2019 (5) TMI 980 - AT - Customs

Tribunal reduces penalties for exporters in fraud case, citing limited gains and proportionality.

The Tribunal reduced the penalties imposed on appellants in a case involving overstated values and misdeclaration of quantity in export goods. While ... Export through baggage under claim of drawback - Readymade Garments - It was found that the value of the export goods was overstated with a view to obtain more drawback and there was misdeclaration of quantity also - confiscation - imposition of penalty - HELD THAT:- It is seen that out of the ten persons of which penalty was imposed, Shri Prakash Golatkar, Shri Khalik Mohamed, Ibrahim ARE dab, Shri Karam Hussain Khan and Shri Mohamed Kasim Ibrahim did not file any appeal. Even though ail the persons had some role, or the other, in the alleged act of export through baggage under claim of drawback, the fact remains that none of them are proved to be the ultimate beneficiaries had the offence been successfully committed. Penalties levied are not commensurate with the roles of individuals. Moreover, the acts of omission and commission were in related to attempt of fraudulent availment of drawback to the tune of 6 lakhs. Imposition of huge penalties ranging from 2 lakhs to 35 lakhs on individuals appears to be harsh, looking in to the fact that none of them were proved to be the ultimate beneficiary. Penalties imposed should be commensurate with the role played by each of the individual in the fraud. Therefore, though imposition of penalties on five appellants is justified, the quantum of penalty is not justified and maintainable - penalty imposed on Shri Ibrahim Umar Sayed, restricted to ₹ 3 lakhs; penalty imposed on Shri Dilip V. Hemrajani restricted to ₹ 50,000 and penalties imposed on M/s Shashmira Edwin Pandya, Shri Santosh Mishra & Shri V Joshi restricted to ₹ 25,000 each. Appeal allowed in part. Issues:- Confiscation of impugned goods and imposition of penalties on individuals/companies involved in the case- Role of different appellants in the inflation of export goods value and misdeclaration of quantity- Violation of principles of natural justice and allegations against the appellants- Justification and quantum of penalties imposed on the appellants- Findings and decisions regarding the penalties in the appealsThe judgment involves a case where officers of Special Investigation & Intelligent Branch intercepted packages containing Readymade Garments for export, revealing overstated values and misdeclaration of quantity. The goods were presented for export by various entities through a Clearing House Agent (CHA). The Commissioner of Customs adjudicated the show cause notice, confiscating the goods and imposing penalties on nine individuals/companies. Appeals were filed challenging the order.The appellants argued their innocence, claiming no direct involvement in inflating goods' value. They presented cases to support their defense, emphasizing lack of knowledge or direct participation in the fraudulent activities. Each appellant's counsel provided specific arguments to challenge the penalties imposed on their clients.The department reiterated the findings of the original order, asserting that all penalized individuals had a role in facilitating the offense committed by the exporters. The department contended that the penalties were justified based on the involvement of the appellants in the fraudulent activities.Upon review, the Tribunal found that while the appellants had some role in the fraudulent export activities, they were not proven to be the ultimate beneficiaries. The penalties imposed were deemed excessive considering the lack of direct benefit to the appellants. The Tribunal decided to reduce the penalties significantly for each appellant, considering their individual roles and lack of substantial gains from the fraudulent activities.The Tribunal restricted the penalty amounts for each appellant: Shri Ibrahim Umar Sayed to Rs. 3 lakhs, Shri Dilip V. Hemrajani to Rs. 50,000, and M/s Shashmira Edwin Pandya, Shri Santosh Mishra, and Shri V. Joshi to Rs. 25,000 each. The judgment concluded by disposing of all five appeals with the revised penalty amounts, emphasizing the need for penalties to be proportionate to each individual's role in the fraudulent activities.