C.N.B. Nair, Member (T)
1. All these stay applications are directed against the penalties imposed on the applicants under adjudication order No. 8/2006 dated 31-1-2006 by the Commissioner of Customs, ICD, Tuglakhabad, New Delhi. They were heard together and are remained disposed of under this common order.
2. The facts leading to the passing of the impugned order are that during April 1998, about 96,800 CD ROMs were exported to M/s. Mondial General Trading, Ajman, UAE. These CD ROMs titles are “discovery” and “encyclopedia”. FOB value of the consignment was about Rs. 7.2 crores. M/s. Sundram Exports Pvt. Ltd. Janakpuri, New Delhi was the exporter.
3. Similarly, 40,000 CD ROMs with declared FOB value of about Rs. 3 crores were exported in May 1998 by M/s. Netcompware Pvt. Ltd. These exports were to M/s. Landmark Exim (HK) Co., Hong Kong.
4. The above exports were under claim for DEPB and based on the export value, DEPB scrips of over Rs. 1.5 crore was issued to the parties.
5. Subsequently, investigations were carried out by the Directorate General of Revenue Intelligence in 1999 and it was found that the exported CD ROMs were purchased at the rate of about Rs. 19 from M/s. Super Cassette Industries and they were exported at a hugely overvalued price of US $ 19 per piece. It was, thus, evident that the exports were made at huge overvaluation in order to benefit from DEPB scheme.
6. Investigation also showed that export prices were not real and that the buyers abroad were connected parties who remitted the amounts to India to help the Indian parties to benefit from the DEPB scheme. It was also found that the consignment exported by M/s. Netcompware Pvt. Ltd. was re-imported into India in the name of M/s. Arvind International. Investigation also snowed that export companies were mere facades and the real persons behind the fraud were the present appellants, Shri Bimal Kumar Jain, Deep Swarup Aggrawal, Ratinder Pal Singh Bhatia, in particular. Penalties have been imposed under the impugned order based on the above findings.
7. The applicants are contesting the penalties by denying any role in the fraudulent activities even though during investigation, they had implicated themselves and others. The submission of Bimal Kumar Jain is that he has no concern with the exports in the name of Sundram Exports Pvt. Ltd. He also has a complaint that his implicatory statement was obtained under duress by the investigating officers. During the hearing, his counsel has also pointed out that the applicant/his firms had deposited about Rs. 17 lakhs during the investigation, against the present penalty of Rs. 25 lakhs.
8. Deep Swarup Aggrawal has contended that the order has been passed ex-parte and is entirely unjust. He has also submitted that the appellant is financially in unsound condition and that his income from salary is Rs. 10,000/-. He has also contended that since the export firms were legal entities it is not permissible to proceed against individuals in respect of exports of those firms.
9. The submission of Shri Ratinder Pal Singh Bhatia is that he was not served copy of show cause notice or hearing intimation. He has also refuted the allegation of participating in the fraud. The contention of the other applicants is that they were merely employees and had no role in the fraud.
10. Learned SDR has taken us through the records of the case and has emphasized that show cause notice as well as the finding clearly bring out a meticulously planned and enacted fraud whereby the applicant had falsely obtained the DEPB scrip worth about Rs. 1.5 crores and sold the same to importers and gained monetarily. He has also emphasized that penalties have been imposed on the individual applicants only after considering the role of each.
11. We have perused the record and considered the submissions made by both sides carefully. This is a clear case of money laundering and racketeering in DEPB scrip. The very fact that a Rs. 19 worth CD ROMs being exported at US $ 19 (overvaluation of over 14 times) clearly points to overvaluation. That the transactions were fraudulent is also clear from the fact that in the case of exports by Netcompware Pvt. Ltd., the same goods were being circulated under different export-import transactions. The finding in the case of exports of Sundram Exports Pvt. Ltd. to M/s. Mondian General Trading is also to the effect that export prices were being remitted back to India by connected parties without regard to actual value or realisation from the sale of the imported CD ROMs. Thus, the applicants were taking advantage of the huge arbitrage between hawala remittance and DEPB scrip by showing false export realisations.
12. The role of the persons concerned also remains brought out by the evidence on record and have been disclosed in-the impugned order. Shri Bimal Kumar Jain and Deep Swarup Aggarawal were the main parties in the fraud and Bimal Kumar Jain’s responsibility in creating the bogus commercial entity of its name and spirit away funds through two other commercial entities controlled by him are all well brought out in the order. Therefore, imposition of penalty on him was quite justified. However, the applicant’s firm has already deposited Rs. 17 lakhs out of Rs. 25 lakhs imposed as penalty. Thus, bulk of the penalty remains already deposited. We consider this to be sufficient for the purpose of taking up the appeal. Accordingly, the requirement for pre-deposit of the remaining amount of penalty is waived in his case.
13. Shri Deep Swarup Aggarwal was intimately involved in the fraud, through his procurement of export goods, arranging their export and arranging the re-import of the CD ROMs exported by M/s. Netcompware Pvt. Ltd. He was also a major beneficiary from the DEPB fraud. As his role in the fraud remains well established, we are of the view that dispensing with the requirement of pre-deposit would not be proper. We, therefore, direct Shri Deep Swarup Aggarwal to deposit an amount of Rs. 15 lakhs (rupees fifteen lakhs). Upon the deposit of the said amount, the requirement for pre-deposit of the remaining amount shall remain waived.
14. In the result, Shri Deep Swarup Aggarwal is directed to make deposit of Rs. 15 lakhs (rupees fifteen lakhs) arid report compliance on 23rd October 2006. The requirement for pre-deposits of the other applicants is waived.
15. The stay applications are ordered in the above terms.
(Pronounced in open Court on 18-9-2006)