1. Appeals 16/92, 44/92 and 45/92 are by A.R. Gupta, Bipin Gupta and Pravin Gupta against the order of the Commissioner dated 30.9.1991.
Appeals 241/92, 242/92, 243/92 are by these three person against the order of the Commissioner dated 19.12.91. Appeals 281, 282 & 283/92 by these persons against the order of the Commissioner dated 19.12.1991.
Appeals 1778/94 1779, 1780 are also by these three person against the order of the Commissioner dated 14.9.1993. This last order of the Commissioner is also impugned in the appeals 667/94 by J.K. Yagnik, 668/94 by Vinod Jatia and 1782/94 by H.P. Daga & Co.
2. In these orders, the Commissioners have found that defective cold roll sheets and coils imported by various firms and cleared without payment of duty in terms of exemption contained in notification 116/88 were not utilised in the manufacture of goods to be exported, but disposed of by sale. They had therefore demanded duty totalling on these goods. They have further found that the goods were in fact really imported by A.R. Gupta, Pravin Gupta and Bipin Gupta and not by the putative importers to whom the advance licences had been issued and who filed the bill of entry for their clearance. They have found that these three persons sold the goods and imposed penalties on them. In the order at 14.9.1993, the Commissioner has imposed penalty on J.K. Yagnik and on H.P. Daga & Co., the custom house agent who was engaged to clear the goods through the custom house and on Vinod Jatia both for being concerned in the illegal disposal of the goods.
3. We have heard the counsel for the appellants and considered the written submissions filed on behalf of A.R. Gupta, Bipin Gupta, Pravin Gupta and Vinod Jatia.
4. The Commissioners in the orders impugned in the appeal, narrates the method that according to them was adopted in these matters. At the instance of A.R. Gupta or one of his two sons, Pravin Gupta and Bipin Gupta, and inconsideration of some money that they offered, persons engaged in the manufacture of steel items were induced to apply for advance licences for import of steel. The application for the licence were made and the licences collected directly by a member of the Gupta family, who using the letterheads and forms on which the signature of the licence holder had been obtained made the applications for licence, cleared the goods through customs, took delivery and sold them in the market. In coming to their conclusions of the liabilities to penalties of the members of the Gupta family, the Commissioner has relied upon the statements recorded under Section 108 of putative importers, the admissions contained in the statement of members of Gupta family and the statement of Custom house agent.
5. The contentions of the counsel for A.R. Gupta, Pravin Gupta & Bipin Gupta, as argued by him and contained in the written submissions that were subsequently filed are as follows. The four notices that were the subject matter of order of adjudicating by the Commissioner were all signed by the Asst. Commissioner of Customs between 1.4.91 and 9.3.1992. All these notices invoked the extended period of limitation contained in proviso under Sub-section (1) of Section 28. As Section 28 of the Act, stood at the relevant time, a notice invoking the extended period of limitation only has been signed by the Commissioner. There is therefore no basis for demanding duty. The Tribunal has held that if a composite notice i.e. one which in addition to demanding duty proposing confiscation of goods and imposing penalty in which the extended period of limitation was invoked was not signed by the Commissioner, penalty also could not be imported. Therefore so far as imposition of penalty is concerned, the notices are bad in law.
6. It is further contended on merits that there is no basis for imposition of penalty on these persons. They were only "facilitators in respect of each of the importers in the present set of appeals and as such helped the importers obtain the DEEC Licence from the Import Trade Control Authority. Except for the clearing agent ... no other party has made such a statement including any of the Guptas." These persons only helped to obtain the advance licence on behalf of the importers to file the application and handed them over to Vinod Jatia. The finance, importing and clearing in the local market is done by Vinod Jatia only." Heavy reliance is placed on the fact that the proposal to impose penalty on Vinod Jatia has been dropped in all but one out of the six notices issued extending the benefit of doubt to him. The same benefit of doubt would have to be extended to these appellants. It is contended that adjudicating on one set of this notices, the Commissioner has imposed penalty on Vinod Jatia and demonstrated mat in each of the transactions it was Vinod Jatia alone who was the financer and importer and sold the goods. This has what has been found by the Tribunal too.
It is alleged that the concerned department of the custom house deliberately badly investigated the matter so as to help Vinod Jatia and hence was biased against these three persons. The order passed by the Commissioner adjudicating one of the notices is cited in support of the contention.
7. We will first consider the preliminary objection raised by the counsel for these appellants. A reading of the notices issued to the persons in question does not bear out the contention of the counsel for these appellants that they have invoked the extended period contained in Section 28 of the Act. In point of fact these notices did not cite the provision of Section 28 at all. They demanded duty on the ground by invoking the provision of 186/88 on the ground that the contention subject to which the exemption was claimed and granted, that the goods should be utilised in the manufacture of goods to be exported has not been complied with. The notification provides specifically that the grant of exemption to the goods is subject to various conditions, one among which is that the exempted goods should be used in the manufacture of materials to be exported. Therefore the preliminary contention relating to the validity of the notice is not acceptable.
8. We will now consider the contention relating to the merits of the issue. This basically one, that the real persons behind the sale of the goods in the market was not these appellant but Vinod Jatia. Their role was only helping various persons in the matter of obtaining advance licence. Vinod Jatia to whom the goods were delivered who sold the goods in the market. It is contended that there is no material implicating these appellants.
9. It is not possible to agree that there is no material to implicate these appellants. In the various order that are under appeal, the Commissioner has referred to copious material in which involvement of these persons is brought out is made manifest. We will give an example in the order ST/1056/91 dated 30.9.91. This order relates to import of goods made by Ashish Engineering and sold in the market. The Commissioner cites various statements of Arun Natwarlal Patel, the proprietor of this firm that in response to an offer made by Pravin Gupta he agreed to apply in 1988 for issue of an advance licence for import of about 600 tons of low carbon/defective steel sheets and coils. In return for a sum of Rs. 2 lakhs which was paid to him of various account between Nov 1988 and February 1989, Patel Praviti Gupta a 100 blank letterheads signed by him and he also signed on various blank forms which Gupta brought to him, Patel goes on to say that every aspect of the matter fight from applying for licence placing orders on foreign supplier importing the goods, clearing them through customs taking delivery thereafter was all done by Pravin Gupta. He says that the custom house agent H.P. Daga & Co. was engaged by directly by Pravin Gupta and he gave a cheque of Rs. 34181 in favour of HPD& CO. in accordance with the instruction of Pravin Gupta which was disowned for want of funds. He subsequently made a draft in favour of H.P. Daga & Co. He had never met or known the clearing agent. The Commissioner also refers to the statement of Pravin Gupta. In this statement, Pravin Gupta accepts that he proposed to Arun Patel that the latter undertake the import of steel sheets. On Patel agreeing, an application was made in advance licence in DEEC book in Patel's name. All the work for applying for licence and DEEC book was done by Pravin Gupta and his father. Thereafter the licences were handed over to Vinod Jatia and the rest of the work was done by Vinod Jatia. Gupta however accepts that for purpose of import and subsequent clearance of goods he and his father got various form and declarations letterhead delivered challan etc. signed from the importer on blank and claims that they were delivered to Vinod Jatia.
10. In his statement A.R. Gupta also agrees to these admissions and makes admissions similar to those that have been made by his son. He says that he approached Vinod Jatia to offer him advance licence DEEC books for sale and Vinod Jatia agreed to purchase them. He blames Vinod Jatia for import sale and subsequent disposal of the goods. He denies that he or his sons met HPG&Co. He however says that Part II of the DEEC book relating to the export board was destroyed by him after the imports were complied and says that he destroyed the part II as there was no intention to export any goods. Similar admissions have been made by Surendra Gupta also. Mulji R. Lodhaya partner of HPG& CO. has said that A.R. Gupta was introduced to him in his office (Lodhaya) by Vinod Jatia saying that Gupta needed some help for clearing goods through customs. Lodhaya says that it was Gupta who took from him various forms required for clearance of the goods and that he delivered all the goods after clearance only to Gupta. He was told by Gupta that he is the representative of the firms. He stated that except for introducing A.R.Gupta, Vinod Jatia was not at all involved in the matter. No delivery of the goods was given to Vinod Jatia.
11. Similar statements have been recorded with regard to other importations. It is clear from these that whether Vinod Jatia was involved or not which we will consider later these three persons from Gupta family were clearly involved. The contention that they merely helped someone else in order to obtain the licence has to be rejected.
It is they who induced the manufacturers to apply for licence. None of the persons to whom licence was issued was at any stage diverts concerned in getting the licence or in importation. None of them ever met the custom house agent. Lodhaya, the custom house agent is clear that it was A.R. Gupta or his sons who contacted him for clearance and delivery of goods. The admission of A. R. Gupta mat he destroyed the part II of the DEEC book in the case of Ashish Engineering is significant. He admits that he did so because there was no intention to export any goods. He does not claim that he destroyed it on instruction from Vinod Jatia. This statement contradicts the statement that the entire set of import licence and the DEEC book were handed over to.
Vinod Jatia and he had no further role to play. The statement of Lodhays, H.P. Daga & Co. that it was A.R. Gupta or his sons who came for clearance of the goods and more importantly to whom delivery of the imported goods was given to them clinches the matter.
12. The next contention that since the Commissioner has in one of the orders impugned in the appeal has extended the benefit of doubt to Vinod Jatia the same benefit should be extended to the Guptas is difficult to understand, What has to be decided whether a particular person is liable to penalty or not in doing so it would not be appropriate for the Tribunal to go by the Diktat of the Commissioner whose order is in appeal before it. Whether the Commissioner has rightly or wrongly extended the benefit of the doubt to Vinod Jatia (if he has done so) is to be decided on the merits of the issue on the application of any one aggrieved by that decision, unless of course the Tribunal accepts the reasoning that he Commissioner has followed. It has to decide these matters on independent reasoning and not following the reason of the Commissioner. The Commissioner order's has to be referred to consider the evidence that he has relied upon and to decide whether he has correctly decided the issue and not to adopt the reasoning On the facts that we have discussed above, we do not see any doubt arising the benefit of these should go to the Gupta. They have been clearly engaged in importation of goods to sell them in the market without utilising them for the purpose for which they were cleared without payment of duty. Virtually the entire effort in this appeal consist of admissions to shift the blame to Vinod Jatia, Whether Vinod Jatia is to blame or not does not take away the blame that falls upon these persons. We therefore hold them liable to penalty.
13. Counsel for the appellant relies upon an order of the Tribunal in appeal 311, 312 and 778/91 to show that penalty should be imposed on Jatia. In fact the Tribunal in the last paragraph of its order no doubt says "that the fact that Vinod Jatia in spite of part in the offence has escaped penalty in this case will not be a ground to do away with penalty on them (these three appellants.)" This if any strengthens the case against the three appellants. In fact the quoted sentence of the Tribunal with regard to the participation of Vinod Jatia does not and could not have said that Vinod Jatia was liable to penalty. Vinod Jatia was not an appellant before the Tribunal and his liability to penalty was not an issued with the Tribunal was required to consider. In any event, the Tribunal could not have found that Vinod Jatia was not liable to penalty without hearing him. Clearly the Tribunal therefore took into account the possibility that Vinod Jatia may have been involved in the matter and that is what it intended to say. Having regard to the repeated offence of these persons, involving large sums of duty, we do not find any justification for reducing the fine imposed on him.
14. We now take up the case of Vinod Jatia. The contention of his counsel is that there is no evidence against him except the statement of the members of the Gupta family. The custom house agent firm had said that only he met or came into contact with Vinod Jatia was when he introduced A.R. Gupta to him. It is contended that the statements of the members of the Gupta family cannot be used against the appellant because they in these statements did not admit their involvement in the sale of goods subsequent to their claims and named Vinod Jatia as the person who conceived and perpetrated the claim in order to divert attention from this. Counsel for the appellant contends that in the four orders impugned in the appeal, Vinod Jatia had been exonerated in three and it is only in the fourth that he has been found guilty. All four orders were passed in pretty much identical circumstances and the department is not appealed the finding of the Commissioner in the three orders in which he has exonerated Vinod Jatia. The Commissioner does not find any specific evidence against Jatia except the statement of members of the Gupta family and virtually admits this to be the case when he says that Vinod Jatia role has been so subtle and clever so that he has not left any traces behind.
15. The departmental representative emphasised what the Commissioner finds against Vinod Jatia.
16. In three out of the four orders in appeal, the Commissioner in identical circumstances, has dropped proceedings against Jatia on the ground that while there is evidence to suggest that he might be the financer, that is to show that either he was concerned with the import of these goods or their disposal in the market. In the order impugned in the appeal, the Commissioner has found it fit to impose penalty on Vinod Jatia on a different finding. The Commissioner's statement that there were "allegations at the time of personal hearing before me that Vinod Jatia is the real financer real importer and the CHA is his man and the CHA for significant reasons has shielded him and not disclosed anything incriminating against him,'' his recording the contention of the advocate for Gupta family "in the presence of all during personal hearing" that Dagha had shielded Vinod Jatia that and had the investigation carried out properly they would have exposed Vinod Jatia role and that the remittance for foreign export was not made by Gupta are nothing more than allegations made by parties. It is a common tactic for any person to blame someone else. Such tactics are no substitute for evidence. The Commissioner goes on to say that all hints that he finds the counsel for the Gupta family their involvement of Vinod Jatia are substantiated by evidence. However, the material that the Commissioner relies upon is entirely the statement of A.R. Gupta, who says that the licence and the DEEC book issued to Laxmi Engineering were handed over to Vinod Jatia and that he received Rs. 60 lakhs from Vinod Jatia. It is now a settled proposition in law that the statement made by a person who admit his involvement in an offence in complicity with another person is sufficient basis for imposing penalty on that other person, Naresh J. Sukhwani v. UOI 1996 (83) ELT 258. Therefore, if any of the Gupta brothers had accepted their role in the sale of the goods subsequent to their clearance the statement of A.R. Gupta and Pravin Gupta could be sufficient basis on which to impose penalty on Vinod Jatia. The members of the Gupta family have however throughout claimed that they facilitated import of the goods and thereafter transferred the whole affair to Vinod Jatia and it was solely Vinod Jatia who was responsible for the sale of the goods. In that situation, where it is likely that one person has blamed another in order to save himself, and thus without implicating himself, it would be imprudent in the extreme to confirm a penalty solely on that statement unless corroboration in material particulars to the contents of that statement. Such corroboration does not exist. There is not the slightest evidence to show the involvement of Vinod Jatia in any transaction relating to the disposal, in the market of the goods. On the other hand, Lodhaya's statement does not at all implicate Vinod Jatia of any such role. He says that he came to meet him once in order introduce A.R. Gupta to him and thereafter on his dealing with A.R.Gupta or his two sons and he did not have anything to do with Vinod Jatia thereafter. In the absence of evidence, whether Lodhaya refused to implicate Vinod Jatia because he was "Vinod Jatia's man" (whatever that may mean) is nothing more man pure speculation. This indeed was the strong thrust of the argument before us for the counsel for the members of the Gupta family. But whether made before the Commissioner or before us, these are nothing more than allegations. Such allegations are an insufficient basis for imposing penalty.
17. The other argument of the Commissioner that Vinod Jatia role has been "far more clever than other persons involved in the conspiracy (and) like a professional he has taken care to ensure that he does not leave any trace behind of his illegal deeds" is hardly a ground. Such a statement can be made about any person against whom there is no evidence or insufficient evidence. We do not find it possible to comment on the quality of investigation in these matters. No material has been cited before us to justify the claim that investigation were badly carried out or were so carried out as to shield Vinod Jatia.
Indeed, the Commissioner in his order, apart from recording various claims of the counsel for the Gupta brothers in this regard, does not proceed to accept these claims as correct. We therefore find absence of sufficient basis to impose penalty on Vinod Jatia.
18. J.K. Yagnik, the proprietor of Laxmi Engineering Works, appeared before us and contended that he had been made a victim of a conspiracy by members of the Gupta family and that he had in all innocence signed various documents as suggested by these persons in return for a small amount of Rs. 30,000/- he had already suffered by having been convicted. The magistrate who tried in that prosecution in this regard had accepting his pleas for leniency and considering his age (67) is poor state of health and financial hardship, only sentence him to pay fine totalling Rs. 20,000/-. He therefore requested leniency in the matter of penalty.
19. The departmental representative emphasises that in applying for licence causing import of the goods etc. and the record and in law Yagnik has imported the goods in question and not utilised them for the purpose in terms of the exemption notification. He has therefore liable for imposition of penalty on him. However, having regard to the fact that he appears to have been more a victim than an active participant in the crime, his entire gain is not more than Rs. 30,000/- for import of goods of duty of Rs. 1.22 crores. Having regard to this fact and his current status and health and finance is reflected in the order of the Magistrate, we think that penalty of Rs. 1 lakh would be appropriate.
20. The contention on behalf of H.P. Daga & Co. are these. The Commissioner has not found any material to justify imposition of penalty on the appellant He has been considerable swayed by the allegations made by the counsel for the Gupta family that the appellant was shielding Vinod Jatia. Among the contention raised by H.P. Daga & Co. is that an order has been passed in contravention of principles of natural justice. The appellant did not receive notice and hearing before the Commissioner and therefore did not attend the hearing fixed before him on 27.8.93. The appellant therefore had no opportunity to rebut what the Commissioner records and allegations made before him on that day by the counsel for the Gupta family that Lodhaya the proprietor of the firm was shielding Vinod Jatia, which appears to us swayed by the Commissioner's finding with regard to H.P. Daga & Co.
Lack of opportunity of hearing as in any event is indicated as defence.
The letter dated 27.8.1993 by the appellant to the Commissioner seem to have been received by him records that this appellant did not attend the hearing on that date for want of intimation and requested for a fresh date. While the Commissioner records the absence of H.P. Daga & Co. or the representative in the hearing, he does not refer to these requests. In these circumstances, we think it appropriate that the appellant be given a fair opportunity of hearing before the case is decided against him. His appeal is accordingly allowed. The Commissioner shall adjudicate on his liability to penalty in accordance with law.
21. Appeal C/667/94 allowed in part. Appeal C/668/94 allowed. Appeal C/1782/94 allowed by way of remand. All other appeals dismissed.