2010 (1) TMI 592 - AT - Customs

Penalty misdeclaration of value of goods Drawback fraud Penalty on CHA - abetment of commission of the above offence - illegal export and behind getting the ineligible drawback by creating and producing false documents; that he had actively involved himself in all the activities relating to the fraudulent export held that - aside the penalty imposed upon the CHA for aiding and abetting the exporters in fraudulent export and claiming ineligible drawback.

Summary

Issues:
Recovery of drawback amount due to inflated value declaration for export of 'T' Shirts; Imposition of penalties on partners of the exporter firm and CHA for abetment of offense.

Analysis:
1. The Commissioner of Customs ordered the recovery of drawback amount paid to the exporter firm on the grounds of highly inflated value declaration for the export of 'T' Shirts to obtain higher inadmissible drawback. The investigation revealed discrepancies between the declared value and the actual value, leading to penalties imposed on the partners of the exporter firm and the Customs House Agent (CHA) under various sections of the Customs Act, 1962.

2. The primary individual, Shri Uday Patravali, was found to be the main brain behind the illegal export scheme. He was actively involved in all fraudulent activities related to the export, including creating false documents and receiving a significant portion of the ineligible drawback amount. Various statements and evidence confirmed his pivotal role in orchestrating the fraudulent export, leading to penalties imposed on him under Section 114(3) for abetment of misdeclaration of value.

3. Another partner, Shri C. Selvaraj, was found to have abetted in the offense by creating false documents, specifically a 'Release Deed,' to obtain ineligible duty drawback benefits by misusing the exporter firm's details. The failure to inform relevant authorities about changes in partnership and the misuse of the IE code led to penalties being upheld against him for his involvement in the fraudulent export scheme.

4. The CHA, M/s. A.V. Thomas & Co. Ltd., faced penalties for failing to obtain necessary authorization, advise their client on compliance, and exercise due diligence in verifying information related to the clearance of cargo. However, the tribunal set aside the penalty imposed on the CHA based on precedents and lack of concrete evidence supporting the allegations of aiding and abetting the exporters in fraudulent activities.

5. Ultimately, the tribunal dismissed some appeals while allowing one appeal, based on the detailed analysis of the roles played by the individuals and entities involved in the fraudulent export scheme. The judgment highlighted the importance of abiding by regulatory requirements and conducting due diligence in international trade transactions to prevent fraudulent activities and ensure compliance with customs regulations.