Abetment in fraudulent export penalties sustained; customs house agent penalty deleted for lack of proved licensing breach.

Penalty for abetment of fraudulent export and wrongful drawback was sustained where the record showed active participation, preparation of documentation, control over the drawback cheque, receipt of part of the proceeds, and supporting statements and circumstances. A second individual was also found involved because an unregistered release deed was not disclosed to the authorities and the partnership deed continued to show him as a partner, establishing misuse of the exporter's identity to obtain ineligible drawback. By contrast, the customs house agent's penalty was set aside because authorization could be inferred from the exporter's signed shipping bills, the relevant GR forms were given to the exporter and the department, and the alleged licensing breaches were not proved.

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Issues: (i) Whether the penalties imposed on the individuals for abetment of fraudulent export and wrongful procurement of drawback were sustainable. (ii) Whether the penalty imposed on the customs house agent for alleged violation of the licensing regulations was sustainable.

Issue (i): Whether the penalties imposed on the individuals for abetment of fraudulent export and wrongful procurement of drawback were sustainable.

Analysis: The material on record showed that one individual was actively involved in the entire export transaction, arranged the documentation and banking formalities, possessed the drawback cheque and received part of the drawback amount. The statements of connected persons and the surrounding circumstances supported the finding that he was the main beneficiary and a central participant in the fraudulent export. As regards the other individual, the release deed relied upon for excluding him from the partnership was not registered and was never brought to the notice of the relevant authorities, while the partnership deed continued to reflect him as a partner. On that basis, his participation in the misuse of the exporter's identity for obtaining ineligible drawback was established.

Conclusion: The penalties imposed on both individuals were sustained.

Issue (ii): Whether the penalty imposed on the customs house agent for alleged violation of the licensing regulations was sustainable.

Analysis: The customs house agent acted under the impression that the person dealing with the papers was the exporter's representative, and the shipping bills signed by the exporter were treated as sufficient implicit authorization. The record also showed that copies of the relevant GR forms were taken for the exporter and the department was informed. The alleged breaches of the remaining regulatory clauses were not established by evidence, and the basis for penal liability under the licensing regulations was therefore not made out.

Conclusion: The penalty imposed on the customs house agent was set aside.

Final Conclusion: The appeals by the penalized individuals failed, while the customs house agent succeeded in having its penalty deleted.

Ratio Decidendi: Penalty for abetment requires proved participation in the fraudulent export scheme, while liability of a customs house agent under the licensing regulations cannot be sustained in the absence of established regulatory breach and where authorization may be inferred from the exporter's signed shipping bills and surrounding conduct.

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