2018 (11) TMI 852 - AT - Customs

Penalty u/s 114 (i) and 114 (iii) of the Customs Act, 1962 - exports of overvalued and sub standards goods - imposition of penalty based on telephonic conversations with Shri Kirt Shrimankar - Held that - Shri S. Chattaraj was not involved in conspiracy with Shri Kirit Shrimankar towards exports of overvalued and sub standards goods. There is no transcript of phone calls made between these two to reach a conclusion that the said conversation was in order to cause fraudulent export. Only on the basis of familiarity between the two, it cannot lead to inference of Appellant having committed any illegal act. In case of other, who are Inspectors & Superintendents, we find that there is no evidence of these Appellants getting any favour from Shri Kirit Shrimankar or any other person - when the appellants are not accused of getting any illegal gratification or advantage from the alleged exporter, they cannot be held responsible for any alleged evasion of duty or causing fraudulent exports. Penalty not imposable - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Imposition of penalty under Section 114 (i) and 114 (iii) of the Customs Act, 1962 on departmental officers.
2. Allegations of involvement in fraudulent export activities.
3. Evaluation of evidence and procedural adherence.
4. Determination of penalties based on the evidence presented.

Issue-wise Detailed Analysis:

1. Imposition of penalty under Section 114 (i) and 114 (iii) of the Customs Act, 1962 on departmental officers:
The appeals arose from a common adjudication order imposing penalties on departmental officers for allegedly facilitating fraudulent exports. The officers were accused of knowing the exporter, who used dummy IECs for exporting sub-standard goods under duty drawback schemes. The adjudicating authority imposed penalties of ?25,00,000 on one officer and ?10,00,000 each on others under Section 114 (i) and (iii) of the Customs Act, 1962.

2. Allegations of involvement in fraudulent export activities:
The main allegation was that the officers facilitated the fraudulent export of sub-standard goods by the exporter, who used dummy IECs. The evidence included call records, attendance at a marriage ceremony, and usage of guest house facilities financed by the exporter. The officers were accused of being in connivance with the exporter due to these interactions.

3. Evaluation of evidence and procedural adherence:
The Tribunal found that the evidence presented, such as call records and attendance at personal events, did not conclusively prove that the officers were involved in fraudulent activities. There was no transcript of phone calls to support the allegations. The Tribunal referred to previous judgments (Shafeek P.K. Vs. Commr. of Customs and Khemani Purshottam Mohandas Vs. CC) to emphasize that mere familiarity and call records without corroborative evidence cannot lead to a conclusion of wrongdoing.

4. Determination of penalties based on the evidence presented:
The Tribunal noted that the officers followed procedural norms, including provisional assessments and sample testing by the Textile Committee, Mumbai. The adjudicating authority's reasoning to impose penalties based on the number of consignments handled was found erroneous. The Tribunal highlighted that there was no evidence of the officers receiving illegal gratification or knowing the fraudulent nature of the exports. Consequently, the penalties were deemed unjustified.

Conclusion:
The Tribunal set aside the penalties imposed on the officers, stating that there was no substantial evidence to prove their involvement in fraudulent export activities. The decision emphasized the importance of corroborative evidence and procedural adherence in determining penalties. The penalties were annulled, providing consequential relief to the appellants.

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