Shri Suresh Agarwal Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
2. the applicant, shri suresh agarwal was the proprietor of m/s. ishaan exports and the sole authorised person of m/s. asheema fashion pvt.ltd.; ms. [m/s] asheema exports and m/s. ishaan international of ahmedabad. the commissioner of customs (adjudication), mumbai had imposed penalty of rs. 4 crores on him. demands of duty were confirmed against the 4 units named above. another person namely mr. a.b.pokharkar, cha was penalised to the extent of rs. 2 crores. the basis for the levy of penalties was that by using formal bills of lading, evidence of export was created, signatures of famous agency officials were forged on the documents against such nonexistent and bogus exports. advance licence were obtained and duty-free imports were made/these actions were jointly undertaken by mr. agarwal and mr.pokharkar. against this order, the appeals were filed by the units and also by mr. suresh agarwal along with stay applications.3. mr. suresh agarwal was directed by the tribunal vide order no.c-2938946/ 2000/wzb dated 24.3.2000 to deposit a sum of rs. 50 lakhs as a pre-condition of the hearing of his appeal. in making this order, the tribunal observed that the claim of financial hardship was not supported by any documentation. subsequently, a miscellaneous application was filed. relying upon the income tax returns and certificates of bank balances plea of hardship was made.4. however, during the hearing of the application, shri j.m. patel, counsel took a different ground. he cited and relied upon the order no.11/28/97-98/eca-iii/i dated 1.2.2000 being an order-in-appeal passed by the additional director general, foreign trade. this order was against the order of cancellation of advance licence ab-initio having been obtained by fraud. initially, the same appellate authority had upheld the cancellation of the licence. however, on remand, the same authority once again heard the license-holder and passed this order.5. addl. dgft placed reliance on the fact that shri suresh agarwal initially admitted to forgery, but he had later retracted his statements by filing an affidavit. he observed that no corroborating evidence was available. he also observed that the customs had also monitored the export proceedings at all levels. on these grounds, he set aside the lower order and re-instated the licence.6. this order shows that he was dealing with the issues before him as to the validity of the licences in the situation explained before him.in page 13 of his order, he has left open the issue of the proceedings of the customs authorities and has in fact declared that his order may not offer any assistance to the appellant in that regard. this is clear from the concluding paragraph of the order, where he has held that although the licences are held to be valid for the previous imports, further imports would not be allowed under these licences until the cases are cleared by the customs.7. we wish to make it clear that we are not examining this order on merits at all nor do we have any power to do so. the retractions made by shri agarwal before the dgft are not before us. prima facie any retraction made nearly after a fortnight of the inculpatory statements would merit closer examination. as regards the lack of corroboration, we do not know whether the inculpatory statements of shri pokhkar implicating mr. agarwal were before the addl. dgft or not. the orders of the commissioner also indicate that there was a degree of complicity on the part of customs formations in documentation. therefore, at this stage it is not possible for us to accept the claim made by shri patel that since the licences were valid at the time of importation, duty-free imports were legally made and therefore no duty was chargeable and no penalty was leviable. it is too tall a claim to make on the basis of the order of the additional dgft which itself leaves the decision of the customs case to the customs authorities.8. on the financial side the evidence in the form of income tax returns and bank's statements/certificates does not impress us at all. a person who has amassed wealth by illegal means, does not include such earnings in his income tax returns nor would he openly keep and display the amount in his bank account. the proceedings show that his amassing wealth is the result of the conspiracy. prima facie the evidences show that he misused the concessions. we are therefore not inclined to revise our orders referred above.9. we grant shri agarwal time up to 18th march, 2001 to deposit this amount and report compliance on 22nd march, 2001. in the absence of compliance, his appeal shall be dismissed forthwith.

Judgment:
2. The applicant, Shri Suresh Agarwal was the proprietor of M/s. Ishaan Exports and the sole authorised person of M/s. Asheema Fashion Pvt.

Ltd.; Ms. [M/s] Asheema Exports and M/s. Ishaan International of Ahmedabad. The Commissioner of Customs (Adjudication), Mumbai had imposed penalty of Rs. 4 crores on him. Demands of duty were confirmed against the 4 units named above. Another person namely Mr. A.B.Pokharkar, CHA was penalised to the extent of Rs. 2 crores. The basis for the levy of penalties was that by using formal Bills of Lading, evidence of export was created, signatures of famous agency officials were forged on the documents against such nonexistent and bogus exports. Advance licence were obtained and duty-free imports were made/These actions were jointly undertaken by Mr. Agarwal and Mr.

Pokharkar. Against this order, the appeals were filed by the units and also by Mr. Suresh Agarwal along with stay applications.

3. Mr. Suresh Agarwal was directed by the Tribunal vide Order No.C-2938946/ 2000/WZB dated 24.3.2000 to deposit a sum of Rs. 50 lakhs as a pre-condition of the hearing of his appeal. In making this order, the Tribunal observed that the claim of financial hardship was not supported by any documentation. Subsequently, a miscellaneous application was filed. Relying upon the Income Tax Returns and Certificates of Bank Balances plea of hardship was made.

4. However, during the hearing of the application, Shri J.M. Patel, Counsel took a different ground. He cited and relied upon the Order No.11/28/97-98/ECA-III/I dated 1.2.2000 being an Order-in-Appeal passed by the Additional Director General, Foreign Trade. This order was against the order of cancellation of Advance Licence ab-initio having been obtained by fraud. Initially, the same appellate authority had upheld the cancellation of the licence. However, on remand, the same authority once again heard the license-holder and passed this order.

5. Addl. DGFT placed reliance on the fact that Shri Suresh Agarwal initially admitted to forgery, but he had later retracted his statements by filing an affidavit. He observed that no corroborating evidence was available. He also observed that the Customs had also monitored the export proceedings at all levels. On these grounds, he set aside the lower order and re-instated the licence.

6. This order shows that he was dealing with the issues before him as to the validity of the licences in the situation explained before him.

In page 13 of his order, he has left open the issue of the proceedings of the Customs Authorities and has in fact declared that his order may not offer any assistance to the appellant in that regard. This is clear from the concluding paragraph of the order, where he has held that although the licences are held to be valid for the previous imports, further imports would not be allowed under these licences until the cases are cleared by the Customs.

7. We wish to make it clear that we are not examining this order on merits at all nor do we have any power to do so. The retractions made by Shri Agarwal before the DGFT are not before us. Prima facie any retraction made nearly after a fortnight of the inculpatory statements would merit closer examination. As regards the lack of corroboration, we do not know whether the inculpatory statements of Shri Pokhkar implicating Mr. Agarwal were before the Addl. DGFT or not. The orders of the Commissioner also indicate that there was a degree of complicity on the part of Customs formations in documentation. Therefore, at this stage it is not possible for us to accept the claim made by Shri Patel that since the licences were valid at the time of importation, duty-free imports were legally made and therefore no duty was chargeable and no penalty was leviable. It is too tall a claim to make on the basis of the order of the Additional DGFT which itself leaves the decision of the Customs case to the Customs Authorities.

8. On the financial side the evidence in the form of Income Tax Returns and Bank's statements/certificates does not impress us at all. A person who has amassed wealth by illegal means, does not include such earnings in his income tax returns nor would he openly keep and display the amount in his bank account. The proceedings show that his amassing wealth is the result of the conspiracy. Prima facie the evidences show that he misused the concessions. We are therefore not inclined to revise our orders referred above.

9. We grant Shri Agarwal time up to 18th March, 2001 to deposit this amount and report compliance on 22nd March, 2001. In the absence of compliance, his appeal shall be dismissed forthwith.