Penalty reduced from Rs. 3 lakh to Rs. 50,000 for abetting duty drawback fraud through fake identity creation

CESTAT Kolkata reduced penalty imposed on appellant from Rs. 3 lakh to Rs. 50,000 in a duty drawback fraud case. The appellant, proprietor of M/s. East India Impex, admitted to abetting the main exporter by creating fake identity, opening bank account, and concealing export documents for inflated drawback claims on necktie exports. Despite finding incriminating documents and blank signed papers in appellant's possession, and his admission of supporting the fraud, CESTAT held the original penalty was disproportionate to his role as abettor, requiring stronger evidence for harsher penalties.

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Issues:
The issues involved in this case are the confiscation of export goods, re-determination of assessable value, rejection of drawback claim, penalties imposed under the Customs Act, 1962, abetting in fraudulent activities, and imposition of penalties on the appellant.

Confiscation of Export Goods and Rejection of Drawback Claim:
The appellant filed an appeal against the Order-in-Original passed by the Commissioner of Customs, Kolkata, directing the confiscation of export goods (Neck Tie) covered under 32 Shipping Bills. The Ld. Commissioner also ordered the re-determination of the assessable value and rejected the drawback claim on the said goods. The rejection of the drawback claim was due to the gross over-valuation of the export goods for claiming inflated drawback amounts.

Allegations against the Appellant:
The appellant, a trader of readymade garments, was accused of abetting Shri Ajay Madan alias Jassi alias Ashutosh Birla in fraudulent activities related to the export of neckties. The appellant was charged with creating a fake identity for Ajay Madan, opening a bank account using the fake identity, receiving money from him, and handing it over to another individual for the purpose of exporting neckties. Penalties were imposed on the appellant under sections 114 and 114AA of the Customs Act, 1962.

Investigations and Findings:
The investigations revealed that certain exporters were involved in unscrupulous exports of goods declared as "Neck Tie" under the duty drawback scheme, claiming inflated drawback amounts. The Customs House Agent, Debasis Mukherjee, was found to have signed export documentation on behalf of exporters without authorization. Incriminating documents, blank signed papers, and various rubber stamps were recovered from his office premises.

Role of the Appellant and Decision:
The appellant admitted to his role as an abettor in the fraudulent activities but later retracted his statement. Despite denying his involvement, incriminating documents were seized from his residence. The tribunal found the appellant guilty of abetting in the fraudulent activities based on the evidence and his financial dealings. However, considering the evidence presented, the tribunal reduced the penalties imposed on the appellant from Rupees Three Lakh to Rupees Fifty Thousand.

Conclusion:
The appeal filed by the appellant was disposed of with a modification in the penalty amount. The tribunal concluded that the penalties imposed were disproportionate to the appellant's role and reduced the penalty amount. The decision was pronounced in the open court on 25 January 2024.

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