Nitesh Kumar Kedia vs Commissioner Of Customs Import & ...
2012 Latest Caselaw 2715 Del

$~6 to 12.
*IN THE HIGH COURT OF DELHI AT NEW DELHI


+      CUSAA Nos. 3/2012, 4/2012, 5/2012, 6/2012, 7/2012,
       8/2012 & 9/2012


       NITESH KUMAR KEDIA .. Appellant in CUSAA No. 3/2012
       GOPAL DOKANIA     .. Appellant in CUSAA No. 4/2012
       ARUN DOKANIA     .. Appellant in CUSAA No. 5/2012
       SANJEEV JAIN     .. Appellant in CUSAA No. 6/2012
       ANUDEEP SINGH      .. Appellant in CUSAA No. 7/2012
       ANUP SINGH      .. Appellant in CUSAA No. 8/2012
       MAHENDER JAIN     .. Appellant in CUSAA No. 9/2012
                    Through Mr. Shailendra Bhardwaj & Ms.
                    Aroma S. Bhardwaj, Advocates.

                       versus

       COMMISSIONER OF CUSTOMS IMPORT & GENERAL
                                       ..... Respondent
                   Through Mr. Kamal Nighawan, Sr.
                   Standing Counsel & Mr. Jitender Kumar
                   & Sumeet Gaur, Advocates.

        CORAM:
        HON'BLE MR. JUSTICE SANJIV KHANNA
        HON'BLE MR. JUSTICE R.V.EASWAR

                    ORDER

% 25.04.2012

Having heard learned counsel for the parties in these

seven appeals, we are inclined to frame the following substantial

question of law:

"Whether the order dated 25th January, 2011 passed by the Customs, Excise and Service Tax Appellate Tribunal in the case of the

appellants meets and deals with the contentions raised by the parties as required and mandated by law?"

2. We have heard learned counsel for the parties on the

aforesaid question and proceed to dictate our decision.

3. The seven appellants are traders based in Chandni

Chowk, Delhi and are trading in silk and unstitched cloth etc.

4. By an Order-in-Original dated 27th September, 2007

passed by the Commissioner of Customs, penalty of Rs.5 lacs

each was imposed on them under Section 112(b) of the

Customs Act, 1962 (Act, for short). He held that they were

trading and dealing with Chinese silk cloth which had been

illegally imported into India and was liable for confiscation. The

Chinese silk cloth was, as per the Order-in-Original, illegally

imported into India by Olga Kozireva, Nazira, Shakista and

Shahlo A etc. Customs duty was not paid on the said import

because of connivance and abetment by the customs officers.

The illegal imported Chinese silk cloth was thereafter sold by

Mamoor Khan, Dil Agha, Abdul Qahar and Dilbar, who are

Afghan nationals, to the appellants.

5. The tribunal in impugned order has given the following

reasons for dismissing the seven appeals:-

"27. Finding of the learned Adjudicating Authority and our observations were precisely depicted by us in Para 5.1 and 5.2 of this order hereinbefore. In the course of hearing no evidence were led to demonstrate that all the 7 (seven) trader appellants were strangers to the proceeding. Rather, they established their intimacy with the smuggling racket and proved their deal in the smuggled goods. Statement recorded from them as well as smuggling racket unmistakably disclosed their identity and destination of the offending goods arrived at the IGI Airport and cleared making evasion of customs duty. Other than the arguments, no logical reasons could be shown to us to infer dissociation of the trader appellants from the charge. When the proof of transport of the offending goods established destination thereof and disposal of the offending goods by trader appellant there remained no doubt to bring these appellants to charge. Thus all their appeals being devoid of merit are dismissed."

6. The aforesaid paragraph refers to paragraphs 5.1 and 5.2

of the appellate order. The said paragraphs for the sake of

convenience are also reproduced below:-

"ADJUDICATION OBSERVATIONS AND FINDINGS AGAINST TRADER APPELLANTS

5.1 So far as the following appeals of the Traders are concerned, ld. Adjudicating Authority dealt their cases in Para 546 to 548 of the order of Adjudication:-

APPEALS FILED BY TRADERS AGAINST ORDER OF

ADJUDIATION 1 Mahendra C- Appearance Appearance Jain 11/2008 for for Assessee Revenue 2 Anudeep C- Mr. Mr. Sumit Singh 12/2008 Shailendra Kumar Bhardwaj 3 Gopal C- -do- -do-

                   Dokania            13/2008
4                  Anup               C-        -do-         -do-
                   Singh              15/2008
5                  Nitesh             C-        -do-         -do-
                   Kumar              16/2008
                   Kedia
6                  Sanjeev            C-        -do-         -do-
                   Jain               17/2008
7                  Arun               C-        -do-         -do-
                   Kokania            18/2008


                     Show cause notices were issued to

trader appellants dealing with textiles operating in Chandni Chowk, Nai Sarak & Model Town areas alleging that they were involved knowingly in acquiring, possessing, dealing or selling of smuggled silk textiles rendering such goods liable to penal action under Section 112(b) of the Customs Act, 1962. The evidence against them was analysed in adjudication as under:-

(1) Abdul Qahar, an Afghan National, testified in his statement dated 30.11.2000 that he used to buy silk textiles from the traders who are in appeal in the present batch of appeals and was carrying the same to Afghanistan through Kuttar Exports. One of the Appellants, Anudeep Singh admitted in his statement dated 8.12.2000 that he purchased imported silk fabrics from one Afghan, who introduced himself as Khan. (2) All the appellants were in touch with Mamoor

Khan on telephone.

(3) Gopal Prasad Dokania in his statement dated 5th Jan, 2001 admitted that he knew Mamoor Khan and that he purchased silk fabrics from him.

(4) Nitish Kedia in his statement recorded on 5th Jan, 2001 admitted that he knew Mamoor Khan but he denied that he had purchased silk fabrics from him.

(5) Anup Singh in his statement dated 1st June, 2001 admitted that he knew Mamoor Khan and Dil Agha but did not deal with them for purchase of silk fabrics.

(6) Mahender Jain in his statements dated 19th Jan. 2001 & 1st Feb., 2001 admitted that he knew Mamoor Khan but denied to had any dealing related to silk fabrics.

5.2 Testimony of Adbul Qahar suggested that the trader appellants were aware of the illegal activities of Ms. Olga K. and her associates. Examination and evaluation of the telephonic contacts exhibited by Table No. 10 & 11 to SCN threw light on such aspect. They were regularly in touch with Mamoor Khan and Dil Agha on their Mobile No. 9811135921 and 9811065897 respectively. Number of calls exchanged were indeed very large and ran into hundred of calls, as evident from Table No. 10 to SCN. The appellants did not deny such contacts but admitted dealing with Khan for purchase of silk textiles. The significance of Table No. 11 to SCN was that these traders were in touch with Mamoor Khan, Dil Agha and passengers on the date when they actually arrived in India with their heavy baggage. For example, when Ms. Olga K. and Shakista K. arrived by HY-151 at 12.51 PM on 27th Feb., 2000, 7 telephonic conversations took place between Sanjeev Jain and Mamoor Khan between 11.06 AM and 5.43 PM. Mamoor Khan also spoke to

Anoop Khem Singh at 11.30 AM. On the same date, Mamoor Khan and Nitish Kedia contacted twice with each other whereas Mahender Jain and Mamoor Khan spoke thrice. Again Mamoor Khan also contacted Anudeep Singh at least once on this day. The next visit of Shahlo A. was on 10th April, 2000 at 9.19 AM and on the same date telephonic conversation between Mamoor Khan on one hand and Mahender Jain, Anudeep Singh, Gopal Dokania and Nitish Kedia on the other was made. These were mere illustrations while huge contact details were on record. The Table shows that whenever passengers came with heavy baggage to IGI Airport at Delhi, frequent exchange of calls took place between Mamoor Khan and Dil Agha on one hand and all the trader appellants on the other. None of the trader appellants could rule out their role in trading with offending goods. Corroborative evidence lent credence to the testimony of Abdul Qahar and on the basis of that, mens rea was established to impute the appellant traders to charge.

Circumstantial evidence were sufficient to impute the traders to charge who had knowledge of the illegal import of silk textiles rendering such goods liable to confiscation under Section 111 of the Customs Act, 1962. So also the appellant traders were liable to penal action under Section 112(b) of the Act for their conscious involvement and possession/sale, purchase of the offending goods."

7. A reading of paragraphs 5.1 and 5.2 would show that they

merely reproduce the contents of the show cause notice and

reference is made to testimonies/statements and other

contentions recorded therein.

8. Paragraph 27 is the only paragraph which specifically

deals with and refers to the allegations and records the findings

of the tribunal both on facts and law. Second sentence in the

said paragraph states that during the course of hearing before

the tribunal, no evidence was led by the seven appellant traders

to demonstrate that they were strangers to the proceedings.

Learned counsel for the appellants has accepted and admitted

that they were not strangers to the proceedings as they had

dealt with and sold Chinese silk. The seven appellants also

admit and accept that they knew Mamoor Khan, Dil Agha, Abdul

Qahar and Dilbar. However, their contention is that they did not

know that the aforesaid persons were dealing with smuggled

goods or were dealing with goods, which had been clandestinely

imported into India without payment of customs duty or by mis-

declaration. The contention of the appellants, which is

strenuously urged, therefore, is that penalty under the said

Section can be imposed only if the appellants, traders had

knowledge or reason to believe that the goods in question, i.e.,

Chinese silk, was liable to be confiscated. The next sentence in

paragraph 27 refers to the intimacy of the appellants with the

smuggling racket and it is observed that this proves their dealing

with the smuggled goods. The aforesaid sentence does not

carry forward and is merely a statement or an inference, which

does not discuss the material and evidence against the

appellants. The tribunal thereafter has mentioned and recorded

that the statements made by the seven appellants as well as the

smuggling racket disclose their identity and destination of the

offending goods. The statements of the seven appellants have

not been referred and or specifically examined in paragraph 27

or any other portion of the impugned order.

9. There is no other discussion in the impugned order

relating to defence or the contention of the seven appellants. In

this regard, we may mention that in paragraph 17, the tribunal

has recorded that both sides were heard extensively on various

occasions and their contention/submissions were recorded in

the open court on the dates of hearings and copy of the same

were provided to the parties. The contentions raised by the

seven appellants as recorded by the tribunal at the time of

hearing have been enclosed as annexures to the present

appeals. The examination and scrutiny of the said annexures

would reveal that hearings had taken place on 27th August, 2009

and various contentions and issues were raised by the

appellants, e.g., in the case of Mahender Jain it was submitted

that his statement under Section 108 of the Act does not bring

out or support the Revenue's allegation; does not show his

involvement in the smuggled goods; these was no presumption

that Mahender Jain knew or had reason to believe that he was

dealing with smuggled goods or goods which were liable to be

forfeited etc. Reference was also made to the order in original

and it was contended that it does not show conscious

involvement of the said appellant. The statement of Abdul

Qahar was referred and it was submitted that the said statement

also does not show his involvement. Even in the statement

under Section 164 of the Code of Criminal Procedure, Abdul

Qahar had not implicated the said appellant. In the statement of

Wali recorded under Section 164 Cr.P.C., there was no whisper

of the nexus of the said appellant with the offence alleged.

Reference was made to the first statement of Dil Agha wherein

no allegation was against Mahender Jain but subsequently Dil

Agha had mentioned Mahender Jain's name. It was submitted

that in the statement of Mahender Singh under Section 108, no

question was put to him whether he was involved or had dealt

with Dil Agha. Our attention is also drawn to separate and

different contentions raised in the case of Sumeet Kumar,

Anudeep Singh, Gopal Dokania, Nitesh Kumar Kedia, Sanjeev

Jain and Arun Dokania. It is pointed out that in the case of

Sanjeev Jain no statement was recorded under Section 108 of

the Act.

10. We have examined the contentions and issues which

were raised by the appellants and have been noticed by the

tribunal itself in the record of proceedings. We have also

examined the written submissions which were filed by the

appellants before the tribunal and have been placed on record.

We do not think the tribunal was right in disposing of the appeal

by recording the reasons given in paragraph 27, which

according to us do not specifically deal and examine the

contentions and issues raised. The order is virtually a non-

speaking order and does not meet the requirements of law, what

is mandated and required to be discussed and examined by the

first appellate authority which is also the final fact finding

authority. The contentions and issues raised by the appellants

on facts and law have to be specifically examined, dealt with and

considered. A speaking and reasoned order is required to be

passed after referring to the evidence and material relied upon

by the parties. We find that the appellate order passed by the

tribunal in the present case does not meet the prescribed and

legal parameters. Accordingly, we answer the question of law

mentioned above in negative, i.e., in favour of the appellants and

against the Revenue. We pass an order of remit and the

tribunal will re-hear the arguments and thereafter pass a

reasoned and speaking order as is mandated and required in

law.

11. To cut short the delay, it is directed that the appellants will

appear before the tribunal on 17th May, 2012 at 11 a.m., when a

date of hearing will be fixed.

10. We may observe that we have not specifically referred to

merits of the case of the appellants and the Revenue in the

present appeals least it causes prejudice to the parties and

influences the tribunal one way or the other.

The appeals are disposed off. No order as to costs.

SANJIV KHANNA, J.

R.V. EASWAR, J.

APRIL 25, 2012/ VKR