2015 (4) TMI 279 - SC - Customs

Imposition of penalty - Overvaluation of goods - Fraudulent availment of DEPB Credit - Held that - Goods were liable for confiscation under sub-section (d) of Section 113 of the Act, and therefore penalty could be imposed under Section 114(I) of the said Act, next question that arises for consideration is as to whether on the facts of this case penalties were rightly imposed by the Commissioner . Though this aspect is not considered by the Tribunal it may not be necessary to refer the case back to the Tribunal for this particular purpose. Counsel on both sides agreed that the order of the Commissioner can be gone into to determine this aspect - Commissioner has imposed the order of payment of penalty of ₹ 25,000 /- upon him only on the ground that the goods were cleared for export by his son Alok Jaiswal . That can hardly be the ground to fasten the liability or attribute abetment on the part of respondent no.1 . Likewise, insofar as respondent no.2 Mr. Rakesh Mishra is concerned, the only allegation against him is that he had supervised the stuffing of the goods at ICD Varanasi and received the payment. Only on this allegation, it cannot be attributed that he became party to the over invoicing of the goods. Penalty in respect of these two respondents, therefore, has to be set aside. As far as respondent no.3 is concerned, he was working as Superintendent ICD - The allegation which has been established against him is that he had a direct role in obtaining the report of M/s. Saraswati Plastics, New Delhi, and it is on that basis the exporter, namely, M/s. Yash Export fraudulently claimed high DEPB to their credit. It is recorded that without the aforesaid report it was not possible for M/s. Yash Export to fraudulently import high DEPB. Therefore, penalty against M/s. Yash Export is accordingly maintained. - Decided partly in favour of Revenue.

Summary

Issues:
1. Allegations of over-invoicing in export consignment leading to confiscation of goods and imposition of penalties under Customs Act, 1962.
2. Interpretation of provisions under Section 113(d) and Section 114(I) of the Customs Act.
3. Assessment of liability and penalties on individuals involved in the export process.

Analysis:
1. The case involved allegations of over-invoicing in an export consignment of PVC soles by M/s. Yash Export, leading to the misdeclaration of the value for fraudulent purposes. The Customs Authorities issued a show cause notice for confiscation of goods under Section 113(d) of the Customs Act, 1962, amounting to a DEPB credit of &8377; 24,12,114. Penalties were imposed on the respondents for their alleged collusion in the over-invoicing scheme.

2. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the confiscation order, stating that confiscation could not be based on over-invoicing. However, the Supreme Court, citing precedents, held that over-invoicing leading to exaggerated values in invoices attracts confiscation under Section 113(d) of the Act. The Court emphasized the importance of correctly stating export values and the consequences of intentional over-invoicing for illegal transactions.

3. The Court analyzed the roles of the individual respondents in the over-invoicing scheme. Penalties imposed on two respondents were set aside as their involvement in the scheme could not be conclusively established. However, the penalty on the third respondent, a Superintendent at ICD Varanasi, was maintained as he played a direct role in facilitating the fraudulent DEPB claim by obtaining a report crucial to the scheme. The Court dismissed the appeal against the penalty imposed on this respondent.

In conclusion, the Supreme Court upheld the confiscation of goods and imposition of penalties under the Customs Act, emphasizing the seriousness of over-invoicing in export transactions. The Court differentiated between the roles of individual respondents, setting aside penalties where involvement was not proven, while maintaining penalties for direct facilitation of fraudulent practices.