2011 (6) TMI 81 - AT - Customs

Penalty - It is the case of the Department that the appellant was required to show due diligence and verify the genuineness of the exporters which was found wanting - There is evidence against the appellant regarding the involvement in the impugned over-invoiced exports leading to loss of revenue by way of disbursement of ineligible drawback amounts - there is also evidence that he has received extra amounts to facilitate over-valued exports and sanction of ineligible drawback amounts to persons who are not traceable - All the appeals are allowed partly by way of reduction in the penalty

Summary

Issues:
Penalty imposed on the appellant in four cases for involvement in over-invoiced exports and sanction of ineligible drawback amounts.

Analysis:
In the present case, the appellant has been penalized collectively for his involvement in over-invoiced exports where goods were grossly overvalued, and export proceeds were not realized. The adjudicating Commissioner found that the appellant, an employee of the CHA firm dealing with the shipments, failed to exercise due diligence in verifying the genuineness of the exporters, leading to the disbursement of inadmissible drawback amounts. Additionally, a statement from a witness implicated the appellant in receiving extra amounts for facilitating the over-invoiced exports. The Department highlighted the appellant's lack of diligence in verifying exporter genuineness.

The appellant's counsel argued that specific rules for exporter verification were recently introduced and that the appellant was merely an employee following routine work at the CHA firm. The counsel pleaded for leniency citing the appellant's current unemployment, lack of income, and a previous handicap due to a work-related injury. Despite these arguments, the evidence against the appellant's involvement in the fraudulent activities was considered substantial.

Upon reviewing the submissions and case records, the judge acknowledged the appellant's role in the over-invoiced exports and the loss of revenue due to the disbursement of ineligible drawback amounts. Even under the unamended CHA Regulations, the appellant was expected to exercise due diligence, a requirement he failed to meet. The judge noted that the appellant received extra amounts to facilitate the fraudulent exports and the sanction of ineligible drawback amounts to untraceable persons. However, considering the penalties imposed on the CHA firm and another employee, as well as the appellant's physical disability and financial situation, the judge decided to reduce the penalties imposed on the appellant in each of the four cases.

The penalties initially imposed on the appellant in each case were reduced significantly, reflecting a balance between the appellant's involvement in the fraudulent activities and his personal circumstances. The reduction in penalties was a result of considering the penalties imposed on others involved, the appellant's disability, financial hardship, and lack of current employment. All four appeals were partly allowed through the reduction of penalty amounts, and the stay petitions were disposed of accordingly.