ORDER
Jyoti Balasundaram, Member (J)
1. The above appeals arise out of the order dated 28.05.96 of the Commissioner of Customs (P), Mumbai, whereby he has ordered absolute confiscation of goods seized from the premises of M/s. Amar Wire & Rolling Mills, Sewree and from the residential premises of Shri Ashok Oza (Appeal No. C/616/96-Bom) under Section 111(d), (m) and (o) of the Customs Act and directed realise of the goods seized from the shop premises of Shri Ajay S. Vora (Appeal No. C/618//96 Bom); National Fridge seized from the residence of Shri Ashok Oza and two trucks bearing Registration No. MHL-4328 and MTS 2036 and imposing the following penalties on the appellants under Section 112(a) of the Customs Act:
Shri Md. Naseer Rs. 1,00,000/-
Shri P. Iran Rs. 10,000/-
Shri Ashok Oza Rs. 2,00,000/-;
Shri Manu. Jagasia Rs. 1,00,000/-;
Shri Ajay Vora : Rs. 1,50,000/-.
2. All appeals arise out of the common adjudication order and are hence hard together and imposed of by this common order.
3. The brief facts of the case are that in pursuance of specific information that excess dutiable goods were going to be imported/smuggled by certain persons at Unaccompanied Baggage Centre, Indira Docks, Bombay Port in the name of Shri Sahad Al Dakheel, Vice Counsel of the Saudi Arabian Consulate at Bombay by misusing the concessions of Customs duty available to diplomats, the officers of the Head Quarter Intelligence Unit proceeded to U.B. Centre, Uncleared warehouse, Bombay on 26.6.95. Some inquiries conducted with regard to the said diplomatic baggage revealed that container No. SCZU 736994 containing the diplomatic baggage had been destuffed and the baggage form in the name of Shri Fahad Al Dakheel, Saudi Vice Consul had been filed and the packages consisting of four wooden crates and a card board carton after clearance, were on the verge of being delivered to the party. Thereafter these five packages were loaded on truck Nos. MTS 2036 and MHL 4328. These trucks were followed after going out of the dock which proceeded towards Wadala Char Rasta. The trucks were taken inside the premises of M/s. Amar Wire & Rolling Mills. On inquiry it was found that these premises belonged to Shri Ashok Oza and he was present in his office. Three more persons Manu Jagasia, Ajay Vora and Dinesh Shah came inside the premises. The statements of these three persons were recorded by the Customs officials wherein they stated that the goods actually belonged to them and imported free of duty with the help and in the name of Saudi Arabian Diplomat taking advantage of diplomatic immunity. They also revealed that the goods packed in all 5 packages were not in accordance with the declaration made by the diplomat in his BDF No. 3117 of 24.6.95 and were in excess both in quantity and value. The two trucks alongwith the same 5 packages loaded on them were brought to Customs House, Ballard Estate, Bombay. During the follow up actions shop premises of Shri Ajay Vora styled as “Video Home” situated at Princes Street, Next to Parsee Agiary at Dhobi Talao and selling electronic goods, was searched on 26.6.95 which resulted in he recovery of goods of foreign origin such as Sony 2911 TV, CD Laser Disc Player, Yamaha Music System totally valued at Rs. 70,000/- CIF.
4. On the basis of statements of various appellants, it was brought out that Shri Manu Jagasia knew Shri Vora for the past 5 years and go introduced by him to one Shri Nasser of Saudi Consulate; Shri Ajay Vora arranged the list of goods of diplomats and also suggested purchase of goods from Dubai as per the exemption certificate; that Manu Jagasia and Shri Ashok Oza went to Dubai and purchased goods worth Rs. 5 lakhs; that the goods were handed over to one Ketan to despatch to Bombay through Zhaveri Shipping of Dubai; that Manu Jagasia and also Ajay Vora promised Rs. 1.50 lakhs to Nasser for the present consignment out of which Rs. 1.30 lakhs was already paid and they had earlier paid Shri Nasser Rs. One lakh for the clearance of one consignment in December 1994; that on earlier occasion about six months ago, they had cleared a similar consignment by using the name of one Shri Saad Al Maliki of Saudi Consulate at Bombay; that Shri Ashok Oza started renovation of his flat at King Circle at about one year back and he has been purchasing house hold goods of foreign origin for which he had approached Shri Ajay Vora; who told him that he possessed list of items to be brought through diplomatic cargo. The statement also brought out that one fridge and one 50″ CTV purchased there were his goods i.e. goods of Shri Ashok Oza and the rest of the goods belonged to Manu Jagasia and Shri Ajay Vora. The statement also reveals that the wooden crate and cardboard carton which were loaded in the truck were examined on 27.6.95 in the presence of two pancha witnesses, representative of Saudi Consulate Shri Sayed Ali Nazer and Mohd. Nasser, Dy. Secretary Protocol, Government of Maharashtra Shri R.S. Benjamin, his Protocol Assistant Shri Gurunath Sawant, CHA Shri Vinod Mistry, Shri Ashok Oza, Shri Ajay Vora and Manu Jagasia. The detailed examination of the said 5 packages resulted in recovery of dutiable goods of foreign origin valued at Rs. 11,33,660/- cif and Rs. 22,67,320/- LMV which were taken over the seized under the reasonable belief that they had been smuggled into India and hence liable to confiscation under the provisions of Customs Act along with the 2 Trucks. The original BDP No. 3117 of 24.6.95 Appendix 1(B) No. 11/FS/2/95 of 2.5.95 along with a copy of invoice of Arabian General Trading Estt. of 12.04.95 were also taken over and seized.
5. Residential premises of Shri Ashok Kumar Oza were searched on 28.6.95 under cover of search warrant which resulted in the recovery of two Sanyo Split Air conditioners Blowers, one Pioneer Colour Projection T.V. with speaker system and one National Gridge totally valued a at Rs. 2,79,000/- cif and Rs. 5,58,000/- LMV and the same were seized under panchnama. The carton of Projection CTV was bearing the following marking:-
“Mrs. Saad S.Al.Maliki, Consulate General of Saudi Arabia, Maker Tower, 5th Floor, Cuffe Parade.”
6. In these circumstances it appeared to the Department that a conspiracy was hatched by S/Shri Mohammed Nasser and Ajay Vora to misuse the duty free import facility available to the Diplomat, after they were introduced to each other by Shri Parvez Irani. It was apparent that Shri Mohamad Nasser had arranged for exemption certificate and had handed over blank invoices of Arabian General Trading Est.UAE to Shri Ajay Vora who filled the same in pencil with the description of goods intended to be imported by them within the scope of Appendix 1(B). Shri Manu Jagasia and Shri Ashok Oza then left for Dubai to purchase and despatch goods from Dubai and despatched the goods from there. Shri Parvez Irani then cleared first such consignment which had arrived in the name of Shri Saad Al Maliki, Administrative Officer of Saudi Consulate. He received a sum of Rs. 10,000/- over and above his usual clearing charges of Rs. 5,000/- for clearance of this consignment. The goods were stored in the premises of M/s. Amar Wire & Rolling Mills, Sewree. Shri Ashok Oza kept whatever goods he wanted for himself (53″ CTV bearing the markings of Shri Saad Al Maliki was recovered from the house of Shri Ahsok Oza), rest of the goods were sold by Shri Ajay Vora and Shri Manu Jagasia in the market. Shri Mohamed Nasser was paid a sum of Rs. 1,00,000/- for arranging the exemption certificate. He also paid a further sum of Rs. 1,30,000/- for arranging the exemption certificate in the name of Shri Fahad Al Dakheel. The goods imported under cover of this exemption certificate of Shri Fahad Al Dakheel were now under seizure, which had been unauthorisedly imported into India misusing the Exemption Certificate facility available to Diplomats and the import of which into India without cover of valid Import Trade (Control) Licence is prohibited in terms of Section 3(1) and 4 of Foreign Trade Development & Regulation) Act, 1992 and under Section 3(3) ibid the said prohibition or restriction is deemed to have been imposed under Section 11 of the Customs Act, 1962.
7. In the above circumstances, a show cause notice dated 21.12.95 under Section 124 of the Customs Act was issued to all the five appellants wherein all the aforestated facts were stated and it was alleged that the goods under seizure were liable to confiscation under Section 111(d) of the Customs Act and two trucks totally valued at Rs. 5 lakhs were liable to confiscation under Section 115 of the Customs Act. Penal action was proposed against Shri Ashok Oza, Shri Manu Jagasia, Shri Ajay Vora under Section 112(a) of the Customs Act and Shri Mohd. Nasser and Shri Parvez Irani under Section 112(b) of the Customs Act.
8. The Commissioner vide impugned order did not accept the various submissions of all the five appellants and has held that the goods declared in the BDF do not tally with the list of goods actually seized by the Customs and he was convinced that the goods under seizure were therefore, liable for absolute confiscation to the Government under Section 111(d), 111(m) and 111(o) of the Customs Act. However, he has found that the good seized from the shop of Shri Ajay Vora do not merit seizure by the Department. Therefore, the ordered release of these items. Further he has also ordered confiscation under Section 111(d) of the goods seized from the residence of Shri Ashok Oza valued at Rs. 5,28,000/- LMV except one National Fridge valued at Rs. 30,000/- which has been released to him. He also found no justification for confiscation of the trucks each valued at Rs. 2.5 lakhs. He has further imposed penalties of varied amounts under Section 112(a) of the Customs Act as stated in the opening para of this order.
9. We have heard at length the ld.counsels appearing for the appellants (as per preamble) and perused the records of the case. We have also heard Shri S.V. Parelkar, DR for the Revenue.
10. We find force in the arguments of various counsels in as much as the goods in question have been imported by Mr. Fahad Al Dakheel, Royal Consulate General of Saudi Arabia in Bombay and even the previous imports were made by Mr. Saad Al Maliki, Administrative Officer, Royal Consulate General of Saudi Arabia in Mumba, who were the actual importers. All the relevant import documents were signed by these officials and the goods have been imported in their respective names. They have complied with all the necessary formalities for importing the goods as prescribed under the Foreign Privileged Person (Regulation of Customs Privileges) Rules, 1957 and claimed the benefit of exemption Notification No. 3/57-Cus. dated 8.1.57, as amended. The benefit of the Notification has been duly allowed by the Customs officers at the time of import. Therefore, it could at best be a case for violation of provisions of the said Notification No. 3/57-Cus read with the said Rules. As per Rule 5 of the said Rules where the goods, other than motor vehicles, are cleared free of customs duty by a privileged person and they are sold or otherwise disposed of by him (other than re-export) to a non-privileged person within three years from the date of their importation, Customs duty shall be recovered from such privileged person by the Commissioner of Customs nearest of the Headquarter of the privileged person concerned. The duty to be recovered shall be assessed with the consultation of the Commissioner of Customs of the Port at which the goods were imported at the rate of duty in force and on the basis of value at the time of importation of the goods. Therefore, when BDF declarations have been filed by these persons, which were duly signed by them, in case of violation of the Customs Act, it was mandatory for the Customs authorities to have recovered the duty from the said diplomats. However, they were neither summoned under Section 108 of the Customs Act nor were their statements recorded by the department. Further, they were not made parties to the show cause notice and adjudication proceedings. In case the Department was of the view that the facility available to diplomat was mis-used, such charge could never be proved without the participation of the diplomat in the adjudication proceedings. We have also gone through the correspondence between the Royal Consulate General of Saudi Arabia, Bombay and the Customs authorities and also the letter dated 25.6.95 by Zaveri shipping & Clearing Est. wherein they have categorically stated that the goods which they sent for Mr. Fahad Al Dakheel do not belongs to him but hey belong to other client to whom they have wrongly shipped his goods and other client’s goods have been wrongly shipped to Mr. Dakheel. We have also seen a letter dated January 27, 1998 wherein it is stated that due to insufficient place to store the goods at the residence of the Diplomatic staff for the reason of renovation, the Diplomat Mr. Fahad R. Al Dakheel, Vice Consul had authorised the clearing agent to store the imported goods in a suitable place until the end of the renovation work which would had not been more than a week. It was further brought to the notice of the Chief Commissioner that the said items were imported by the diplomat for his personal use which were not tallying with the invoice when goods were opened after approval by the Mission in the presence of two staff Mr. Md. Nasser and Mr. Sayed Ali Nazir. In fact those goods were sent wrongly to the above said Diplomat, from the Shipping company in Dubai. The said Company has clarified that the goods were wrongly shipped and requested to return the same on their account, and informed the Consulate by Telegram/fax to enable them to send the correct and particular items required by the Vice Consul.
11. We do not find any justifiable reason to dis-believe the contents of the letter written by Zaveri Shipping & Clearing Est. dated 25.6.95. ie. a day before the date of seizure of the goods. We, therefore, hold that the provisions of Section 111(d) are not applicable to the facts of the present case since the goods were legally imported by the Vice Consul. The Commissioner has also invoked Section 111(m) and 111(o) of the Customs Act for confiscation of the goods. Such an action of the Commissioner cannot be sustained on two counts. Firstly, Section 111(m) and 111(o) were not invoked in the show cause notice. Therefore, by invoking the two sub Section ie. 111(m) and 111(o), the Commissioner has travelled beyond the scope of the show cause notice. It is a settled law that the adjudicating authority has to pass his order within the parameters of the allegations leveled in the show cause notice. Since he has travelled beyond the scope of the show cause notice, the same cannot be sustained. Secondly, these provisions cannot be invoked against the appellant since they neither mis-declared the goods themselves nor (SIC) they breach any post importation condition. We have already held herein above that in case the Department was of the view that there has been a violation of the diplomatic facility, it was incumbent upon the department to have demanded duty from the actual importer which has not bee done in the present case. Therefore, the violation of Section 111(d), (m) and (o) is not established.
12. Another reasoning given by the adjudicating authority to penalize all the appellants is that a conspiracy was hatched amongst all of them. It is the finding of the Commissioner that all the appellants came together and enticed diplomats and utilised them to further their smuggling interest. This finding of the Commissioner is based on two aspects; firstly, the inculpatory statements of Shri Ashok Oza, Shri Ajay Vora, Shri Manu Jagasia and Shri Mohamed Nasser, and secondly the seizure of the goods from the premises of M/s. Amar Wire & Rolling Mills which belong to Shri Ashok Oza. We find that all the aforementioned persons retracted from their statements at the first available opportunity when they were produced before the Judicial Magistrate. The Commissioner has also accepted at page 38 of the order that the statements were retracted sometime later as a defence perhaps under legal advice, to save themselves from the adverse effects of their deposition. However, we hold that retraction were made at the first available opportunity.
13. As regards the seizure of the goods, there are several contradictions which have been pointed out to us by the learned counsel and the same can be summarised as under:
(a) The panchnama drawn at Amar Rolling Mills, Sewree did not bear the signature of even one person who was present in Sewree when the trucks containing the goods were apprehended.
(b) The panchas are not local but from Bhandup and Ghatkopar and both are the employees of CHA. Although it has been mentioned in the show cause notice that Shri Ashok Oza, Shri Ajay Vora and Shri Manu Jagasia were present in Amar Wire & Rolling Mills, the panchnama does not record their presence.
(c) That, one officer, Mr. M.M. Nigam was involved in panchnama at Ashok Oza’s place in Sewree and also in the shop of Ajay Vora at Dhobitalao. The two panchnamas took place almost simultaneously. It is not understood as to how one person could be present at two different places at the same time.
(d) That, panchas were called at 3.50 PM to Shri Ashok Oza’s factory at Sewree. They left at Customs House at 7.20 PM and reached Customs House at 8.45. In cross examination the pancha stated that he was called at about 8.30 PM and he reached Sewree at 9 PM. He arrived at Customs House at 11 PM.
(e) Panchnama states that the premises at which the seizure was made is a factory. In cross examination the pancha stated that the premises was a godown.
(f) The panchnama stated that the baggage contained certain markings showing the diplomat’s names etc. In cross-examination, the panchas stated that they did not see any marking on the baggage.
14. From the above, we note that there are several material contradictions in the manner of seizure of the goods and the conspiracy theory is also not proved beyond reasonable doubt. Therefore, we extend the benefit of doubt to all the appellants on the ground that there was insufficient evidence to penalise them under Section 112 of the Act. Therefore, we set aside the penalty on all the appellants.
15. The Commissioner has also ordered confiscation of projection CTV seized from the residential premises of Ashok Oza solely on the ground that the carton of projection CTV was bering the following marking:
“Mr. Saad S.Al. Maliki, Consulate General of Saudi Arabia, Maker Tower, 5th Floor, Cuffe Parade.”
We hold that the said projection CTV was not liable to confiscation only on the ground that it bore the name of Consulate General of Saudi Arabia. The department has not proved that the same was cleared as a diplomatic cargo without payment of duty. Therefore, the confiscation of projection CTV is set aside and the same is released to Shri Ahsok Oza from whose possession the same was seized.
16. In the light of the above discussion, we set aside the impugned order and allow all the appeals with consequential relief, if any, in accordance with law.