2017 (4) TMI 540 - AT - Customs

Overvaluation of export goods - claim of duty drawback - fraudulent transactions and inflated value of the consignments to claim drawback - levy of penalty for abetment in fraud - redemption fine - Held that - Against the finding of the adjudicating authority on the issue of export of low priced inferior quality goods no defence could be led by the exporter appellants to discard the same. Market inquiry as well as statements recorded, demonstrated fraudulent act, oblique motive and malafides of appellant. Exports consignments were overvalued. That could not be ruled out by the exporter appellant in the absence of any cogent and credible evidence led by them in the course of hearing before Tribunal. Further, when the investigation found that Shri Krishna Prasad was also involved in the Red Sanders smuggling, that could not be ruled by him. His fraudulent act perpetuated. Non-existent firms M/s. Amritsar Knit Readymade Garments also M/s. JM Fashions crippled the appellants to come out with clean hands in absence of any sales invoices being produced. M/s. Sri Sairam Exports and M/s. Sindhu Textiles were mere bubbles. Therefore appellants fail to deserve any consideration under law. When Customs was made to believe on the basis of fraudulent documents and defrauded, ulterior motive and deliberate intention of the appellants came out. Their premeditated design and malafide to cause evasion is proved. That does not call for any interference to any aspect of the conclusion and findings of the adjudicating authority. Law is well settled that fraud is sworn enemy of Justice and do not dwell together. Demand with penalty and fine confirmed. - Decided against the appellants.

Summary

Issues:
1. Attempted over-valuation of goods for claiming undue drawback
2. Allegations of fraud and smuggling involving multiple parties
3. Denial of drawback claim and imposition of penalties
4. Defense against fraud allegations and penalties
5. Adjudication of the case and final decision

Issue 1: Attempted over-valuation of goods for claiming undue drawback
The case involved the attempted export of goods by two appellants, where the goods were found to be over-valued to claim excess drawback unduly. The investigation revealed discrepancies in the declared value of goods compared to their actual value, leading to a substantial difference. The fraudulent over-valuation was aimed at gaining undue benefits at the expense of Customs.

Issue 2: Allegations of fraud and smuggling involving multiple parties
The investigation uncovered a complex scheme orchestrated by a mastermind to defraud Customs through over-valuing goods and false documentation. The parties involved, including non-existent firms and individuals, were found to be part of a smuggling racket. The fraudulent activities extended to creating fictitious entities, fabricating documents, and engaging in red sander smuggling, indicating a systematic effort to deceive Customs.

Issue 3: Denial of drawback claim and imposition of penalties
The adjudicating authority denied the drawback claim for the live consignments and directed the recovery of the allowed drawback claim for one of the appellants. Penalties were imposed on various individuals and firms involved in the fraudulent activities. The appellants contested the denial of drawback and penalties, arguing lack of evidence to support the allegations of fraud against them.

Issue 4: Defense against fraud allegations and penalties
The appellants disputed the allegations of fraud, claiming innocence and lack of active involvement in the Customs fraud scheme. They argued that the penalties imposed were unjustified as they were not directly engaged in fraudulent activities. However, the departmental representative contended that the fraud was meticulously planned and executed by the entire smuggling racket, justifying the denial of the drawback claim and penalties.

Issue 5: Adjudication of the case and final decision
After considering the arguments from both sides and examining the evidence, the Tribunal upheld the adjudicating authority's findings. The Tribunal concluded that the appellants failed to provide a credible defense against the allegations of fraud and over-valuation of goods. The deliberate attempt to defraud Customs through false documentation and over-valuation was established, leading to the dismissal of all eight appeals.

In conclusion, the judgment highlighted the serious repercussions of fraudulent activities in trade transactions and emphasized the importance of upholding integrity in customs procedures to prevent revenue loss and maintain justice.