2014 (10) TMI 458 - AT - Customs

Fraudulent claim of draw back - Misdeclaration of goods - Overvaluation of export - Involvement of officers of customs - Imposition of penalty -Held that - M/s.H.M.Impex was nonexistent and there was an organised bid made by all the appellants in this batch of appeal to create that concern to make export of overvalued, inferior, discarded and valueless goods to make fraudulent claim of drawback. Extensive enquiry and investigation discovered commitment of fraud by the appellants - Attempt to export inferior goods overvaluing the same was successfully proved from the C.R.C.L. as well as report of NITRA. So also the Apparel Export Promotion Council (AEPC) reported that the garments attempted to be exported were inferior quality not commanding the value as declared by the appellant. Similarly, the textile machinery parts were totally inferior and were of very low value. Customs Officer Shri Suraj Prakash was named by Shri Vijay Kumar Gupta in his statement dated 22.07.2003 while he was in judicial custody. He being involved in the Customs fraud, he was before the Court of ACMM. Shri Suraj Prakash allotted both the impugned shipping bills in his name for examination. He manipulated the data in the computer through one Shri Narender Singh. That manipulation was done in the computer terminal of Shri D.V. Sidhmukh since that was open. Mischievous act of Suraj Prakash was corroborated by statement of Narender Singh and Sanjay Kumar Pandey as well as Deeraj Kumar, H card holder of M/s.Kunal Travels, the CHA. As per the work allocation order issued by Assistant Commissioner, Shri Suraj Prakash was posted at the Customs Station on 18.06.2003 under the supervision of Shri Ravinder Mohan. However, the shipping bills of M/s. H.M. Impex were taken by him to Shri D.V. Sidhmukh, Superintendent without the same being presented to Shri Ravinder Mohan. He admitted such crucial fact. His connection with the smuggling racket was also corroborated from the call details register and his involvement in committing fraud against Revenue remained uncontroverted except inviting misplaced sympathy in the course of argument submitting that the appellant was a Customs Officer. So far as the case of Shri Poonam Chand Gupta is concerned, his involvement is vividly clear from para 108 of the adjudication order. Although he claimed to be an Advocate, he was involved in purchasing all spurious goods from one M/s. Jyoti Enterprises and that was corroborated by the proprietor thereof. He (Proprietor) admitted to be a dealer of junk garments and Shri Vijay Kumar Gupta as well as Poonam Chand used to purchase such goods from him for export. Recovery of the blank letter heads from premises of Shri Poonam Chand could not be ruled out. He was also brought to record from the evidence of Shri Sanjay Kumar Pandey when he was accompanying him for the clearance of the fraudulent exports attempted to be done by both the shipping bills. He was found to be a master mind behind this to defraud Revenue. Entire investigation pointed at him which was well considered by ld. adjudicating authority in para 108 of his order. Drawing of the draw-back amount from the fake bank account of the said non-existent concern i.e. M/s. H.M. Impex was proved unerringly by investigation supported by cogent evidence. When involvement of this appellant was confirmed by all the appellants, he could not come out from the cluster of allegation made against him by investigation. He was unerringly proved to be manufacturer of fraudulent documents and defrauded Revenue. The appellant was examined under section 108 of Customs Act, 1962 by customs authority and the evidence gathered during that process is valuable evidence which is admissible in law not being recorded by a police officer. Such evidence being given in the course of judicial proceedings, that is creditworthy and the appellant has no right to go back from that. That may be confessional statement. The statement given by the appellant in the present case corroborated by cogent evidence gathered by investigation inculpated him to the commitment of offence by him under law for which he was rightly penalised. When the appellant faced penalty only, there is no further necessity of dealing with the plea of joint liability raised by the ld. counsel. Law is well settled that fraud and justice do not well together and fraud is sworn enemy of justice. When the appellant made every successive effort to de-fraud Revenue, it was bound to suffer consequence of law. The manner how the appellant acted in defiance of law and deceived Revenue, that has vitiated his solemn act. Tainted illegality committed by appellant brought him to the vice thereof and he was penalised. That has come to an end by the right dose of penalty, not calling for interference. Shri Vijay Kumar Gupta and Shri Poonam Chand Gupta were so intimately connected with each other, they could not dissociate themselves from the racket attempting to export the offending goods. While M/s. H.M. Impex was proved to be a fake concern and this appellant played a pivotal role to defraud Customs Authority impressing them that M/s.H.M. Impex was an existed concern in the eyes of law, he was perpetrator of fraud. M/s.H.M. Impex having been proved to be fake concern and attempted to export inferior goods overvaluing the same and draw back having been claimed fraudulently as well as depositing the same in bank account were drawn for their enjoyment, commitment of fraud against Revenue was established. All such factors call for dismissal of all the appeals - Decided against the appellants.

Summary

Issues Involved:
1. Recovery of excess payment of drawback.
2. Penalties under Section 114 of the Customs Act, 1962.
3. Mis-declaration of description, quantity, weight, and value of the goods.
4. Liability for fraudulent duty drawback claims.
5. Confiscation of goods under Section 113 of the Customs Act, 1962.
6. Joint liability for the fraudulent activities.

Issue-wise Detailed Analysis:

1. Recovery of Excess Payment of Drawback:
A Miscellaneous Application No.C/50502/2014 was filed to raise additional grounds under Rule 16 of CESTAT Procedure Rules, 1982. The legal point was that recovery of excess payment of drawback should be made from the person who claimed it, not from others. This application was allowed.

2. Penalties under Section 114 of the Customs Act, 1962:
Several appellants faced penalties under Section 114 of the Customs Act, 1962. The penalties ranged from Rs. 50,000 to Rs. 15,00,000. The appeals were heard, and the tribunal considered the involvement of each appellant in the fraudulent activities. For instance, Shri Suraj Prakash, a Customs officer, was found to have tampered with entries in the computer to favor the exporter M/s. H.M. Impex. His involvement was corroborated by call details and statements from other involved parties.

3. Mis-declaration of Description, Quantity, Weight, and Value of the Goods:
The tribunal examined the mis-declaration of goods in shipping bills. For example, goods declared as high fashion ladies' dresses were found to be rags of uneven and inferior quality. Similarly, goods declared as 'Gear Cutting Tools made of Cobalt Bearing High Speed Steel' were found to be non-metallic components of very low value. Reports from CRCL, NITRA, and AEPC confirmed these findings.

4. Liability for Fraudulent Duty Drawback Claims:
The tribunal examined whether the duty drawback amount of Rs. 40,39,440/- availed by M/s. H.M. Impex was recoverable along with interest from the appellants. It was found that M/s. H.M. Impex was a fictitious firm, and the appellants were involved in its operations to make fraudulent claims. For instance, Poonam Chand Gupta was found to have possessed blank letterheads of M/s. H.M. Impex and was involved in opening bank accounts in its name.

5. Confiscation of Goods under Section 113 of the Customs Act, 1962:
The goods attempted to be exported by the appellants were liable to be confiscated under Section 113 of the Customs Act, 1962 due to mis-declaration. The tribunal confirmed that the goods were overvalued and of inferior quality, justifying their confiscation.

6. Joint Liability for the Fraudulent Activities:
The tribunal considered the argument that there cannot be joint liability for the drawback claim. However, it was established that the appellants acted in concert to defraud the Revenue. For instance, Poonam Chand Gupta's involvement in purchasing spurious goods and opening bank accounts in the name of M/s. H.M. Impex was clearly established.

Conclusion:
The tribunal dismissed all the appeals, confirming the penalties and the findings of the adjudicating authority. The appellants were found to have committed fraud against the Revenue by creating a fictitious firm, mis-declaring goods, and making fraudulent duty drawback claims. The judgment emphasized that fraud and justice do not coexist, and the appellants' actions warranted the penalties imposed on them.