2019 (12) TMI 296 - AT - Customs

Penalty Reduction for Individuals in Fraudulent Activities Case

The Tribunal reduced the penalties imposed on Shri Rajesh P. Joshi and Shri Naresh M. Dudhela to Rs. 20,000 and Rs. 25,000, respectively, based on their ... Imposition of penalties - Mis-declaration of imported goods - Melamine Crystal - misuse of IEC - HELD THAT:- Shri Rajesh P. Joshi in his statement dated 23.12.2008 and 21.10.2008, has accepted that he had applied for IEC in the name of M/s. Ravi Enterprises with an intention to lend the same for a monetary consideration through Shri Naresh M. Dudhela and that he was no aware of any imports in the name of the said firm. This statement has not been retracted - the involvement of Shri Rajesh P. Joshi is limited to the extent of lending IEC to other importers for a consideration. However, for this purpose the penalty levied cannot be comparable to the penalty imposed on the actual perpetrators of the offence - penalty imposed on Shri Rajesh P. Joshi is reduced. Penalty on Shri Naresh M. Dudhela - HELD THAT:- Shri Naresh M. Dudhela was involved in the past as well in the imports made by Shri. Kaushal Anil Shah, in the import of goods using the IEC of M/s. Ravi Enterprises for a consideration. Shri Naresh M. Dudhela in his statement dated 5.7.2008 accepted that he has arranged for the IEC of 6 firms, including that of M/s. Ravi Enterprises to Shri Kaushal A. Shah for a monetary consideration; he got a consideration of 1.5% of the value. He is the person who advised Shri Joshi to obtain the IEC in his name and to lend it; he also obtained signatures of Shri Rajesh P. Joshi on blank letter-heads and cheques of M/s. Ravi Enterprises - role of Shri Naresh M. Dudhela cannot be undermined in the present case also. However as no specific allegations of his role other than arranging for the IEC of M/s. Ravi Enterprises to be used, has been brought on record - Quantum of penalty is reduced. Appeal allowed in part. Issues Involved:Fraudulent import of chemicals, mis-declaration of consignment value, misuse of IEC, penalties imposed on various parties, misuse of IEC by different individuals, appeal against penalties, involvement of individuals in fraudulent activities, reduction of penalties based on individual roles.Analysis:1. Fraudulent Import and Misuse of IEC:The case involved fraudulent import activities related to chemicals, where individuals misused Importer Exporter Code (IEC) lent to them by others. The Directorate of Revenue Intelligence (DRI) investigated the import of 'Melamine Crystal' under a different name, revealing mis-declaration of consignment value and IEC misuse. A show cause notice was issued, resulting in confirmation of revaluation of the consignment, recalculated duty payable, redemption of goods on payment of a fine, and imposition of penalties on the importer and associated individuals under the Customs Act, 1962.2. Appeal Against Penalties:The appellants, including Shri Rajesh Pravinchandra Joshi and Shri Naresh Mathuradas Dudhela, filed appeals challenging the penalties imposed on them. The Commissioner (Appeals) confirmed the penalties, leading to further appeal before the Appellate Tribunal CESTAT MUMBAI.3. Defense and Arguments:The appellants' counsel argued that the penalties were unjustified as they were not directly involved in negotiating prices, filing documents, or owning the impugned goods. They contended that the evidence presented by DRI was not specific to the imports in question and that the statements were generic, thus denying their involvement in permitting IEC use for the imports.4. Tribunal's Findings and Decision - Shri Rajesh P. Joshi:Upon reviewing the case records and statements, the Tribunal found that Shri Rajesh P. Joshi had lent his IEC for a consideration, limited to facilitating the misuse by others. The Tribunal acknowledged his role but reduced the penalty imposed on him considering his lesser involvement compared to the main perpetrators.5. Tribunal's Findings and Decision - Shri Naresh M. Dudhela:Regarding Shri Naresh M. Dudhela, the Tribunal noted his involvement in arranging IEC for monetary gain and advising others on IEC misuse. However, specific allegations beyond facilitating IEC use were lacking. Consequently, the Tribunal decided to reconsider the penalty imposed on him, acknowledging his role but reducing the penalty amount.6. Legal Precedents and Application:The appellants cited legal cases where lending IEC did not constitute an offense without additional allegations like misdeclaration or under-valuation. However, the Tribunal differentiated the present case, where under-valuation was established not just by lending IEC but also by facilitating changes in the importer's name, making the cited case laws inapplicable.7. Final Decision:In conclusion, the Tribunal reduced the penalties imposed on Shri Rajesh P. Joshi and Shri Naresh M. Dudhela to Rs. 20,000 and Rs. 25,000, respectively, based on their individual roles in the fraudulent activities. The reduction reflected the Tribunal's assessment of their involvement compared to the primary offenders, acknowledging their roles while adjusting the penalties accordingly.This detailed analysis covers the fraudulent import case, penalties imposed, defense arguments, tribunal's findings, legal precedents, and the final decision regarding the reduction of penalties based on individual involvement in the fraudulent activities.