By TIOL News Service

MUMBAI, JAN 19, 2017: THE appellant had exported certain goods under DEEC and had imported titanium dioxide as raw material for the same.

On the basis of intelligence, the export containers were recalled and on examination, it was found that not only the said containers contained goods which were mis-declared during the export but also Indian currency. Consequently, searches were made and more currency was seized from the premises of Pradeep Bhatnagar and a show cause notice was issued.

The appellant approached Settlement Commission.

The Settlement Commission vide order dated 20.6.2001 refrained from giving any finding in respect of Indian currency and observed as follows -

"It is noticed by the Revenue that the goods recalled in these shipping bills were misdeclared and different in description, value and quantity. There was also a seizure of Indian currency of Rs.66.99 lakhs in these three consignments. There was also a seizure of Indian currency of Rs.1,22,30,000/- from the residence-cum-office premises. The Commission observes that no duty liability has been occurred yet in the transaction covered by the licence No. 0310035809 dated 27.4.2000. The applicant has sought release of Indian currency seized. In this connection, the Commission finds that an application is made by an importer or any other person at any stage of the case relating to him. The ‘case' is defined to mean any proceeding under the Customs Act, or any other Act for the levy, assessment and collection of customs duty, or any proceeding by way of appeal or revision in connection with such levy, assessment or collection, which may be pending before a proper officer or the Central Government on the date on which an application under sub-section (1) of Section 127B is made.

The Commission is of the view that the seizure of the Indian currency does not fall with the definition of ‘case' and, therefore, is not in a position to consider the plea made by the applicant with regard to the release of Indian currency. The Revenue is at liberty to take action as provided for in Customs Act with regard to the Indian currency seized."

(Emphasis supplied)

The show cause notice was thereafter adjudicated by the Commissioner to the extent not settled by the Commission.

Aggrieved,the appellants are in appeal before the Tribunal.

The appellants had also challenged the order of the Settlement Commission before the Bombay High Court but since they could not pursue remedy at two places, they withdrew the petition filed and which was allowed on 15.03.2016.

Before the CESTAT, the appellant urged on the limited issue of confiscation of Indian currency amounting to Rs.30 lakhs (out of Rs.1.22 crores seized from the appellant's premises) under Section 121 of the Customs Act, 1962. The appellants also contested the imposition of penalty under Section 114 of the Customs Act, 1962. It was argued that the appellants are not contesting the confiscation of currency amounting to Rs.66,99,000/- which was recovered from the export containers which was recalled by Revenue.

It was argued that since the statements admitting that the said currency belonged to him (Pradeep Bhatnagar) were retracted no reliance could be placed on the same for imposing penalty u/s 114. Reliance is placed on the decision in Vinod Solanki vs. UOI - 2009-TIOL-01-SC-FEMA. It is also argued that in the present case, apart from the statement (which is since retracted) there is no other evidence to show that the currency found in the containers exported by the appellant belonging to the co-appellant; that separate penalties cannot be imposed on the company and the director; that the goods imported duty free, against the sale of which, the currency of Rs.30 lakhs has been confiscated under Section 121, cannot be called as smuggled goods; that since they had contravened the actual user condition stipulated in the advance licence, the duty amount of Rs. 13,52,419/- which was foregone was demanded from the appellant and which has since been paid; therefore, the said goods do not remain liable to confiscation and hence Section 121 cannot be invoked; that the Settlement Commission vide its order has regularized the non-fulfillment of condition of Notification 30/97-Cus on the condition of paying duty and interest (since paid);that once immunity from fine and penalty has been granted by Settlement Commission, then it is not open to Revenue to re-confiscate the sale proceeds of the goods.

The AR justified the order by placing reliance inter alia on the apex court ruling in Sheshank Sea Foods Pvt. Ltd. vs. UOI - 2002-TIOL-142-SC-CUS.

The Bench observed -

+ Reading Section 121 harmoniously with the definition of smuggling as given in Section 2(39) of the Customs Act, it is clear that it is not necessary to confiscate the goods to enable invocation of Section 121. In fact, in most cases since the goods are already sold, no confiscation can be done. In the instant case, it is an admitted position that the goods imported by the appellant vide bill of entry no. 7083 dated 29.3.2000 by availing the benefit of advance licence No. 031017072 were sold in the market in violation of the policy and in terms of the licence. Such goods obviously become liable to confiscation under Section 111(o) of the Customs Act and in these circumstances, Section 121 can be invoked.

+ It is obvious that the Settlement Commission has limited its order to charges (a), (b), (c), (f), and (h) of the show cause notice and therefore any immunity from fine and penalty can only be in respect of those charges. Such immunity does not extend to the charges made in clauses (d), (e) and (g) of the show cause notice. In these circumstances, we uphold the confiscation of Rs. 30 lakhs seized from the premises of Shri Pradeep Bhatnagar under Section 121 of the Customs Act.

+ In the instant case the containers exported by the appellant were recalled for examination. Indian currency amounting to Rs.66.99 lakhs was recovered from the containers. In his statements dated 13.6.2000 and 7.7.2000, Shri Pradeep Bhatnagar had admitted the knowledge of such currency. However, vide retraction dated 18.8.2000, the said statements were retracted.

+ We find that the retraction has numerous loopholes. First of all, when the containers were recalled, he claims to have been approached by an unknown person who threatened him. If that was true, he should have reported the same to DRI/police, which he failed to do. DRI has recorded his statement more than once. He could have retracted the same when he was produced before the Additional Chief Metropolitan Magistrate. If he was coerced to give statement, he should have clearly stated before the Additional CMM who is a judicial authority. He was again produced before the Magistrate on 11.7.2000 when he was released on bail, where he had another opportunity of placing on record the threat and coercion. It has been alleged that he was threatened by an inmate in the jail where he had the opportunity of informing the Jailer or DRI officers. It can be seen from the above that he had ample of opportunities to retract his statements but he did not do so. In these circumstances, the retraction made 37 days after his release from jail and more than two months after his first statement dated 13.6.2000 cannot be considered as true. In these circumstances, the Commissioner has rightly relied on these statements.

+ It is difficult to believe that anybody in the dock would put currency in such large amounts in the pallet belonging to the appellant without his knowledge. Anybody putting such money would be interested in getting the same back when the container reaches its destination. It cannot be done without the connivance and the help of the exporter and the consignee. Moreover, the currency has been found on more than one occasion in the export consignments. In these circumstances, it cannot be said that there is not enough corroborative evidence to substantiate his statements.

+ There is no bar on the imposition of separate penalty on the company and the director. In the instant case, the director has played significant role and, therefore, penalty has been rightly imposed.

The appeals were rejected.

(See 2017-TIOL-167-CESTAT-MUM)