2003 (10) TMI 60 - HC - Customs

Court Upholds Penalties for Fraudulent Export Attempt, Emphasizes Deterrent Measures

KR. SHENOY Versus UNION OF INDIA

The court upheld the penalties imposed on the petitioners for their involvement in a fraudulent export attempt involving misdeclaration of goods. It ... Writ jurisdiction - Factual findings - Penalty - Quantum of Issues Involved:1. Legality of the penalty imposed on the petitioners.2. Interpretation of Section 114 of the Customs Act regarding the maximum penalty.3. Factual findings and involvement of each petitioner in the fraudulent export attempt.Issue-Wise Detailed Analysis:1. Legality of the Penalty Imposed on the Petitioners:The petitioners challenged the orders confirming the confiscation of goods and the imposition of penalties. The Directorate of Revenue Intelligence (DRI) seized 50 cartons allegedly containing 80 Denier Polyester texturised yarn but found them to contain building bricks wrapped in coir. The Collector of Customs confirmed the confiscation and imposed penalties ranging from Rs. 1 lakh to Rs. 3 lakhs on the petitioners. The Appellate Tribunal upheld these orders. The court noted that the petitioners played roles in the fraudulent export attempt, justifying the penalties under Section 114 of the Customs Act. The court emphasized the necessity of harsh penalties to deter such fraudulent activities, stating, 'These penalties are to act as a deterrent measure as otherwise economy of this country is at stake.'2. Interpretation of Section 114 of the Customs Act:The petitioners argued that under Section 114 of the Customs Act, the maximum penalty should be five times the value of the goods, which they claimed to be the bricks and coir. The court rejected this argument, clarifying that the 'value' referred to in Section 114 pertains to the original dutiable goods, not the defrauded material. The court stated, 'The value of the defrauded goods cannot replace the value of the dutiable goods and five times is certainly not referable to an altered fraudulent goods.' This interpretation ensures that penalties are substantial enough to prevent such fraudulent activities.3. Factual Findings and Involvement of Each Petitioner:The court reviewed the involvement of each petitioner based on the Collector's detailed findings and the Tribunal's confirmation:- Shri Pushparaj Shetty: His involvement was established through statements indicating he coordinated the fraudulent export plan. The court found no material to contradict the factual findings of his involvement.- Shri S.D. Kini: He admitted to packing the bricks and arranging the shipment, receiving Rs. 75,000 for his role. His involvement was corroborated by other statements.- Shri P.M. Nayak: He advised on the fraudulent export and assisted in arrangements, expecting 25% of the declared value. His confessional statement and dismissal from his bank job further confirmed his role.The court concluded that the factual findings by the authorities were based on substantial evidence and could not be overturned in a writ petition. It stated, 'Writ Petition is not a Court of appeal sitting in judgment over all factual findings.'Conclusion:The court dismissed the petitions, affirming the penalties imposed on the petitioners. It emphasized the importance of stringent penalties to deter fraudulent export activities, safeguarding the economy. The interpretation of Section 114 was clarified to ensure penalties are based on the value of the original dutiable goods, not the defrauded material. The factual findings of the petitioners' involvement in the fraud were upheld, with the court noting that no substantial evidence was presented to overturn these findings.