2017 (9) TMI 203 - AT - Customs

Penalties u/s 114 (i)/114AA of the CA, 1962 - smuggling of Red Sanders - penalty on Shri Surender Kumar Singh who was G card holder - Held that - From the FIR lodged by him, almost four months prior to incident of fraudulent export, it is apparent that he was not instrumental in filing the shipping bill covering the fraudulent export consignment. The inquiry carried out in terms of CHA Regulation also has exonerated Shri Surender Kumar Singh from any involvement in the export fraud. In view of the above, we find no justification for the penalty imposed on Shri Surender Kumar Singh, which is consequently set aside. Penalty on Shri Dinesh Khatri, who was the proprietor of M/s. Khatri Traders, Rohini - it was alleged that he facilitated the storage of contraband goods i.e. red sanders in his godown premises - Held that - it is clearly evident that Shri Deepak Khatri has played a significant part in fraudulent export of contraband goods by facilitating storing of the same in his godown. Consequently connivance in the illegal export stand established and hence, we find no reason to interfere with the findings and imposition of penalty on Shri Dinesh Khatri. Penalty on Smt. Mili Khatri wife of Shri Dinesh Khatri for abetting the fraudulent export of red sander - Held that - It is on record that the godown was given on rent to M/s. Khatri Traders which was rented by her husband Shri Dinesh Khatri. From the records, we find no evidence incriminating the role of Ms. Mili Khatri in the fraudulent export of red sanders. Consequently, there is no justification to impose penalty on her and same is set aside. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Penalties imposed under section 114(i)/114AA of the Customs Act, 1962 for involvement in the illegal export of red sanders logs.

Analysis:
1. Shri Surender Kumar Singh:
The penalty of Rs. 3,00,000 was imposed on Shri Surender Kumar Singh, the G-card holder of a CHA firm involved in filing the shipping bill for the illegal export of red sanders. The adjudicating authority found that Singh failed to report the misuse of the CHA license, resulting in the unlawful export. However, Singh argued that he had lost his G-card before the incident and submitted an FIR showing his lack of involvement. The inquiry exonerated him, leading to the penalty being set aside due to insufficient evidence linking him to the fraud.

2. Shri Dinesh Khatri:
A penalty of Rs. 8,00,000 was imposed on Shri Dinesh Khatri, the proprietor of a trading firm where red sanders were found stored during a search. The adjudicating authority held him responsible for facilitating the storage of contraband goods without proper legal documentation. Khatri's defense claimed another individual was the mastermind behind the illegal export, and the penalty was imposed in violation of natural justice. Despite the lack of direct evidence against Khatri, the involvement in storing the contraband goods was established, leading to the penalty being upheld.

3. Smt. Mili Khatri:
Smt. Mili Khatri, wife of Shri Dinesh Khatri, was penalized Rs. 5,00,000 for abetting the fraudulent export from her rented godown. The adjudicating authority found her complicit in allowing the illegal activities to take place. However, the defense argued that there was no concrete evidence of her active involvement in the illegal export. As the records did not show her direct participation in the fraud, the penalty imposed on her was set aside due to insufficient proof.

In conclusion, the appeals were partially allowed, setting aside the penalties on Shri Surender Kumar Singh and Smt. Mili Khatri, while upholding the penalty on Shri Dinesh Khatri for his role in facilitating the storage and illegal export of red sanders logs.