2024 (9) TMI 629 - HC - Customs

Penalty of Rs. 5 lakhs imposed on the Appellant - Import of chemicals under 9 bills of entry on various dates - Claim of exemption in respect of Duty Entitlement Pass Book (DEPB) - Fake DEPB licences and Telegraphic Release Advice (TRA) - Refusal to rely on the retracted statement of Shri. Chandran - no nexus established between the brokers and the goods imported by the importers - absence of a finding that the Appellant had acted in a fraudulent manner - HELD THAT - The Tribunal has taken note of all the relevant facts. As regards the statement of B.R.Chandran implicating the appellant, the statement has been recorded on 09.11.2004 when the deponent was in custody. The order of adjudication makes it amply clear that the statement was recorded, as per the order of learned Judicial Magistrate No.1, Tuticorin, before the Senior Intelligence Officer of the Department of Revenue Intelligence in the presence of the Superintendent of the Sub Jail, Tuticorin. The adjudicating authority has applied his mind as to whether the procedure followed for recording of the statement was acceptable, noting specifically that the Superintendent of the Sub Jail is not a Police Officer and that the presence of multiple Officers in the Jail where the statement had been recorded would have protected against pressure, coercion or duress being applied on the deponent. Thus, no material has been placed warranting intervention in the above factual findings. There are no perversity in the conclusions arrived at by the Tribunal on the basis of the material on record. In fact, the Tribunal has, on appreciation of the facts, applied its discretion to reduce the penalty from Rs. 5 lakhs to Rs. 3 lakhs. Appeal dismissed.

Summary

Issues:
- Import of chemicals under bills of entry with exemption claim
- Verification of authenticity of scrips procured for exemption
- Involvement of various entities in procurement of DEPB scrips
- Imposition of penalty under Section 112(a) of the Customs Act
- Appeal before CESTAT challenging penalty amount
- Substantial questions of law raised by the appellant
- Reliance on retracted statement of a key individual
- Tribunal's findings on the appellant's involvement in DEPB scam
- Tribunal's decision to reduce penalty amount

Analysis:

The judgment pertains to the import of chemicals under bills of entry with a claim of exemption, where doubts arose regarding the authenticity of Duty Entitlement Pass Book (DEPB) scrips procured. The appellant was found to have procured fake DEPB licenses and Telegraphic Release Advice (TRA) through intermediaries, leading to the imposition of a penalty under Section 112(a) of the Customs Act. The Tribunal, acting as a fact-finding authority, reduced the penalty from Rs. 5 lakhs to Rs. 3 lakhs, prompting the appellant to challenge the decision based on substantial questions of law.

The appellant argued that the penalty was solely based on a retracted statement from a key individual, suggesting innocence due to returning the money upon discovering the fake licenses. However, the respondent contended that the Tribunal's findings were evidence-based and factual, warranting no intervention. The High Court concurred with the Revenue, emphasizing that the Tribunal had considered all relevant facts.

Regarding the retracted statement, the Court noted that it was recorded in the presence of appropriate authorities, ensuring no coercion or duress. Even if the statement was retracted later, the delay did not invalidate its reliability. The Tribunal's findings highlighted the appellant's involvement in trading fake DEPB licenses and TRAs, leading to duty-free clearance of goods, ultimately upholding the penalty imposition under Section 112(a) of the Act.

The Court affirmed the Tribunal's decision, stating that no new evidence warranted intervention in the factual findings. The Tribunal's discretion to reduce the penalty amount from Rs. 5 lakhs to Rs. 3 lakhs was upheld, and the appeal was dismissed with no costs incurred. The judgment underscores the importance of evidence-based decisions in penalty imposition cases under the Customs Act, emphasizing the need for factual substantiation in such matters.