Sunday, December 6, 2015

BOMBAY O.A.NO. 583/2011 & O.A. NO. 584/2011


O.A.NO. 583/2011 & O.A. NO. 584/2011
Misc. Petitions No.13 & 14/2012

Dated this Wednesday, the 7th day of March, 2012.


Shri Raj G.Kuwatkar,
Working as Appraising Officer &
Residing at Mohan Paradise, Wayle Nagar,
Kalyan (West) 421301. ... Applicant
in O.A.No.583/2011

Sanjeev M. Patil, residing at
610, Koyna B Wing,
Shantivan, Borivali (East)
Mumbai 400 066 and working as
Tax Assistant at New Custom House,
Ballard Estate, Mumbai 400 001. ..Applicant in
(Applicant by Shri G.K. Masand, Sr. Advocate with
Shri A.A.Manwani, Advocate)


1. Union of India through
the Secretary, Ministry of Finance
Department of Revenue, North Block
New Delhi 110001.

2. Commissioner of Customs (General)
New Custom House,
Ballard Estate, Mumbai 400 001.
(Respondents No.1
& 2 common in both
the O.As.)

3. Addl. Commissioner of Customs (Gen.)
in the office of the Commissioner of
Customs (General), New Custom House
Ballard Estate,
Mumbai. 400 001. ... Respondents in
(Respondents by Shri V.S.Masurkar, Advocate)


Per: Smt. Leena Mehendale, Member (A):

These O.A. No. 583/2011 and 584/2011 are both filed on 09.08.2011 under Section 19 of the Administrative Tribunal's Act, 1985.
2. The matter appears to be very simple on the surface but like an iceberg only 1/10th are above the surface and 9/10th are below the water. Seen in isolation, it is a matter of delay in giving charge-sheet but seen against a larger canvas, it would appear that the people of India have lost and might continue to lose crores of rupees in bogus claims of DEPB scrips due to negligence if not facilitation by a number of custom officials at various levels.
3. Present OAs are preceded by 16 other OAs which arose in the same Department of Customs for a similar event namely allowing fraudulent and bogus claims of Duty Draw Back against exported goods. In that event, it was alleged that during the period from January, 1995 to October, 1997 in all 300 bogus duty drawbacks totaling Rs. 50,14,80,668/- were issued in favour of three firms, namely, (i) M/s. Om Traders, (ii) M/s. Tropical Exotics and (iii) M/s. Prime Agricom on continuous basis and was claimed to have been received by Mr. Naval Kishor Bangard and his wife Smt. Sangeeta Bangard by submitting the forged export documents to various Custom officials of Duty Drawback Section at Sahar Air Cargo either in collusion or close association with them. The DGFT detected that the parties and the claims were both bogus. On enquiry, the CBI had recommended prosecution against three custom officers, major penalty against 30 officials and minor penalty against 12 officials (in all 45 officials).
4. It was unfortunate that the fraud was detected not by the senior officials of Customs Department but by the office of DGFT (Director General of Foreign Trade) which comes under a separate ministry and it is pertinent to note that the office of DGFT being outside the Department of Custom, they take nearly two years or more to detect such fraudulent claims. The Department of Customs would be in position to detect such frauds within a few days if they are more vigilant but it appears that they did not have a proper system of supervision by senior officials. From the details of that event it would appear that proper supervision was never a strong point for the respondent Custom Department and the matter was approached with casualness. Bogus claims were detected only when the DGFT and CBI pointed out the bogus claims, where after the department pursued various steps needed for the charge-sheet. It would also appear that the charge-sheets were delayed to the extent of vitiating them. The charge-sheets were issued individually on 21.04.2005. Three charge-sheets were immediately challenged before this Tribunal in OA No. 382-383-384 of 2005 on the ground of delay as the event had occurred in 1995. Two more OAs namely, 216/2006 and 217/2006 were also filed. In the first set, OAs were allowed by a single order dated 26.06.2006 and in the second set OAs were allowed by a single order dated 12.10.2006. The Respondent Department challenged these decisions in Writ Petition No. 1717, 1697, 1699, 1784 & 1871 of 2007 and the same were dismissed by a common order dated 04.02.2008. The SLP filed by the dept. to the Hon'ble Supreme Court was also dismissed.
5. Thereafter, the department proceeded in 2009 to appoint Inquiry Officer in remaining cases. 10 OAs were filed namely 153-158/2009, 161-162/2009, 428/2009 and 444/2009 on the ground of delay in appointing Inquiry Officer. All of them were disposed of by a single order dated 03.02.2010, allowing the request to quash the charge-sheet. A 16th OA Of that series was OA No. 41/2011 which was also filed for the same reasons of delay in appointing Inquiry Officer, but was dismissed on 19.08.2011 on the ground of delay in filing the OA against the charge sheet of 21.04.2005. The tribunal order was challenged in Writ Petition No. 8382/2011 dated 07.12.2011 and the High Court has remanded back the case to this Bench 'for being decided on its own merit'.
6. This history of charge-sheets comes later. However, after the detection of that fraud in 1997, the Respondent Department of Customs issued some revised instructions by way of Standing Order No. 7382 dated 04.08.1998 which directed the custom officials at various stations to exercise caution to avoid recurrence of forgery and directed them to follow a certain improved methodology for claim-documentation and verification. Despite so, the present two applicants in O.A. 583 & 584/2011, who were working as UDC & LDC respectively at the office of New Customs House, Mumbai in the year 1998 have once again come under a scanner that they failed to avoid a similar fraud thus causing a wrongful loss to Government Exchequer to the extent of Rs. 1,64,05,957/- and Rs. 80,40,641/- respectively. The present OAs have to be seen in this backdrop. They also necessitate certain directions to be given in public interest to CVC, DGFT, CBI, and Custom dept. for ensuring speedier detection and these are given at a later paragraph of this order.
7. The present two applicants were working as UDC (Upper Division Clerk) and LDC respectively in the year 1998 at the office of New Custom House, Mumbai and were assigned the duty of verification of DEPB (Duty Entitlement Pass Book) of firms/exporters having names with first letter of N to Z (& A to M). Hereinafter, we will refer to the matrix of O.A. 583/2011 only.
8. It is his case that in the year 2002 Dy. DGFT Enforcement, Mumbai noticed that in 1998 some non-existing firms had obtained DEPB Scrips by submitting forged export documents. A complaint was therefore lodged by the Dy. DGFT (Enf) Mumbai with the Economic Offences Wing of the CBI which was registered as RC/4/E/2002 Mum and RC/5/E/2002 Mum. During its investigation of the above 2 cases the CBI noticed that proprietors of non-existing firms M/s. Ritlene Exports, M/s. Vaibhav Sales and M/s. TVS Exports had submitted forged documents for obtaining DEPB Scrips aggregating credit value of Rs. 1,64,05,957/- which had allegedly caused wrongful loss to that extent the Government Exchequer. The CBI had recorded the statements of concerned personnel, including the Applicant who was the concerned UDC at that time, the Appraiser and Assistant Commissioner of Group VII. They all denied having verified the said DEPB scrips belonging to the Accused firms. The Applicant claims that Customs Department made its own Investigations and came to the conclusion that the Applicant had not done verification of DEPB scrips nor had he made the entries in the Punching Register/Verification Register but that these were made by some other unknown persons.
9. The applicant claims that the above enquiries were made against DEPB scrips awarded in the year 1998 after which there was no further action in pursuance of the matter. He was promoted in the year 2005 with retrospective effect from 2004 as Examining Officer, and the promotion was later on made effective from 6.12.2002. In the year 2008 he received yet another promotion for the post of Appraising Officer where he continues till date. Thus, in the eyes of the department, he was innocent till the date of charge-sheet.
10. Under these circumstances he has received a charge-sheet on 27.12.2010, Annexure A.1 which has a Single Article of Charge, which reads as follows:
Article of Charge: 1:
" Shri Raj Kuwatkar, UDC (Now Appraising Officer), being aware of the facts that he was required to make DEPB Scrips entry showing the particualrs of DEPB No. and the amount of credit given against the individual shipping bills in the punching register and verification register while allotting verification numbers to DEPB Scrips submitted by the exporters or their representative as per the alphabets allotted to him, he however, allowed other unauthorised person to make various entries of DEPB scrips of non existing firms viz. M/s. Ritlene Exports, Vaibhav Sales and Tvs Exports. He failed to restrict outsider to make entries in the official records of Customs under his control, thereby contravened the provisions of para 4.1 of the Standing Order No. 7300 dated 07.05.1997 and para 2 of the Standing Order No. 7382 dated 04.08.1998 which has caused loss to Government exchequer.
Thus, by the above acts of commission and omission, Shri Raj Kuwatkar, UDC (Now Appraising Officer) committed gross misconduct, exhibited lack of integrity, failed to maintain devotion to duty as well as acted in a manner unbecoming of a Government Servant, thereby contravening Rule 3 (1) (i) (ii) (iii) of the CCS (Conduct) Rules, 1964."
11. In the Statement of Imputation the Department has listed 16 DEPB scrips, pertaining to the three firms, all originating between the period 11.6.1998 to 23.11.1998 (5 months) aggregating to a total credit value of Rs.1,64,05,957/-. The same Statement of Imputation also gives the details of Standing Order No. 7300 dated 07.05.1997 and Standing Order No. 7382 dated 04.08.1998 which both would clarify the exact method to be followed by the UDC while issuing DEPB scrips. It, therefore, imputes that registers to be maintained by the applicant as part of his official duty was misused by somebody due to his own negligence of duty. Further Standing Order No. 7382 expresses concern about past similar cases of DEPB having been obtained on the basis of fraudulent documents and hence asks the officers to exercise caution to avoid recurrence of forgery. Despite so, the applicant has shown lack of integrity, lack of devotion to duty and acting in a manner unbecoming of a Government Servant.
12. The applicant, after receiving the impugned charge Memo dated 27.12.2010, denied the charge by his letter dated 23.1.2011 and also requested the Disciplinary Authority by another representation dated 23.1.2011 to withdraw the Charge-Memo on the ground of inordinate delay. He pointed out that his case was similar to a number of cases on the question of delay in issuing charge sheet, in which various courts including the Apex Court have held that delay in initiation of Departmental Enquiry by more than 10 years without any convincing explanation would be prejudicial to the person concerned and hence the Departmental Enquiry was quashed. His representation is seen at Annexure A.5. which was not answered and he preferred O.A. No. 336/2011 which was disposed of by this Tribunal, by order dated 29.4.2011 (Annexure A.2) directing the respondents to consider the representation and take an appropriate decision within six weeks.
13. Accordingly, the respondents have passed speaking order on 01.06.2011 as seen at Annexure A-4. They have given various stages through which the investigation has passed, thus, coming to the conclusion that the delay was neither abnormal nor unjustified. The applicant has, therefore, impugned both Annexure I (Charge sheet) and Annexure A-4 (detailed reply of the respondents answering the representation of the applicant).
14. At this stage a brief description of the methodology of duty draw back concession is pertinent. It is mentioned in the Statement of Imputation of Charges and the reply statement. The DEPB which is issued to the exporter by the Licencing Authority on post-export basis, is verified by the Pass Book Section with respect to (i) DEPB, (ii) copies of the Shipping Bills presented by the party and (iii) the ledgers maintained for this purpose. The verifications are in particular carried out in respect of description of goods, FOB value, etc. After the verification the DEPB book has to be endorsed with a stamp stating "verified by Customs" and signed in full with dated signature of the nodal Assistant Commissioner. The particulars of the DEPB No. and the amount of credit given against individual Shipping Bill shall be mentioned in the ledger and the nodal Assistant Commissioner of Customs shall put the endorsement "verified" in the ledger and sign in full below the endorsement. Thereafter, the DEPB shall be registered.
15. The relevant documents are then sent to DGFT who has a chance to locate the fraud only after about one to two years of time has elapsed. It is, however easily possible for the Customs officials to locate the fraud. As seen from the statement of imputation of charges, without the verification and the allotment of Verification Number to the DEPB scrips as per Verification/Punching Register/, the DEPB scrips cannot be utilised for importing/exporting goods as the debits are made by Debit clerk against the concerned SI. No. and the verification No. in the Debit Register.
16. It would thus appear that Punching of the DEPB scrips, when done fraudulently by an outsider will be noticed immediately by the concerned UDC who handles the Register. Entering of non-authentic DEPB scrips not only gives a huge duty draw back benefit to the concerned firm but also, at a later date, becomes a prima facie proof of its existence and can be utilized for more serious crimes including huge financial fraud on the country or even terrorism.
17. Coming back to the present OA, the applicant in his representation to the Department dated 23.01.2011 has relied on the judgments:
(a) in the case of State of M.P. Vs. Bani Singh, AIR 1990 SC 1308 and (b) in the case of Sate of Andhra Pradesh Vs. N. Radhakrishnan (1998) 4 SCC 154 decided by the Hon'ble Apex Court; and (c) in the case of P.V. Mahadevan Vs. M.D., Tamil Nadu Housing Board, Civil Appeal No. 4901 of 2005 decided by Supreme Court on 08.08.2005.
18. The learned counsel for respondents argued that in the latest OA No. 41/2011 of the earlier instance, this Bench took a view different from the view taken in allowing 3rd set of 10 OAs No 153-158/2009, 161-162/2009, 428/2009 and 444/2009. These 10 OAs were allowed and the charge sheet were
quashed but in the latest OA 41/211 the charge sheet was upheld and the OA was dismissed on the ground of delay between date of charge sheet (21.4.2005) and filing of OA in 2011. Similarly effect of the decision of earlier 5 Writ Petition No.1717/2007 etc. was of upholding the quashing of charge sheet. But in the latest Writ Petition No. 8382/2011 decided on 07.12.2011, the Hon'ble High Court has not found it fit to give complete relief to the original applicant but has remanded back the OA to be decided on merits.

19. A. The learned counsel for respondents argued that the respondents have complied with the orders of this Hon'ble Tribunal dated 29.04.2011 in OA No 336/2011 and passed a speaking order which has been conveyed to applicant. Therefore, now unless and until the Disciplinary Proceedings are over, and all departmental remedies are exhausted, the applicant has no cause of action to approach this Hon'ble Tribunal. The Administrative Tribunal Act, 1985 clearly stipulates that only when all the departmental proceedings are over he can raise grievance before the Hon'ble Tribunal, and hence on this ground itself the present OA is required to be dismissed as premature.

B. Department received the investigation report and related documents from CBI, Mumbai in year 2006/07, hence there is no inordinate or unjustified delay.
C. There are guidelines of Central Vigilance Commission that when a premier agency like CBI is investigating the case, there should not be any parallel investigation by the department. Any disciplinary proceeding should be initiated only after receiving the investigation report, specifying the role played by the Govt. Servant.
D. On the basis of forged documents, 03 firms had obtained 16 DEPB scrips of aggregated credit value of Rs. 1,64,05,957/- which has caused wrongful loss of equal amount to the Government Exhequer.
E. Applicant during subject period under charge-sheet was assigned the duty of verification of DEPB Scripts and maintaining the registers. Though applicant denied having made any such entry in the Register, it is equally true that the Register which he was maintaining in his section as a part of his official duty was misused by someone else due to his negligence towards his duties resulting in huge loss of Govt. Revenue. Applicant allowed outsider to make entries in the said Register thereby damaging the protective mechanism of the Deptt. and making the whole system vulnerable to fraud.
[We also observe that the applicant was in a position to immediately notice that entries were not made by him, so he could have immediately raised the issue with supervisery officers but has not done so].
F. DEPB fraud for which applicant has been charge-sheeted took place during 1998 and was brought to light by DGFT in year 2002. Thereafter, CBI investigated the case and submitted its detail investigation report in 2006/07 specifying applicant's role in the fraud, and then, after following official formalities charge-sheet was issued to applicant in December, 2010. In-between, applicant got his due promotions in year 2005 and 2008, making it necessary to seek more permissions from higher-ups for the Departmental Enquiry.
G. Also it is expected that when a premier agency like CBI is investigating the case, there need not be parallel investigation by the department.
H. The fact that he was given promotion shows that there was no bias against him.
20. The respondents have cited many judgments to stress that every Departmental Enquiry need not be quashed on the ground of delay alone. They have particularly cited a Division Bench judgement of the Delhi High Court delivered on 29.10.2003 in LPA No. 39/1999 in the case of DDA vs. D.P Banbah & Anr. wherein the High Court has, in great details, examined the pros and cons in a chargesheet issued with an apparent delay and have compared two possibilities as below:
Unless the statutory rules prescribe a period of limitation for initiating disciplinary proceedings, there is no period of limitation for initiating the disciplinary proceedings.
Since delay in initiating disciplinary proceedings or concluding the same are likely to cause prejudice to the charged employee, courts would be entitled to intervene and grant appropriate relief where an action is brought.
If bonafide and reasonable explanation for delay is brought on record by the disciplinary authority,in the absence of any special equity, the court would not intervene in the matter.
Balancing all the factors, it has to be considered whether prejudice to the defence on account of delay is made out and the delay is fatal, in the sense, that the delinquent is unable to effectively defend himself on account of delay.
The Court would ordinarily lean against preventing trial of the delinquent who is facing grave charges on the mere ground of delay. Quashing would not be ordered solely because of lapse of time between the date of commission of the offence and the date of service of the charge-sheet unless of course if the right of defence is found to be denied as a consequences of delay.
It is for the delinquent officer to show the prejudice caused or deprivation of fair trial because of the delay.

21. Thus, finally we have to be guided by two opposing claims.
(a) On the one hand is the claim of the two applicants that the event of passing duty draw back to the extent of nearly Rs. 2 crores has take place in 1998, apparent fraud has been detected in 2002 by DGFT (another Ministry of the Govt), the C.B.I. Enquiry has been conducted and reported to the respondent Department in 2007 but the chargesheet has been given in 2010. Such a delay jeopardises their defence and a prejudice is caused to them and that the delay would deny a fair trial to them.
(b) On the other hand, we have the issue of public money worth nearly Rs.2 crores being taken away by bogus exportes by submitting fraudulent document and possibility of such documetns being used in future for more grievious crimes, the possibility of other fraudulent companies being emboldened and the possibility of Custom Employees in charge of duty draw back operations also being emboldended. Even at the cost of repetition it is worth mentioning that out of the 16 cases referred to in earlier paras, which emanated from earlier incident, the CBI had recommended criminal offences against three officials, major penalty proceedings against 30 officials and minor penalty proceedings 12 officials. The event had occurred between 1995 to 1997 and chargesheet was served in 2005. Only 5 employes had approached this Tribunal immediately and obtained the relief in terms of quashing of the chargesheet on the ground of delay. Thereafter it took the Department another four years to appoint Enquiry Officer and Presenting Officer in other 10 cases. Thus, another group of 10 employees could seek quashing of the chargesheet on the ground that the Respondent Department had taken four years to appoint Enquiry Officer and this delay was unjustified. It is also pertinently pointed out by the Learned Counsel for the respondent that in those earlier matters, the Disciplinary Authority was of the view that no Departmental Enquiry was necessary and there was a protracted correspondence between Senior level officers of the Respondent Department and the CBI, before the decision to issue chargesheet was final taken.
(c) In the present OA the factors that would weigh against the two applicants are that the Department had tried to inculcate certain caution and certain discipline by way of their Standing Order S.R.No. 7382 dated 4.8.1998 which inter alia stipulates that:
Standing Order No. 7382 DATED 04.8.1998 stipulates, interalia, that "Recently some cases of DEPB having been obtained on the basis of forged documents have been noticed. It has been noticed that some DEPBs were obtained on the basis of forged E.P. copies of the Shipping Bills, B/Ls etc. presented to the licensing authority. In order to prevent similar occurrence in future it has been decided that DEPB verification would be carried out with reference to the EGM. After verification of EGM in the said matter a perforated stamp similar to the perforated stamp put by the Cash Department at the time of payment of duty would be affixed by the concerned verified officer".
Hence the statement of imputation emphasizes that;
"in view of the above two Standing Orders, it is clear that, without the verification and the Verification Number allotted to the DEPB scrips as per Verification/Punching Register/ the DEPB scips cannot be utilised for importing goods as the debits are made by Debit against the concerned Sl.No. Of the verification No. in the Debit Register."
(d) The second factor that would weigh is that the fraud amount and therefore, the consequent loss to the Govt. Exchequer is as huge as nearly Rs. 2 crores. The applicant of OA 584/211 has pointed to one earlier and similar incident of bogus claim passed by him where department had taken prompt action and he was given some minor penalty and hence claims that here too, the department should have taken quick action if he was guilty. However, in view of the fact that the instant matter was under CBI investigation, we feel it right to let the Departmental Enquiry decide the issue.
22. At this juncture, we find it necessary, as foremost preventive step for future, to issue following instructions to the Central Vigilance Commission (CVC), DGFT, the CBI and suitable representatives of Ministry of Finance not below the rank of Additional Secretary to Govt. Of India that they shall meet under the Chairmanship of the CVC, for as many meeting as would be needed and appoint a small group of Officers of the CBI, DGFT and the Commissioner of Customs to conduct a study on how the duty drawback scrips are issued to the Exporters, how data entry is done in the computers, at what frequency they are sent to the DGFT, what are the documents which enable the DGFT to locate that the firms are bogus and non- existing, what kind of additional documentation is needed at the level of Customs Department so that at their level itself they are in a better position to locate such bogus companies etc. It is also very necessary that supervision by the Senior Customs Officers are carried out periodically of all the work done upto the level of Appraising Officers and an appropriate monitoring system is developed that would allow the Senior Customs Officers to detect the negligence or connivance at the level of Appraisers. We would expect a report to be filed before us in that regard by the CVC within next six months.
23. In view of the above, we consider it just and fair that the Departmental enquiry should proceed. It would however be necessary for the respondents to complete the said enquiry within four months.
24. Both the O.As. are, therefore, dismissed. No Interim Relief was granted on M.P.No.13 & 14/2012 dated 4.1.2012. The same also stand dismissed. No order as to costs.

(Smt. Leena Mehendale) ( Jog Singh)

Member (A)              Member (J)


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