Allied Laws

11.  Evidence – Doubt that the exported goods were
overpriced cannot be sustained – No business interests between the parties
hence held to be at arm’s length price – Monies received through banking
channel – Cannot be held as hawala. [Customs Act, 1962 – Sections 114, 114A,
127A, 127B, 14, 17, 156, 28]

UOI vs. Padmini Polymers Ltd. and Ors.
2017 (353) E.L.T. 25 (Del.)

The ground on which the impugned order was
challenged is that the settlement commission had erred in overlooking the fact
that during settlement proceedings, it is not for the petitioner to establish
respondent’s guilt beyond reasonable doubt; instead it was for the license
holder to establish its innocence apropos the issues raised in the show
cause notice.

It was held that in the absence of
sufficient proof being led, Revenue’s doubt about the FOB value of the goods
cannot be sustained. It has not substantiated its contention that the exported
goods were overpriced. Furthermore, there was nothing on record to conclude
that there were business interests between Respondent and its importers in
Singapore, United States and USA so as to doubt that the transactions between
them were not in the normal course of trade or that it was not a transaction at
arms’ length. Hence, the declared FOB would have to be accepted.

Since Revenue has not led any evidence to
indicate either a ‘Hawala’ transaction or a back flow of money to Respondent
through illegal means regarding the value of the exported goods, the export
transaction cannot be viewed with suspicion. In any case, all monies were received by
Respondent through the banking channels as have been so certified by its
bankers through remittance certificates. In view of the same, the petition was
dismissed.

12. Interest – No
provision in Act to pay – Govt. to pay interest on currency seized at the time
of refund of such amount. [Central Excise Act]

R.H.L. Profiles Ltd. vs. Commr. of Cus.,
Ex. and Service Tax, Kanpur 2017 (352) E.L.T. 349 (All.)

The only issue was whether the Tribunal was
justified in rejecting the claim of interest on the amount refunded on the
ground that there was no provision for paying interest on such amount?

 It was observed that nowhere the Government
can enrich itself at the cost of the others. The Government cannot deny payment
of interest merely for the reason that there is no express statutory provision
for payment of interest on the refund of excess amount/tax collected by the
Revenue.

It was held that the amount which was
illegally confiscated by the Revenue and was ultimately refunded, the
assessee-appellant was entitled to interest and that the department is under
obligation to pay the same.

13.
Money Laundering – Attachment of money alleged to be proceeds of illegal
transactions – No link between sum of money attached and the alleged proceeds
of crime – Fixed deposit receipt to be returned together with the accretions.
[Section 5, PMLA, 2002]

 Satish Estate Pvt. Ltd. vs. Union of
India 2017 (353) E.L.T. 21 (P & H)

The Petitioner owns a piece of land which it
sought to sell to TI Ltd. TI Ltd. advanced a sum of Rs. 25 lakh towards earnest
money by two cheques. Disputes and differences arose between the petitioner and
TI Ltd. TI Ltd. filed an FIR against the petitioner for offences inter alia
u/s. 420 of the Indian Penal Code. However, the suit and the FIR filed by TI
Ltd. came to an end and the petitioner forfeited the earnest money of Rs. 25
lakh.

TI Ltd. had entered into another agreement
with a third party for the sale of an entirely different property for a total
consideration of Rs. 3.61 crore and advance/earnest money was paid by third
party of a sum of Rs.11 lakh and Rs. 3.50 crore, respectively, where also,
differences and disputes arose due to which the third party filed an FIR
against TI Ltd. and for the sale of an entirely different property and charges
were framed pursuant to that FIR against the respondent under Sections 420,
467, 468 and 471 of the Indian Penal Code.

The petitioners had forfeited an amount of
Rs.25 lakh, in respect of which the Enforcement Directorate had passed a
provisional attachement order against the director of the petitioner and not
against the petitioner directly.

It was stated that the amount of Rs. 25 lakh
paid to the petitioners by TI Ltd. was from the proceeds of crime i.e. from the
sale of the land to the third party consequent to which the an FIR had been
filed by the third party against TI Ltd., and hence, such amount of Rs. 25 lakh
was to be attached.

The petitioner sought an order for the
return of the sum of Rs. 25 lakh which stood attached by the Directorate of
Enforcement in exercise of powers under the Prevention of Money Laundering Act,
2002.

It was held that the director was not a
party to the transaction in his personal capacity but only as a Director of the
petitioner. The maintainability of such proceedings itself is doubtful.
Secondly, there was no connection between the land which was a subject matter
of the agreement between the petitioner and the Respondent on the one hand, and
the land that was a subject matter of the agreement between the Respondent and
the third party entered on the other hand. Since there was no link between the
said sum of Rs. 25 lakh and the alleged proceeds of crime namely the sum of Rs.
3.61 crore received by Respondent from third party. In the circumstances, the
petition was allowed.

 The FDR was directed to be returned together
with the accretions thereto, if any. It was clarified that in the event of any
evidence being obtained by the respondents in respect of the said sum of Rs. 25
lakh, they are always at liberty to take necessary action in accordance with
law.

14. Money
Laundering – Person in possession of proceeds of crime – Not charged with
offence of crime [PMLA, 2002; Sections 3, 
24]

 Jafar Mohammed Hasanfatta and Ors. vs.
Deputy Director and Ors. 2017 (353) E.L.T. 55 (Guj.)

The allegation against each of the
petitioner is of commission of offence u/s. 3 of PMLA, which is punishable u/s.
4 of PMLA. Section 3 describes the offence of money-laundering where whosoever
directly or indirectly attempts to indulge or knowingly assists or knowingly is
a party or is actually involved in any process or activity connected with the
proceeds of crime including its concealment, possession, acquisition or use and
projecting or claiming it as untainted property shall be guilty of offence of
money-laundering.

It was held
that section 24 shows legislative intent of attachment and confiscation of
proceeds of crime by presuming involvement of proceeds of crime in money
laundering irrespective of whether the person concerned is or not charged with
the offence of money laundering. Thus, there shall be a legal presumption in
any proceeding relating to proceeds of crime under PMLA that such proceeds of
crime are involved in money-laundering. Burden would be on the person concerned
to show to the contrary.

However, section 24 clearly indicates that
even a person in possession or connected with any proceeds of crime may or may
not be charged with the offence of money laundering. Whether a person shall be
charged with money laundering or not shall thus depend only upon satisfying the
requirements of Section 3 of PMLA.

In the instant
case, neither there was anything to raise a presumption of fact or law that any
of the petitioners was aware that the monies received in their bank accounts
through banking channels were ‘proceeds of crime’ derived from any ‘scheduled
offence’, nor is there anything to further presume that the petitioners were
intentionally projecting or claiming any proceeds of crime as untainted one. In
absence of the same, offence of money laundering u/s. 3 of PMLA even on prima
facie basis would not be attracted.

15. Tenancy – Devolution – Brother – Not
family nor heir. [Hindu Succession Act, 1956, S.3(a), S.15(2)(b)].

Durga Prasad vs. Narayan Ramchandani (D)
thr. AIR 2017 SUPREME COURT 915

In the present case, the suit property was
taken on rent by the father-in-law of deceased tenant-Lalita that is Hem Ram
Sharma and after his death, his son Baldev (husband of Lalita) became tenant of
the suit property. Upon his death, Lalita became the tenant of the suit
property. The Appellant is the brother of deceased Lalita, who was the tenant
of the Respondent herein. Upon death of Lalita, in terms of section 15(2)(b) of
the Hindu Succession Act, in the absence of any son or daughter of deceased
Lalita, the tenancy would devolve upon the heirs of her husband. Since the
Appellant is the brother of deceased Lalita and does not fall under the
category of ‘heir’ of Lalita’s husband, the tenancy of the suit property will
not devolve on him nor can he be called as an ‘heir’ u/s. 3(a) of the U.P. Act
XIII of 1972.

Section 3(g) defines ‘family’, in relation
to landlord which includes the spouse that is husband or wife of a person, male
lineal descendants which means his or her son, son’s son, son’s son’s son and
so on, parents, grandparents, unmarried, widowed, divorced daughter or
granddaughter, etc.

The definition given in the Clause is an
inclusive one and is supposed to be construed in its technical meaning which
implies that,what is not given has to be excluded as not forming part of the
family of landlord or tenant.

Therefore, sisters and brothers of landlord
and tenant are excluded from his/her family. In the facts of the present case,
the Appellant being brother of deceased tenant cannot be held to be the
‘family’ as the inclusive list given under the Act clearly omits “brother
and sister” and the same cannot be read therein as the list has to be read
and interpreted strictly. _