2018 (5) TMI 363 - AT - Customs

Appellant's Passive Abetment in Illegal Export Case Results in Reduced Penalty

The appellant, Shri Surya Prakash Kothari, was found to have passively abetted in the attempted export of red sanders disguised as granite slabs. Despite ... Smuggling - red sanders - It appeared to the department that Senthil Murugan @ City Raja and Vasudevan @ Ravi had engaged themselves in the act of attempting export of Red Sanders in the guise of granite slabs - absolute confiscation - penalty - Held that: - it appears the main perpetrators of the foiled attempted export of red sanders had gone to great lengths to plan and execute the modus operandi. It also appears to reason that the consignment of granite slabs might have been camouflage cargo to be presented for Customs examination to be possibly substituting later within the consignment of red sanders in another identical container on which the same container number and other markings had been got done. Penalty u/s 114 (i) of the Customs Act, 1962 - Held that: - while there is nothing on record to allege that Shri Kothari had conspired or connived with the main protagonist in the attempted export of red sanders, he will definitely have to take the blame for having facilitated the entire modus operandi by allowing use of his IEC and also allowing bank account to be used by Shri S. Vasudevan - penalty is very much imposable on Shri Kothari. However, taking note of the fact that no active abetment, connivance or conspiracy with the main perpetrator has been alleged or brought out in the SCN, penalty of ₹ 10 lakhs is certainly on the higher side and therefore reduce the same to ₹ 3,00,000/- Appeal allowed in part. Issues: Attempted export of red sanders disguised as granite slabs, abetment by the appellant, imposition of penalty under Section 114 (i) of the Customs Act, 1962.Analysis:1. Attempted Export of Red Sanders Disguised as Granite Slabs:- The case involved intercepted containers containing red sanders disguised as granite slabs, revealing a sophisticated smuggling operation.- The perpetrators used a fictitious firm to export the red sanders, substituting them for the declared granite slabs during customs examination.- Investigations pointed towards a coordinated effort to deceive customs officials and attempt illegal export of red sanders.2. Abetment by the Appellant:- The appellant, Shri Surya Prakash Kothari, was alleged to have facilitated the smuggling operation by lending his IEC to the conspirators and allowing his bank account for financial transactions.- The appellant's actions were deemed as passive abetment, as he did not actively participate in the smuggling but enabled the illegal activities to take place.- The appellant's negligence in verifying the parties involved in the export transactions was highlighted as a contributing factor to the smuggling attempt.3. Imposition of Penalty under Section 114 (i) of the Customs Act, 1962:- The penalty under Section 114 (i) was imposed on the appellant for his role in abetting the attempted export of red sanders.- The legal provision allows for penalties up to three times the value of the goods involved in the prohibited export.- Despite no active connivance with the main perpetrators, the appellant was held liable for his facilitation of the smuggling operation, leading to the imposition of a penalty of &8377; 3,00,000.4. Judicial Decision:- The appellate tribunal acknowledged the appellant's passive abetment in the smuggling attempt and reduced the penalty from the initial &8377; 10,00,000 to &8377; 3,00,000.- The tribunal emphasized that while the appellant did not actively conspire in the smuggling, he benefited from the illegal activities by securing repeat orders and safeguarding his financial interests.- The judgment clarified that the penalty reduction was based on the absence of active abetment or connivance with the main perpetrators, maintaining the integrity of the rest of the impugned order.This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHENNAI highlights the complexities of the case involving attempted smuggling of red sanders, the appellant's role in facilitating the illegal activities, and the legal implications under Section 114 (i) of the Customs Act, 1962.