Vinod Kumar Jatia vs Union Of Indian & Ors.
2013 Latest Caselaw 4563 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       Writ Petition (Civil) No. 3347/1996

                                  Reserved on: 11th September, 2013
%                                Date of Decision: 3rd October, 2013

VINOD KUMAR JATIA                                        ....Petitioner
             Through              Mr. Naresh Kaushik, Advocate.

               Versus

UNION OF INDIAN & ORS.                              ...Respondents
              Through

CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJIV KHANNA, J.

1. Vinod Kumar Jatia by this writ petition has challenged order

dated 22nd July, 1996 passed by the Appellate Committee, Ministry of

Commerce confirming order dated 13th January, 1992 passed by the

Additional Chief Controller of Imports and Exports under Section 4-

M of the Imports and Exports (Control) Act, 1947 as amended by

Imports and Exports (Control) (Amendment) Act, 1976. The

appellate order however reduced the quantum of penalty imposed

vide order dated 13th January, 1992 from Rs.75 lakhs to Rs.25 lakhs.

2. We have heard the learned counsel for the petitioner but no one

has entered appearance on behalf of the respondents. The

respondents have also not filed any counter affidavit.

3. Learned counsel for the petitioner submitted that there was no

evidence to show involvement of the petitioner except for the

statements of Ramesh R. Desai recorded under Section 108 of the

Customs Act, 1962 (C Act, for short). It was stated that statements of

Ramesh R. Desai were contradictory and in any case the petitioner

cannot be implicated and punished with fine of Rs.25 lakhs on the

basis of statements of self confessed wrong doer. Reliance was

placed upon judgments of the Supreme Court in Haroon Haji

Abdulla Vs. State of Maharashtra, [1968] 2 SCR 641 and Chandan

& Anr. Vs. State of Rajasthan, AIR 1988 SC 599. Our attention was

drawn to the fact that the petitioner was exonerated and no penalty or

adverse order was passed in the proceedings initiated under the C Act on

the basis of the same and identical evidence. Order dated 17th

September, 1991 (date of issue 28th October, 1991) passed by the

Collector of Customs (Judicial) was referred to. It was stated that this

order was prior in point of time. It was pleaded that on the basis of the

same very evidence, two different authorities have reached contradictory

conclusions and the decision of the Collector of Customs (Judicial)

was more appropriate and in accordance with the law.

4. Order dated 13th January, 1992 passed by the Additional Chief

Controller of Imports and Exports is a detailed order and elucidates

the facts. M/s Hiren Metal Works were given advance licence

No.P/L/1499535 and DEEC Book No.018694 dated 1st May, 1989 for

import of 1875 metric tons of second/defective/circles cuttings for

CIF value of Rs.1,14,37,500/-. The said licence was given under the

DEEC scheme and entailed an obligation to export Ghamelas of value

of Rs.1.80 crores. M/s Hiren Metal Works had imported the entire

quantity under the licence by way of 13 consignments. 12

consignments were cleared by the custom authorities without

payment of duty and the 13th consignment of 89 metric tons was

pending clearance when investigations began. It was learnt that 12

earlier consignments had been sold by M/s Hiren Metal Works in the

market for monetary consideration. Statements of Ramesh R. Desai,

trustee of M/s Hiren Metal Works, was recorded under section 108 of

the C Act wherein he had accepted that the consignments had been

sold in the market. Ramesh R. Desai did not retract the said

statement. Investigations revealed that the said firm had never

exported in the past and did not have machinery to manufacture the

product, which was to be exported. The factory itself was not

operational and was closed. Therefore, there is no doubt, it has to be

accepted and indeed it is not questioned by the petitioner before us

that all goods imported under the DEEC scheme had been diverted

and sold in the market. The question raised is whether there is any

material or evidence to show and prove involvement of the petitioner

in the said import or sale of the imported cold rolled sheets.

5. Order dated 13th January, 1992 records and mentions that

Vinod Kumar Jatia had purchased imported raw material from

Ramesh R. Desai. It has been admitted by Ramesh R. Desai that

clandestine dealings and illegal disposal of the imported raw material

was fully known to Vinod Kumar Jatia. The order also records that

clandestine dealings were carried out without any written agreement

or documents. The contention of the petitioner that statements of

Ramesh R. Desai cannot be relied upon against the petitioner was

rejected, inter alia, observing as under:-

"...........He further contented that the statements of Shri Ramesh R. Desai cannot be relied upon to proceed against his client since Shri Desai himself is one of the co-accused persons in the case. I have looked into this aspect and I am inclined to disagree with the contentions of the learned advocate. It is clarified that

the proceedings under Section 4-L for action under Section 4-I of the aforesaid Act, have been initiated against Shri Vinod Kumar Jatia as there is an ample of evidence to show that he is a part and parcel of the entire transactions beginning from arranging a foreign supplier to the purchase of imported raw materials on preferential terms. The grounds for abetment are extremely clear in the sense that there has been a deep rooted collusion and connivance between Shri Vinod Kumar Jatia and Shri Ramesh R. Desai. This is more than meeting mind, which is crucial to abetment, collusion and conspiracy. Shri Ramesh R. Desai, though he is a co-accused in the proceedings before me, the confessional statements he had given before the customs authorities are voluntary in nature. They do not result from duress or coerce. The learned advocates objection is understandable though not justifiable. What is relevant to adjudication proceedings is preponderance of prima facie probabilities. Therefore, I do not wish to place any credentials on the averments of the learned advocate."

6. The said order also refers to statement of Ramesh R. Desai

under Section 108 of the C Act dated 29th November, 1989 and states

that maker i.e. Ramesh R. Desai had admitted that he had received

Rs.120 lacs from Vinod Kumar Jatia in cash in installments towards

sale proceeds during August-September 1989 and had spent Rs.108

lacs for settlement of documents. The balance amount was spent to

pay off the debts. Vinod Kumar Jatia recommended foreign

suppliers for import of goods on the understanding that 90 days credit

would be given on D.P. basis. Vinod Kumar Jatia was the middle

man. But, there was no written agreement between Ramesh R. Desai

and Vinod Kumar Jatia and there was also no correspondence

between them. Ramesh R. Desai had offered Vinod Kumar Jatia

should purchase the imported consignment at a price less than

Rs.500/- per metric ton on the prevailing market rate. Apart from this,

there was no other evidence or reference in the order dated 13 th

January, 1992.

7. The appellate order dated 22nd July, 1996 is brief and cryptic

and simply records as under:-

"The Committee considered the arguments and the entire records of the case carefully. The Committee observed that it appears that the appellant has completely been exonerated by the Customs authorities. He also contends that there is only the uncorroborated contention of the co-accused based on which the adjudicating authority had held him responsible and imposed a penalty on him for abetting in the misutilisation of the imported goods against the licence. The learned advocate submitted that contention of the co-accused should not be relied upon.

The Committee felt that no doubt the Customs authorities have exonerated the appellant but this is because there was only subsequent misutilisation of the goods after imports. Though the statement of the co- accused has not been corroborated by any independent evidence, the statement could not be discounted totally on this ground alone. The adjudicating authority has rightly held that the appellant did abet in misuse of imported goods. However, on considering the matter in its entirety, the Committee held that the extent of misuse has not been quantified precisely. The penalty imposed by the Adjudicating authority is excessive hence the Committee ordered that the penalty be reduced to Rs.25.00 lakhs."

8. It is clear from the aforesaid that the evidence relied upon by

the respondents in their order dated 13th January, 1992 is the

statement of Ramesh R. Desai under Section 108 of the C Act

recorded on 29th November, 1989 implicating the petitioner. There is

no documentary evidence. The imported material itself could not be

seized and located. It was not found to be in possession of the

petitioner. No investigation was carried out to locate and seize the

imported consignments. There is no evidence to show that any

payment was made by the petitioner for the imported consignment or

there was any correspondence between the petitioner and the third

party located outside India, who had dispatched the imported

material. The Collector of Customs (Judicial) in his order dated 17th

September, 1991 had examined the same very statement of Ramesh

R. Desai under Section 108 of the C Act. He had also referred other

statements of Ramesh R. Desai recorded on 24 th October, 1989, 29th

November, 1989, 12th January, 1990, 22nd January, 1990, 21st March,

1990 and 22nd February, 1990 under the Section 108 of the C Act.

After examining the said statements, he has recorded what was stated

under oath by Ramesh R. Desai in his different statements as under:-

"In his statement Shri Ramesh Desai, interalia, stated:

(i) That M/s. Hiren Metal Works was a Trust and he and his wife Smt. Hansa R. Desai were the two trustees and his son and daughter were the beneficiaries of this trust.

(ii) That they have obtained an Advance licence No.P/L/1499535 dated 24.4.89 for the import of 1875 M.T. Defective CRCA sheets/coils in the name of M/s. Hiren Metal Works as a manufacturer/exporter.

(iii) That they have imported the full quantity against this licence, but some quantity of about 90 M.T. was pending clearance.

(iv) That the resultant product for export under this DEEC was Ghamellas but there were not machines to manufacture Ghamellas at their Mulund factory premises.

(v) That no export against this DEEC Book and Advance licence has taken place so far.

(vi) That DEEC Book was sold to Shri Vinod Jatia in June/July 1989 at the rate of Rs.6500/- per M.T.

(vii) That the goods were imported by Shri Vinod Jatia of M/s. Subhkaran and Sons in the name of M/s. Hiren Metal Works under D.A. basis of 90 days and the payments for remittances of all the imports has been made from time to time the Oriental Bank of Commerce, Fort, Bomabay by Shri Vinod Jatia's employees and by him also.

(viii) That goods in respect of B/EIGM/No.2271/39 dated 18.9.89 of Approx. 90 M.T. of C.R.C.A. sheets which were lying in Docks was book by Shri Vinod Jatia of M/s. Subhkarna & Sons, Pearl Mansion, New Marine Lines, Bombay against Advance licence No.P/L/1499535 dated 24.4.89.

(ix) That he was never given any import document to C.H.A. M/s. H.P. Dagha for the clearance of the consignments imported in the name of M/s. Hiren Metal Works against Advance licence

No.P/L/14999535 dated 24.4.89 and DEEC Book No.8694 dated 1.5.89.

(x) That he had signed the delivery challans of C.H.A.

M/s H.P. Dagha and Co., after confirming that the goods imported under this DEEC Book have reached the warehouse/godown of Shri Vinod Jatia without physically receiving the goods. As the goods cannot be kept under any other person's name, he had signed on delivery challans and import documents without physically receiving the goods so that it was not disclosed that the goods under DEEC Import have already been sole in the market.

(xi) That the payments to C.H.A. M/s. H.P. Dagha & Co.

were made by him through cheque, however the said cheque amount was received in cash by him from Shri Vinod Jatia.

(xii) That he had never received, either in his factory or godown, any goods imported under Adv. Licence No.P/L/1499535 dated 24.4.89 which had been clearned by Shri H.P. Dagha and Co. These goods were delivered to Shri Vinod Jatia and Shri Rajkumar Surekha.

(xiii) That out of the total C.R.C.A. sheets imported under Advance Licence No.P/L1499535 dated 24.4.89 approx. 500 M.T. was also sold to Mr. Rajkumar Surekha of M/s. Rachna Industries, Maker Tower A, 3rd floor, Cuffe Parade, Bombay and balance was sold to Shri Vinod Jatia and goods imported under B/E No.2271/39 have already been sold to Mr. Vinod Jatia.

(xiv) That they have sold the imported goods in the open market without the permission of Jt. C.C.I.& E.

(xv) That he had submitted bogus export documents to Jt.

CCI&E's office for getting waiver of Bank Guarantee.

(xvi) That facts stated in Chartered Accountant Certificate was not correct. They did not have any past export performance in the name of M/s. Hiren Metal Works, and any export order or contract, shipping bills, etc.

They had not shown or produced any documents to M/s. Thar and Co. for their verification. As Mr. Jayesh Thar was known to him since 1983-84, since he was coming to his company. M/s. Tensile Steel Co. Ltd. for auditing, he issued the certificate without verifying the records.

(xvii) That no documents were shown to the Chartered Accountant, Shri Jayesh P. Thar for past exports since there were no such documents and good faith for a consideration of Rs.2000/- to Rs.3000/- as Mr. Thar was known to him for the last five years.

(xviii) That he never negotiated with M/s. Alesayi Trading Corporation, Saudi Arabia for exporting any Ghamellas. The copy of export order which was submitted in Jt.CCI&E office was obtained through one of his friend only to submit in Jt.CCI&E as this was one of a requirement of DEEC Book and that actually on the basis of this document there was no intention to export anything and he had never entered into any correspondence with M/s. Alesayi Trading Corporation".

9. The said gist indicates that Ramesh R. Desai had contradicted

himself on several aspects on the nature of involvement of Vinod

Kumar Jatia. He had claimed that DEEC book was sold to Vinod

Kumar Jatia in June-July, 1989 at the rate of Rs.6,500/- per metric ton

and payments for imports were made from Oriental Bank of

Commerce, Fort, Bombay by Vinod Kr. Jatia and his employees.

Consignment of 90 metric tons which was lying in docks was booked

by Vinod Kumar Jatia. The clearing agent H.P. Dagha & Company

was paid by Ramesh R. Desai by cheque, but he had received similar

amount in cash from Vinod Kumar Jatia. The goods after clearance

were delivered to Vinod Kumar Jatia and Raj Kumar Surekha.

10. Referring to the said statements and the inference which should

be drawn therefrom, Collector of Customs (Judicial) in his order

dated 17th September, 1991, reached the following conclusion:-

"40. Regarding the other persons charged in the show cause notice I find that so far as the Clearing Agents are concerned, they have only done the job of clearing the goods through customs on the basis of documents given by Mr. Ramesh R. Desai. They are, therefore, not liable to any penalty for the unathorised disposal of the goods after clearance. So far as Mr. Rajkumar Surekah is concerned, I find that he was only a financier of the goods. Same is the case of Mr. Vinod Kumar Jatia who also cannot be said to be liable to penalty. He has done nothing for rendering the goods liable for confiscation under section 111(o) of the C.A.

62. There is a suggestion in the statement of Mr. Ramesh R. Desai that Mr. Jatia like Mr. Surekah might have purchased a certain quantity of the goods. However it appears that sometimes Mr. Desai says that Mr. Jatia purchased the imported goods and sometimes he say that DEEC itself was sold to Mr. Jatia. In any case the DEEC Book and the licence was issued to the importers and it was their responsibility to use the imported goods for the purpose for which exemption from duty under the DEEC was available to them. I, therefore, do not propose to take any penal action against Mr. Surekha, Mr. Jatia and the clearing Agents. Same is the case of the Chartered Accountant, who even though, had assisted the importers in giving false documents before licencing authorities, based on which the bank guarantee condition was waived, it cannot be said that they are liable to penalty under section 112(a) of the C.A. 62. I therefore drop the proceedings against these persons. I find that vide order dated 12.9.90 the Jt. CCI&E has also more or less taken the same view except that in the case of Mr. Jatia he has held that possibly Mr. Jatia had purchased some goods from Mr.

Ramesh R. Desai. That however would be the post import violation for which the action by the licencing authority has already taken against him. That will not make him liable to penalty under section 112(a) of the C.A.62."

11. The said paragraph records the oscillating statements made by

Ramesh R. Desai as it was sometimes stated that the petitioner had

purchased the imported goods and on the other occasion it was stated

that DEEC book itself was sold to the petitioner. The order of the

Collector of Customs (Judicial) also refers to the statement of the

petitioner recorded on 5th October, 1990 under Section 108 of the C

Act. In this statement the petitioner had stated that he had not

purchased the said CRCA sheets from Ramesh R. Desai, though he

was engaged in import of steel from various countries for trading

purpose. He has also stated that he arranged for import of steel on

behalf of actual users as a letter of authority holder and had never

arranged for import of steel other than in cases of actual users. The

petitioner has further accepted that he knew Ramesh R. Desai, who

was dealing in steel but he did not have any business dealings with

Ramesh R. Desai. This clearly shows that one authority has relied

upon and accepted the statements of Ramesh R. Desai and whereas

the other authority on the basis of the same statements felt that this

was not sufficient. What is noticeable is that the in the order dated

13th January, 1992 reference is made only to the statement of Ramesh

R. Desai recorded on 29th November, 1989 and other statements have

not been referred to or examined. The statement of Vinod Kumar

Jatia recorded on 5th October, 1990 under Section 108 of the C Act

has also not been considered. There is no other corroboration or

independent evidence to show involvement of the petitioner

whatsoever.

12. From the above discussion, it is apparent that there has been

error in the decision making process. Relevant statements had been

ignored and not taken into consideration. The appellate order dated

22nd July, 1996, is brief and cryptic and does not deal with the

contentions and issues raised by the petitioner. The said order cannot

be sustained.

13. In view of the aforesaid, we issue writ of certiorari and quash

the impugned order dated 22nd July, 1996 passed by the Appellate

Committee, Ministry of Commerce. An order of remand is passed for

fresh decision on the appeal by the Appellate Committee, Ministry of

Commerce. Deposit already made by the petitioner herein will abide

by the order of the Appellate Committee. The Appellate Committee

will dispose of the case within six weeks from the date the copy of the

order is received by them. Observations made above, are for the

disposal of the present writ petition. The Appellate Committee will

independently apply their mind on all aspects before passing the

order. Observations made above will not be binding on them.

14. Writ petition is disposed of. In the facts of the case, there will

be no order as to costs.

(SANJIV KHANNA) JUDGE

(SANJEEV SACHDEVA) JUDGE OCTOBER 3rd, 2013 NA