V.K. Agrawal, Member (T)
1. In these seven appeals preferred by the Revenue, the issue involved is whether the penalties under Section 114 of the Customs Act are imposable on the Departmental Officers, namely, Shri W.L. Hang Shing, Assistant Collector, Shri M.I. Khan, Superintendent and Shri R.K. Sharma, Inspector.
2. We heard Shri V. Lakshmikumaran, learned Advocate of Shri Hang Shing, Shri K.K. Anand, learned Advocate for Shri M.I. Khan and Shri J.P. Kaushik, learned Advocate and Shri V. Valte, learned SDR for Revenue. It transpired that though the Revenue has filed seven appeals against the impugned Order No. 52/KK/96, dated 29-11-96 passed by the Commissioner, the Central Board of Excise & Customs has reviewed the same under Section 129D(1) of the Customs Act only in respect of the three Departmental Officers as no penalty under the Customs Act was imposed on them. We observe that it is specifically mentioned in the Review Order No. 222-R/97, dated 20-11-1997 that. "The Commissioner has erred in dropping the proceedings against the Departmental Officers and the order is not proper and legal on this count" and the Board has, therefore, directed the Commissioner to apply to the CEGAT, New Delhi for correct determination of the above points and pass such order as deemed fit." Further, no averment has been made in respect of other respondents. We, therefore, hold that in the absence of any Review Order passed by the Board in exercise of powers vested under Section 129D(1) of the Customs Act, the appeals against M/s. Hargovind Export, Shri Kuldip Singh, Shri Akhilesh Kala and Shri Ashok Behl are not maintainable and are accordingly dismissed.
3. The learned SDR submitted that when the Officers of the Directorate of Revenue Intelligence examined the 130 packages covered by Shipping Bill Nos. 094823, 094825 and 094829, dated 29-5-90, filed by M/s. Hargovind Exports for spectacle frames, they found that all the packages contained saw dust, wooden chips, stones, etc.; that the goods covered by these shipping bills for 50 packages each already been examined by Customs and "let export" Orders had been given; that out of these goods, 20 packages pertaining to Shipping Bill No. 094823 had already been exported; that a similar consignment said to contain spectacle frames had also been exported under Shipping Bill No. 094827, dated 29-5-90; that the investigation revealed that the exporter had acted in a fraudulent manner in connivance with the Customs Officers and some other persons and misdeclared the goods to obtain drawback. The learned SDR, further, submitted that the exporter had admitted that no spectacle frames were put in any of the consignments; that this fact has been duly corroborated by the physical examination undertaken of the 130 packages which had still not been shipped though for which 'let export' order had been passed by the Customs Officers; that Shri R.K. Sharma had wrongly claimed in his statement that when he examined two packages, these were found to contain very huge, thick and crude black spectacle frames; that he colluded with the exporter in giving a false examination report; that Shri M.I. Khan had signed the examination report; that he cannot pass on the responsibility or claim that he had not physically seen the goods or contents of the packages were not opened in his presence and that he was not aware that the samples shown were a part of the consignment or not; that considering the substantial claim for drawback it was his duty, as a supervisory officer, to examine carefully the consignment by physical examination of the goods for satisfying about the description and value of the goods; that Shri Wilson Hang Sheing has countersigned the examination report; that considering all the evidences on record duly corroborated by the statement of the Inspector and other persons, it is apparent that some well considered rearrangement had been made with the connivance of the Respondents for not raising any objection and pass the fake goods as shipment of spectacle frames. The learned SDR, therefore, contended that the three Officers had abetted the exporter in misdeclaring the contents and value of the goods being shipped under the claim of drawback; that provisions of Section 114 of the Customs Act are clearly applicable as giving a false examination report on the Shipping Bills with a view to give unwarranted benefit of drawback to the exporter is nothing but abatement; that the Commissioner has erred in accepting the contention of the Officers that under Section 155(2) of the Act there is a bar for proceeding against them; that Section 155(2) has to be read with Section 114; that there must be compliance or intended compliance with the provisions of the Act, however, honest the conduct be otherwise, so as to qualify to be an act done in good faith in pursuance of the Customs Act or the Rules and Regulations made thereunder; that accordingly the penalties are imposable on these Officers under Section 114 of the Customs Act.
4. Countering the arguments, Shri Lakshmikumaran, learned Advocate, submitted that it has been mentioned in the show cause notice that Shri R.K. Sharma in his statement had stated that at the time of examination it was told by Shri M.I. Khan that the exporter was a friend of Shri W.L. Hang Shing; that on the basis of such a statement Appellant Assistant Commissioner cannot be saddled with the penalty under Section 114 of the Customs Act since a number of persons may claim to be the friend of persons in authority; that Shri Hang Shing, in his statement, has clearly deposed that he had never told Shri M.I. Khan to facilitate the clearances; that Shri Kuldeep Singh has also deposed in his statement, dated 17-8-90 that he did not know Shri Hang Shing or other Appellants herein personally; that nowhere it has been brought on record that the fact that the containers did not contain the goods corresponding to the samples was known to the Appellant (Assistant Commissioner); that the shipping bills were put up to him in routine manner without any objection/remarks and accordingly no negligence on his part can be attributed; that he had thus acted in good faith. The learned Advocate relied upon the decision in the case of Commissioner of Customs v. M.I. Khan, 2000 (120) E.L.T. 542 wherein it has been held by the Tribunal, following the decision in the case of Costao Fernandes v. State, 1996 (82) E.L.T. 433 (S.C.) and G.H. Industries v. Commissioner, 1997 (94) E.L.T. 483 (Guj.) that there was no legal infirmity in the Order of the Commissioner in dropping the proceedings against the Customs Officers. He finally mentioned that the show cause notice, dated 11-5-95 had been issued after nearly five years from the accrual of the cause of action, i.e. 29-5-90 when the goods were examined.
5. Shri J.P. Kaushik, learned Advocate, submitted on behalf of Shri M.I. Khan and Shri R.K. Sharma, Appellants, that they had never met the exporter which is evident from the statement of Shri Kuldeep Singh; that on being asked whether he personally knew Shri Wilson, Shri R.K. Sharma and Shri M.I. Khan, he stated in his statement, dated 17-8-1990 that he did not know them personally; that there is no evidence on record to show that these Officers were offered or promised any consideration for conniving with any activity alleged in the show cause notice; that knowledge by the person is a must before any penalty can be imposed on him under Section 114 of the Customs Act; that it has been held by the Tribunal in the case of Commissioner of Customs, Mumbai v. M. Vasi, 2003 (151) E.L.T. 312 (Tri. - Mumbai) = 2003 (54) RLT 222 (CEGAT) that "Abatement presupposes knowledge of the proposed offence and also presupposes benefit to be derived by the abettors therefrom.....In the absence of conscious knowledge, penalty on charge of aiding and abetting would not sustain."
6. We have considered the submissions of both the sides. The show cause notice was issued to the Assistant Collector, Superintendent and Inspector who were posted at Air Corgo Complex, Indira Gandhi international Airport, New Delhi for imposition of penalty under Section 114 (iii) of the Customs Act on the ground that they had abetted the doing or omission of the act of misde-claring the goods with a view to claim wrongful drawback amount which was not due to them. The Commissioner, under the impugned Order, after examining the evidences brought on record and referring to various statements came to the conclusion that the entire conduct of these Respondents would throw a serious doubt about discharging their duty properly but it is not sufficient to penalise them under Section 114 of the Customs Act. The Commissioner has given his findings that there is no evidence on record to show that any act or omission on the part of the Respondents has rendered the goods liable to confiscation under Section 113 of the Customs Act. In the appeal filed by the Revenue, it has not been highlighted that there is any material to show that the Respondents had connived with the exporter in misdeclaring the goods. What has been mentioned in the Memorandum of Appeal, filed by the Revenue, only highlights the dereli-cation of the duty by the Respondents which is not sufficient for imposing penalty under Section 114 of the Customs Act. The learned Advocate has emphasised that there is no allegation or proof of consideration having been demanded by the Respondents or paid or supposed to be paid by the exporter. We also observe that this aspect has also been mentioned in the impugned order. The exporter, Shri Kuldeep Singh, has clearly denied knowing any of the Respondents personally. In his statement, he has only mentioned that one Shri Akhilesh Kala knew the Assistant Collector. But Shri Akhilesh Kala has not been traced out during investigation nor he has participated in the adjudication proceedings. Further again some allegation is that Shri Akhilesh Kala had told Shri Kuldeep Singh that he (Akhilesh Kala) knew the Assistant Collector which is not sufficient material to come to the conclusion that the Assistant Commissioner had abated the act of misdeclaration of the consignment for the purpose of claiming the drawback. The learned Advocate has relied upon the decision in the case of M. Vasi, supra, wherein the Tribunal has held that "Abatement presupposes knowledge of the proposed offence and also presupposes benefit to be derived by the abetters therefrom." Nothing has been brought on record by the Revenue to show the knowledge of and the benefit to, the Respondents. In view of this, we find no reason to interfere with the impugned order insofar as it relates to dropping of the charges against the three Respondents, namely, Shri W.L. Hang Shing, Shri M.I. Khan and Shri R.K. Sharma. All the appeals filed by the Revenue are thus rejected.