2018 (2) TMI 1799 - HC - Customs

Classification of imported goods - parts of Air-Conditioner - the case against A2 Sanjay Kakkar was quashed on a technical ground for want of proper sanction to prosecution - Held that - Quashing of complaint on technical reason for want of sanction will not ensure any benefit to the co-accused. It is now well settled by catena of the judgments that when the prosecution has placed before the trial Court prima facie material for the trial, the Court cannot probe into the records summarily and discharge the accused persons. In this case, the material placed by the prosecution, if proved to be true it will lead to conviction. The observation of the Commissioner in the adjudication proceedings that there was no loss to the State cannot be considered at this juncture, because on going through his report, though he has discussed at length about various proposition of law, he has not addressed the core issue of mis-declaration of goods and wrong reference of Tariff code. This Court holds that order of the Trial Court is legally sustainable and need no interference - petition dismissed.

Summary

Issues Involved:
1. Alleged wrongful import of full Air-Conditioners under the guise of parts, causing loss to the government.
2. Alleged conspiracy and misconduct by Customs officials in clearing the goods.
3. Petitioners' contention of innocence and discharge of duty as per Customs Manual.
4. Prosecution's evidence and arguments against the petitioners.
5. Trial Court's dismissal of petitioners' discharge petitions and the subsequent Revision Petitions.

Detailed Analysis:

1. Alleged wrongful import of full Air-Conditioners under the guise of parts, causing loss to the government:
The First Information Report (FIR) registered by C.B.I. on 29-2-2013 alleged that full Air-Conditioners were imported by M/s. Majestic Impex under the guise of Air-conditioner parts, resulting in a wrongful loss of ?42,05,597/- to the government. Customs officials, including the petitioners, were accused of deliberately allowing the clearance of these goods despite knowing they were not parts but full Air-Conditioners.

2. Alleged conspiracy and misconduct by Customs officials in clearing the goods:
The investigation revealed that Shri P. Kathirvel (A-1), Assistant Commissioner of Customs, and Shri Sanjay Kakkar (A-2), Appraiser of Customs, despite knowing the goods were pre-packaged commodities requiring assessment on MRP basis, did not seek MRP/RSP details and wrongly assessed the Bill of Entry. They approved the description of goods as "Part of Air-Conditioner indoor unit only," which should have been assessed as full Air-Conditioners. Additionally, they failed to adopt the contemporary value of MRP for similar goods and did not demand the necessary import license from DGFT. The examination order passed by them was not reassessed despite findings that the goods were full Air-Conditioners.

3. Petitioners' contention of innocence and discharge of duty as per Customs Manual:
The petitioners contended their innocence, arguing that they had no involvement in the alleged misdeclaration or evasion of Customs duty. They claimed to have discharged their duties according to the Customs Manual. Specifically, the petitioner in Crl. R.C. No. 1457 of 2017 argued that as an examiner, he had a restricted role and made a special observation that the packages contained "O General Brand Air-Conditioner." He cited Supreme Court judgments to support his claim for discharge. The petitioner in Crl. R.C. No. 47 of 2018 argued that the criminal prosecution was unsustainable as he was not the only person involved in the clearance process, and the misdeclaration could not have been identified without information from the physical examiner.

4. Prosecution's evidence and arguments against the petitioners:
The prosecution contested the petitioners' claims, presenting substantial evidence collected during the investigation. They argued that the petitioners were part of a conspiracy to allow the clearance of full Air-Conditioners by misdeclaring them as parts, causing significant revenue loss. The prosecution highlighted that the bill of lading and delivery order indicated full Air-Conditioners, while the Bill of Entry falsely described them as parts. The Assistant Commissioner and Appraiser failed to identify this inconsistency and reassess the goods, facilitating the wrongful clearance.

5. Trial Court's dismissal of petitioners' discharge petitions and the subsequent Revision Petitions:
The trial court, after analyzing the material and arguments, dismissed the petitioners' discharge petitions, leading to the filing of the Revision Petitions. The court found a prima facie case of conspiracy and deliberate misdeclaration by the petitioners. The court emphasized that the material placed by the prosecution, if proven, would lead to conviction. The court also noted that the quashing of the case against A-2 on technical grounds did not benefit the co-accused. The court upheld the trial court's order, directing the trial court to frame charges immediately and complete the trial within six months.

Conclusion:
The Revision Petitions were dismissed, affirming the trial court's decision to proceed with the charges against the petitioners. The court directed the trial court to expedite the trial process, emphasizing the prima facie evidence of conspiracy and misconduct by the petitioners in the wrongful clearance of full Air-Conditioners.