2011 (8) TMI 746 - AT - Customs

Penalty - Held That - Person who is not authorized undertakes a transaction it is clear that the mens rea is present. In the instant case the transaction related to fraudulent exports claiming undue DEPB benefits. Merely because he has not signed any document it does not mean that he has not abetted in the commission of an offence.

Summary

Issues:
- Appeal against imposition of penalties under Order-in-Original No. 54/2003/CAC/CC/SK dated 04.08.2003 by the Commissioner of Customs (Export Promotion), Mumbai.
- Allegations of aiding and abetting in fraudulent export.
- Application of Section 114 (i) of the Customs Act, 1962.
- Lack of authorization for exports.
- Misdeclaration of quantity and value in export consignment.
- Facilitation of ineligible claim of Duty Entitlement Passbook (DEPB) benefits.

Analysis:

1. Allegations of Aiding and Abetting in Fraudulent Export:
The judgment involves two appeals, one by a Director of a company and another by an employee, both directed against an Order-in-Original regarding fraudulent exports. The Director was found to have aided and abetted in fraudulent exports by misdeclaring the quantity and value of goods, leading to an ineligible claim of DEPB benefits. The employee was also implicated in facilitating the fraudulent exports by handling export documents without proper authorization.

2. Application of Section 114 (i) of the Customs Act, 1962:
The penalties imposed under Section 114 (i) of the Customs Act, 1962 were challenged in the appeals. The section provides for penalties in cases where acts or omissions render goods liable to confiscation or abet such actions. The judgment extensively analyzed the actions of the appellants in relation to this section to determine the imposition of penalties.

3. Lack of Authorization for Exports:
The Director of the company was found to have not obtained proper authorization for exports from the exporter, leading to misdeclaration of goods and claiming undue DEPB benefits. This lack of authorization was a crucial factor in establishing the liability of the Director for penalties under the Customs Act.

4. Misdeclaration of Quantity and Value in Export Consignment:
The misdeclaration of both quantity and value in the export consignment was a key aspect of the fraudulent exports. The judgment highlighted how the Director's actions, including signing blank forms and leaving them to be misused by employees, contributed to this misdeclaration, ultimately resulting in the confiscation of goods.

5. Facilitation of Ineligible Claim of DEPB Benefits:
The employee, by handling export documents without proper authorization and facilitating the transactions with unauthorized individuals, was found to have played a role in the scheme to defraud the government by securing clearance for exports based on misdeclared quantities. This facilitated the ineligible claim of DEPB benefits, leading to the imposition of penalties under the Customs Act.

6. Conclusion:
After considering the submissions and evidence, the Tribunal upheld the penalties imposed on both appellants. The Director's actions, constituting both omission and commission in facilitating illegal exports, justified the penalty under Section 114 (i) of the Customs Act. Similarly, the employee's unauthorized handling of export documents and facilitation of fraudulent exports warranted the penalty. The appeals were dismissed, affirming the penalties imposed by the adjudicating authority.