By TIOL News Service

CHENNAI, MAR 21, 2013: THIS is a Revenue appeal.

The following are the substantial questions of law raised:

1. When the statement of Abdul Razak given in response to the summons issued is admissible in evidence, has not the Tribunal committed an error of law in ignoring that statement, while deciding the issue in question ?

2. Whether the failure to take the statement of the first respondent made before the Income Tax Authorities, which is otherwise admissible in law, vitiates the judgment challenged in this appeal?

A Toyota HI LUX SURI car was imported and cleared under a Bill of Entry dated 21.1.1998.

On a specific intelligence that the said car was imported using false documents and was being used by one Abdul Razak, the DRI, Calicut directed Abdul Razak to produce the vehicle before them. On 22.2.2000, Abdul Razak produced the said vehicle and he was also subjected to a detailed examination. Consequently, the vehicle was seized under a Mahazar on the reasonable belief that the same was imported in contravention of the provisions of the Customs Act 1962.

In his statement he mentioned that he purchased the said vehicle through his relative viz., the first respondent from Afghan Motor Co., Sharjah after paying an advance of 500 Dhs in cash for which a receipt in No. 002 dated 18.11.1997 was given in his favour. A further sum of 27,000 Dhs was paid by him on 27.11.1997 and thereafter the vehicle was handed over to him on the same day and it was sent to Madras on 30.11.1997 and subsequently registered at Bangalore Registration Office. However, Abdul Razak retracted his statement on the very next day, by issuing a letter and claiming that he was using the said vehicle which was imported by the first respondent who is his nephew and that car had been purchased on 12.11.1995 as per Inv. 1000 issued by Afghan Motor Co., Sharjah. He also stated that the receipt in No. 002 dated 18.11.1997 issued in his name was not connected with the original purchase made by the first respondent.

Summons were issued requiring him to present himself before the DRI, Calicut. He appeared on 8.6.2000 and gave a statement stating that the earlier statement given on 22.2.2000 was correct and the retracted statement given on 23.2.2000 was not correct. He also stated that the receipt in No. 1000 dated 12.11.1995 issued in the name of the first respondent was not a true invoice.

The Joint Commissioner of Customs, Chennai ordered provisional release of the said vehicle on furnishing a bond with 100% bank guarantee for the assessable value of Rs. 4,92,855/-. Accordingly, the bank guarantee was furnished and the vehicle was also provisionally released on 17.7.2000.

Just before that, a SCN was issued on 5.7.2000 by the DRI, Calicut, calling upon the first respondent as well as Abdul Razak to show cause as to why the car should not be confiscated under the provisions of Section 111(d) and 111 (m) of the Customs Act, 1992 read with Section 3(3) of the Foreign Trade (Development &Regulation) Act, 1992.

The first respondent replied to the show cause notice on 18.9.2000. Thereupon, an Order-in-Original dated 26.11.2001 came to be passed by the Additional Commissioner of Customs, Chennai by holding that the car was liable to confiscation and as the same was provisionally released, he imposed redemption fine of Rs.4,50,000/- and penalty of Rs.50,000/- and Rs.60,000/- on the said Abdul Razak and the first respondent herein respectively and also for enforcement of the Bond and bank guarantee executed at the time of provisional release of the vehicle.

The first respondent preferred an appeal before the Commissioner of Customs (Appeals) Chennai who while confirming the order reduced the penalty to Rs. 25,000/-.

By an order dated 12.10.2004 the Tribunal set aside the order of the lower authorities and so the Revenue is before the High Court by raising the questions of law as mentioned at the beginning.

The Revenue representative submitted that the statement made under Section 108 of the Customs Act is admissible in law and therefore the statement issued by Abdul Razak dated 22.2.2000 and reiterated once again by him on 8.6.2000 are to be taken as valid and admissible statements establishing the fact that the car was imported by the said Abdul Razak using false documents.

He further submitted that the Tribunal is wrong in rejecting the statement given by the said Abdul Razak on 8.6.2000, only on the reason that it was made after four months period. The receipt issued by the Afghan Motor on 18.11.1997 showing the said Abdul Razak as the purchaser was a genuine receipt which was also authenticated by the Consul (Economics) at Dubai. Inasmuch as when the receipt dated 18.11.1997 issued in favour of Abdul Razak establishes the fact that he was the purchaser of the vehicle and hence the import made by the first respondent by using false documents contravenes the provisions of the Customs Act, 1962. Reliance is placed on the decision in Surjeet Singh Chhabra Vs. Union of India = (2002-TIOL-158-SC-CUS) and Roshan Beevi and Others Vs. Joint Secretary, Government of Tamil Nadu 1984 (15) ELT 289 (Mad) in support of his submissions.

In response, the counsel appearing for the first respondent /importer submitted that the findings rendered by the Tribunal based on the materials available on record are not canvassed by the Revenue as perverse and, therefore, there is no substantial question of law arises before this court for consideration in this appeal. Apart from the said preliminary objection, he further submitted that all the documents filed along with the Bill of entry show that the first respondent is the purchaser of the said vehicle and he had imported the same with valid and genuine documents which are not proved as not genuine by the Revenue by placing any other materials except the statement made by the said Abdul Razak and the receipt issued in No.002 dated 18.11.1997 showing him as the purchaser of the said vehicle. He further contended that any statement made before the Income Tax Authorities cannot be relied on by the Customs Authorities for the purpose of implicating the first respondent. In support he relied on the decision in K.T.M.S.Mohd. and another Vs. Union of India (1992 (3) SCC 178). Attention was also invited to the individual documents filed along with the Bill of Entry to establish that those documents are not false or forged one.

The High Court distinguished the decisions cited by the Revenue and also noted that there was no necessity to go into the case law cited by the counsel for the respondent.

The High Court inter alia observed -

"11. We have perused the invoice dated 12.11.1995 issued by the Afghan Motor Company in favour of the first respondent. It shows that the car with unit price of 24,050/- Dhs was sold on the same day by receiving the entire amount. The Private Vehicle Registration Book also shows that the first respondent is the owner of the said vehicle with registration dated 15.11.1995. In the very same Registration Book, the Insurance Policy No. SH/P/1215/95 is also mentioned by indicating that such Policy expires on 14.11.1996. The said certificate was substantiated by another document, viz, Insurance Certificate showing the Policy Number as 1215/SH P/95. Though the insurance certificate was made in Arabic language, a translated version of the same was placed before this Court by the first respondent and a perusal of the same shows the above said details. Further, a perusal of the Vehicle Export Certificate also indicates that the first respondent is the owner of the said vehicle by showing the registration date as 15.11.1995. A perusal of all these documents unambiguously indicate that the first respondent was the purchaser of the said vehicle and the same was purchased on 12.11.1995 itself and got registered on 15.11.1995 and thereafter exported to India under Bill of Entry dated 21.1.1998.

12. The Revenue, as found by the Tribunal, has not disproved these documents by placing any rebuttable evidence. On the other hand they relied on the receipt issued by the very same Afghan Car Company dated 18.11.1997 under receipt No. 002. We have also perused the said receipt issued by the very same Car Company. The said receipt indicates that a sum of Rs.500/- Dhs. was received as advance from the said Abdul Razak on 18.11.1997 out of the total price of 29,000/- Dhs. However, in the very same receipt further entries were made on 29.11.1997 as if a further sum 27,000/- Dhs was paid. If any such sum had been paid, the Car Company would have certainly issued a separate receipt instead of making entry in the very same receipt dated 18.11.1997, which appears to be very unusual. Therefore such entry raises some doubt about the genuineness of the said transaction itself. Even otherwise, when the very same Car was already sold by the very same car company on 12.11.1995 to the first respondent, who in turn got it registered on 15.11.1995 itself in his name with a cover of insurance policy, we fail to understand as to how the Car Company can issue another receipt after two years to show as though the said car was sold to another person viz., Abdul Razak. Certainly, this receipt dated 18.11.1997 raises all reasonable doubts. Therefore, when there is a cloud in the said receipt issued on 18.11.1997, the Tribunal had rightly refused to accept the same. Insofar as the statement given by the said Abdul Razak is concerned, it is needless to say that any statement made should be supported by materials. The Revenue cannot rely on the statement made in the absence of any substantiating documents, especially when the first respondent on the other hand proved that he is the purchaser of the said vehicle with valid documents and imported the same in this country with the support of such valid documents.

13. We cannot ignore the fact that the said Abdul Razak though gave a statement on 22.2.2000, had however immediately retracted the same on the very next day i.e. On 23.2.2000. No doubt, after a period of four months he wanted to stick on to the earlier statement given on 22.2.2000. Such contradictions and inconsistency on the part of the Abdul Razak only shows that there is no bonafide on his part. Therefore, the Tribunal was right in rejecting those statements as inadmissible in evidence. Even otherwise such statement alone cannot prove the case of the Revenue especially when the presumption in favour of those documents filed by the first respondent were not rebutted by the Revenue. Consequently we find that the order of the Tribunal based on its factual finding need not be interfered with, especially when the Revenue has not placed any other materials to contradict such factual findings."

In fine, the Civil Miscellaneous Appeal filed by the Revenue was dismissed.

(See 2013-TIOL-213-HC-MAD-CUS)