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2006 DIGILAW 679 (BOM)

Wall Street Finance Ltd. v. Union of India

2006-04-25

J.P.DEVADHAR, R.M.LODHA

body2006
Judgment R. M. LODHA, J. ( 1 ) THE short question that arises in this writ petition is: whether the order dated 3rd February, 2000 passed by the customs, Excise and Gold (Control) Appellate Tribunal is a decision in the eye of law? ( 2 ) BEREFT of unnecessary details for consideration of the aforesaid question, the relevant facts may be noticed by us first. ( 3 ) THE Commissioner of Customs (Preventive), Mumbai issued a show-cause notice dated 4. 11. 1997 to 12 parties specifically and others known or unknown persons generally calling upon them to explain as to why:" (i) assorted foreign currency including tcs amount of Rs. ,43,57,730. 15 seized on 27. 5. 97 on board ya Hajipir. (ii) amount of Rs. 58,02,000 seized on 2. 6. 97 lying in the pay order account of m/s. TTC in Union Bank of India, versova Branch. (iii) amount of Rs. 10,01,010 seized on 2. 6. 97 lying in the pay order account of m/s. TTc in Syndicate Bank, Jogeshwari branch. (iv) amount equivalent of US $ 1,07,450 (Rs. 38,57,455 @ 35. 9) available with wsfl. (v) amount equivalent to US $ 2,92,850 (Rs. 1,05,13,35 $ 35. 9) available with m/s. AFS. (vi) amount of Rs. 54,75,750 belonging to m/s. TTC and Riyaz Arif Retiwala and unauthorisedly adjusted by M/s. WSFL against liabilities of M/s. TTC. (vii) amount of Rs. 9. 5 lakhs seized on 31. 10. 97 lying in the fixed deposit account of M/s. TTC in Union Bank of india, Versova Branch. (viii) amount of Rs. 1,25,259. 68 seized on 31. 10. 97 lying as closing balance in the current account number 30033 of m/s. TTC in Union Bank of India, versova Branch. (ix) amount of Rs. 1,06,150 seized on 28. 5. 97 from the premises of M/s. TTC. (x) amount equivalent of US $ 1200 (Rs. 43,080 @ 35. 90) seized on 28. 5. 97 from the premises of M/s. TTC. (a) should not be confiscated under the provisions of section 121 as also under section 113 (d) of the customs Act, 1962. (b) the country craft ya Hajipir having registration no. MNV-1048/mandvi seized on 29. 5. 97 which was used for smuggling of the foreign currency seized on 27. 5. 97 on board the country craft should not be confiscated under section 115 of the Customs Act, 1962. (b) the country craft ya Hajipir having registration no. MNV-1048/mandvi seized on 29. 5. 97 which was used for smuggling of the foreign currency seized on 27. 5. 97 on board the country craft should not be confiscated under section 115 of the Customs Act, 1962. The said country craft ya Hajipir having being released provisionally under bond, the bond should not be enforced. (c) 470 M. T. of cargo of onions on board ya Hajipir which was used for concealing the bag containing foreign currency/tcs, which was seized on 29. 5. 97, should not be confiscated under section 115 of the customs Act, 1962. The said 470 M. T. Of onions having being released for export provisionally under bond, the bond should not be enforced. (d) the hassein cloth bag and the other packing material which were used for packing the seized foreign currency, should not be confiscated under section 118 of the Customs Act, 1962. (e) penalties should not be imposed on each of them under the provisions of section 114 of the Customs act, 1962 for the offences relating to smuggling of foreign currency and TCs aforesaid valued at Rs. 13 crores approximately over a period of time, which includes the seized amounts as mentioned in (a) above. " ( 4 ) THE present petitioner being one of the noticees responded to the show-cause notice by filing reply on 24. 4. 1998. ( 5 ) INTERALIA, the petitioner set up the case that they carry on the business of Full-fledged money Changers (for short, ffmc) and are duly licenced by Reserve Bank of India as FFMC from the year 1991-92. The said license was granted to the petitioner under section 7 of the Foreign Exchange Regulations Act, 1973 (for short fera) and was renewed by the Reserve Bank of India from time to time. As part of their business operations, the petitioner is permitted to stock and sale VISA brand Travelers cheques (for short tcs) of Arab Financial Services (for short afs ). The petitioner got permission from Reserve Bank of India (RBI) to sell visa brand TCs of AFS and also have permission from rbi to sell blank TCs of the said brand to other FFMCs in India. For the stocking of the TCs of the said brand, AFS has appointed the petitioner as their agent in India. The petitioner got permission from Reserve Bank of India (RBI) to sell visa brand TCs of AFS and also have permission from rbi to sell blank TCs of the said brand to other FFMCs in India. For the stocking of the TCs of the said brand, AFS has appointed the petitioner as their agent in India. Under the permission from rbi and with the consent from AFS the petitioner appointed two sub-agents namely M/s. Time Travel and Cargo (TTC) and m/s. Mohamedi Exchange Bureau as its sub-agents for stocking and selling the TCs of the said brand. The sub-agents were also ffmcs licenced by RBI. As per the arrangement between the petitioner and TTC, blank stock of TCs would be issued to TTC at any given time within the over all limit agreed. The TCs were to be sold by TTC as per the terms and conditions of the licence granted to TTC as FFMC by RBI and as per the guidelines and instructions given in the memorandum of instructions issued by rbi from time to time. The petitioner claims to have neither any control over them nor kept any check on such transactions of sale by TTC. It was submitted that the amount of Rs. 68,00,000/- was received by way of pay orders in the normal course of its said business with TTC and by unlawfully seizing the said two pay orders of Rs. 68,00,000/-, the petitioner was unable to realise the the said amount. The petitioner vehemently opposed the proposed confiscation under section 113 (d) and 121 of the Customs Act and the penalty under section 114 of the said Act. ( 6 ) THE Commissioner of Customs (Preventive) recorded the evidence and after hearing the concerned parties, on 23rd June, 1998 passed the following order:" (a) I order confiscation of seized assorted foreign currency including TCs (Sr. No. 108 4702 526 301 to 440 for US$ 70,000) amounting to rs. 1,43,57,730. 15 seized on 27. 05. 1997 on board ya Hajipir under section 113 (d) and 113 (f) of the Customs Act, 1962. No order of redemption is given as nobody has come forward to claim the same. (b) I order confiscation of country craft Y-Hajipir having registration No. MNV-1048/mandvi seized on 29. 05. 1997 valued at Rs. 70 Lakhs under the provisions of section 115 of the customs Act, 1962. No order of redemption is given as nobody has come forward to claim the same. (b) I order confiscation of country craft Y-Hajipir having registration No. MNV-1048/mandvi seized on 29. 05. 1997 valued at Rs. 70 Lakhs under the provisions of section 115 of the customs Act, 1962. Since the said country craft was released provisionally under Bond and is available for confiscation, I order and amount of Rs. 5 lakhs be appropriated in lieu of fine for confiscation. (c) I order for release of 470 M. T. Cargo onions valued at Rs. 25 lakhs seized on 29. 05. 1997 on board ya Hajipir. The said cargo was released provisionally to the respective exporters and hence I order for discharge of their liabilities and order for return/refund of bond and cash securities. (d) I order absolute confiscation of the hessair cloth bag and the other packing material having no commercial value which were seized on 27. 05. 1997 under section 118 of the customs Act, 1962. (e) I order confiscation of the amount of rs. 58,02,000/-, seized on 2. 6. 1997 lying in the pay order account of M/s. TTC in the Union bank of India, Versova Branch and the amount of Rs. 10,01,010/- seized on 2. 6. 1997 lying in the order Account of M/s. TTC in Syndicate bank, Jogeshwari Branch under the provisions of Section 121 of the Customs Act, 1962. Out of this amount, pursuant to the order of honble in Special leave to Appeal (Civil) No. 793/98, an amount of Rs. 68,00,000/- was put in Fixed Deposit vide fd No. 5520758 dated 20. 5. 1998 with Union bank of India, Hill Road Branch, Bandra West in the joint names of Assistant Director, DRI, mumbai and M/s. Wall Street Finance Ltd. , I hereby order that the said amount alongwith the interest accrued on the said fixed deposit shall be confiscated to Govt. account forthwith. I also order confiscation of 2,000/- and rs. 1,010/- being the bank charges paid by m/s. TTC from their accounts maintained at respective banks for obtaining the pay orders. (f) In view of my findings above, the amount equivalent to US $ 1,07,450/- (Rs. 38,57,455/- @ 35. 9) and US $ 2,92,850 (Rs. 1,05,13,315 @ 35. 9) I do not order confiscation of the same. (g) In view of my findings above, only an amount of Rs. (f) In view of my findings above, the amount equivalent to US $ 1,07,450/- (Rs. 38,57,455/- @ 35. 9) and US $ 2,92,850 (Rs. 1,05,13,315 @ 35. 9) I do not order confiscation of the same. (g) In view of my findings above, only an amount of Rs. 23,00,000/- out of total amount of rs. 54,75,750/-, can be identifiable with the sale proceeds of smuggled TCs and therefore, i order confiscation of Rs. 23,00,000/- under the provisions of section 121 of the Customs act, 1962- M/s. Wall Street Finance Ltd. shall pay the said amount forthwith. (h) I order confiscation of Rs. 9. 5 lakhs (alongwith accrued interest if any) seized on 31. 10. 97 lying in the fixed deposit account of M/s. TTC in Union Bank of India Versova Branch under the provisions of section 121 of the Customs act, 1962. (i) I order confiscation of Rs. 1,25,259. 68 seized on 3. 10. 97 from the current account no. 30033 of M/s. TTC in Union Bank of India, versova Branch under the provisions of section 121 of the Customs Act, 1962. (j) I order release of an amount of Rs. 1,06,150/- seized on 28. 05. 1997 from the premises of m/s. TTC. I also order release of blank TCs seized from the premises of M/s. TTC on 28. 5. 97 amount to US $ 1200. (k) I order keeping the proceeding in abeyance in respect of M/s. Arab Financial Services. 6. Under section 114 of the Customs Act, 1962, I also impose penalties to following persons/firms.