2021 (11) TMI 995 - AT - Customs

Levy of penalty u/s 114 (iii) and Section 114AA of the Customs Act, 1962 - criminal offence of abetment - Availment of duty draw-back wrongly and fraudulently - allegations of aiding and abetting said Mr. Sajjan Kumar so as to make those fraudulent exports of hand woven carpets and to wrongly avail the corresponding duty draw back - retraction of statements - HELD THAT - In the present case apparently and admittedly, the act / omission on part of the appellant in improperly conducting the Inquiry of the fraudulent export of hand-woven carpets is the act after the impugned fraudulent export got unearthed and after the mastermind behind those export, Shri Sajjan Kumar, had already availed the unreasonable, unjustified, illegal duty draw-back benefit. There is no evidence for the present appellant to at all be the beneficiary of the said illegal benefit being drawn by said Shri Sajjan Kumar. Irrespective the said statement has been retracted, but there is no iota of utterance in any of the statements of Shri Sajjan Kumar about the present appellant or the Co-Inspector Shri Subhash Chand to ever have facilitated him prior he exported those carpets. In absence thereof, the only lacuna on part of the present appellant is that they conducted inquiry about fair market rate of the hand-woven carpets from such firms which were later found to not at all to be involved in export of carpets and hence were not competent to provide any information to these Inspectors about the rate of the carpets. This act, to my opinion, is nothing more than an act of conducting investigation negligently in casual and improper manner. These Inspectors, in their statements have acknowledged them to be casual while conducting the impugned investigation. To constitute a criminal offence of abetment as punishable as defined under Section 107 of Indian Penal Code, 1862, there has to be an intention to instigate, to conspire or to aid/facilitate a person to do or abstain from doing something, which is a defined penal offence and that the abettor is the part of the conspiracy with an intent to draw back benefit out of the alleged offence. Apparently and admittedly, there is nothing on record produced by the Department to show the involvement of the appellant and the Co-Inspector for insighting or conspiring with or aiding or facilitating said Sajjan Kumar at the stage prior he made the exports. There is no evidence for the appellant and the Co-Inspector to be the beneficiary of the amount of duty draw-back illegally availed by said Sajjan Kumar - the act is not sufficient to constitute a penal offence as that of abetment for the impugned fraudulent exports. For imposition of penalty under Section 114AA the information should knowingly be false. There should have been an intention to give false or incorrect statement. But as already mentioned above that lapse in obtaining the correct information from improper source cannot be called as an intentional act of giving wrong information. Hence no question arises for imposition of penalty - appeal allowed - decided in favor of appellant.

Issues:
- Imposition of penalty under Section 114 (iii) and Section 114AA of the Customs Act, 1962 on the appellant for aiding and abetting fraudulent export of hand-woven carpets.
- Allegations against the appellant for conducting negligent inquiry leading to fraudulent exports.
- Examination of evidence to determine if the appellant and co-inspector were involved in abetting the fraudulent exports.
- Analysis of the intention and knowledge of the appellant in facilitating the export of prohibited goods.
- Assessment of whether the appellant knowingly provided false information warranting penalty under Section 114AA.

Imposition of Penalty under Sections 114(iii) and 114AA:
The appeal challenged the imposition of penalties under Sections 114(iii) and 114AA of the Customs Act, 1962 on the appellant for allegedly aiding and abetting fraudulent export of hand-woven carpets. The appellant, along with another inspector, was assigned to conduct a Market Inquiry to determine the fair value of exported carpets. However, subsequent investigations revealed that the inspected firms were not competent to provide accurate market rates. The Tribunal observed that the appellant's negligence in conducting the inquiry did not amount to abetment as there was no evidence of intentional facilitation of the fraudulent exports. The Tribunal emphasized that the appellant's actions were characterized by inefficiency rather than intentional wrongdoing, leading to the setting aside of the penalties.

Allegations of Negligent Inquiry:
The appellant was accused of conducting a negligent inquiry that indirectly facilitated the fraudulent exports of hand-woven carpets. The Commissioner (Appeals) had upheld the penalties on the basis of the appellant's casual and improper investigation methods. However, the Tribunal determined that the appellant's negligent conduct did not amount to abetment as defined under Section 107 of the Indian Penal Code. The Tribunal highlighted that the appellant's actions, while indicative of inefficiency, did not demonstrate intentional facilitation of the fraudulent exports, ultimately leading to the dismissal of the penalties.

Involvement in Abetting Fraudulent Exports:
The judgment scrutinized the evidence to ascertain whether the appellant and the co-inspector were involved in abetting the fraudulent exports. Despite admissions of conducting the inquiry in a casual manner, there was no proof of intentional facilitation or conspiracy prior to the exports. The Tribunal emphasized the lack of evidence implicating the appellant and the co-inspector in instigating or aiding the mastermind behind the fraudulent exports. The judgment concluded that the appellant's conduct, although negligent, did not amount to abetment, thus warranting the allowance of the appeal.

Intention and Knowledge in Facilitating Prohibited Goods Export:
The analysis delved into the appellant's intention and knowledge regarding the facilitation of prohibited goods export. It was established that the appellant's negligent inquiry post the discovery of the fraudulent exports did not demonstrate an intention to aid in the illegal activity. The judgment highlighted the absence of evidence linking the appellant to the benefits derived from the fraudulent exports, ultimately leading to the dismissal of the abetment allegations.

Assessment of False Information Provision:
The judgment evaluated whether the appellant knowingly provided false information, warranting penalty under Section 114AA. It was clarified that the lapse in obtaining correct information due to improper sources did not constitute an intentional act of providing false information. Citing precedent, the Tribunal emphasized the importance of mens rea in determining penalties, leading to the setting aside of the findings of the Commissioner (Appeals) and the allowance of the appeal.

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