2011 (5) TMI 1046 - AT - Customs

Tribunal penalizes main applicant for fraudulent scheme, waives penalties for others

The Tribunal found that the main applicant orchestrated a fraudulent scheme involving overvalued goods for claiming undue drawback. The Tribunal directed ... - Issues Involved:Waiver of penalties in appeals against common adjudication order.Analysis:The applicants sought waiver of penalties in appeals against a common adjudication order. The case involved multiple applicants, each filing for a waiver of different penalty amounts. The Revenue alleged that a firm made exports of readymade garments with overvalued goods to claim higher drawback, leading to an investigation revealing discrepancies. The Revenue contended that the claimed drawback was inadmissible under the Customs Act due to undervalued goods. The main applicant was accused of orchestrating the scheme to obtain undue drawback claims.The applicants relied on previous stay orders in similar cases to support their plea for penalty waiver. The counsel for some applicants argued that there was no concrete evidence implicating them in the misdeclaration of goods, questioning the sustainability of the impugned order based solely on statements recorded under the Foreign Exchange Regulations Act. In contrast, the Revenue cited a market survey and investigation evidence to establish the misdeclaration of goods for claiming undue drawback.The Tribunal found that the goods were indeed overvalued, with evidence from market inquiries and suppliers supporting the actual value of the goods. Additionally, it was revealed that no payment was received for the exports, further substantiating the fraudulent scheme. The Tribunal considered the discrepancy between the declared value and market price significant, leading to a decision on penalty waivers for each applicant based on their involvement and evidence presented.In the final decision, the Tribunal directed the main applicant to deposit a specific amount within a set timeframe, with the remaining penalty amount waived during the appeal's pendency. For other applicants, including those working with the firm and partners/employees, the pre-deposit of penalties was waived due to lack of evidence or investigation against them. The Tribunal set a compliance reporting date for the parties involved, emphasizing the specific actions required for each applicant based on their level of involvement and evidence presented.