2022 (11) TMI 1237 - AT - Customs

Customs Act penalties overturned for appellants. Dereliction of duty falls under CCS Rules, not Customs Act.

Shri C.S. Prasad, Shri Yogendra Singh Versus Additional Director General-Mumbai Adj.

Shri C.S. Prasad, Shri Yogendra Singh Versus Additional Director General-Mumbai Adj. - TMI Issues Involved:1. Imposition of penalty under Section 112(a) of the Customs Act, 1962 on the appellants for aiding and abetting the clearance of misdeclared goods.2. Examination of the role and actions of the appellants in the clearance of the goods.3. Consideration of the exoneration of the appellants in departmental disciplinary proceedings.Issue-wise Detailed Analysis:1. Imposition of Penalty:The Additional Director General (Adjudication) imposed a penalty of Rs. 2,00,000/- on each appellant under Section 112(a) of the Customs Act, 1962. The penalties were based on findings that the appellants had allegedly aided in the clearance of misdeclared goods, resulting in evasion of customs duty and rendering the goods liable for confiscation under Sections 111(d) and 111(m) of the Customs Act.2. Role and Actions of the Appellants:The investigation by the Directorate of Revenue Intelligence (DRI) revealed that the appellants, in their respective capacities as Superintendent of Customs and Inspector of Customs, failed to properly verify and examine the imported goods. The investigation highlighted discrepancies in the declared and actual nature, quantity, and value of the goods. Specifically, the appellants were found to have granted 'out of charge' orders and examination reports without proper inspection, leading to the clearance of misdeclared goods.Appellant 1 (Superintendent of Customs):- The appellant admitted to granting 'out of charge' for the bills of entry in question.- The investigation found that the appellant did not verify the import documents against the Airway Bill (AWB) and failed to detect discrepancies.- The appellant's actions were deemed to have facilitated the clearance of undervalued goods without payment of appropriate customs duty.Appellant 2 (Inspector of Customs):- The appellant admitted to feeding examination reports into the system without physically examining the goods.- The investigation revealed that the appellant had cleared multiple bills of entry in a similar manner, leading to fraudulent imports.- The appellant's failure to properly examine the goods was considered a dereliction of duty, contributing to the improper clearance of goods.3. Exoneration in Departmental Disciplinary Proceedings:Appellant 1 presented the order dated 18.04.2022, where the disciplinary authority exonerated him of the charge of 'abetting' after considering the same set of evidence. The disciplinary authority concluded that there was no evidence of the appellant knowingly abetting the smuggling activities or colluding with the importers or other parties involved. The disciplinary authority's findings emphasized that the appellant relied on the examination report provided by the Inspector and did not have knowledge of the misdeclaration.Judgment:The judgment considered the exoneration of Appellant 1 in the departmental proceedings and various legal precedents. It was held that the imposition of penalties under Section 112(a) of the Customs Act could not be sustained in light of the exoneration in the disciplinary proceedings and the absence of positive evidence of abetment. The judgment referenced several cases, including Parminder Jit Singh, Suraj Prakash, B K Pabri, and Boria Ram, which supported the view that penalties under the Customs Act cannot be imposed when disciplinary proceedings on the same charges have resulted in exoneration.Conclusion:The appeals filed by the appellants were allowed, and the penalties imposed under Section 112(a) of the Customs Act were set aside. The judgment clarified that while the appellants may be guilty of dereliction of duty, such charges should be adjudicated under the CCS Rules and not under the Customs Act. The disciplinary authority was free to proceed against the officers for dereliction of duty without referring to the exoneration from the charge of 'abetting' for the imposition of penalties under the Customs Act.