2015 (1) TMI 260 - AT - Customs

Tribunal overturns penalties in fraudulent export case, emphasizing evidence requirements

The Tribunal set aside the penalties imposed on the appellant, ruling that the allegations of aiding and abetting in fraudulent export claims were not ... Penalty on Examiner or Examining Officer of Customs - Allegation of aiding and abetment - enabling the exporter to claim huge duty drawback - export of old and used readymade garment in the name of new and fresh garments - Held that:- the ingredients for proving the charge of abetment as required under Section 114(iii) has not been brought out in the show cause notice. The Superintendent has admitted that there was a lot of rush in the STP shed and he could not supervise, as required of him. Further, there is no locus-standi of Ramesh Singh & Sanjay Sharma, who are neither exporter, nor CHA. The reference to call records of telephone is also not a conclusive evidence, as the explanation of the appellant that this mobile phone was used by other staff as well as visiting staff of CHA etc., is not found untrue. The dereliction in duty is not a penal offence committed by him for implicating him along with the offence by the exporters, CHAs and others. The ruling rendered in the case of A.P. Sales (2006 (2) TMI 328 - CESTAT, BANGALORE) is exhaustive and deals with the present situation while the situation in the case of Zaki Anwar (2005 (10) TMI 159 - CESTAT, NEW DELHI) is not distinguishable in the present case and so the findings by this Bench in the case of A.P. Sales (supra). The Apex Court in the case of COSTAO FERNANDES (1996 (2) TMI 137 - SUPREME COURT OF INDIA) has clearly held that the Customs Officer is entitled to protection from under Section 155 read with Section 106 of the Customs Act. The ratio of this judgment would apply to the facts of the case. Penalty under Section 114 (iii) of the Customs Act, 1962 is held not sustainable, as the appellant has neither done anything nor omitted to do any act which act or omission would render such goods liable to confiscation, nor he has abetted in doing or in omission of any act which shall attract penalty provisions on him - Decided in favour of appellant. Issues Involved:1. Allegation of aiding and abetment in fraudulent export claims.2. Examination and clearance of export goods under the duty drawback scheme.3. Imposition of penalties under Section 114(iii) of the Customs Act, 1962.4. Validity of evidence and assumptions in the adjudicating authority's order.5. Application of Section 155 of the Customs Act, 1962 for protection of Customs Officers.Detailed Analysis:1. Allegation of Aiding and Abetment in Fraudulent Export Claims:The appellant, a Customs Examiner, was accused of aiding and abetting exporters in fraudulent claims under the duty drawback scheme. The exporters allegedly declared old and used garments and carpets as new to claim higher drawbacks. The appellant was accused of entering false examination reports in the EDI system without proper examination of the goods.2. Examination and Clearance of Export Goods:The appellant was responsible for examining the export consignments and issuing 'let export orders.' The consignments were later found to contain old and used garments and carpets, contrary to the declared new items. The appellant argued that he examined 2% of the cargo as per norms and found it in conformity with the declared description. He also suggested the possibility of cargo replacement during the time lag between his examination and the re-examination by SIIB officers.3. Imposition of Penalties under Section 114(iii) of the Customs Act, 1962:The adjudicating authority imposed penalties on the appellant for aiding and abetting the fraudulent exports. The appellant contested the penalties, arguing that there was no direct evidence of his involvement or any monetary gain. The penalties were based on assumptions and presumptions without concrete evidence of his complicity.4. Validity of Evidence and Assumptions in the Adjudicating Authority's Order:The appellant argued that the findings were based on hearsay and uncorroborated statements. The Superintendent of Customs admitted that there was a lot of rush in the shed, and he could not supervise the examination properly. The appellant contended that the investigation did not implicate other responsible officers, such as the Superintendent or the Assistant Commissioner, who marked the shipping bills for examination.5. Application of Section 155 of the Customs Act, 1962 for Protection of Customs Officers:The appellant invoked Section 155 of the Customs Act, 1962, which provides protection to Customs Officers from legal action for acts done in good faith during the discharge of their duties. He cited several case laws where penalties were set aside due to lack of evidence of abetment or collusion with exporters.Judgment:The Tribunal considered the arguments and submissions, noting that the ingredients for proving the charge of abetment under Section 114(iii) were not established. The Superintendent's admission of not supervising due to rush and lack of incriminating statements against the appellant were significant factors. The Tribunal referred to previous judgments, emphasizing that dereliction of duty does not amount to abetment and cannot attract penalties under Section 114(iii). The Tribunal concluded that the appellant's actions, at most, constituted dereliction of duty, which should be addressed under Conduct Rules rather than penal provisions.The Tribunal set aside the penalties imposed on the appellant, allowing the appeals with consequential relief. The judgment reiterated that penalties based on assumptions and without concrete evidence of abetment are not sustainable under law. The appeals were allowed, and the impugned orders were set aside.