2014 (5) TMI 1139 - HC - Customs

Identity theft - It is the petitioner s case that it received the Code only on 17th September, 1997 and during the interregnum one Mr. A.K. Singh claiming himself to be Proprietor of M/s. Vikas Exports and after giving the same address as that of the petitioner s firm opened a current account bearing No. 49057 with the Oriental Bank of Commerce, Air Force Station, Palam, New Delhi branch and then effected certain exports and availed drawback against the same Held that - This Court finds it strange that while the Department did not initiate any criminal proceeding against Mr. A.K. Singh, it now wants to penalise the petitioner who is also a victim of the fraud - petition allowed - recovery proceedings initiated against petitioner is dropped - decided in favor of petitioner.

Summary

Issues: Recovery proceedings initiated against the petitioner based on alleged fraud committed by another individual.

Analysis:
1. The petitioner filed a writ petition seeking the quashing of recovery proceedings initiated against them under impugned Recovery Notices dated 15-12-2012 and 14-11-2012.
2. The petitioner's case revolved around the fact that they applied for an Import-Export Code in 1994, but it was misused by another individual, Mr. A.K. Singh, who opened a current account in the petitioner's firm's name and conducted fraudulent exports.
3. The Directorate of Revenue Intelligence (DRI) did not find any fault with the petitioner's conduct during their investigation.
4. The Assistant Commissioner, Customs, in an order, imposed penalties on Mr. A.K. Singh and others involved in the fraud but also imposed penalties on the petitioner's proprietary firm, M/s. Vikas Exports.
5. The recovery notices issued to the petitioner prompted them to approach the court, arguing that there was no finding against them in the investigations or the Order-in-Original.
6. The petitioner's counsel highlighted that the fraud was committed by Mr. A.K. Singh and others, and the petitioner had no connection to the illegal activities.
7. The respondent's counsel argued that the petitioner should have been aware of the Import-Export Code being allotted to their firm in 1994 and questioned the credibility of the petitioner's claim regarding the receipt of the code in 1997.
8. The court examined the evidence presented, including the original envelope and the Import-Export Code, and concluded that it was a case of identity theft, absolving the petitioner of liability for the actions of Mr. A.K. Singh and others.
9. The court noted that no criminal proceedings had been initiated against Mr. A.K. Singh by the Customs Department, further supporting the petitioner's innocence.
10. Ultimately, the court allowed the writ petition, quashing the recovery proceedings initiated against the petitioner and disposing of the case in favor of the petitioner.