2015 (11) TMI 548 - AT - Customs

Availment of fraudulent duty drawback claim - Fabrication and forging of documents - Imposition of penalties - Held that - Initially Shri B S Chauhan admitted that the signatures on the shipping bills bearing examination reports were his. He also stated that he had given the examination report on the basis of goods shown to him by the CHA but denied having received any money. It is indeed strange that although the Customs investigating agency had specimens of handwriting when the statements of Shri Chauhan were recorded in March April 96 there is no evidence that the handwriting expert s opinion was taken at that stage. If it was taken the same was not made available to Shri Chauhan who requested for it vide his letter dated 05.03.07. The case of the department is based on the statement of Shri GS Kohli. He deposed that Shri R S Singh (the employer of Shri Balbir Singh) had told to Shri GS Kohli that according to Balbir Singh, Appraise Shri B S Chauhan would give examination reports as desired by them . At the same time the fact is that Shri GS Kohli and Shri R S Singh themselves never discussed any issue with Shri Chauhan. Therefore as held by the adjudicating authority, the next logical step for investigation shoul have been to examine Shri R.S. Singh and Shri Balbir Singh. But this was not done. More so when the Department did not examine Balbir Singh who is supposed to have met B S Chauhan. Therefore the statement of Shri GS Kohli is beyond secondary evidence and cannot be relied upon in the face of judicial pronouncements discussed in paras above. In the facts and circumstances the allegation against Shri BS Chauhan is based merely on hearsay evidence in the form of a statement dated 08.08 1995 of Shri GS Kohli. - case established by Revenue does not even meet the standards of proof in a civil case. The case is full of flaws. It is not explained why for many years Revenue did not get the handwriting of the accused verified by the handwriting expert. This is especially so when Shri GS Kohli admittedly forged the signatures of all other agencies such as banks, steamer agents, RBI, DGFT etc. In such circumstances the preponderance of probability is that Shri GS Kohli had forged the signatures of Shri Chauhan too. Further department is taking a contradictory stand as far as the statement of Shri Chauhan is concerned. When Shri G S Kohli and Shri R S Singh (employee of Shri Balbir Singh) themselves had never discussed any issue with Shri BS Chauhan. Therefore we hold that Revenue has not been able to counter the logical reasoning and analysis by the Commissioner in absolving Shri B.S. Chauhan of the charges. - once it was found by an investigating agency that the statement of Sh. G.S. Kohli was not a good enough evidence to allege some of the officers implicated by him, the same could not have been made basis for others to establish charges against them, more so when no reasoning have been given for such different treatment for different officers. - no good reason to differ with the Order and uphold the same in dropping penalty against Shri. Pamnani. - department has not proved the case with any degree of certaint. We hold that penalty cannot be imposed on Shri. Balbir Singh. As regards Shipping Bills showing the CHA as Pal India Shipping Agency, he categorically stated that the signatures were not that of Manohar Badheka. Both Shri. Quereshi and Badheka have denied that the relevant S/Bills bear their signature. The department should have taken the help of handwriting experts, more so when so many documents and signatures were found to have been forged by the Shri. G.S. Kohli. We do not appreciate that department proposes to fix responsibility on these persons without caring to verify whether the signatures on the S/B s were theirs. Shri. Quereshi stated that when Shri. G.S. Kohli and Shri. R.S. Singh had forged signatures of so many officers of Customs, Banks and Steamer Agents they could have forged his(Quereshi s) signatures as a CHA on these fabricated S/bills. The absence of any evidence to prove that Shri. Quereshi and Shri. Badhekar had indeed filed the S/Bills, the penalty on them is clearly not sustainable. - Decided against Revenue.

Summary

Issues Involved:
1. Fabrication and forgery of export documents.
2. Fraudulent claim of drawback.
3. Role of Customs officers in the alleged fraud.
4. Admissibility and reliability of statements and evidence.
5. Penalty imposition on various individuals involved.

Issue-wise Analysis:

1. Fabrication and Forgery of Export Documents:
The investigation revealed that an individual floated multiple companies and forged documents related to the export of goods without actual physical export, fraudulently claiming a significant amount of drawback. The fabricated documents included bogus IEC Code, RBI Code, Bill of Lading, bank-attested invoices, and forged signatures of customs officers on export promotion copies of shipping bills. The companies involved were M/s. GSK Exports, M/s. ATA Industrial Enterprises, and M/s. All Export. The falsified documents were used to claim drawbacks at Nhava Sheva and Mumbai Ports. The scrutiny found that the addresses of the companies were bogus, and the quantities shown in shipping bills exceeded container capacities. Additionally, the invoices submitted to Customs were often different from those attested by the bank, and some remittances were not received against the so-called exports.

2. Fraudulent Claim of Drawback:
The fraudulent activities included claiming drawback without actual export, using fabricated documents and forged signatures. In some cases, the drawback was sanctioned, while in others, it was not. The investigation found that no export goods were carted at the Central Intelligence Warehouse Corporation (CWC), and the Bills of Lading were fabricated. The Customs officers' signatures on the shipping bills were forged, and the RBI and IEC codes were bogus. The statement of the main accused confirmed the receipt of drawback without making any exports and admitted to distributing the amounts to officers and staff involved.

3. Role of Customs Officers in the Alleged Fraud:
The investigation implicated several Customs officers, including Shri. B.S. Chauhan, Shri. Abhay Desai, and Shri. Harsh Srivastava, who allegedly provided examination reports without actual carting of goods. The accused officers initially admitted to examining the goods but later denied receiving any money. The investigation by CBI concluded that the signatures on the shipping bills were forged, and the handwriting expert's opinion supported this conclusion. The Commissioner dropped penalties against the Customs officers due to the lack of independent evidence corroborating the main accused's statement.

4. Admissibility and Reliability of Statements and Evidence:
The Revenue's appeal relied heavily on the statement of the main accused, which was considered hearsay evidence. The judgments cited emphasized that a confession of a co-accused cannot be treated as substantive evidence without independent corroboration. The court found that the investigation lacked independent evidence apart from the accused's statement. The absence of handwriting verification for several years and the failure to examine crucial witnesses weakened the Revenue's case. The court held that the allegations against the Customs officers were based on hearsay and lacked substantial evidence.

5. Penalty Imposition on Various Individuals Involved:
The Commissioner imposed penalties on the main accused and another individual but dropped penalties against others, including Customs officers and shipping agents, due to insufficient evidence. The Revenue's appeal sought to impose penalties on all individuals involved, but the court upheld the Commissioner's decision. The court found that the investigation was flawed, with missing links and contradictory stands taken by the department. The absence of independent evidence and the reliance on hearsay statements led to the dismissal of the Revenue's appeal.

Conclusion:
The court upheld the Commissioner's order, rejecting the Revenue's appeal due to the lack of independent evidence and the flawed investigation. The penalties against the Customs officers and other individuals were dropped, and the case was dismissed. The judgment emphasized the need for independent corroboration of confessions and the importance of thorough and unbiased investigations.