2014 (3) TMI 169 - AT - Customs

Export of Ketamine from India in the guise of Alfa Olefin Sulphonate (AOS) - Identification of exporter - Held that - Investigation revealed that M/s Vikash Exporter had not exported Ketamin through the shipping bills in question. Both the appellants know each other to defraud Revenue even opening fake account in Andhra Bank by a benamidar account holder who was an employee of Shri Mahesh Kumar Gupta and all remittances of export were transacted through that dummy account. That account was parking place of fraudulent considerations. Both were so intimate and connected with each other that they used a known IEC of another concern and opening bank account in the name of that concern smuggled Ketamin. It was further established that the real owner of Aggarwal Industries brought out a law suit against Shri Mahesh Kumar for fraudulent use of his firm s name. All these evidence go against both appellants. Entire chain of evidence successfully proved malafide of both appellants. They were not innocent. But were the sole designer of fraud to defraud customs. They made undue gain at the cost of Revenue. When interest of nation is affected due to export of narcotic substance by these appellants they should not be leniently dealt under the law. Adjudication does not suffer from any legal infirmity for which adjudication sustains and both appeals are liable to be dismissed. Redemption fine is imposable on the exporter Shri Devinder Pramod but not jointly on Shri Devinder Pramod and Shri Mahesh Kumar Gupta. Other than this modification, entire consequence of adjudication is confirmed and both the appeals are dismissed. - Decided against the appellants.

Issues Involved:
1. Allegation of fraudulent export of Ketamine.
2. Use of another firm's IEC number.
3. Admissibility and reliability of evidence from China.
4. Joint liability for redemption fine and penalties.
5. Involvement and liability of the appellants.

Issue-wise Detailed Analysis:

1. Allegation of fraudulent export of Ketamine:
The Directorate of Revenue Intelligence (DRI) received intelligence from China that an Indian firm had exported Ketamine disguised as Alfa Olefin Sulphonate (AOS). The investigation revealed that 1010 kgs of Ketamine were seized in China. The investigation identified three shipping bills linked to the export of Ketamine by M/s Vikas Overseas.

2. Use of another firm's IEC number:
The investigation found that the IEC number of M/s Vikas Overseas was used by Devinder Pramod and Mahesh Kumar Gupta to export Ketamine fraudulently. Statements recorded under Section 108 of the Customs Act, 1962, from various individuals, including employees of the CHA and the freight forwarder, corroborated the use of a fake IEC number and the involvement of the appellants in arranging the export documents and bank accounts.

3. Admissibility and reliability of evidence from China:
The appellants contested the reliability of the report from the Consulate General of India in Hong Kong, based on the Bureau of Narcotics Control, China. However, the tribunal found the report to be a cogent and authentic document, as it was based on thorough verification by the Chinese authorities. The appellants did not provide any substantial evidence to challenge the veracity of the report.

4. Joint liability for redemption fine and penalties:
The tribunal examined the argument that there cannot be a joint liability for redemption fine and penalties. The adjudicating authority had imposed a fine of Rs. 15 lakhs jointly on Devinder Pramod and Mahesh Kumar Gupta and penalties of Rs. 10 lakhs each under Section 114 of the Customs Act, 1962. The tribunal modified the adjudication, stating that the redemption fine is imposable on the exporter, Shri Devinder Pramod, but not jointly on both appellants.

5. Involvement and liability of the appellants:
The investigation revealed a detailed chain of evidence showing the involvement of both appellants in the fraudulent export. Statements from various individuals, including the CHA and freight forwarder, established the roles of Devinder Pramod and Mahesh Kumar Gupta in arranging the export documents, bank accounts, and storage of the goods. The tribunal concluded that both appellants were intimately connected and designed a fraud against Customs, making undue gains at the cost of revenue. The tribunal upheld the penalties and confiscation of goods, confirming the adjudication's findings with a minor modification regarding the joint liability for the redemption fine.

Conclusion:
The tribunal dismissed the appeals, confirming the adjudication's findings of fraudulent export, misuse of IEC number, and the reliability of evidence from China. The penalties and confiscation of goods were upheld, with a modification that the redemption fine is imposable on the exporter, Shri Devinder Pramod, but not jointly on both appellants. The judgment emphasized the appellants' deliberate involvement in the export of Ketamine and the resulting impact on national interest.

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