Deepak Kothari vs Commissioner Of Customs (Csi Airport), ...

(Arising out of Order-in-Original No. MUM-CUSTM-PAX-COM-013-13-14 dated 28.1.2014 passed by Commissioner of Customs (CSI Airport), Mumbai)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :

CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Deepak Kothari Appellant Vs. Commissioner of Customs (CSI Airport), Mumbai Respondent

Appearance: Shri Arun Mehta, Advocate, for appellant Shri S.J. Sahu, Assistant Commissioner (AR), for respondent

CORAM: Honble Mr. P.K. Jain, Member (Technical)

Date of Hearing: 21.8.2015 Date of Decision: 11.9.2015

ORDER NO

This appeal and stay application are filed against imposition of penalty of Rs.10,00,000/- on the appellant under Section 112(a) of the Customs Act, 1962. Vide order on the order sheet dated 16.6.2015, it was decided in consultation with both the parties that both stay application and appeal can be heard at the same time. Accordingly, after waiving the requirement of pre-deposit, the case is being taken up for final disposal.

2. Brief facts of the case are that one M/s. Neelkamal Jewellery Exports Ltd. is a unit located in SEEPZ. The unit is importing diamonds and precious metals like gold etc. and exporting jewellery, diamonds etc. The unit is importing the said diamonds/precious metals etc. under Notification No.177/94-Cus. read with the relevant provisions of EXIM Policy. The said items are imported duty free and are expected to be used in the manufacture of the export goods. Case of the Revenue is that the said unit clandestinely diverted a large quantity of diamonds, gold etc. in the domestic market instead of exporting. Further, a large quantity of diamonds clandestinely diverted were sold to the present appellant. Such sale was in contravention of the provisions of Notification 177/94-Cus. as also the EXIM Policy. Since the appellant has purchased from M/s. Neelkamal Jewellery Exports Ltd. and thereafter sold such diamonds in the domestic market, penalty has been imposed under Section 112(a) of the Customs Act.

3. The case of the Revenue started with an information and thereafter stock taking in the unit of Neelkamal Jewellery Exports Ltd. on 5th November 1999. There was acute shortage of the diamonds of various varieties physically available compared to the stock position indicated in the records of the said company. Statements of various persons starting from one Shri Bhupendra Kapadia, Director of the said company, were recorded who admitted that due to some financial difficulties, he has clandestinely cleared and sold the diamonds and other jewellery articles in the domestic market. He also took name of certain persons to whom he has sold such diamonds. The present appellant appears in such names. Number of statements of Shri Bhupendra Kapadia were recorded as the investigation progressed. There were some variations in his statement. However, as far as the present appellant is concerned, his name appeared consistently in all the statements. Statements of large number of officials working in the said unit were recorded as also that of the present appellant and one Shri Prem Atmaram Mayekar who was working in the office of the present appellant, was also recorded.

Statements of one Miss Pearl Bengali who was working as secretary to the director, Shri Bhupendra Kapadia, were also recorded on 11.11.1999 and 12.11.1999. In her statement, she informed that on number of occasions Shri Bhupendra Kapadia asked her to take out diamonds of particular varieties in particular quantity. She took out those diamonds weighed and thereafter she was asked to fax the details to the present appellant at his office fax number. The fax number was also detailed by Miss Bengali and is not under dispute that the said fax number is installed in the office of the present appellant. Miss Bengali also stated that on each such occasion, the diamonds were thereafter handed over to Shri Bhupendra Kapadia. Miss Bengali also stated in the statement that on one or two occasions, Shri Bhupendra Kapadia asked her to take the said diamonds out of the SEEPZ and hand over to the present appellant. However, she refused to do so and thereafter Shri Bhupendra Kapadia has not asked her to take the diamonds out of the SEEPZ. She also explained that no records of such transactions were kept initially.

However, from August 1999 she started keeping the record in the computer. Ms. Bengali also took 18 printouts indicating such transactions. It appears in those printouts name of certain exporter and other details were written. However, according to Ms. Bengali, these details were faxed to the present appellant and diamonds were handed over to Shri Bhupendra Kapadia and diamonds were not really exported. From the investigation, it also appeared that most of the time one Shri Ramdas Birbal Yadav and Shri Balasaheb Shyamrao Sutar who were working as driver and peon in the said company, were transporting these documents from SEEPZ to the present appellants office in Opera House. These diamonds were being handed over to the present appellant and the present appellant either himself or through his Accountant Shri Prem Atmaram Mayekar, was handing over the cash to them which in turn was given to Shri Bhupendra Kapadia. In the investigation, it is seen that number of statements of the present appellant were recorded. The present appellant perhaps being aware of the fact that the diamonds have been clandestinely removed from SEEPZ which is not permitted under the law, gave evasive reply to most of the questions so as to project that he has done nothing and there have been no transactions except one transaction between him and Shri Bhupendra Kapadia / Neelkamal Jewellery Exports Pvt. Ltd. On the other hand, Shri Balasaheb Sutar, Shri Ramdas Yadav who were working with Neelkamal Jewellery Exports Pvt. Ltd. in SEEPZ as also Shri Prem Atmaram Mayekar who was working in the appellants office admitted certain things which obviously implied that the diamonds were being clandestinely removed from SEEPZ were being sold to the present appellant and the present appellant in turn was paying for the same to Shri Bhupendra Kapadia.

The investigator thereafter carried a confrontational panchnama wherein the present appellant was called. In addition, Shri Prem Atmaram Mayekar, Shri Balasaheb Sutar and Shri Ramdas Yadav were also called. During the confrontational panchnama, the present appellant admitted that he had received the diamonds from Shri Balasaheb Sutar/Shri Ramdas Yadav and paid in cash to them either himself or through Shri Prem Atmaram Mayekar. Such transactions were not done on one occasion but on number of occasions. Statement of the present appellant and also other persons were also recorded on the day of confrontational panchnama wherein the position was confirmed by the said persons. In addition to the above mentioned statements, there were statements of number of other persons, which are not so much relevant for the present appeal and are therefore not being discussed. Based upon investigation, show cause notices were issued to Neelkamal Jewellery Exports Pvt. Ltd., Shri Bhupendra Kapadia, the present appellant and other persons. The case was adjudicated. Aggrieved by the said order, the present appellant along with another appellant Shri Bhutnath Das filed appeal before this Tribunal.

This Tribunal allowed their appeal on the grounds of principles of natural justice with the direction to the Commissioner to allow them inspection of records and thereafter hear and decide the case. In pursuance of the said direction, the impugned order has been passed.

4. Learned counsel for the appellants main submission has been that the 18 documents referred in Ms. Bengalis statement were not given to the appellant. It was submitted that it is only just before the adjudication that the Commissioner has informed that those 18 documents though referred in the statement of Ms. Bengali but are not relied upon in the show cause notice. Further, the said documents are not available with the department. Since the documents are neither available with the department nor are relied upon though mentioned in one of the statements, he decided the case on the basis of available records. Learned counsels main emphasis was that these 18 documents are mentioned in the statement of Ms. Bengali and the statement states that these documents were given to the investigating officer and, therefore, the copies of the documents should be provided to him. Since these documents have not been provided to him, his client is not able to make his submissions. Another contention of the learned counsel was that the statement of Shri Bhupendra Kapadia cannot be relied upon as there are variations in his statements and he has been changing the stand in different statements.

Another contention of the learned counsel was that the appellant in none of his statements has accepted that he has purchased the clandestinely removed diamonds. His submission was there has been only one transaction of diamonds with Shri Bhupendra Kapadia and that transaction was also was not from his SEEPZ unit but from one of his another set up in Hiranandani Gardens. It was also submitted that in the said transactions, the diamonds were exported and the amounts were paid through cheque to Shri Bhupendra Kapadia. Learned counsels submission is that even though the present appellant knew Shri Bhupendra Kapadia for large number of years, there was no transaction with him. It was his submission that Shri Bhupendra Kapadia used to come to their office or his persons used to come to their office and they were dealing with some other brokers and in the process, the appellant was helping him as the office was located in Prasad Chambers in Opera House which is the centre for diamond trading. The learned counsels submission was that in the facts and circumstances of the case, particularly the fact that the appellant has not admitted and Shri Bhupendra Kapadias statement cannot be relied upon and also the fact that those 18 documents could not be produced by the Revenue, there is no case whatsoever for imposition of penalty under Section 112(a) of the Customs Act.

5. Learned AR, on the other hand, submitted that the appellant was provided copies of all the statements relied upon as also copies of panchnama and all other documents. He further submitted that the so called as 18 printouts were not listed in the relied upon documents and even then the Revenue tried to locate and made efforts to find out the said 18 documents. However, these were not available in the records in spite of the efforts made by the department and, therefore, the case is required to be decided based upon the available records and the fact that these 18 documents are not relied upon in the show cause notice. He also submitted that other than these 18 documents, there is no grievance whatsoever of the appellant and documents running into few hundreds of pages which included large number of statements, panchnama etc. were all provided to the appellant. The learned ARs next submission was that in any case, these 18 documents were shown to the appellant while recording his statement and the present appellant at the time of recording of the statement has gone through these documents and given his comments.

The learned AR submitted that except stating that these 18 documents are not available with the appellant who has seen those 18 documents, has not given any submission to support his case. It was also submitted by the learned AR that Ms. Bengali who has taken the printouts and presented these documents at the time of investigation, was called for cross-examination and was available for cross-examination to the present appellant, but the present appellant did not cross-examine her. The learned AR submitted that the appellant could have asked any question about these documents from her but that was not done. Similarly, the appellant could have asked about Ms. Bengalis claim that details of these 18 documents as also on earlier occasions details of diamonds were faxed to the appellant could have been questioned and also how and on what basis she has claimed that these diamonds have gone to the present appellant, but nothing of this sort was done. This itself proves that whatever Ms. Bengali has stated in heir statement was true and correct. The learned AR further submitted that the present appellant is well aware of the implications of what he had done and it is for this reason that in all his statements he has been vague and not coming to the point or was negative in replies.

However, when a confrontational panchnama was drawn calling Shri Prem Atmaram Mayekar who was working in his own office, as also Shri Balasaheb Sutar and Shri Ramdas Yadav who were bringing the diamonds and handing over to the appellant and also collecting the cash, the appellant admitted the transactions. This admission itself proves that the appellant has been purchasing regularly the clandestinely cleared diamonds from the SEEPZ. The said panchnama or the statements have not been retracted or questioned and, therefore, these have to be relied upon. The learned AR also submitted that the so called as variation in the statement of Shri Bhupendra Kapadia are of no consequence whatsoever as far as the present appellant is concerned. It is normal that the people who are aware of the consequences of the manipulation carried out by them that they do not admit or tell the truth in one go and at times tried to be vague or give vague answers and it is only as the investigation progresses that the true facts come to light. The learned AR took us through the findings of the Commissioner in the impugned order, particularly para 3.11 to support the Revenues case.

He also took us through the large number of case laws quoted by the learned Commissioner, about the reliability relating to the statements, cross-examination etc.

6. I have carefully gone through the records, particularly the various statements as also other details including the submissions made by the leaned counsel for the appellant as also of the learned AR. The learned counsel has submitted that the statements of Shri Bhupendra Kapadia of Neelkamal Jewellery Exports Ltd. cannot be relied upon as there are lot of contradictions between different statements, while in the initial statement he has been taking the name of 3-4 persons and later on he has changed his stand. I have gone through these statements very carefully and I do not find any contradictions in the statements though there are some variations in the statement. It is not as if that Shri Bhupendra Kapadia did not name the present appellant in first, second or any of the statements. In fact, as far as the present appellant is concerned, his name for purchase of clandestinely cleared diamonds is available in all statements made by Shri Bhupendra Kapadia. To my mind, whatever variations are there in the statements of Shri Bhupendra Kapadia are of no consequence as far as the present appellant is concerned and the statements of Shri Bhupendra Kapadia can be relied upon.

7. The other main submission of the learned counsel was that the 18 computer printouts have not been given to them and it is in violation of the direction of this Tribunal in earlier remand proceedings. I have gone through the earlier order of this Tribunal. There was no specific direction about any particular document. The direction was to provide inspection of all the relied upon documents. It is not under dispute that all the relied upon documents have been given to the appellant. The 18 computer printouts are not listed in the list of relied upon documents. However, I do find that these 18 printouts were given by Ms. Bengali after taking computer printouts during heir statement on 12.11.1999. I also note that the impugned order details the effort made by the department to locate these printouts. However, the Revenue has not been able to locate these 18 printouts from the records available with them. Since these 18 printouts are not available, one has to decide the case based upon what is available. I also note that these documents are not fatal to the case. First of all, these documents relate to clandestine clearance of diamonds from August 1999 onwards.

It is not the Revenues case that the clandestine clearance of the diamonds and purchase of the same by the present appellant started only in August 1999. In fact, Ms. Bengalis statement speaks of approximately two years period. Thus the clandestine clearance and purchase of the diamonds was happening even before August 1999 and Ms. Bengali in her statement has indicated how this was being done and the fact that the diamonds would be taken out from the safe, weighed and thereafter the details of the diamond, weighment etc. will be communicated to the present appellant on fax and the diamonds will be handed over to Shri Bhupendra Kapadia who would take further action to ensure that these are clandestinely taken out of the SEEPZ area and thereafter transported to the present appellants office. In my view, it is very important to note that these 18 printouts for whatever worth these may be, were shown to the present appellant while recording his statement and even that time he gave vague answer to that and simply stated that these printouts indicate the detail of the export, consignee etc. During the statement, he did not say that he never received the consignments covered by these 18 documents nor said that he received the diamonds covered by these documents.

Ms. Bengali was very specific along with the dates that the diamonds were weighed and the details were faxed to the present appellant and the diamonds were handed over to Shri Bhupendra Kapadia who in turn had sent to him and the diamonds were not exported. It is very strange that Ms. Bengali was present for cross-examination but the appellant did not cross-examine her. She could have been cross-examined even in the absence of those 18 documents or they could have asked questions about those 18 documents. In the absence of any such cross-examination by the appellant despite the availability of Ms. Bengali for cross-examination, whatever has been stated in Ms. Bengalis statement has to be taken as true and correct. I also find that the Revenues case is not limited to these 18 documents though in respect of these 18 documents, the Revenue has been able to specify the exact quantity and value of the diamonds cleared which is not so in case of earlier clandestine clearances where the only known fact is the clandestine clearances were done but the quantity and the value of the diamonds in those clearances are not known.

Further, I find from the statement of Shri Prem Atmaram Mayekar who was working in the office of the appellant, in his statement has confirmed that Shri Balasaheb Sutar and Shri Ramdas Yadav used to bring the diamonds and would go straight to the cabin of the present appellant and many a times the present appellant would direct him to hand over substantial amount of cash. I have also gone through the panchnama drawn during the confrontational panchnama/statement on 24.11.1999 and in this confrontational panchnama/statement, the present appellant has confirmed that he knew Shri Ramdas Yadav and he knew Shri Balasaheb Sutar and also confirmed about the transactions number of times. Since the appellant himself has confirmed through statement and panchnama the wrong doings and the said panchnama or the statements have not been retracted in any reasonable time or on any reasonable basis, these have to be taken as true and correct. It is well settled law that whatever has been admitted need not be proved. From the various evidences which have been discussed in detail by the adjudicating authority in para 3.11, I have absolutely no doubt whatsoever in my mind that the appellant was actively involved in almost throughout two years and a very substantial quantity of diamonds which have been clandestinely cleared by the unit located in SEEPZ were purchased by him.

He was aware of the fact that these diamonds have been imported by a SEEPZ unit and as per the law vide Notification No.177/94-Cus. as also EXIM Policy, these are not permitted to be sold in the domestic market and if sold in violation of the Notification and the provisions of EXIM Policy which would make such goods liable to confiscation and hence penalty on the appellant besides the main importer. Under the circumstances, I do not find any reason to interfere with the impugned order. I also find that the then value of the diamonds covered by the 18 printouts itself is more than Rs.7 crores. Similar purchase of clandestinely cleared diamonds was being done by the present appellant even for the earlier period for which the quantity and value details could not be found out in the investigation. Keeping in view the over all facts, the penalty of Rs.10 lakhs cannot be considered on the higher side.

8. In the result, the impugned order is upheld and the appeal filed by the appellant is dismissed.

(Pronounced in Court on 11.9.2015)

(P.K. Jain) Member (Technical)

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