JUDGMENT
Gowri Shankar, Member (Technical)
1. The application is for waiver of deposit of penalty imposed on the
applicant under Section 112 of the Act of Rs. 50 lakhs. Penalty has been
imposed following the finding of the Commissioner in his order impugned
in the appeal that the applicant was involved in the smuggling of foreign
exchange amount equivalent to Rs. 1.14 crores by Yousef Al-Loughani, at
the relevant time was functioning as a security officer of the applicant.
2. We find this explanation prima facie extremely difficult to accept.
During the course of the hearing in order to clarify the matter, we asked for
affidavit of the chief executive of the applicant, and received an affidavit of
Director General of Kuwait Airways. In this affidavit, the Director General
explains that Al-Loughani was the security officer of the Ministry of
Interior of the Government of Kuwait and the Al-Loughani was
performing the function as security officer at Mumbai in that capacity.
However this was not the version that the company gave to the customs
department. It did not at any stage disclose that Al-Loughani was not its
employee. Even subsequent to the seizure of the currency when this
statement under Section 108 of the Act was recorded. Al-Rasheedi, station
manager of the Kuwait Airways at Mumbai had said that Al-Loughani was
working as a security officer. It was only in a reply to the show cause
notice the fact of his not being an employee was brought to the department.
Nor does the counsel for the applicant denies that the security pass which
was issued to Al-Loughani gave him access to the operational area of the
airport was as a result of the effort made by the airlines which had given
him a staff identity card and all along held him to be an employee.
4. The position that emerges is that Al-Loughani (and it appears three
other persons) who were working for the in Mumbai for the Ministry of
Interior of Kuwait were masquerading as officers of the Kuwait Airways.
It was also accepted by the counsel for the applicant, after consulting his
client, that none of the officials of Kuwait Airways, upto its Director
General, who was the chief operating officer had any control over the
person. We have thus a situation in which Al-Loughani and three other
persons who had access to every area of the airport and had authority to
clear baggage having been checked by the airlines, who were not
employees of the airlines over whom the highest officer of the airlines had
no control. It is also accepted by the counsel for the applicant that this state
of affairs appears has been continuing for the past seven years. During the
seven years, it seems doubtful that any department of the Central or State
government was kept informed of the true identity of these persons. Prima
facie therefore it is the attitude and the conduct of the airline that provide a
fertile field for the activities of Al-Loughani and it is debatable whether
without the cloak of the security and false identity and facilities including
car and housing provided by the Kuwait Airways, Al-loughani would have
been able to continue his activities.
5. At the same time, we note the contention that the counsel for the
applicant makes that, notwithstanding these gross and continuing lapses on
the part of the airlines, it had not been established that the airline was party
to, or had knowledge of these smuggling that Al-loughani undertook. We
also note the submission he makes that subsequent to the event of
11.9.2001, airline traffic all over the world has considerably reduced and
thee has been retrenchment almost 80% of its staff at Mumbai.
6. Taking these aspects into account, we consider a deposit by the
applicant of Rs. 20 lakhs to be appropriate. On such deposit being made
within a month of this order, we waive deposit of the remaining penalty and
stay its recovery.
7. Compliance on 20.12.2001.