A.C.C. Unni, Member (J)
1. These three appeals have been filed by the Commissioner of Customs, New Delhi on the basis of Order of the Central Board of Excise & Customs dated 28-10-98 reviewing the Order-in-Original dated 29-10-97 passed by the Commissioner of Customs, Air Cargo, Delhi, by which proceedings initiated against three Officers of Customs (who are the three Respondents in the present Appeals) namely, Shri W.L. Hangshing, Shri M.I. Khan and Shri R.K. Sharma were directed to be dropped.
2. Since the facts relating to the three Appeals were common and common issues have been raised, they were heard together and are being disposed of by this order.
3. Shri Sumit K. Das, ld. JDR appeared for the appellant Commissioner and S/Shri J.S. Agarwal, K.K. Anand, Dev Nath and A. Madhava Rao, ld. Advocates appeared for the Respondents.
4. Brief facts are: The staff of the Directorate of Revenue Intelligence (DRI) examined 152 packages in respect of several shipping bills dated 15-5-90 and 1-6-90 filed by a firm called M/s. Excalibur Steel at the Delhi Airport and it was found that all the packages contained wooden shavings, sand, waste paper etc., instead of Photocromic Lenses as declared by the Exporter in the shipping bills. All these goods covered by the above shipping bills, had already been examined by the Airports Customs Officers and 'Let Export' order had been given on the shipping bills. Investigations revealed that the Exporter had acted in a fraudulent manner in connivance with the Customs staff on duty by mis-declaring the goods with a view to obtaining duty drawback on the declared items. Show cause notice was therefore issued on 22-8-96 to the exporter, M/s. Excalibur Steel and its proprietor Shri Akhilesh Kala proposing confiscation of the goods and imposition of penalty. The Customs Officers connected with the clearance of the said shipping bills, namely, Shri Wilson Hangshing, Asst. Collector, Shri M.I. Khan, Superintendent and Shri R.K. Sharma, Inspector were also asked to show cause why penal action should not be taken against them for acting/abetting in the acts of the exporter to defraud the Government by way of claiming drawback on the said exports. On adjudication, the goods were ordered to be confiscated under Section 113(d) and (i) of the Customs Act, 1962 and penalties were imposed on the exporting firm M/s. Excalibur Steel as well as on its proprietor Shri Akhilesh Kala. The Adjudicating Officer, however, declined to impose any penalty on the three Customs Officers and dropped the proceedings against them on the ground that Section 155 of the Customs Act barrred action against the said Officers. On the basis of review of the said order by the Board, the present Appeals have been filed by the Commissioner challenging the said findings.
5. The Department's case is that the adjudicating Commissioner had failed to consider substantial evidence which was available on record against the Respondents clearly corroborating the involvement of the three Officers in passing 28 shipping bills declaring the goods as photocromic lenses whereas physical examination of the packages revealed that they contained only rubbish material instead of the declared item. The Adjudicating Authority, according to the Department, had placed too much reliance on the fact that duplicate copies of the 28 shipping bills containing export order and the signatures of Inspector Shri R.K. Sharma, Superintendent Shri M.I. Khan and Asst. Collector Shri W.L. Hangshing had not been produced before him and therefore the charges against the three Officers had not been established convincingly. The Department has on the other hand placed reliance on the statements given by Shri R.K. Sharma, Inspector and the statements given by the Superintendent, Shri M.I. Khan, in which they had admitted to having examined the consignments presented in the warehouse for all the 28 shipping bills and having passed the goods for shipment and giving 'Let Export' order. The Department contends that such clearance could not have been given unless the Officers were in league with the Exporter. It is the Department's case that as per the procedure, no goods covered under drawback claim are normally allowed for shipment unless these have been carefully examined, even if it is on percentage basis, and the concerned Superintendent and Inspector are satisfied about the nature of the goods declared by the Exporter. Even the Asst. Collector in-charge of such consignments relating to drawback is required to countersign the shipping bills to ensure that no fraudulent claim for drawback is allowed to be made and the goods passed for shipment under drawback scheme are actually goods which are declared in the shipping documents. The Department contends that though in the absence of duplicate copy of the shipping bills, which normally contains signatures of the Officers who had examined the goods and cleared them for export, the various statements on record and the warehouse register of the godown and other documents had clearly established that the shipping bills had been passed by the three Respondents without any objection. Both Inspector, Shri R.K. Sharma and Superintendent Shri M.I. Khan had in their statements admitted to having examined the goods under different shipping bills, though in the statement given by the Superintendent, he had stated that he had seen only samples and not the total consignments. The Asst. Collector had also sought to deny the allegation about his involvement by denying having seen the consignments. Since the Asst. Collector had given permission for 'Let Export' order without any objection, neither the Inspector nor the Superintendent nor the Asst. Collector can take the plea that they were ignorant of the nature of the goods, especially in view of the other evidence on record. Therefore, the Department is seeking the reversal of the impugned order dropping the proceedings against the three Officers and imposition of appropriate penalties on them.
6. The following specific points have been urged on behalf of the appellant Commissioner; (i) The Commissioner had erred in taking the view that the Department had failed to show any motive or consideration on the part of the Officers for allowing clearance of the packages. It is pointed out that, inasmuch as the Inspector and the Superintendent had failed to detect the bogus nature of the contents of the packages which they had cleared, there was clear evidence of connivance in the matter with a view to receiving illegal gratification from the exporter. According to the ld. JDR, the Commissioner should also have taken note of the fact that various statements brought on record clearly showed the commission of a similar fraud by the same exporter, Shri Akhilesh Kala, for claiming huge drawback amounts by mis-declaration of certain other consignments earlier. In that case also the duplicate shipping bills for four consignments certifying the contents to be correct had been proved to be a case of bogus goods being filled in the consignments instead of spectacle frames declared by the exporter. In the said case also, it were the same persons; namely Shri R.K. Sharma, Inspector, Shri M.I. Khan, Superintendent and Shri W.L. Hangshing, Asst. Collector, who were the Officers concerned. In these circumstances, there was no warrant for giving the three Respondents the benefit of doubt merely on the basis of non-availability of duplicate copy of the shipping bills. It was evident from the examination report signed and cleared by the Superintendent without raising any objection allowing issuance of the 'Let Export' order that he had not physically seen the contents of all the packages. He claims that he had seen only some samples was merely an attempt to avoid responsibility and to cover up his failure to carry out his duties properly. Having regard to the substantial amount of drawback involved it was the duty of the Supervisory Officers to examine carefully the consignments by physical verification of the goods and satisfy themselves about the description and the value and if they had any doubt they should have brought that on record and get the samples tested. By allowing the 'Let Export' order to be issued on the consignments containing only waste material against the 28 shipping bills, it was quite evident that Shri M.I. Khan, Superintendent, deliberately abetted the fraudulent transaction indulged in by the exporter. The Asst. Collector, Shri W.L. Hangshing was also a party to the false examination report inasmuch as he was responsible for the issue of the 'Let Export' order. Considering the statements given by the Inspector, it is quite evident that the Asst. Collector was acting in connivance with the exporter and had thereby abetted in the fraud committed by the exporter.
7. On the question whether Section 155 of the Customs Act, 1962 barred taking out proceedings against the appellants, including the issuance of SCN under Section 124 proposing penalty under Section 114(iii), the Departmental Representative has strongly contended that Section 155 would not be applicable to the adjudication proceedings under Section 122 which are quasi-judicial in nature whereas Section 155 refers to "suits, prosecutions or legal proceedings" before Court. Since Section 155(2) talks of the procedure to be followed before commencing prosecution and other legal proceedings against the Central Government or any other Officer of that Government, the said bar did not affect adjudication proceedings initiated by Central Govt. against its own Officers. Having regard to the facts of the case and the aforementioned submissions, ld. JDR pleaded for allowing the three appeals and for passing an appropriate order imposing penalties on the three Respondents.
8. Arguing the appeal of Shri Hangshing, Asst. Collector, Shri A. Madhavrao, ld. Counsel raised the following points: The SCN having been issued after six years after the detection of mis-declaration of goods, the SCN was barred by time in terms of Section 28 of the Customs Act; the penalty proposed to be imposed on the appellant, Shri Hangshing and the two other Officers under Section 114(iii) will not sustain since Customs Officers cannot be said to have done anything in relation to any goods which had become liable to confiscation under Section 112 or in the abetting of any such act since their role was only to discharge their responsibilities under the Act and the rules by way of scrutinising the documents and checking of the goods which were presented for export by the exporter; the goods became liable to confiscation under Section 113 not by any act of commission or omission by the Customs Officers but by the acts of commission or omission of the exporter or his agent. Mere failure on the part of the concerned Customs Officers to discharge their duties efficiently, even if such inefficiency is proved, will not amount to abetment under Section 114. As regards the finding in the impugned order that Section 155(1) and (2) barred any action against the appellant and the other two Officers, ld. Counsel referred to the Apex Court judgment in the case of Costao Fernandes v. State at the instance of D.S.P., CBI, Bombay 1996 (82) E.L.T. 433 (S.C.) in which it was held that Customs Officers were entitled to the protection under Section 155 read with Section 105 of the Customs Act from criminal prosecution. Reliance was also placed on two further decisions viz., Asst. Collector v. Ramdev Tobacco Co. 1991 (51) E.L.T. 631 (S.C.) and Shri Vasudeva Bank v. GOI 1990 (48) E.L.T. 214 (Mad.). Further, according to Ld. Counsel, there was also no evidence on record to show that the Respondent, Shri W.L. Hangshing, had seen any of the packages which contained the bogus goods. The Department had also not produced the second copy of the shipping bills which containing the signature of the Respondent.
9. Ld. Counsel therefore, submitted that the Department has not shown that the impugned order dropping the proceedings against the appellant suffered from any infirmity either on legal or factual grounds. He prayed for the dismissal of the appeal against the appellant, Shri W.L. Hangshing, A.C.
10. Arguing the defence of Shri R.K. Sharma, Inspector, ld. Counsel, Shri K.K. Anand adopted the legal submissions made by Shri A. Madhava Rao, ld. Advocate for Shri W.L. Hangshing, A.C. Further, he drew attention to the fact that Section 40 of the Central Excise Act, 1944 (after its amendment in 1973) was in part materia with Section 155 of the Customs Act, 1962. In G.H. Industries v. CCE, Ahmedabad 1997 (94) E.L.T. 483 (Guj.), Hon'ble Gujarat High Court had held that the bar under Section 40 of the Central Excise Act would operate when action is taken in good faith by the Officers. In this connection, reliance was also placed on the Order-in-Original dated 29-11-96 passed by the Commissioner of Customs, New Delhi against the same Respondents on a similar charge of abetting clearance of goods for export under false declaration by the same exporter, Shri Akhilesh Kala and his firm, M/s. Hargobind Exports, New Delhi. In the said case also, on identical facts, the Commissioner had dropped the proceedings against all the three present Respondents. The Department has not filed any appeal against the said order. Further, in the Departmental disciplinary, vigilance proceedings against one of the Respondents, Shri R.K. Sharma, in relation to the same facts, the enquiry officer had held that the charge of failure to maintain devotion to duty and for acting in a manner unbecoming of a Government Servant and thereby contravening the provisions of Rule 3(i), (ii) and (iii) of the CCS. (Conduct) Rules, 1964 had not been established and the said proceedings dropped. He also contended that the Department had mixed up the facts relating to the export of spectacle frames by M/s. Hargobind Exports and the facts of exports made by M/s. Excalibur Steel. He drew attention to the fact that though the goods were submitted for clearance by M/s. Excalibur Steel on June 1st, the seizure of the consignments was made 12 days later, i.e., on 12th June as per the Panchnama. The possibility of the goods having been substituted during the period could not be ruled out. He also drew attention to the fact that though the 'Let Export' order had been issued on 1-6-90 by the Asst. Collector, the date of alleged verification by Shri R.K. Sharma, the Inspector, had been shown as 2-6-90. This point had been noted by the investigating Officer in the diciplinary proceedings. As regards issuance of the SCN after six years of the attempted shipment of mis-declared goods, ld. Counsel submitted that it was clearly beyond the limitation period under Section 28. He relied on the Hon'ble Supreme Court decision in Govt. of India v. Citadal Fine Pharmaceutical Co. 1989 (42) E.L.T. 515 (S.C.) wherein it has been held that a reasonable period is built in for issuing SCN. Ld. Counsel contended that there was no material to show that Respondent, Shri R.K. Sharma had any role in M/s. Excalibur Steel shipment. The statement attributed to him cannot be made the basis for alleging his involvement since Shri R.K. Sharma had stated that he had examined only a few consignments which were found to be in order, whereas the DRI had found that the said consignments did not contain the declared goods. He relied on the following case lew in support of his contention that where documentary evidence showed the existence of a particular fact, any oral evidence to contrary cannot be accepted, (a) R.P. Industries v. CCE 1996 (82) E.L.T. 129 (T) and (b) Zunjarrao Bhikaji Nagarkar - 1999 (112) E.L.T. 772 (S.C.). In view of the foregoing, ld. Counsel pleaded for the dismissal of the Departmental appeal against Shri R.K. Sharma.
11. Appearing for Respondent, Shri M.I. Khan, Superintendent, ld. Counsel Shri J.S. Agarwal referred to the "other evidence" mentioned in Para 3.4 in the Board's order and stated that there was no such evidence on record and none had been explicitly brought out. In the absence of any documentary evidence to show that Respondent, Shri M.I. Khan had allowed the clearances of the consignments, penal action cannot be taken on the basis of mere suspicion. Reliance was placed on the Supreme Court decision in Bhana Khalpa Bhai Patel v. Asst. Collector of Customs Bulsar, Gujarat and Anr. reported in 1997 (23) RLT 455 (SC). He also adopted the legal submissions made on behalf of the other two Respondents.
12. We have considered the submissions advanced by both the sides. On the question whether the provisions of Section 155 would provide a bar to the initiation of adjudication proceedings against Officers of the Customs as in the present case we find that the Supreme Court decision in Costao Fernandes case (supra) has gone into this question (though in that case the proceedings related to criminal prosecution). It was observed that in the facts of the case, it will not be proper to disallow the protection under Section 155 to the Officer. We also observe that the protection available under Section 40 of the Central Excise Act, 1944 had been allowed to Asst. Collector of Central Excise acting in the exercise of his statutory powers. Section 40 of the Central Excise Act, 1944 is in pari materia with Section 155 of the Customs Act, 1962. Following the ratio of the Supreme Court decision in Costao Fernandes case (supra) and the High Court decision in G.H Industries, we are satisfied that there is no legal infirmity in the order passed by the Commissioner dropping the proceedings against the Respondents in these three appeals. We therefore find no reason to interfere with the impugned order insofar as they concern with the three Respondents viz., S/Shri M.I. Khan, R.K. Sharma and Hangshing.
13. Since we are rejecting the three Departmental appeals on the ground of bar to adjudication proceedings under Section 155 of the Customs Act, we do not feel it necessary to go into the other submissions urged on both sides.
14. All the three Appeals are rejected in the above terms.