot traverse beyond Order-in-Original and S.C.N. (f) Ld. Advocate reiterated paras 70 & 78 onwards of Hon'ble Vice President's order and concluded there is nothing on record to show Kannan's deliberate involvement. He concluded that no one has implicated Kannan in any conspiracy. He was operating as CHA since 1984 without any complaints. Kannan had no knowledge of contents of the cargo and earlier 4 consignments cleared demonstrated bona fides of importer. (g) Ld. Advocate cited : -- 1996 (83) E.L.T. 557 (T) - negligence different from culpable negligence; -- 1978 CRJ 1690 SC -- AIR 1977 SC 666 - intention to aid commission of an offence -- AIR 1975 SC 175 - abatement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce only shows that there was an attempt to import goods by Venkatesh and Sanghvi but does not implicate Mardia or Surana. If there was no such person as K. Sanghvi, then only fingers could be pointed at Surana and Mardia. He also argued that the main premise in Bhoormull case was also that Burden of proof was on department to show goods are smuggled and the rest of the judgment flowed therefrom. He further argued that while identification of Surana and Mardia was not disputed, there was no nexus established. Earlier imports were neither incriminating nor in the name of the 5 firms operated by them. Further, evidence of Rohit Sanghvi and his father regarding Surana telling Kamlesh to run away is also hearsay and mother not inquired from. Therefore, there were glaring loopholes. Citation of Surjit Singh Chabbra's case in para 49 of order of Hon'ble Member (J) is not applicable [1997 (89) E.L.T. 646] as it deals with a confession/retraction. In this case there is neither confession nor retraction involved. 96. At this point ld. JDR rose to point out that goods being smuggled, Bhoormal's case-law applied. Also identification by photo of Surana and Mardia and their request for ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is not disputed. But I am, with due respect, unable to accept, that this shows that Kamlesh was employed by Surana and that too with respect to this import. We cannot totally reject the deposition of Surana and the questionable value of the two letters as discussed above. 101. In para 46, Hon'ble Brother discusses that Surana/Mardia knew Kannan. This is not disputed by anyone. But by itself this does not establish a nexus between the contraband and the appellants. Much more solid evidence is necessary for that. 102. In para 47 Hon'ble Brother accepts Kannan's identification of Mardia/Surana by photo and by deposition as owners of M/s. Sargam. But it is also on record that this was soon retracted and in his cross-examination it was revealed that Kannan was not very sure on this count. This evidence has not been considered at all except to hold that retraction does not prove anything. If retraction is supported by deposition in cross-examination, as happened here, then the case law relied upon by Hon'ble Brother, is of not much use. 103. In para 48, the case law of Sukhwani is held applicable in this case. With due respect, I find the facts here to be different. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solely on evidence sourced through Kannan, particularly he being a party to the charges alleged, almost a co-accused (though this is not a prosecution trial in a Court of Law) and also as his evidence shifts on material issue of who hired his service as CHA in this case. These conclusions are supported by [1991 (51) E.L.T. 302 (Bom.) = 1991 (35) ECR 209 Bom.] wherein it is held that even a confessional statement by a co-accused is not substantive evidence and by 1990 (49) E.L.T. 207 (T) wherein it is held that contradiction in statements may lead to charges not being established. Therefore, of necessity, we have to look for other corroborative evidence. 107. The first source of corroboration is his employee, one Shri Yuvaraj. But as argued by ld. Advocate Shri Nankani, I agree that Yuvaraj is even less reliable as a witness, because he shifts his deposition and follows that of Kannan. When questioned on this, he almost confesses to be following what his employer has said. His evidence is therefore worthless. 108. The next source is Shri Rohit Sanghvi and his father. The crux of their evidence is that K. Sanghvi was working for Surana and they would contact him on telep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven son) would not tell officers where they were. This raises clear suspicions. But it is equally true that, grilled on this issue with respect to his statement that he knew him only as a tenant. So this evidence shows that Kamlesh was contactable on phones of Surana, but this does not prove that he was working with Surana vis-a-vis this consignment. It has been rightly argued that a holistic view of the evidence should be taken (by ld. JDR). This is also held in 1996 (81) E.L.T. 426 by the Hon'ble Tribunal. But, as is clear from above, when we do so, no clear picture emerges about the involvement of Surana, and more so of Mardia. At best one can, on evidence so far available, only suspect this as a possibility. But what we need to impose penalty is a preponderance of probability [1989 (41) E.L.T. 265 (T)] and not a preponderance of possibility, which is what we have. We may not need mathematical precision but we need a clear picture showing probability of a high order. 111. Furthermore, this case totally hinges on circumstantial evidence, as far as penalty imposable on Mardia and Surana is concerned. Now, it is also laid down that circumstantial evidence must be compati ..... 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