CBI arrests Deputy Commissioner of the Customs forging export documents to avail duty drawback benefits

The CBI on 2^nd November, 2020 arrested a Deputy Commissioner of the Customs and an exporter in Kolkata in connection with a 3-year-old case of alleged forgery in export of gaskets to Bangladesh to avail duty drawback benefits.

The Central Bureau of Investigation (CBI) is the premier investigating agency of India, operating under the jurisdiction of the Ministry of Personnel, Public Grievances and Pensions. The agency has been known to investigate several economic crimes, special crimes, cases of corruption and other cases.

What do you mean by duty drawback?

Duty Drawback scheme was introduced by the Ministry of Finance as a rebate for duty chargeable on any imported materials or excisable materials used in manufacture or processing of goods, manufactured in India and exported.
The Central Government is empowered to grant Duty Drawback under section 74 and 75 of the Customs Act, 1962.
Under section 74 of the Customs Act, 1962 duty drawback to the extent of 98% of the duty paid on imported goods can be claimed for re-export, provided the goods are re-exported within two years of payment of import duty.
Section 75 of the Act, empowers duty drawback on export of manufactured articles.

Why was the Deputy Commissioner of Customs arrested?

The Deputy Commissioner of Customs and an exporter were arrested in connection with a case of alleged forgery.
They were accused of conspiring with each other in producing false export-related documents to obtain huge amount of duty drawback against false export of gaskets to Bangladesh in 2014 in the name of fictitious firms.
This arrest was on the basis of a complaint received from the Customs Department in 2017.

CBI also arrested Customs Superintendent in a separate matter

In a separate matter related to an alleged attempt to illegally export Rs 100 crore worth of Red Sanders wood, the CBI arrested Customs Superintendent Sandeep Kumar Dixit and another person, Sudhir Jha.
The case related to allegations of exporting and attempting to export a total 240 MTs (metric tonnes) of Red Sanders, a prohibited item, valued Rs 100 crore through NS Dock, Kolkata Port, in 2016.
The CBI had registered the case on December 23, 2017, on a complaint received from theCustoms and the Central Excise, Kolkata.
The Directorate of Revenue Intelligence (DRI) first intercepted a consignment and found red sanders beingsmuggled outside India under the garb of iron and steel product exports.
When the DRI started to track the consignments, it found at least two more similar shipments.
These consignments normally carried with them documents that allowedthe exporter to take the cargo directly from the factory to the port.
During investigation the DRI found that the documents were forged. The group had smuggled 16 consignments of red sanders by at that time.

Penalties and prosecution for producing false export-related documents to obtain huge amount of duty drawback against false exports in the name of fictitious firms shall be as follows:

Section 132of the Customs Act 1962 – False declaration, false documents, etc

According to Section 132, whoever makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document in the transaction of any business relating to the customs, knowing or having reason to believe that such declaration, statement or document is false in any material particular, shall be punishable with imprisonment which may extend to 2 years or with fine, or with both.

Section 135of the Customs Act 1962 – Evasion of duty or prohibitions.

If any person –

is in relation to any goods in any way knowingly concerned in misdeclaration of value or in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods; or
acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 or Section 113, as the case may be; or
attempts to export any goods which he knows or has reason to believe are liable to confiscation under Section 113; or
fraudulently avails of or attempts to avail of drawback or any exemption from duty provided under this Act in connection with export of goods,

the he shall be punishable, –

with imprisonment for a term which may extend to 7 years and with finein the case of an offence relating to:
1. any goods the market price of which exceeds Rs 1 crore; or
2. the evasion or attempted evasion of duty exceeding Rs 50 lakh; or
3. such categories of prohibited goods as the Central Government may, by notification in the Official Gazette, specify; or
4. fraudulently availing of or attempting to avail of drawback or any exemption from duty, if the amount of drawback or exemption from duty exceeds Rs 50 lakh,

In any other case, with imprisonment which may extend to 3 years, or with fine, or with both.

Section 136 – Offences by officers of customs

If any officer of customs enters into or acquiesces in any agreement to do, abstains from doing, permits, conceals orconnives at any act or thing, whereby any fraudulent export is effected or any duty of customs leviable on any goods, or any prohibition for the time being in force under this Act or any other law for the time being in force with respect to any goods is or may be evaded, he shall be punishable with imprisonment for a term which may extend to 3 years or with fine, or with both.

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