2014 (3) TMI 525 - AT - Customs

Tribunal upholds penalties for customs fraud scheme involving forgery. Appellants' arguments rejected.

KAPIL OBEROI Versus COMMISSIONER OF CUSTOMS, AMRITSAR

The Tribunal upheld penalties imposed on the appellants for their involvement in a scheme to defraud Customs through forgery and fraudulent use of DEPB ... Evasion of custom duty - Forging of signature of Customs Officers on the bill of entry - Non-existent DEPB scrips were utilized for clearing imports - Held that:- There is no rebuttal to the forgery of the signature and fabrication of TR6 challans as well as destroying the same later by the appellants. Mentioning of fake DEPB scrips on the bill of entries remaining undisputed has caused sabotage to Revenue. Customs was given an impression that DEPB scrips were genuine. But investigation proved that there were no such scrips in existence to discharge duty liability. Once fraud and forgery came to record that nullified every solemn act. Prima facie the appellants do not deserve any consideration for waiver of pre-deposit. Considering mischief played by the appellants and their notoriety, prima facie, we are unable to appreciate that they were innocent and have come out with clean hands. They had pre-meditated mind to cause subterfuge to Revenue to satisfy their ill will and have been unjustly enriched at the cost of Customs. This we say because one after another consignment they proved their continued mischievous conduct of defrauding Customs which does not require further dialteration in view of proved investigation result and their confessional statement recorded by investigation - appellants having been enriched at the cost of the state and also having their hands in glove and caused prejudice to the interest of Customs, they do not have a case in their favour even at the prima facie stage - Stay denied. Issues Involved:1. Alleged forgery and fraudulent use of DEPB scrips.2. Evasion of Customs duty.3. Involvement of multiple parties in the fraud.4. Adjudication and penalties imposed.5. Arguments by appellants regarding penalties and applicability of Section 112 of Customs Act, 1962.6. Precedents cited by appellants.7. Tribunal's assessment of the case and decision on stay applications.Detailed Analysis:Alleged Forgery and Fraudulent Use of DEPB Scrips:Investigation revealed that the appellants were clearing goods using non-existent and fraudulent DEPB scrips by forging signatures of Customs Officers and filing fabricated TR6 challans. This fraudulent activity involved the appellants and an employee of the CHA Unison Clearing Pvt. Ltd.Evasion of Customs Duty:The appellants admitted in their statements that they defrauded Customs by forging signatures and making fake entries in bills of entries, resulting in the evasion of Crores of rupees of Customs duty. The fabricated TR6 challans were destroyed after clearances were made, and fake entries were made on the bills of entry to show that the clearances were made against DEPB scrips.Involvement of Multiple Parties in the Fraud:Concerns like Jai Bhole Overseas Co., Unison Clearing Pvt. Ltd., and Saini Consultant were floated by the appellants to commit the fraud. The appellants admitted to paying and receiving money for their involvement in these fraudulent activities.Adjudication and Penalties Imposed:The Adjudicating authority, after examining the oral and documentary evidence, concluded that the appellants fabricated TR6 challans and used non-existent DEPB scrips, causing a loss to the exchequer. Penalties were imposed on the appellants as tabulated in the judgment.Arguments by Appellants Regarding Penalties and Applicability of Section 112 of Customs Act, 1962:The appellants argued that the imports were under OGL and that no fraud was committed by them. They contended that penalties under Section 112 of the Customs Act, 1962, were not applicable as there was no element of Sections 111(d) and 111(o) satisfied. They also argued that the importers had settled their disputes with the Settlement Commission, and hence, disproportionate penalties should not have been levied.Precedents Cited by Appellants:The appellants cited several cases, including S.K. Colombowala v. Commissioner of Customs (Import), Mumbai, and Mukesh Garg v. CCE, Noida, to support their arguments. However, the Tribunal disagreed with the appellants' reliance on these cases, stating that the present case involved fraud and forgery, which were not the circumstances in the cited cases.Tribunal's Assessment of the Case and Decision on Stay Applications:The Tribunal found no rebuttal to the forgery of signatures and fabrication of TR6 challans. The appellants' actions caused significant loss to the Revenue. The Tribunal noted the appellants' continued fraudulent conduct and their unjust enrichment at the cost of Customs. Consequently, the Tribunal rejected the stay applications and ordered the appellants to deposit the adjudicated amounts within four weeks.Conclusion:The Tribunal concluded that the appellants were involved in a premeditated scheme to defraud Customs and evade duty. The penalties imposed by the Adjudicating authority were upheld, and the appellants were ordered to make the necessary deposits as adjudicated. The Tribunal emphasized that financial difficulties should not sway the decision when dealing with abettors causing evasion of duty and economic harm to society.