2024 (8) TMI 800 - AT - Customs

Levy of penalties u/s 114 and u/s 114AA of CA - overvaluation of goods for duty drawback scheme - HELD THAT - It is found that all the present three appellants are neither the exporter of the goods not the CHA. The entire case of over valuation stands attributed to exporter and CHA. As far as the allegation of fraudulent claim of duty drawback by over valuing the goods, the beneficiaries are the exporter i.e. M/s. Haresh Fashion. All the three appellants have no locus- standi to either claim the drawback or receive the drawback. As regard the allegation that Shri Pratik Bhansali and Zayd Chakiwala admitted that they were supposed to get 40% and 60% of drawback does not appeared to be correct for the reason that the drawback if at all is received, it is by the exporter of the goods i.e. M/s. Haresh Fashion in the present case. Moreover, except statements which too not relatable, there is no documentary evidence to show said kickback of 40% to 60% drawback. It is found that Shri Pratik Bhansali has clearly denied the allegation in his first statement, thereafter, there was no need to again call him but he was repeatedly summoned and in the subsequent statement he stated that he was supposed to get 40% of the duty draw back. When there are two contradictory statements by one person, those statements cannot be relied upon. Moreover, when the appellant right from their reply to show cause notice denied the allegation, the adjudicating authority was supposed to cross-examine the witnesses, however, no cross-examination has been conducted. As regard the allegation of sharing 40% or 60% drawback by Shri Pratik Bhansali and Shri Zayd Chakkiwala , no documentary evidence was brought on record for any past incident that they have received any such sharing of the drawback, therefore, the penalties under Section 114(iii) and 114 AA was wrongly imposed. As regard Kaustubh Parikh, he is mere an employee of CHA, therefore, he has performed his duty on the instructions of his senior and it is also a proven fact that he has not been benefited by attempt to claim excess drawback by the exporter. The CHA has already been penalized. In such case, the penalty on the employee cannot be imposed on the charge of wrong availment of drawback by the exporter. Therefore, all the three appellants in the present case are not liable for any penalty. The penalties set aside - appeal allowed.

Summary

Issues:
Penalties imposed under Section 114 (iii) and Section 114AA of Customs Act, 1962 upheld by Adjudicating Authority; Appeals filed by three appellants challenging penalties; Allegations of overvaluation of goods for duty drawback scheme; Involvement of Shri Pratik Bhansali, Shri Zayd Chakkiwala, and Shri Kaustubh Parikh in the case; Appellants denying involvement in overvaluation scheme; Lack of documentary evidence supporting allegations; Adjudicating Authority upholding penalties without conducting cross-examination; Appellants being mere employees not directly involved in export or customs procedures.

Detailed Analysis:

1. Allegations and Penalties:
The Adjudicating Authority upheld penalties imposed under Section 114 (iii) and Section 114AA of Customs Act, 1962 against three appellants: Pratik Bhansali, Zayd Chakkiwala, and Kaustubh Parikh. The penalties were based on allegations of overvaluation of goods for duty drawback scheme, with specific amounts imposed on each appellant.

2. Involvement of Appellants:
- Pratik Bhansali: Worked at a Container Freight Station and was accused of overvaluing goods for duty drawback. Denied involvement and claimed he was falsely implicated, being coerced into providing statements.
- Zayd Chakkiwala: Allegedly fixed values in export documents for higher drawback amounts. Appellant denied direct involvement and claimed he was falsely implicated without substantial evidence.
- Kaustubh Parikh: Accused of preparing invoices and packing lists without benefiting from the overvaluation scheme. Claimed innocence as a mere employee following instructions.

3. Appellants' Defense:
- Pratik Bhansali: Submitted that he lacked expertise in valuation, denied involvement, and argued that the market survey used to determine overvaluation was baseless and illegal.
- Zayd Chakkiwala: Stated that he was not the exporter, and the exporter's actions were the focus of overvaluation. Denied direct involvement and highlighted lack of evidence against him.
- Kaustubh Parikh: Defended his actions as an employee following instructions, claiming lack of knowledge about the scheme and asserting his innocence.

4. Tribunal's Findings:
- The Tribunal found that the appellants were not directly involved in the export or customs procedures and were not the beneficiaries of the duty drawback scheme.
- Lack of documentary evidence supporting allegations of sharing duty drawback percentages.
- Contradictory statements and lack of cross-examination raised doubts on the credibility of the allegations.
- Penalties under Section 114 (iii) and Section 114AA were deemed wrongly imposed due to insufficient evidence against the appellants.

5. Tribunal's Decision:
The Tribunal set aside the penalties imposed on all three appellants, ruling that they were not liable for any penalties. The appeals were allowed, and the penalties were revoked.

This detailed analysis highlights the key issues, defense arguments, tribunal's findings, and the ultimate decision to set aside the penalties imposed on the appellants.