2018 (11) TMI 1164 - AT - Customs

Tribunal reduces penalty in MOP export fraud case, emphasizing evidence and limited involvement.

Gunwantral S Joshi Versus Commissioner of Customs, Chennai

The Tribunal in CESTAT CHENNAI partially allowed the appeal in a case involving the abetment of fraudulent export of Murate of Potash (MOP) through the ... Levy of penalty for abetting - Penalty u/s 114 of the Customs Act, 1962 - Smuggling - “Murate of Potash” (MOP) - restricted item - attempt to export MOP out of India in the guise of industrial salt - detention of consignments - Held that:- It is brought out from the evidence that appellant has issued invoices and that there was no physical transaction or delivery of goods which were raised in the invoices - Although, it may be true that by such invoices the exporter was able to indulge in fraudulent export, the involvement of the appellant in mis-declaration of the goods is not brought out. Though penalty is attracted for abetment, imposition of penalty of ₹ 4 lakhs is on the higher side and requires to be reduced - appeal allowed in part. Issues: Penalty under Section 114A of the Customs Act, 1962 for abetment of fraudulent export of Murate of Potash (MOP) by issuing invoices.The judgment by the Appellate Tribunal CESTAT CHENNAI involved a case where a consignment of export goods, suspected to contain Murate of Potash (MOP) being smuggled out of India as industrial salt, was detained. Samples confirmed the goods were MOP, leading to a show cause notice alleging fraudulent export. The original authority confirmed the demand and imposed a penalty of Rs. 4,00,000 under Section 114A of the Customs Act, 1962. The appellant contested, arguing they were unaware of the fraudulent export and merely issued invoices. The Tribunal analyzed the evidence and found that while the appellant's invoices facilitated the fraudulent export, there was no direct involvement in mis-declaration. Consequently, the penalty was reduced to Rs. 1,00,000 as the original amount was deemed excessive. The appellant was directed to pay the reduced penalty, and the appeal was partly allowed with consequential benefits as per law.The primary issue examined was whether the penalty under Section 114A of the Customs Act, 1962 could be imposed on the appellant for abetting the fraudulent export of MOP by issuing invoices. The Tribunal noted that while the appellant's invoices enabled the fraudulent export, there was no evidence of direct involvement in mis-declaration. The Tribunal acknowledged the abetment but deemed the original penalty of Rs. 4,00,000 excessive, reducing it to Rs. 1,00,000 as a more appropriate amount considering the appellant's role in the fraudulent export.The case involved a detailed analysis of the appellant's role in the fraudulent export of MOP. The appellant argued that they were not aware of the misuse of the invoices and contended that the invoices were issued by an intermediary. The appellant claimed innocence regarding the mis-declaration of goods and asserted that they did not actively participate in the fraudulent export. The Tribunal considered these arguments and concluded that while the appellant's issuance of invoices facilitated the export, there was no direct involvement in the mis-declaration. This distinction led to the reduction of the penalty imposed on the appellant.The judgment highlighted the importance of evidence in establishing liability for abetment in cases of fraudulent export. The Tribunal emphasized that although the appellant's actions indirectly supported the fraudulent export, there was a lack of direct involvement in the mis-declaration of goods. The decision to reduce the penalty was based on the specific role played by the appellant, focusing on the issuance of invoices rather than active participation in the fraudulent activities. This nuanced approach underscored the need for a clear link between the actions of the accused and the fraudulent export to determine the appropriate penalty under the Customs Act, 1962.