2017 (10) TMI 1272 - AT - Customs

Misdeclaration of export goods - contraband item - red sanders wood - penalty - Held that - in the instant case one container was loaded with glass tumblers in the factory of BG. The container was stuffed under the supervision of Central Excise officers and also sealed. The container after export was recalled by the DRI and examined and it was found to contain 9.34 mt of red sander wood which is prohibited for export. Along with the contraband a part of the declared goods i.e. glass tumblers was also found - it is evident that none of the appellants had any role to play in the fraudulent export of red sander wood - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Fraudulent export of red sanders wood; Imposition of penalties on appellants; Modus operandi of smuggling syndicate.

Analysis:
The case involved three appeals filed by a company and individuals against an Order-in-Original (OIA) dated 27.05.2015. The facts revealed that a container declared to contain glass tumblers for export actually held red sanders wood, a prohibited item. Investigations by the Directorate of Revenue Intelligence (DRI) implicated the driver and associates in the fraudulent exchange. The appellants denied involvement and highlighted the fraud committed by the driver. The authorities imposed penalties for failing to verify the overseas buyer's genuineness and for omission in due diligence.

The investigation uncovered a syndicate led by Sunil Gupta involved in smuggling red sanders wood by replacing legitimate export goods with contraband. The modus operandi included obtaining orders from exporters, creating duplicate seals, and using their transport to swap goods in containers. The investigation confirmed the fraudulent substitution of goods in the container belonging to the appellants. Statements from supervisors and officials corroborated the loading and sealing of export goods in the container. The appellants were found not complicit in the fraudulent export scheme.

After hearing arguments, the Tribunal found no justification to uphold the penalties imposed on the appellants. The penalties were set aside, and the appeals were allowed only for the appellants present. The Tribunal clarified that the rest of the order was not interfered with, modifying the impugned order accordingly. The judgment was pronounced in open court on 21.09.2017.