2015 (11) TMI 312 - HC - Customs

Former Assistant Commissioner's Customs Act penalty appeal dismissed for complicity in export fraud.

The appeal by a former Assistant Commissioner challenging a penalty imposed under Section 114 of the Customs Act, 1962, was dismissed. The penalty of Rs. ... Fraudulent drawback claim - Misdeclaration of goods and serial numbers - Held that:- As observed by the Commissioner of Customs, there is sufficient corroboration by the fact that as many as 100 consignments were allowed to be cleared without proper verification. The Appellant has been unable to show that any relevant piece of evidence has been overlooked or that the appreciation of the evidence by the Commissioner or the CESTAT is perverse. - As regards the procedure followed, it is not the case of the Department that the EDI computer system had thrown up these discrepancies. The Department has been able to substantiate that the Appellant had given oral instructions to his subordinates on how they should act. - The Court is conscious that in the criminal case the CBI chargesheet did not name the Appellant as an accused. However, that cannot by itself lead to the inference that in the adjudication proceedings, where the standard is of preponderance of probabilities, the Department has failed to establish its case. - Joseph Kuok was exonerated in the adjudication proceedings does not in any affect the case against the Appellant. The case of the Department against the Appellant stands substantiated by the evidence on record. Considering the number of consignments and the value thereof, the submission that there was heavy pressure of work and therefore, the Appellant cannot be held responsible is unacceptable. - There is no legal infirmity in the impugned orders of the Commissioner of Customs or the CESTAT. Further, the penalty levied on the Appellant cannot be said to be excessive. It does not call for interference. - Decided against assessee. Issues Involved:1. Legality of the penalty imposed on the Appellant under Section 114 of the Customs Act, 1962.2. Evaluation of evidence, including the statements of co-noticees.3. Role and conduct of the Appellant in the alleged export fraud.4. Judicial review scope and standard of proof in adjudication proceedings.Issue-wise Detailed Analysis:1. Legality of the Penalty Imposed on the Appellant:The appeal by the Appellant, a former Assistant Commissioner (Export) at ICD, Tughlakabad, challenged the penalty of Rs. 3 lakhs imposed under Section 114 (iii) of the Customs Act, 1962, by the Commissioner of Customs, which was affirmed by the CESTAT. The penalty was based on findings that the Appellant was complicit in the fraudulent export of old and used clothes to claim undue drawback.2. Evaluation of Evidence, Including the Statements of Co-noticees:The Department's case relied significantly on the statements of co-noticees, including Inspectors Zaki Anwar and Lovkesh Sharma, and Superintendent Joseph Kuok. These statements implicated the Appellant in instructing the clearance of overvalued and misdeclared goods. The Court noted that while statements from co-noticees required corroboration, the evidence presented was consistent and corroborated by the large-scale misdeclaration of 100 consignments. The Court emphasized that the burden of proving coercion or duress in obtaining statements lay on the maker, which was not established by the Appellant.3. Role and Conduct of the Appellant in the Alleged Export Fraud:The findings against the Appellant included:- Instructions to Inspectors to clear overvalued goods.- Frequent communication with Rajesh Kumar, proprietor of the exporting firms, indicating a nexus.- Failure to scrutinize shipping bills adequately despite departmental instructions.- Allocation of 85 shipping bills to Inspector Lovkesh Sharma, confirming the Appellant's involvement.The Court found that the Appellant's plea of heavy workload was unconvincing, and the evidence indicated his complicity in the fraud.4. Judicial Review Scope and Standard of Proof in Adjudication Proceedings:The Court reiterated the principle that judicial review does not extend to re-evaluating evidence but ensures that the findings are not perverse. The standard of proof in adjudication proceedings is the preponderance of probabilities, not beyond a reasonable doubt. The Court found no legal infirmity or excessive penalty in the orders of the Commissioner of Customs and the CESTAT. The concurrent findings were upheld, and the appeal was dismissed with costs of Rs. 10,000.Conclusion:The appeal was dismissed, affirming the penalty imposed on the Appellant. The Court found substantial evidence supporting the Appellant's involvement in the export fraud and upheld the findings of the Commissioner of Customs and the CESTAT. The Appellant's arguments regarding the reliability of co-noticees' statements and heavy workload were rejected, and the procedural correctness of the adjudication was confirmed.