2020 (6) TMI 180 - HC - Customs

100% EOU - Maintainability of revision petition - Conspiracy - Export of substandard capital goods/machinery to Singapore by falsely declaring the item exported as Capital Goods - allegations in the charge sheet are specific and there were sufficient evidence with regard to the criminal conspiracy between the petitioners/accused and the other accused for misappropriation of foreign funds and there are sufficient oral and documentary evidence to prove the offences - HELD THAT - The Income Tax Department after analyzing all official transaction and on perusal of the document, books of account found that the petitioner did not import the machinery and did not make any claim for depreciation. Likewise the CESTAT has held M/s.Sundaram Finance Limited (SFL) and M/s.ICICI Bank (erstwhile Bank of Madura) are its importers, owners of the goods and liable to pay duty. Further, in view of the live connect of conspiracy being snapped at both end, this Court finds that the continuation of the proceedings against the petitioners would be an excise in futility. In view of the subsequent development that it has become inherently improbable to reach a just conclusion that there is sufficient ground to proceed against the petitioners/A6 to A8 and further considering that the case is pending from the year 2004 without any progress - revision allowed.

Issues Involved:
1. Conspiracy to cheat the Government of India.
2. Dismissal of the discharge petition.
3. Non-application of mind by the trial court.
4. Involvement of various accused and their roles.
5. Evidence supporting the prosecution.
6. Previous judicial decisions and their implications.
7. Financial transactions and their legality.
8. Import and export irregularities.
9. Legal responsibility and criminal liability.

Issue-wise Detailed Analysis:

1. Conspiracy to Cheat the Government of India:
The prosecution alleged a conspiracy among several accused to cheat the Government of India by exporting substandard capital goods to Singapore, falsely declaring them as capital goods, and over-invoicing their value. The goods were then re-imported to India under the 100% Export Oriented Unit (EOU) scheme without paying customs duty, causing a wrongful loss of approximately ?31.10 crores to the Government.

2. Dismissal of the Discharge Petition:
The petitioners filed a discharge petition, which was dismissed by the trial court on 03.10.2018. The dismissal was based on the premise that the case was instituted otherwise than by a police report. The petitioners then filed a fresh discharge petition, which was again dismissed on 19.03.2019, leading to the current criminal revision petition.

3. Non-application of Mind by the Trial Court:
The petitioners argued that the trial court's dismissal of the discharge petition was due to non-application of mind. They contended that the judgments referred to by the trial court were irrelevant to the facts of their case. The trial court was accused of mechanically dismissing the petition by merely extracting portions of the charge sheet and listing witnesses and documents without proper consideration.

4. Involvement of Various Accused and Their Roles:
The case involved 17 accused, including companies and individuals. Some accused had died, and cases against others were quashed or abated. The petitioners were accused of conspiring with others, including a company and its directors, to import substandard machinery and evade customs duty.

5. Evidence Supporting the Prosecution:
The prosecution presented evidence of agreements, attestations, and financial transactions to support the allegations of conspiracy and customs duty evasion. The evidence included documents showing the import and export of machinery, financial transactions through banks, and attestations from government authorities.

6. Previous Judicial Decisions and Their Implications:
The petitioners cited previous judicial decisions, including those of the Supreme Court and the High Court, to argue that the benefits granted to co-accused should be extended to them. They also referred to decisions quashing proceedings against other accused, arguing that the conspiracy link had been severed.

7. Financial Transactions and Their Legality:
The petitioners argued that all financial transactions were conducted through authorized banks and that they had no control over the funds. They contended that the transactions were legitimate and that they had not benefited from the alleged conspiracy.

8. Import and Export Irregularities:
The prosecution alleged that the petitioners imported substandard machinery by falsely declaring it as capital goods and over-invoicing its value. The machinery was then re-imported without paying customs duty. The petitioners argued that the machinery was imported for legitimate purposes and that they had complied with all regulatory requirements.

9. Legal Responsibility and Criminal Liability:
The court considered the legal responsibility of the petitioners and their criminal liability. The court noted that the prime conspirator and beneficiaries had been relieved from the case, and the chain of events linking the conspiracy had been severed. The court found that the continuation of proceedings against the petitioners would be futile.

Conclusion:
The High Court set aside the trial court's order dated 19.03.2019, discharging the petitioners from the case. The court found that the prosecution's case had become inherently improbable due to the severance of the conspiracy link and the relief granted to other accused. The criminal revision petition was allowed, and the connected miscellaneous petition was closed.

← Previous Next →