By TIOL News Service

MUMBAI, JAN 01, 2015 : A nice way to begin the New Year!

THE appellant was the Examiner of Customs (now Appraiser) at S.T.P. from 01.07.2000 onwards. Allegation of aiding and abetment was made against him in a case of fraudulent exports wherein S. Bills where filed under duty drawback scheme.

The facts -

+ An information was received by SIIB (Export), NCH, Mumbai that certain unscrupulous exporters were trying to export old and used garments as well as old carpets merely for claiming huge drawback by declaring them as new readymade garments. Accordingly the officers of SIIB (Export) intercepted the containers carrying the export consignments and goods were examined under panchnama. The examination resulted in recovery of old and used clothes/carpets.

+ Investigation were carried out and statements of various persons concerned were recorded and finally SCNs were issued to the exporters along with fraudsters involved in the matter and the Appellant, then Examiner.

+ Confiscation of the goods and penalty imposition u/s 114(iii) of the Customs Act, 1962 were proposed. The Appellant was asked to show cause as to why penal action should not be taken against him for aiding & abetting in the acts of the exporters to defraud the Government revenue by way of claiming huge drawback on the said exports.

+ The Commissioner of Customs (Export Promotion), Mumbai-I adjudicated the case(s) by passing an order for confiscation of the goods and imposing a redemption fine of Rs.50 lakhs. Penalty was also imposed on the exporters and the appellant u/s 114 (iii) of the Customs Act, 1962.

Being aggrieved, the Examiner filed appeals before the Tribunal in the year 2005/2006.

++ It is submitted that the findings given by the adjudicating authority that the appellant had knowledge about the offence being committed; that he had acted in a manner to aid the offence by facilitating the examination of offending goods; that he failed to discharge his duties prudently and conscientiously and thus had helped the exporters in the fraudulent attempted export is based on assumptions and presumptions.

++ Inasmuch as it is further submitted that there is no such admission in his statements recorded; that there is not an iota of evidence or reliable deposition on behalf of anyone; evidences are only hearsay and that the investigating agency had not corroborated the evidences, on which they rely upon, which are mainly statements given by others; that the LEO was given in good faith as there was lot of rush and it was not possible to examine and supervise the examination of the export goods; that the officer(s), the Sepoy, who registered the documents from the unknown persons and the Superintendent (Responsible for Supervision), who gave, Let Export Order in all the consignments and Assistant Commissioner (in-charge) who marked these shipping bills for the appellant were allowed to go scot free ignoring collective and higher responsibility and they were neither made Noticee in the SCN nor any action was taken against them under any Rules by the department; that there is no allegation that the Appellant has taken any monetary consideration from the exporters. Also there was no recovery of any unaccounted money or incriminating documents from the Appellant or from his residence, during search. Furthermore, the investigating agency has failed to identify the exporters in all the cases without which the allegation of the appellant's complicity, in the matter of export of sub-standard goods is not be proved.

++ At the most, the conduct of the appellant would only attract a charge of negligence, but not a charge of abetment hence the penalty so imposed u/s 114(iii) is fit to be set aside. So also, section 155 of the Customs Act, 1962 barred action against the Customs Officers. Reliance is also placed on the decision in A.P. Sales vs. Commissioner of Customs, Hyderabad - 2006-TIOL-1972-CESTAT-BANG.

The AR reiterated the findings of the adjudicating authority.

Placing reliance on the decision in A.P. Sales (supra) and noting that the same is exhaustive and deals with the facts on hand the Bench observed -

“Considering the arguments and the submissions made and perusal of the Commissioner's order, which is extracted supra, I notice that the ingredients for proving the charge of abetment as required under Section 114(iii) has not been brought out in the show cause notice. The Superintendent has admitted that there was a lot of rush in the STP shed and he could not supervise, as required of him. Further, there is no locus standi of Ramesh Singh & Sanjay Sharma who are neither exporter nor CHA. The reference to call records of telephone is also not a conclusive evidence as the explanation of the appellant that this mobile phone was used by other staff as well as visiting staff of CHA etc., is not found untrue. There is no admission made by the appellant Customs Officer in support of alleged abetting in the offence charged. Neither the exporters, if any, nor the CHA have made any incriminating statement, implicating the appellant Examining Officer. The appellant has not been benefited in any way. The alleged lapse on his part in not examining the goods properly and feeding of un-qualified examination report in the EDI System without examining the goods would at best be dereliction of duty, for which he can be proceeded in terms of Conduct Rules. The dereliction in duty is not a penal offence committed by him for implicating him along with the offence by the exporters, CHAs and others.”

In fine, the penalty u/s 114 (iii) of the Customs Act, 1962 was held as not sustainable. The appeals were allowed with consequential relief.

(See 2015-TIOL-19-CESTAT-MUM)