Judgment:
D.N. Panda, J.
1. Consequent upon receipt of an intelligence by DRI from China on 19.09.2005 through the consulate General of India, Hong Kong that one M/s Vikas Overseas, B-6, Arya Nagar Society, Patparganj, Delhi having IEC No. 0592009335 had exported Ketamine from India in the guise of Alfa Olefin Sulphonate (AOS) and 1010 Kgs of Ketamine was seized by Chinese Bureau of Narcotics Control, DRI investigated into the export made by Shipping Bill No. 1494427 dated 06.08.2005 backed by Invoice No. 465/2005-06 dated 04.08.2005 covering export of 17,500 kgs of Alfa Olefin Sulphanate (AOS) to a Chinese buyer viz., M/s Yantai High Link Import and Export Co. Ltd., 47, X inanhe Road, Yantai, China, by M/s Vikas Overseas in India.
2. According to the outcome of investigation, there was an allegation against Shri Devinder Pramod and Shri Mahesh Kumar Gupta that they had exported Ketamine in terms of 3 (three) Shipping Bills No. 1494427 dated 06.08.2005 1435176 dated 02.11.2004, 1470670 dated 29.04.2005 and 1491042 dated 25.07.2005 in the name of the exporter M/s Overseas in the guise of Alfa Olefin Sulphonate (AOS) to China and 1010 kgs of such goods exported was seized in China on 19.09.05 by the Bureau of Narcotics Control, NNCC of China. In the course of investigation by DRI, following evidence came to record:
(1).One M/s Vikas Overseas useing IEC No. 0592009335 exported Ketamine in the guise of AOS and that firm was belonging to Ms/ Anju Jolly as per Shipping Bills. The said exporter was IEC holder and was situated at B-6, Arya Nagar Society, Patparganj, Delhi-92 prior to its shifting to C-29, Ashok Niketan, Delhi-92 and its changed address was incorporated in the record of DGFT as communicated vide letter No. nil dated 01.07.92 by that Authority.
(2).The IEC number of M/s Vikas Overseas was used by Devinder Pramod and Mahesh Kumar Gupta to make export of Ketamine fraudulently mis-declaring that as Alfa Olefin Sulphonate (AOS) and the CHA involved in the export was M/s Air Delta Air Freight Pvt. Ltd.
(3).There was a report from the China Customs stating that the goods exported vide shipping Bill No. 1494427 dated 06.08.2005 was actually Ketamine whereas that was declared before the Indian Customs as Alfa Olefin Sulphonate (AOS).
(4).Shri K.L. Arora, Director of M/s Delta Air Freight Pvt. Ltd (CHA) in his statement recorded under Section 108 of Customs Act, 1962, stated that their CHA company had provided services for export of 3 consignments of M/s Vikas Overseas covered vide Shipping Bill Nos. 1491042 dated 25.07.05, 1494427 dated 06.08.05 and 1435176 dated 02.12.2004; and one Harvinder singh, their employee attended to the Customs clearance of these three shipments of M/s Vikas Overseas.
(5).Customs clearance of above consignment was made by CHA at the request of Deepak Berry, Director of M/s Direct Oceans Shipping Pvt. Ltd Kalkaji and nobody from M/s Vikas Overseas contacted them. Service charges was paid to Delta by cheques by M/s Direct Ocean shipping Co. Pvt. Ltd.
(6).Shri Deepak Berry, Director of M/s Direct Oceans Shipping Pvt. Ltd Kalkaji in his statement recorded under Section 108 of the Customs Act, 1962, stated that they had done freight forwarding of above said three export consignments of M/s Vikas Overseas, B-6, Arya Nagar Society,Plot No. 91, IPExtension, Patparganj Delhi-92. He identified shri Devinder Pramod, Proprietor of M/s NKS and Co., 303, Jyoti Sikhar, Janakpuri Distt. Centre, New Delhi who approached them getting reference from one Mukehs of M/s Blue Art Flower Vash, Kalkaji, New Delhi for the freight forwarding of the above said three consignments and brought those documents as well as collected the shipping documents after clearance from customs and paid their charges in cash.
(7).Shri Deepak Berry further stated that one Shri Adish Bansal employee of Devinder Pramod used to visit his office for payment and collection of the shipping document and sometimes Devinder Pramod also used to directly call Mr. Harvinder Singh (an employees of M/s Delta Air Freight, the CHA) who looked after examination at export shed. The invoice and packing-list were prepared when the relevant documents were handed over to them by Devinder Pramod.
(8).Shri. Devinder Pramod, in his statement recorded under Section 108 of the Customs Act, 1962, stated that earlier he was a Commission Agent for M/s Numeric International Ptd. Ltd., Singapore, which was engaged in the business of Palm Fatty Acids and was under control of one paramdeep Singh; that he (Devinder Pramod) used to procure orders for Palm Fatty Acid from Indian Market and foreign countries like Nepal, Bangladesh including some African Countries. He admitted that two consignments of Chemicals and Plastic Dana through M/s Vikas Overseas and last two consignments of chemical products were exported to China through M/s Vikas Overseas.
(9).Shri Devinder Pramod further stated that he contacted Mahesh Kumar Gupta at his office at 94/2A, 2nd Floor, Katra Baria, Delhi and requested him to arrange a company for export of some goods. Shri Mahesh Kumar Gupta arranged the firm M/s Vikas Overseas for him to make export.
(10). Devinder Pramod hired a go-down near Siraspur village, Delhi to store goods on monthly rent of Rs. 5,000/- with the help of Mahesh Kumar Gupta and to avail service of a CHA, he contacted Shri Deepak Berry of M/s Direct Ocean Pvt. Ltd New Delhi. He admitted having purchased Snocem, Distemper and Texture Paint and purchased total 900 Kgs of these goods in the name of M/s Vikas Overseas from Snocem factory situated in Kirti Nagar, New Delhi. The purchase price of these goods was about Rs. 3 to 4 Lakhs, which they paid in cash. He further stated that one Lakhvinder Singh paid Rs. 5,000/- towards rent to the go-down owner. Remittance of the export consignments was received and deposited in the bank account of M/s Vikas Overseas opened by Mahesh Kumar Gupta in the Andhra Bank, Chandni Chowk, Delhi.
(11). Shri Devinder Pramod further admitted that he purchased 17,500Kg of Alfa Olefin Sulphonate (AOS) @ Rs. 55/- kg packed in 700 Plastic bags (Subsequently packed in drums) and for export of the same advance money was received through TT in the account of M/s Vikas Overseas. He further admitted that for the second consignment he procured 450 drums of AOS and kept that in the aforesaid godown. He further stated that remaining 250 drums said to contain AOS were arranged by Lakhvinder Singh and were delivered at the godown above. All the documentation pertaining to export was done by Shri Mahesh Gupta in the name of M/s Vikas Overseas and Customs clearance was made and forwarded by Shri Deepak Berry and remittance of all the consignments have been received in the bank account of M/s Vikas Overseas in advance from the foreign buyers. So also payments to the local suppliers were made in advance.
(12). Shri Mahesh Kumar Gupta in his statements recorded under Section 108 of Customs Act, 1962, stated that he was known in the market as Mahesh Bill-Purchewala as his main business was to arrange IEC for opening firms and preparing bogus bills. He met Devinder Pramod through his friend Sahil and Shri Devinder Pramod was working in M/s West Cost Impex Pvt. Ltd in Arunchal Building, Delhi and approached him to arrange a firm which has IEC for export purpose and to open a bank account in the name of that firm. He took fees Rs. 15,000/- from Shri Devinder Pramod.
(13). Mahesh Gupta also admitted that he arranged a copy of IEC No. 0592009335, which pertained to M/s Vikas Overseas and he also opened a bank account of name of M/s Vikas Overseas in Andhra Bank through his employees. He further admitted that documents of M/s Vikas Overseas pertaining to export of 17,500 Kg of Alfa Olefin Sulphonate, were prepared in his office on his computer as per his instruction. He also admitted that the remittances of export were received in the account of M/s Vikas Overseas through TT.
(14). Shri Mahesh Kumar Gupta further admitted having received Rs. 16 Lacs from Devinder Pramod for fabrication and forging of document. He also stated that on being asked by Devinder Pramod, he arranged a new firm in the name of M/s Aggrawal Industries and opened an account of that firm in Dena Bank, Alipur. However actual owner thereof came to know mis-use of name of his firm for which legal action was taken against him (Mahesh Kumar).
(15). Shri Mahesh Kumar Gupta further admitted that he and Devinder Pramod were conscious that bogus IEC was used for export in the name of M/s Vikas Overseas and the goods exported were not as per description and declaration in the relevant Packing List, Invoice as well as shipping bills and defrauded Customs.
(16). Shri Harvinder Singh, Cargo Executive of M/s Delta airfreight Pvt. Ltd in his statement recorded on 01.12.2005 under Section 108 of Customs Act, 1962, revealed that during the financial year 2005-2006, Deepak Berry provided three Invoices Nos. 458/05-06, 465/05 and 429/04-05, for the export of goods in the name of M/s Vikas Overseas and thereafter, he prepared Shipping Bills and processed the same by the Customs and all the Shipping Bill were signed by him under the direction of K.L. Arora and Sunil Arora. He further stated that he used to remain in touch with Deepak Berry and his employees for the Customs clearance work.
(17). Enquiries were made about the godown premises of Devinder Pramod at Siraspur. Statement recorded from Suresh Kumar Jain, owner of godown under Section 108 of Customs Act, 1962 on 15.02.2006, showed that one Mahesh Gupta had hired that godown on monthly rent of Rs. 2,500/- per month for storing the goods to be exported by Devinder Pramod and this godown was used on hire for 3 months only.
(18). Enquires were made with the Andhra Bank, Chandni Chowk, New Delhi. That bank vide letter No. 0773/21/602 dated 08.12.2005 supplied copies of FIRCs towards the inward remittances received in the bank account. Scrutiny of such documents revealed that one M/s Numeric International remitted the export proceeds against exports made by Devinder Pramod and Mahesh Kumar.
(19). Account opening form of M/s Vikas Overseas collected from the Andhra Bank, Chandni Chowk, New Delhi, revealed that one Dinesh Kumr was shown as Proprietor of M/s Vikas Overseas and one Lallan Kumar Thakur was introducer of that account in the name of M/s Vikas Overseas. Shri Lallan Kumar Thakur in his statement recorded under Section 108 of Customs Act, 1962, stated that he was working with Mahesh Gupta as a servant and the account No. 2832 of M/s Vikas Overseas was opened by Mahesh Kumar and Mahesh Kumar took Dinesh Kumar with him for opening of the said account and owner of the firm M/s King Trader having account No. 2806 with the bank was introducer of M/s Vikas Overseas which was a firm of Mahesh Gupta. Shri Dinesh Kumar stated that he had signed all the related documents as per direction of Mahesh Gupta;
3. When name of M/s Vikas Overseas came up during investigation, Mrs. Anju Jolly proprietor of the said concern was examined. She denied to have exported AOS to China since she was engaged in ready made garment export. Investigation also recorded statement of Raman Jolly, husband of M/s Anju Jolly, on 28.11.2005 under Section 108 of the Customs Act, 1962. He stated that he alongwith his wife Anju Jolly resided at B-6, Arya Nagar Apartment, I.P. Extension, Delhi and had started a firm M/s Nidhi Garments in 1990 at 24, Aram Park, Ram Nagar, Krishna Nagar, Delhi which was changed to C-29, Ashoka Niketan, Delhi and the name of that firm was changed to M/s Nindhi Overseas subsequently. However no exports of ready made garments were made by this firm. In 1992, another firm by the name of M/s Vikas Overseas was started with the address 24, Aram Park, Ram Nagar, Delhi, which was changed to B-6, Arya Nagar Apartment, I.P. Extension, Delhi and subsequently to C-29, Ashoka Niketan, Delhi in 2003. They had neither exported any consignment to China nor they exported any goods to any country after February 2005. They had never signed export invoices, packing list of M/s Vikas Overseas, however, his wife M/s Anju Jolly used to sign these documents. On being shown Invoice No. 465/05-06 dated 04.08.2005 and Packing List without any date, which pertained to 17,500 Kg Alfa Olefin Sulphonate (AOS) exported by M/s Vikas Overseas, vide Shipping Bill No. 1494427 dated 06.08.2005, he stated that those documents did not pertain to their firm M/s Vikas Overseas as they never exported any chemical consignment to China or any other country and that their export item was only readymade garments. The letter-head used for preparation of Invoice and Packing list of consignment for the said Shipping Bill No. 1494427 dated 06.08.2005 was not of their firm. The signatures made on the said documents were also not of Ms/ Anju Jolly. On being asked about M/s Delta air Freight Pvt. Ltd., who was mentioned as CHA of Shipping Bill No. 1494427 dated 06.08.2005, he stated that he did not know the said CHA.
4. On behalf of Shri Mahesh Kumar it was submitted that there cannot be a joint liability of redemption fine. The goods being exported and not available for redemption, no redemption fine can be imposed nor penalty of Rs. 10 lakhs imposable under Section 114 of Customs Act, 1962. Statement of Shri Deepak Berry does not implicate Shri Mahesh Kumar because he was not involved in mis-declared export. He had not arranged fake firm name or IEC number for the export in question. Similarly, his statement nowhere implicates him. Because of allegation from overseas source and the goods exported not being questioned by Customs at the time of export no penalty can be imposed on him. The report of Consulate General was not exposed to this appellant for which no allegation can be made against him. It was further submission on behalf of Shri Mahesh Kumar that he had no knowledge of M/s. Vikas Overseas because he was neither partner nor owner thereof. The Adjudication proceeding was based on hear say evidence.
5. On behalf of Shri Devinder Pramod it was submitted that the export was done by M/s. Vikas Overseas under the respective shipping bill. Report of Consulate Genral of India based on Narcotic Bureaus report is an unreliable document since export was not questioned when goods left India. Further, he was not at all involved in storing of the exported goods in the alleged go-down which was arranged by Shri Mahesh Kumar for M/s. Vikas Overseas. The export was done by Shri Mahesh Kumar through Shri Deepak Beri who was Director of Ocean Shipping Pvt. Ltd. When the appellant entrusted all works to CHA he cannot be held guilty. Shri Mahesh Kumar opened bank account and proceeds were deposited therein. Therefore appellant is not liable to any consequence under law.
6. It was further submitted on behalf of appellant that the chain of evidence brought by investigation does not speak that the appellant Devinder Pramod was deliberately involved in the export of Ketamin in absence of source of procurement brought to record. There was no inculpating statement given by anybody against the appellant. Ketamin not being prohibited goods and not dutiable, nor any incentive claimed on the export made there was no violation of law made by appellant in India to make export of the goods (AOS). It was further submitted that when all custom formalities were followed and the CHA was appointed by Shri Mahesh Kumar Gupta, for export, this appellant (Shri Devinder Pramod) is not liable to any consequence under law. Further the goods were exported without causing any inquiry at the time of export. Therefore no post export inquiry can be conducted when nothing revealed at the time of export about questionable character of the goods.
7. Revenues submission was that beginning from using IEC number belonging to some other exporter both the appellants designed fraud against Revenue through a chain of conduits to export Ketamin mis-declaring the same as (AOS). In view of World Customs Convention, harmful substance exported form a country or imported to a country, upon detecting is informed to their counterpart in fulfillment of their responsibility and international understanding to protect national interest of the respective country. The report which came from Consulate Genral of India at Hongkong was upon thorough verification by Bureau of Narcotics Control, China. That was most authentic document and cannot be said to be unreliable. That was cogent evidence against the exporters and the conduits. Both the appellants were members of smuggling racket to export Ketamin using the name of M/s Vikas Overseas as exporter fraudulently.
8. Investigation revealed that M/s Vikash Exporter had not exported Ketamin through the shipping bills in question. Both the appellants know each other to defraud Revenue even opening fake account in Andhra Bank by a benamidar account holder who was an employee of Shri Mahesh Kumar Gupta and all remittances of export were transacted through that dummy account. That account was parking place of fraudulent considerations. Both were so intimate and connected with each other that they used a known IEC of another concern and opening bank account in the name of that concern smuggled Ketamin. When Rs. 16 lakhs was paid by Devinder Pramod to Shri Mahesh Kumar Gupta to arrange a firm (one of which was Aggarwal Industries) and that person opened bank account in Dena Bank, Alipur, that clearly proved how both were inextricably connected. It was further established that the real owner of Aggarwal Industries brought out a law suit against Shri Mahesh Kumar for fraudulent use of his firms name. All these evidence go against both appellants.
9. Heard both sides and perused the record and also thread bare examined the chain of evidence brought out by the investigation to record.
10. Examining aforesaid evidence that came to record and upon hearing the parties, ld. Adjudicating Authority ordered as under:
(i). Goods covered by Shipping Bill Nos. 1494427 dated 06.08.2005, 1435176 dated 02.12.2004, 1470670 dated 29.04.2005 and 1491042 dated 25.07.2005 collectively valued at Rs. 29,40,092/- were confiscated under Section 113(d) the Customs Act, 1962 read with rules 11 and 14 of Foreign trade Rules, 1993 and the goods exported not being physically available for confiscation, fine of Rs. Fifteen lakhs only was imposed jointly on S/Sh. Devinder Pramod and Mahesh Kumar Gupta.
(ii). Penalty of Rs. 10,00,000/- (Rupees Ten lakhs) only was imposed on Sh. Devinder Pramod under Section 114 of the Customs Act, 1962.
(iii). Penalty of Rs. 10,00,000/- (Rupees Ten lakhs) only was imposed on Sh. Mahesh Kumar Gupta under Section 114 of the Customs Act, 1962.
11. At the outset we have depicted how both the appellants were keenly and intimately connected with each other to export ketamin and scientifically designed fraud against Customs which was proved from the report of Bureau of Narcotics Control, China came through Consulate General of India. Show cause notice clearly brought out such evidence sought to be used in adjudication. There was nothing hidden by investigation while seeking defence reply. Both the appellants availed fair opportunity of hearing before learned Adjudicating Authority, apart from first course of natural justice followed issuing show cause notice calling for defence reply. Both the appellants did not challenge veracity of the report of Bureau of Narcotics Control, China except saying that is not reliable. But action of consulate General cannot be questioned without allegation of his malafides.
12. Shri Mahesh Kumar Gupta imputed charge against Shri Devinder Pramod and both revealed identity of each other in commitment of smuggling of Ketamin. When the State Agency reported the questionable character of the goods exported by both the appellants and they could not make themselves aloof from dealing with Ketamin export their mis-declaration with ulterior motive came to record. Added to this, their arrangement of firm name, IEC number also proved their premeditated design to defraud Revenue.
13. Evidence revealed how Shri Mahesh Kumar was well known in the market as œMahesh Bill Purchiwala? and arranged IEC number belonging to M/s. Vikas Overseas as well as opened bank account in Andhra Bank for export of 17500 kgs. of Ketamin (mis-declared as Alpha Olefin Sulphonate). So also he facilitated export thereof by Shri Devinder Pramod. Statement recorded from CHA and Freight forwarder brought out a live link between both the appellants. Their further design of storing offending goods proved by investigation.
14. It came to record that Shri Devinder Pramod was in search of a genuine firms name with IEC number and Shri Mahesh Kumar extended his support in this regard arranging M/s Vikash Overseas to use name of that concern as instrumentality for export and make ill gain by both of them. Shri Mahesh Kumar and Shri Devinder Pramod also revealed about place of storage of the offending goods before export.
15. Entire chain of evidence successfully proved malafide of both appellants. They were not innocent. But were the sole designer of fraud to defraud customs. They made undue gain at the cost of Revenue. When interest of nation is affected due to export of narcotic substance by these appellants they should not be leniently dealt under the law. Adjudication does not suffer from any legal infirmity for which adjudication sustains and both appeals are liable to be dismissed. However, we may say that redemption fine is imposable on the exporter Shri Devinder Pramod but not jointly on Shri Devinder Pramod and Shri Mahesh Kumar Gupta. Other than this modification, entire consequence of adjudication is confirmed and both the appeals are dismissed.