2013 (11) TMI 1394 - AT - Customs

Tribunal confirms fraudulent activities, penalties imposed, revenue appeal partially allowed.

M/s. Contessa Commercial Co. (P) Ltd. Versus CC., Amritsar

The tribunal upheld the findings of the adjudicating authority, confirming the fraudulent activities of the appellants involving mis-declaration of goods, ... Fraudulent claims of Drawback - Mis declaration of description of goods as gear cutting tools of Cobalt bearing high speed steel and heat resistance rubber tape as against inferior nature and quality thereof exported - Onus of proving mis declaration - Held that:- Appellants 5 to 7 had hand in glove with the master minded appellants 1 and 2 to procure inferior goods from unknown source misguiding the investigation that those were procured from the fictitious concerns named by investigation in its result of investigation summarised herein before and fake invoices fabricated by all of them - Entire investigation result depicted at the our set and adjudication finding brought out truth and close connection of entire racket acting in defiance of law making fraudulent export to claim undue benefit of DEPB claim. When reinvestigation gathered cogent evidence against Kishorpuria group, they came forward to surrender part of the DEPB claim made by them and deposited the same with investigation. Their contumacious conducts came to broad day light. Revenue proved its case in minute detail and established truth by fruitful investigation result to make its story very believable - None of the appellants proved to be innocent and failed to lead cogent evidence to disturb adjudication finding. They did not repel any of the arguments of Revenue with cogent evidence - Appellants resorted to fraud consciously by their ill design as was found by investigation and adjudicating authority. Their conscious knowledge of mis-declaration as to description of the goods as well as value of the export made from India was proved when they had intention to make ill gain from undue claim of DEPB. Motive of all these appellants was oblique to promote illegality. Investigation discovering truth by extensive enquiry brought out neatly the intimate connection of the racket and their conscious involvement to benefit each other - Having echoing evidence on record by investigation, establishing live link and close proximity of the above appellants inference drawn by the Adjudicating Authority cannot be disturbed against them since presumption of innocence was countered by Customs by the presumption of guilt which could not be assailed by the appellants. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent mans estimate as to the probabilities of the case - Escapement of misdelcared goods resulting in fraud against Customs (Revenue), proved from governing facts, attendant circumstances and conduct of the parties using fraudulent documents for export, cannot be brushed aside accepting the plea that Customs failed to check the goods exported nor the same tested at the time of export. If such plea is entertained, the economy will be in jeopardy and fraud against the State shall perpetuate. Secrecy and stealth being covering guards of ill designed act, it is normally hardship for Revenue to unravel every link of the process. Revenue successfully corroborated mala fide of Appellants when material facts and evidence relating to their ill design remained in their special or peculiar knowledge - Decided against assessees. Issues Involved:1. Fraudulent claims of duty drawback.2. Mis-declaration of the description and quality of exported goods.3. Involvement of non-existent firms and fabricated invoices.4. Recovery of undue duty drawback and penalties imposed.5. Appeals against adjudication consequences.6. Revenue's appeal against dropped proceedings on certain exports.Detailed Analysis:1. Fraudulent Claims of Duty Drawback:The case involved four exporting appellants who made fraudulent claims of duty drawback by mis-declaring the description of goods. The goods declared as gear cutting tools of cobalt bearing high-speed steel and heat-resistant rubber tape were found, upon chemical testing, to be of inferior quality, specifically low carbon steel and pre-vulcanised rubber. The investigation revealed that the appellants exported inferior goods and claimed undue duty drawbacks.2. Mis-declaration of Description and Quality of Exported Goods:The chemical testing conducted by CTL Mumbai found the declared goods to be of inferior quality. The investigation showed that the goods exported were not as declared, leading to the conclusion that the appellants mis-declared the description and quality of the exported goods to claim higher duty drawbacks. The goods were found to be of low carbon steel and pre-vulcanised rubber, contrary to the declared high-speed steel and heat-resistant rubber tape.3. Involvement of Non-existent Firms and Fabricated Invoices:The investigation revealed that the appellants procured inferior goods from non-existent firms using fabricated invoices. The firms involved were found to be non-existent at the given addresses, and the invoices were proven to be fake. The appellants used these fabricated documents to claim higher duty drawbacks fraudulently.4. Recovery of Undue Duty Drawback and Penalties Imposed:The adjudicating authority ordered the recovery of undue duty drawbacks already availed and denied the pending claims. The penalties were imposed on the appellants for their fraudulent activities. The total duty drawback availed and pending was detailed in tables, and penalties were imposed under Section 114(iii) of the Customs Act, 1962.5. Appeals Against Adjudication Consequences:The appellants appealed against the adjudication order, arguing that the exports were genuine and the goods were of proper quality. They contended that the CRCL report was unreliable and that cross-examination was not allowed. However, the tribunal found that the investigation was thorough and the evidence was cogent, leading to the dismissal of the appeals.6. Revenue's Appeal Against Dropped Proceedings on Certain Exports:The revenue appealed against the adjudicating authority's decision to drop proceedings on certain exports, particularly gaskets. The tribunal remanded these cases back to the adjudicating authority for re-adjudication, taking into account the grounds of the revenue's appeal.Conclusion:The tribunal upheld the findings of the adjudicating authority, confirming the fraudulent activities of the appellants and the involvement of non-existent firms and fabricated invoices. The appeals by the appellants were dismissed, and the penalties and recovery of undue duty drawbacks were upheld. The revenue's appeal was partially allowed, with certain cases remanded for re-adjudication. The judgment emphasized the seriousness of fraud against revenue and the importance of thorough investigation and cogent evidence in such cases.