2022 (4) TMI 214 - AT - Customs

Freight forwarder's penalty confirmed for facilitating fraudulent export by mis-declaration.

The Tribunal confirmed the penalty imposed on the appellant, a freight forwarder, under Section 114 of the Customs Act for facilitating the fraudulent ... Penalty for facilitating export of prohibited goods by mis-declaration - jurisdiction to issue show cause notice in customs enforcement - confession and retracted statement - corroboration by co-accused and material evidence - reduction of penalty in exercise of discretionary powerJurisdiction to issue show cause notice in customs enforcement - Jurisdiction of the Additional Commissioner (SIIB) to issue the show cause notice was not in question and the notice was validly issued. - HELD THAT: - The Tribunal found that the matter did not concern a demand of duty under Section 28(4) and therefore the competence of the Additional Commissioner (SIIB) to issue the show cause notice was not challenged on a proper legal basis. The show cause notice was issued on allegations of mis-declaration and bringing prohibited goods into the customs area for export, matters squarely within the enforcement jurisdiction of customs authorities. On this basis the Tribunal held that no jurisdictional objection prevented issuance of the show cause notice. [Paras 22]The show cause notice was rightly issued and jurisdictional objection is not sustained.Penalty for facilitating export of prohibited goods by mis-declaration - confession and retracted statement - corroboration by co-accused and material evidence - reduction of penalty in exercise of discretionary power - Whether the appellant knowingly connived in the fraudulent export of prohibited non-basmati rice and whether penalty under the Customs Act was justified; if so, whether quantum of penalty required modification. - HELD THAT: - The Tribunal examined the appellant's recorded statements in which he admitted knowledge of the true contents of containers, detailed the modus operandi, and disclosed remuneration received. Those admissions, though a retracted statement was later made before a magistrate, were present in multiple statements recorded on different dates and were corroborated by statements of others, the intercepted consignments, and evidence of forgery on export documents. The Tribunal held that the retraction before the Court of Duty Magistrate did not negate the probative value of the appellant's other statements nor the corroborative material found by the customs officers. On the facts the appellant was found to have connived with other persons in mis-declaring and exporting prohibited goods. However, exercising its discretion having regard to the facts and circumstances, the Tribunal reduced the penalty originally imposed on the appellant. [Paras 22, 23]Penalty under the Customs Act is confirmed but reduced from the amount imposed by the adjudicating authority to a lesser sum.Final Conclusion: Appeal allowed in part: jurisdictional objection rejected; findings of connivance and liability for penalty upheld but the penalty imposed on the appellant is reduced (from the original quantum to a reduced amount). Issues Involved:1. Imposition of penalty on the appellant under Section 114 of the Customs Act.2. Mis-declaration and fraudulent export of non-basmati rice.3. Use of forged documents and seals.4. Role and involvement of various individuals and entities in the fraudulent activities.5. Jurisdiction of the Additional Commissioner (SIIB) to issue the show cause notice.6. Evidentiary value of retracted statements.7. Corroboration of statements by co-accused.Issue-wise Detailed Analysis:1. Imposition of Penalty on the Appellant:The central issue in this appeal is whether the penalty of Rs. 8 lakhs imposed on the appellant, a freight forwarder, under Section 114 of the Customs Act, was justified. The appellant was found to have facilitated the export of non-basmati rice by mis-declaring it as sanitary ware.2. Mis-declaration and Fraudulent Export of Non-Basmati Rice:The appellant facilitated the export of non-basmati rice, which was prohibited under DGFT Notification No. 39(RE-2007)/2004-2009, by using the IEC codes of other companies and declaring the goods as sanitary ware and gas regulators. The containers were seized and found to contain non-basmati rice instead of the declared goods.3. Use of Forged Documents and Seals:The investigation revealed that the appellant and his associates used forged rubber stamps of Central Excise and fake export documents to facilitate the fraudulent export. The appellant admitted to preparing fictitious export documents and using forged stamps and signatures of Central Excise officials.4. Role and Involvement of Various Individuals and Entities:The statements of various individuals, including Sh. Rakesh Dhamir, Sh. Rakesh Kumar, and Sh. Sinder Pal, indicated their involvement in the fraudulent export activities. The appellant admitted to receiving payments for facilitating the export and was aware of the mis-declaration. The CHA firms, M/s Neptune Cargo Movers Pvt. Ltd., and Sh. Rajinder P. Kapoor, were also implicated for their roles in the clearance process.5. Jurisdiction of the Additional Commissioner (SIIB):The appellant contested the jurisdiction of the Additional Commissioner (SIIB) to issue the show cause notice. However, it was held that the issue of jurisdiction was not involved as it was not a case of demand of duty under Section 28(4) but rather a case of violating the provisions of the Customs Act by bringing prohibited goods into the customs area for export through mis-declaration.6. Evidentiary Value of Retracted Statements:The appellant retracted his statements before the Court of Duty Magistrate, arguing that a retracted statement had no evidentiary value. However, the Tribunal found that the retraction was not of much consequence as the appellant had admitted his involvement in various statements recorded on different dates, which were corroborated by the statements of co-accused and the live consignment intercepted by Customs Officers.7. Corroboration of Statements by Co-Accused:The Tribunal noted that the statements of the appellant were supported by the statements of co-accused and were corroborated with the live consignment intercepted and the forgery noticed by the Customs Officers. The appellant's detailed admission of the modus operandi and the remuneration received from Sh. Sinder Pal and others led to the conclusion that he had knowingly connived in the export of prohibited goods for money.Judgment:The Tribunal confirmed the penalty imposed on the appellant but reduced it from Rs. 8 lakhs to Rs. 4 lakhs, considering the facts and circumstances. The appeal was allowed in part.