2021 (7) TMI 578 - AT - Customs

Allegation for conducting market inquiry improperly by the Inspector (Cutoms) (now deceased) - Illegal availment of drawback - fraudulent export of goods by the companies of kingpin - penalties u/s 114A and 114AA of Customs Act - HELD THAT - Nothing has been discussed by the Adjudicating Authority as to what has rendered the alleged casual and amateur manner of conducting market inquiry into an act of alleged abetment for fraudulent export. To further appreciate, it is important to understand the ingredients of the penal offence, namely, abetment. Section 107 of Indian Penal Code 1862 defines abetment to include instigating any person to do a thing or engaging with one or more persons in any conspiracy for the doing of a thing, if an act or illegal omission takes place in pursuance of that conspiracy and in order to the doing of that thing, or intentional aid by any act or illegal omissions to the doing of the said act. The allegation against the appellant is of conducting market inquiry in such a manner so as to aid the fraudulent exporters to draw heavy duty draw backs. Apparently, this inquiry was conducted post the alleged fraudulent exports were already made. It is abundantly clear that to constitute abetment the abetor has to come into action of abeting the offender prior later does or fails to do an act which amounts to committing the crime/offence. The market inquiry was post the commission of crime of fraudulent export of handwoven carpets which were otherwise liable for confiscation to wrongly avail higher duty draw-back by Mr. Sajjan Kumar. Hence, no question arises of abeting him at a stage later than the commission of said fraudulent exports. There is no evidence produced by the department which may prove that the appellant ever instigated or conspired or intentionally aided Shri Sajjan Kumar to fraudulently export the hand woven carpets to traders in different countries and to take as high as 12 Crores of drawback in DAPL and higher drawback in other companies as well. There is no evidence that appellant has been the beneficiary of these amounts or part thereof. Penalties under Section 114 (iii) 114 AA - HELD THAT - Abeting is something much more than the negligence or dereliction of duties. The noticed negligence on part of the appellant unless and until goes back to the stage of initiation of crime, same cannot be held to the abetment either instigation or conspiracy. The improper and amateur act of market survey in the given facts and circumstance, cannot be held as aiding Shri Sajjan Kumar to make fraudulent export of carpets. Though the Adjudicating Authority below has taken a plea that the appellant in his statement has admitted for the alleged offence but the perusal of the document on record shows that the admission of appellant is only to the fact that the inquiry conducted by him with his Co-Inspector Naresh Kumar is an improper inquiry that too after it was brought to his notice that both the firms inquired by them are found by DRI to have been controlled by same Sajjan kumar who has been investigated in the impugned matter. The said statement has wrongly been considered as an admission of appellant for abeting fraudulent exports made by Sajjan Kumar and for heavy amount of draw back being claimed by him. Appeal allowed.

Issues Involved:
1. Allegation of abetment in fraudulent export.
2. Conduct of market inquiry by the appellant.
3. Imposition of penalty under Section 114 (iii) and 114 AA of the Customs Act, 1962.

Issue-Wise Detailed Analysis:

1. Allegation of Abetment in Fraudulent Export:
The appellant, a retired Customs Inspector, was accused of abetting fraudulent exports by companies controlled by one Shri Sajjan Kumar. The fraudulent activities involved exporting carpets, garments, and fabrics at over-invoiced values to avail undue export incentives like duty drawback. The key allegation was that the appellant conducted a market inquiry in a manner that facilitated these fraudulent exports.

2. Conduct of Market Inquiry by the Appellant:
The appellant, along with another inspector, conducted a market inquiry to determine the value of hand-knotted carpets. The inquiry was conducted from two firms, M/s. Indus Chemitex Ltd. and M/s. S.R. Goyal and Sons, which were later found to be controlled by Shri Sajjan Kumar and not engaged in carpet exports. The firms denied providing any market rate information for carpets. The appellant argued that the inquiry was part of his official duties and any negligence should not be construed as abetment.

3. Imposition of Penalty under Section 114 (iii) and 114 AA of the Customs Act, 1962:
The Show Cause Notice proposed a penalty for abetting fraudulent exports, which was confirmed by the Order-in-Original and upheld in the Order-in-Appeal. The appellant contended that there was no evidence of intentional aid or collusion with the fraudulent exporter. The Department failed to prove that the appellant had any malafide intent or benefited from the fraudulent exports.

Judgment:
The Tribunal observed that to constitute abetment, there must be evidence of instigation, conspiracy, or intentional aid. The market inquiry conducted by the appellant was post the alleged fraudulent exports, and there was no evidence of the appellant's involvement in the fraud. The Tribunal noted that negligence or dereliction of duty does not amount to abetment. The appellant's actions were found to be improper and casual but did not constitute abetment. The Tribunal relied on precedents, including the Supreme Court's judgment in Shri Ram & Another vs. The State of Uttar Pradesh, which emphasized the need for intentional aid and active complicity for abetment. The Tribunal concluded that the Department failed to provide evidence of the appellant's complicity or benefit from the fraudulent exports. Consequently, the order imposing penalties was set aside, and the appeal was allowed.

Conclusion:
The Tribunal set aside the order imposing penalties on the appellant, concluding that the appellant's conduct amounted to negligence but did not constitute abetment of fraudulent exports. The appeal was allowed, and the penalties were revoked.

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