2015 (7) TMI 850 - AT - Customs

Fraudulent claim of undue DEPB benefits - willful mis-statement of FOB value of textile article/fabrics exported - Over Valuation of goods - Penalty imposed on officers for abatement u/s 114 - Held that - while discarding the value of the goods which have been exported, has relied upon mainly the overseas inquiry conducted, certificate of BTRA and the action of the exporters regarding submitting false BRCs for obtaining DEPB licence, is erroneous for more than one reason - Charts C-1 & C-2 annexed to the show-cause notice purportedly supposed to be collated from the overseas inquiry does not have any signature of the officers. It is pertinent to note that these reports as per Chart annexed at C-1 & C-2, the basis was not divulged to the appellant to defend against such inquiry. In our considered view, the adjudicating authority should have given copy of the overseas inquiry conducted by the department, if any, so that the appellant could have defended or put forth his views on the same. To that extent, we find that the order seems to have been passed in violation of the principles of natural justice. - No contemporary value on identical or similar goods were brought on record in order to ascertain the contemporaneous prices of the goods sought to be exported. In the absence of above, we find that the impugned order is passed in violation of principles of natural justice and needs reconsideration by the adjudicating authority in respect of M/s. Ruchika International and their partners. - Matter remanded back. There is no abetment on the part of officers inasmuch as all the shipping bills were signed after examining the documents which were attached. The shipping bills and the documents attached and produced before these three departmental officers were indicating the prices, which they felt were correct in the facts of these cases and being recently posted may have lacked in training in clearance of export goods; even otherwise, the only violation which was highlighted in the impugned order was these officers have indicated that they have drawn the samples and maintained the records, but in fact they have not done so; for the charge of abetment - impugned order imposing penalties on these officers under the provisions of Section 114 of the Customs Act, 1962 is unwarranted and unsustainable - Decided in favour of appellants.

Summary

Issues Involved:
1. Alleged illegal exports and fraudulent DEPB benefits by Ruchika International.
2. Imposition of penalties on departmental officers for alleged collusion and connivance.

Detailed Analysis:

1. Alleged illegal exports and fraudulent DEPB benefits by Ruchika International:

The appeals were filed against an order by the Commissioner of Customs, Pune, which involved allegations against Ruchika International for illegal exports and fraudulent DEPB (Duty Entitlement Pass Book) benefits through misstatement of FOB (Free on Board) value of textile articles. The intelligence suggested that Ruchika International declared an FOB value of Rs. 284/- per meter, while the BTRA (Bombay Textile Research Association) report indicated a PMV (Present Market Value) of Rs. 96/- per meter. This discrepancy led to a show-cause notice for wrongful DEPB claims on fifty shipping bills.

The appellant's counsel argued that the DEPB claims were post-export and the cancellation of DEPB licenses was not due to over-valuation. The remittances were received through proper banking channels, and the overseas inquiry report was not provided to the appellants, violating natural justice principles. The counsel also contended that the BTRA report was not competent to determine the product's composition and that the adjudicating authority did not determine the value based on identical or similar goods.

The Tribunal found that the adjudicating authority relied on unsigned overseas inquiry reports and BTRA certificates, which were not fully disclosed to the appellants. The value of the goods was not redetermined based on acceptable norms, and no contemporaneous value of similar goods was provided. The impugned order was passed in violation of natural justice principles, necessitating a reconsideration by the adjudicating authority.

2. Imposition of penalties on departmental officers for alleged collusion and connivance:

The penalties were imposed on departmental officers under Section 114 of the Customs Act, 1962, for allegedly abetting the over-valuation of exported goods. The officers were accused of allowing clearances without permission, not maintaining records, and not drawing samples. The counsel for the officers argued that there was no evidence of their involvement beyond their knowledge and jurisdiction. The Chief Commissioner had already dropped most charges against one officer, except for non-drawal of samples.

The Tribunal found no evidence of collusion or connivance by the officers. The non-drawal of samples and other procedural lapses were considered dereliction of duty, not abetment. The Tribunal relied on previous judgments, including the Sunshine Overseas case, which set aside penalties on departmental officers in similar circumstances. The penalties on the officers were deemed unwarranted and unsustainable.

Conclusion:

The appeals of Ruchika International and its partners were remanded to the adjudicating authority for reconsideration, ensuring adherence to natural justice principles. The appeals of the three departmental officers were allowed, and the penalties imposed on them were set aside.