2024 (10) TMI 910 - AT - Customs

Smuggling - Confiscation of Red Sanders attempted to be exported - levy of penalties under CA, 1962 - rejection of declared value - redetermination of value. Levy of penalty u/s 114 of CA - HELD THAT - The goods were mis-declared in the baggage declaration which is an entry made under the Customs Act and the goods were prohibited for export. Both these factors rendered the goods liable for confiscation. The baggage declaration itself was filed in the name of Shri Vipin Dua who had nothing to do with the consignment. However, this consignment could not have been exported unless an airway bill was also filed which is the requirement of the airlines. The airway bill was filed in the name of M/s Sikki Auto Pvt. Ltd. the fictitious company (M/s Seiki Auto a company which exists at the address and nothing to do with the consignment). Since the name of the consignor/consignee and the description of the goods in the airway bill and the baggage declaration were different, two letters were filed and the name of the consignor and consignee and the description of the goods in the airway bill were changed to match the description in the baggage declaration. Several persons were involved in this scheme and Shri Mayank Gupta s role in the entire operation is that of filing the airway bills themselves. Without the airway bill being filed by Shri Mayank Gupta in the name of a fictitious company the entire fraud would not have been possible. There is no error in the Commissioner imposing penalty on Shri Mayank Gupta under section 114 of the Act. It also needs to be noted that section 114 does not require the intent of an individual to be established. The act or omission which rendered the goods liable for confiscation under section 113 of the Act is sufficient. Penalty on Shri Mayank Gupta under section 114AA of the Act - HELD THAT - The document for the purpose of the Act in this case was the baggage declaration which was not filed by Shri Mayank Gupta. The airway bill is not a document filed under the Act but is a document required by the airlines. It is the counterpart of bill of lading filed for transport by ships. Although the airway bill is an essential document to take the goods out of the country it is not the document filed under the Act. In view of the above, the Commissioner was correct in not imposing a penalty on Shri Mayank Gupta under section 114AA of the Act. Penalty of Shri Ravindra Kumar - HELD THAT - There is no dispute that red sanders were attempted to be exported using fake baggage declarations filed in the name of Shri Vipin Dua without his knowledge and fake airway bills filed in the name of fictitious company M/s Sikki Auto. Later, in order to align the two documents, letters were given to change the consignor, consignee and description of goods in the airway bill. Shri Ravindra Kumar was a key player in arranging the fake airway bills through Shri Mayank Gupta at the behest of Shri Sarvesh Kumar. We have no manner of doubt that but for these actions of Ravindra Kumar the attempted export of red sanders would not have been possible. Therefore, the Commissioner was correct in imposing penalty under section 114 of the Act on Shri Ravindra Kumar. Penalty under section 114 AA of the Act - HELD THAT - This can be imposed only if the knowledge of the person is established and the mis-declaration was in respect of a document filed for the purposes of the Act. In this case, the document filed for the purpose of Act is the baggage declaration. The role of Shri Ravindra Kumar was in getting the airway bill filed which was the document related to the airlines. Therefore, no penalty was imposable on section 114AA of the Act. The Commissioner was correct in not imposing penalty on him under this section. Penalty under section 114AA of the Act on Shri Sarvesh Kumar - HELD THAT - There are no hesitation in holding Shri Sarvesh Kumar was liable for penalty under section 114AA of the Act for the mis-declarations in the baggage declaration. In our considered view, Commissioner erred in not imposing the penalty under section 114AA of the Act on Shri Sarvesh Kumar. The value of the goods admitted to be exported was Rs. 2,00,00,306/-. Section 114AA of the Act provides for imposition of the penalty not exceeding five times the value of the goods for mis-declaration. No minimum penalty is stipulated under this section. Considering the role of Shri Sarvesh Kumar, it is found appropriate to impose penalty of Rs. 75,00,000/- on Shri Sarvesh Kumar under section 114AA of the Act. Penalty on Krishna Chandra Jha under section 114AA of the Act - HELD THAT - There are no manner of doubt that Shri Krishna Chandra Jha was not only a co-player but had full knowledge of the entire fraud being perpetuated. Since the baggage declaration was filed in the Custom House, any mis-declaration in it with knowledge attracts penalty under section 114AA of the Act. The Commissioner erred in not imposing the penalty under section 114AA of the Act on Shri Krishna Chandra Jha. Considering his role, it is found appropriate to impose a penalty of Rs. 50,00,000/- under section 114AA of the Act on Shri Krishna Chandra Jha. Appeal disposed off.

Summary

Issues Involved:

1. Confiscation of Red Sanders and imposition of penalties under sections 114 and 114AA of the Customs Act, 1962.
2. Non-imposition of penalties under section 114AA on certain individuals.
3. Appeals by individuals against penalties imposed under section 114.

Detailed Analysis:

1. Confiscation and Imposition of Penalties:

The Commissioner of Customs confiscated 1103.1 kg of Red Sanders under sections 113(d) and 113(h)(i) of the Customs Act, 1962, and imposed penalties on seven individuals. The confiscation was due to an attempt to export the Red Sanders, a prohibited item, by misdeclaring it as household goods. The penalties varied among the individuals, with the highest being Rs. 75,00,000/- imposed on Shri Prashant Kumar Jha under section 114AA.

2. Non-Imposition of Penalties under Section 114AA:

The Revenue filed appeals against the non-imposition of penalties under section 114AA on Shri Krishna Chandra Jha, Shri Ravindra Kumar, Shri Mayank Gupta, and Shri Sarvesh Kumar. Section 114AA mandates penalties for the use of false or incorrect material with knowledge. The Revenue argued that these individuals played significant roles in using false documents without verifying their authenticity, thus warranting penalties under section 114AA.

- Shri Mayank Gupta: The Tribunal found no error in the Commissioner's decision not to impose a penalty under section 114AA, as the airway bill, a document required by airlines and not filed under the Customs Act, was not considered a document for the purposes of the Act.

- Shri Ravindra Kumar: Similar to Shri Mayank Gupta, the Tribunal upheld the Commissioner's decision, noting that the airway bill was not a document filed under the Act, and thus, section 114AA penalties were not applicable.

- Shri Sarvesh Kumar: The Tribunal found that Shri Sarvesh Kumar, as a customs broker, was liable under section 114AA due to mis-declarations in the baggage declaration, a document filed under the Customs Act. The Tribunal imposed a penalty of Rs. 75,00,000/- under section 114AA.

- Shri Krishna Chandra Jha: The Tribunal imposed a penalty of Rs. 50,00,000/- under section 114AA, concluding that Shri Krishna Chandra Jha had knowledge of the fraud and played a significant role in the conspiracy.

3. Appeals Against Penalties under Section 114:

- Shri Mayank Gupta: His appeal against the penalty under section 114 was dismissed. The Tribunal found that his actions contributed to the goods being liable for confiscation, thus justifying the penalty.

- Shri Ravindra Kumar: His appeal was also dismissed. The Tribunal determined that his involvement in arranging fake airway bills was crucial to the attempted export, validating the penalty under section 114.

Conclusion:

The appeals were disposed of with modifications to the penalties as follows:

- Appeals by Shri Mayank Gupta and Shri Ravindra Kumar against penalties under section 114 were dismissed.
- Revenue's appeals seeking penalties under section 114AA on Shri Sarvesh Kumar and Shri Krishna Chandra Jha were allowed, with penalties imposed accordingly.
- Revenue's appeals against non-imposition of penalties under section 114AA on Shri Mayank Gupta and Shri Ravindra Kumar were dismissed.

The Tribunal's decision emphasized the importance of verifying the authenticity of documents and the roles individuals play in facilitating illegal exports.