ORDER
T.K. Jayaraman, Member (T)
1. These appeals arise out of the Order-in-Original No. 19/2000 dated 30.11.2000, 20/2000 dated 30.11.2000 and 21/2000 dated 29.12.2000, passed by the Commissioner of Customs, Mangalore.
2. In the Appeals No. C/44-46/2001, penalties have been imposed on Shri J. Surendra and in the Appeal No. C/90/2001 on Shri Tony Tarakan under Sections 112 and 114(iii) of the Customs Act, 1962. The appeals are against the imposition of penalties.
3. The Orders-in-Original No. 19/2000 and 20/2000 both dated 30.11.2000 relate to attempt to claim drawback fraudulently by exporting inferior quality garments. Shri J. Surendra has been penalised for assisting one Shri Nataraj in claiming drawback fraudulently. According to the investigation, Shri Surendra arranged a Customs House Agent (CHA) for clearance of export goods and also signed as an introducer in the application for opening an account in the name of M/s S.K. Enterprises and the State Bank of Mysore at Kottara Chowki, Mangalore. It is further seen from the application form that a fictitious address has been given and Shri Surendra by signing it and also by arranging containers for carrying the goods from Mangalore to Cochin has abetted by committing fraud.
4. The adjudication Order No. 19/2000 dated 30.11.2000 passed by the Commissioner relates to attempt to claim drawback fraudulently by over-valuation by M/s N.M. Exports. In this case, Shri Surendra Introduced M/s. N.M. Exports and Shri Y.B. Sha to State Bank of Mysore, though he had not known either of them adequately to be able to introduce them. Further, Shri Surendra introduced Shri Tony Tarakan to Shri Nataraj. Shri Tony has arranged 30,000 pieces of T-Shirts, 100% cotton knitted for the purpose of export. Shri Nataraj told Shri Tony to quote US $ 7.95 per piece in invoice and told him to send all the paper to Shri Surendra. It is also stated that Shri Surendra and Shri Tony Tarakan would get Rs. 50 per piece as drawback. In view of the above involvement, a penalty of Rs. 2 lakhs was imposed on Shri Surendra in Order-in-Original No. 19/2000 dated 30.11.2000. In Order-in-Original No. 21/2000 dated 29.12.2000 for similar involvement of Shri Surendra, a penalty of Rs. 2 lakhs and in Order-in-Original No. 20/2000 dated 30.11.2000 a penalty of Rs. 1 lakh had been imposed by the Commissioner. In Order-in-Original No. 21/2000 dated 29.12.2000, the Original Authority has imposed a penalty of Rs. 2 lakhs on Shri Tony Tharakan under Section 114(iii) of the Customs Act, 1962.
5. Shri A.K.J. Nambiar, learned Advocate appeared on behalf of the appellant and Smt. Shoba L. Chary, JCDR appeared on behalf of the Revenue.
6. The learned Advocate urged that Shri Surendra arranged empty containers for transport of the garments. He also introduced Shri Nataraj to the CHA. Further, without proper verification he signed the introduction form blindly for opening an account in the name of M/s S.K. Enterprises in the State Bank of Mysore. He contended that imposition of penalty of Rs. 1 lakh in the Order-in-Original No. 20/2000 and Rs. 2 lakhs in the Orders-in-Original No. 19/2000 and 21/2000 is not justified. He said that Shri Surendra in good faith signed the introduction form and he had no role in the fraudulent claim of the drawback. He pointed out that the adjudicating authority imposed equal penalty on Shri Surendra and also Shri Nataraj who was the kingpin in the attempt to claim fraudulent drawback. Further he said that even though the CHA has signed the Shipping Bills, he has been let off by the adjudicating authority. Therefore, he prayed for leniency in the matter. On behalf of Shri Tony Tarakan, it was urged that he was running only transport business concerned and acted only in his business capacity. He was under the bonafide belief that the export price fixed was on the basis of experience of Shri Nataraj. Only on receipt of the Show Cause Notice he knew about the fraudulent intention of Shri Nataraj in fixing very high export price for claiming huge drawback. Shri Tony had no role in fixing the export price. He contended that a heavy penalty of Rs. 2 lakhs imposed is unjustified. The learned Advocate relied on the following case laws:
(i) Rakesh Kumar Sharma v. Collector of Customs, New Delhi .
(ii) Kamal Shipping Services Ltd. v. CCE, Hyderabad .
(iii) Shri Ram v. State of U.P.
In the case of Rakesh Kumar Sharma , it was held that the penalty imposed on person in-charge of courier agency on the footing that six parcels (alleged to contain smuggled goods) were accepted by the despatched for despatch from Delhi to Mumbai and he was aware of the contents of the parcels as per normal trade practice was not accepted and penalty was held to be not warranted and set aside. In the case of Kamal Shipping Service Ltd. , it was held that penalty on the container agent cannot be sustained as the container was allotted in the normal course of business. Relying on the above case laws, the learned Advocate urged that S/Shri Surendra and Tony Tharakan were only doing their work in the normal course and they did not have any knowledge of the containers for the export.
7. The learned JCDR took me at the relevant Paras of the Orders-in-Original and urged that Shri Surendra was involved in all the three cases in introducing the concerned persons to the Bank for opening accounts in fictitious address. Moreover, he has also arranged containers for the export of the garments. Further he had introduced the CHA to Shri Nataraj who is the master mind in the fraud. Hence Shri Surendra is not that innocent as contended by the learned Advocate. The learned JCDR said that the very fact that Shri Surendra introduced Shri Nataraj to the Bank without verifying raises suspicions and the fact of his abatement in the attempt to claim drawback fraudulently to the extent. Shri Tony has also actively assisted in the export of the garments by which Shri Tony Tharakan and Shri Surendra would get Rs. 50 per piece of the garments from the drawback amounts. In these circumstances, she said that the imposition of penalty by the Original Authority is legal and proper. Hence, she prayed for upholding the penalty imposed on Shri Surendra and Shri Tony Tharakan.
8. I have heard the rival contentions. Shri Surendra has been penalised in all the three cases. In all the three cases, there has been attempt to claim drawback fraudulently by inflating the value of the exported goods. What is the role of Shri Surendra in each of these cases? The Order-in-Original No. 19/2000 relates to the export made by M/s N.M. Exports. In this case Shri Surendra has assisted Shri Nataraj by arranging empty container. This itself is not an offence. He has also arranged CHA for the clearance of export goods. In the normal circumstances, this also cannot be deemed as an offence under the customs law. Further he introduced Nataraj M. Kanchan to the State Bank of Mysore and signed in the application form which indicated fictitious address. It is also seen from Para 41 of the Order-in-Original No. 19/2000 that Shri Surendra was very much in the know of fixation of price of the export goods and also transportation of the goods. He also knew Shri Tony Tharakan, Partner, M/s T.V. George Tharakan and Co., CHA who had arranged 30,000 pieces of T-Shirts, 100% cotton knitted for the purpose of exports and Shri Tony sent a sample to Shri Surendra and he had shown the same to Shri Nataraj., It is also seen that out of all the drawback amount to be received, Shri Tony would get a commission of Rs. 50 per piece. The Order-in-Original No. 20/2000 relates to export by M/s. S.K. Enterprises. In this case also the address of M/s. S.K. Enterprises was fictitious and Shri Surendra introduced them to Bank. Shri Surendra’s involvement in this case is similar to his involvement in M/s. N.M. Exports case. The adjudicating authority in Para 47 of the Order-in-Original has observed as follows:
The office of M/s Bhaskar Kini and Co. where he works, is located on the same floor in the same building. Obviously he was aware that a fictitious address was being used. Further, he had signed the application form of M/s S.K. Enterprises as an introducer for the purpose of opening a current account at State Bank of Mysore, Mangalore and when he signed the application form, he found that no photograph of the proprietor of the firm was affixed on the account opening form i.e. he signed the application form without knowing the person who would operate the account. That he had not doubted the credentials or veracity of the signature of the proprietor points to his knowing complicity in the fraud. He had knowingly assisted Shri Nataraj in the drawback fraud.
In this case also Shri Tony Tharakan arranged 30 pieces of T-Shirts, 100% cotton knitted for the purpose of export and sent a sample of T-Shirt to Shri Surendra. Both these persons knew that US $ 7.95 per piece was indicated in the invoice. Shri Tony would get Re. 0.50 per piece as commission. This is very much an indication of the involvement of both the persons in the drawback fraud. The Order-in-Original No. 21/2000 relates to the export by M/s Sri Nambunayaki Exports. In Para 47, the adjudicating authority has given his finding regarding the role of Shri Surendra in the fraudulent exports and in Para 48 he has given finding regarding the role of Shri Tony Tharakan. Paras 47 and 48 of the Order No. 21/2000 are reproduced below:
47. Sri J. Surendra is a person through whom the entire scheme was chalked out. He introduced Shri Tony Tharakan of Kochi to Shri Nataraj M. Kanchan who coordinated the export. The trio, Shri J. Surendra, Shri Nataraj M. Kanchan and Shri Tony Tharakan discussed the modus operandi of the entire fraud and worked out the details. He arranged containers for export and he introduced Shri Gerald Sequieria CHA to Shri Nataraj M. Kanchan as per the latter’s request. He received the cargo in Mangalore sent by Shri Velliangiri from Tirupur through Shri Tony Tharakan. He was to get Re. 0.50 per piece of T-Shirt out of drawback received for the export. This is corroborated by Shri Tony Tharakan in his statement. I do not accept his contention that there was no mens rea on his part as stated in his reply. I do not believe that he just arranged container and introduced CHA to Nataraj M. Kanchan in the normal course of business as an executive of M/s Bhaskar Kini and Co. as the evidences and statements of witnesses prove otherwise. The idea of the export started with his discussion with Shri Tony Tharakan. He received Rs. 1,00,000 from Shri Tony Tharakan to handover the same to Shri Nataraj M. Kanchan at the time of stiffing of the container. He had knowledge of the nature and value of the goods received, sample of which was handed over to Shri Nataraj M. Kanchan by him. The cases referred by him in his reply i.e. Kamal Shipping Services Ltd. v. Commissioner of Central Excise, Hyderabad and Vijay Kumar v. Collector of Customs, Delhi are not relevant to his case as in both the cases Hon’ble Tribunal ruled that as parties were not having prior knowledge of the offence penalty was not sustainable. But here in this case he has acted beyond his duties as an executive of Steamer Agents with full knowledge of the illegal nature of the transactions. By actively assisting/abetting in the exports and rendering the goods liable for confiscation he has rendered himself liable for penalty under Section 114(iii) of the Customs Act, 1962.
48. Shri Tony Tharakan is found to have actively involved himself with Shri J. Surendra and Shri Senthil Kumar through Shri Velliangiri. He obtained IE Code and bank details of M/s Sri Nambunayaki Exports through Shri Velliangiri. He only obtained certificate from Apparel Export Promotion Council required for garment exports and handled the documentation work. He obtained the sample from Shri Velliangiri and handed over to Shri Nataraj through Shri Surendra and prepared invoice showing price of US $ 7.95 per piece as directed by Shri Nataraj M. Kanchan. As admitted by him in his statement he was to get Re. 0.50 per piece from Shri Nataraj as his share on settlement of drawback claim. He actively assisted/abetted the exporter in this drawback fraud with full knowledge. He has rendered himself liable for penalty under Section 114(iii) of the Customs Act, 1962 by rendering the goods liable for confiscation.
In view of the very clear findings of the Commissioner, I cannot accept that Shri Surendra and Shri Tony Tharakan are innocent. They are very much involved in the entire scheme of exports with an intention to get drawback fraudulently. Hence, the finding of the Commissioner regarding their abetment is correct. Therefore I do not want to interfere with these orders as regards penalties imposed in respect of Shri Surendra and Shri Tony Tharakan. Therefore, I uphold the Orders-in-Original and dismiss the appeals.