2017 (5) TMI 1438 - AT - Customs

Penalty u/s 114 (iii) of CA, 1962 - DEPB-cum-drawback scheme for export of silk tops - mis-declaration of goods - act/omission during the course of their performance as customs officers, dealing with export cargo - Held that - to impose penalty u/s 114 (iii) on the officers of customs, it is necessary to establish with supporting evidence, a positive act on the part of the officers to abet a omission or an act of another person which will render the connected goods liable for confiscation u/s 113. Failure, if any, in discharge of duty assigned or negligence on the part of the Custom Officer by itself cannot bring in penal consequence in terms of the said section. It is apparent that in the absence of documents based on which allegations were made, the whole proceedings against the appellants become seriously jeopardized. The attempt by the Original Authority to rely on certain incidental and collateral evidence is also not found sustainable. None of these evidences will lead to the conclusion based on preponderance of probability as stated by the Original Authority. Even for such preponderance of probability evidences are required. The presumptions and possible inferences by deciding authority cannot substitute evidences. There is no sustainable ground to impose penalties u/s 114 on the appellants in the present case - appeal allowed - decided in favor of appellant.

Summary

Issues: Liability for penalty under Customs Act, 1962

Issue 1: Liability of the appellants for penalty under Customs Act, 1962
The appeals were against an order related to the liability of the appellants for penalty under the Customs Act, 1962. The appellants, as officers of Customs, were accused of abetting an improper transaction that would render the goods liable for confiscation. The Original Authority imposed penalties on the appellants under Section 114 (iii) of the Customs Act, 1962. The case involved the processing of export goods by the appellants and their alleged involvement in the improper transaction.

Analysis: The case revolved around the investigation of shipping bills filed by a company for export goods. The investigation revealed mis-declaration, leading to penalties and confiscation of goods. The Original Authority imposed penalties on the appellants for their alleged involvement in abetting the act that made the goods liable for confiscation. The Tribunal remanded the matter back to the Original Authority for a fresh decision. However, crucial documents were not provided to the appellants, and the evidence relied upon was insufficient to establish liability for penalties under the Customs Act.

Issue 2: Compliance with Tribunal directions and evidentiary requirements
The counsel for one of the appellants argued that the directions of the Tribunal were not complied with by the Original Authority. He contended that the charge of abetting, which invites penalties under the Customs Act, must be supported by evidence of a positive act with knowledge on the part of the appellant. Mere suspicion or negligence should not suffice for imposing penalties under Section 114 of the Act. The appellant denied processing or signing any documents related to the impugned shipment.

Analysis: The lack of compliance with Tribunal directions and the absence of crucial documents raised doubts about the validity of the penalties imposed on the appellants. The counsel emphasized the need for concrete evidence of active involvement in the alleged abetment to justify penalties under the Customs Act. The argument highlighted the importance of establishing a positive act on the part of the officers to abet an omission or an act that would make the goods liable for confiscation.

Issue 3: Disciplinary proceedings and exoneration
The counsel for another appellant pointed out that disciplinary proceedings initiated by the Department found the appellant not guilty of violating conduct rules. He argued that since the Department exonerated the appellant of all charges related to the impugned exports, no penalty under the Customs Act should be imposed. The counsel cited a Tribunal decision supporting this argument.

Analysis: The counsel's argument focused on the inconsistency between the findings of the disciplinary proceedings and the imposition of penalties under the Customs Act. The counsel relied on a Tribunal decision to support the claim that when disciplinary proceedings are dropped, penalties under the Customs Act for the same charges cannot be sustained. This issue raised questions about the coherence and fairness of imposing penalties based on conflicting outcomes in different proceedings.

In conclusion, the judgment highlighted the importance of concrete evidence and compliance with procedural requirements in imposing penalties under the Customs Act. The lack of crucial documents, inconsistencies in disciplinary findings, and the need for active involvement in the alleged abetment were central to the decision to set aside the penalties imposed on the appellants. The judgment emphasized the necessity of establishing a positive act of abetment to justify penal consequences under the Customs Act.