2023 (5) TMI 453 - AT - Customs

Levy of penalty on CHA - allegation of abetting some unscrupulous exporters - mens rea - Availment of fraudulent export incentives under duty drawback and FPS (benefit of Focus Product Scheme) - mis-declaration the exported goods - only allegation in the show cause notice against the appellants is that Shri Shameshwar Sharma had shown a sample of export goods to Jayant Vikram which appeared to be costing at around Rs. 300/- per piece as contrary to the value declared @ 19.80 per U.S. per square meter - HELD THAT - The entire findings are based on the statement of Jayant Vikram as was recorded on 8 January 2015 where he stated that there is partnership agreement between Satyender Singh G-card holder and Shri Umesh Chand Dhyani proprietorship of CHA. But it is observed that there is no such partnership agreement on record. Contrary thereto there has been the statement of Shri Umesh Chand Dhyani as was initially recorded on 8 January 2015 itself where he stated that he had an agreement with Jayant Vikram with regard to handling of the export consignments. He only used to manage the exporter clearance charges and other matters related to export consignment. Jayant Vikram only had handled the impugned export consignments. It is observed that later Shri Umesh Chand Dhyani vide his subsequent statement dated 23.11.2015 contradicted saying that Jayant Vikram was not the controller of his CHA firm he was merely a part time employee engaged in marketing/soliciting business on behalf of his firm. M/s National Enterprises had tried to export 10 consignments by committing mis-declaration of description as well as the value of the goods to be exported and that the allegations have been confirmed goods have been confiscated and the penalties have been imposed upon the exporters and their representatives. None of them have come forward to challenge the orders against them. As such the orders qua them have attained finality. But the said fact cannot be read as a ground for holding that the present appellants i.e. the CHA firm its G-card holder and its employee would have abated with the exporter. Abatement has no where been defined under Customs Act. The CHA are merely but processing agent on documents of clearance of goods through Customs House. They are not the Inspector to inspect the genuineness of transactions nor they have any allegation to look into the information receive from the exporter/importer. Though it is onus to expect CHA to enquire into and verify of import-export code given by each client for each transaction but when such code is presented there is a prima facie presumption about it to be correct because while issuing the code necessary background check should definitely has been done by the Customs Authorities - except the statements that too full of contradictions and that none of the deponents were being cross-examined by the appellant herein it is held that there is no evidence to attribute the said mens-rea with the appellants to abate with the exporter for gross mis-declaration in description and value of the consignment. Thus it is clear that there is no such evidence on record which may prove knowledge with the appellants about the alleged mis-declaration. In such circumstances the order imposing penalties upon the appellants is now sustainable - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are mis-declaration of goods for duty drawback and Focus Product Scheme, imposition of penalties on appellants based on statements without opportunity for cross-examination, involvement of CHA firm in mis-declaration, and admissibility of statements as evidence.

Mis-declaration of goods and penalties based on statements:
The case involved M/s National Enterprises mis-declaring goods for duty drawback and FPS benefits, leading to confiscation of goods and imposition of penalties. The appellants, employees of the exporting firm and CHA firm, were penalized based on statements without the opportunity for cross-examination, contrary to legal principles established in the case of Laxmi Export Ltd. The appellants argued lack of evidence of connivance with the exporter and emphasized their bonafide discharge of duties. The Tribunal held that the penalties imposed solely on the basis of statements were not sustainable and set aside the order, allowing the appeals.

Involvement of CHA firm in mis-declaration:
The investigation revealed that M/s National Enterprises mis-declared goods, and the CHA firm, represented by the appellants, was found negligent in verifying the goods. The Departmental Representative argued that the CHA firm acted negligently and connived with the exporter for mis-declaration to obtain more benefits. However, the Tribunal observed contradictions in statements and lack of evidence to penalize the appellants for abetment. The Tribunal emphasized that the CHA's role is limited to processing documents and not verifying the actual goods, and without concrete evidence, the penalties on the appellants were set aside.

Admissibility of statements as evidence:
The Tribunal highlighted the legal requirement for statements to be admissible only after cross-examination, citing relevant case laws. The statements of the appellants and other involved parties were found contradictory and lacking in evidentiary value. The Tribunal concluded that without proper cross-examination and substantial evidence, the statements could not be relied upon to penalize the appellants. As a result, the order imposing penalties on the appellants was set aside, and the appeals were allowed.