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2013 (10) TMI 1003 - AT - Customs


Issues Involved:
1. Mis-declaration of exported goods.
2. Undue DEPB benefit gained.
3. Recovery of customs duty and interest.
4. Confiscation and fines in lieu of confiscation.
5. Penalties imposed on the appellant company and its Vice President.
6. Jurisdiction of customs authorities over DEPB issues.
7. Validity and retrospective application of subsequent amendments to DEPB schedule.
8. Allegations of fraud and misrepresentation.

Detailed Analysis:

Mis-declaration of Exported Goods:
The appellant company was found to have exported VGA monitors while declaring them as CGA monitors in the shipping bills. This mis-declaration was established through various statements and technical data, including the specifications of the monitors and the number of pins used, which did not match CGA monitors but VGA monitors.

Undue DEPB Benefit Gained:
The appellant company gained undue DEPB benefits by mis-declaring the exported monitors. The DEPB benefits were disallowed as the exported monitors did not qualify for such benefits under the DEPB scheme. The investigation revealed that the company did not manufacture CGA monitors, which were eligible for DEPB benefits, but instead exported VGA monitors.

Recovery of Customs Duty and Interest:
Customs duty discharged using unduly gained DEPB scrips was ordered to be recovered under Section 28 of the Customs Act, 1962, along with interest under Section 28AB. The amount deposited by the appellant was appropriated towards the duty demand, and the remaining amount was ordered to be recovered by encashing the bank guarantee.

Confiscation and Fines in Lieu of Confiscation:
The exported VGA monitors were confiscated, and fines were imposed in lieu of confiscation since the goods had already left India. Similarly, goods imported using unlawfully obtained DEPB scrips were confiscated, and fines were imposed in lieu of confiscation.

Penalties Imposed on the Appellant Company and Its Vice President:
Penalties were imposed on the appellant company and its Vice President under Sections 112 and 114 of the Customs Act, 1962. The penalties were reduced to 40% for the company and 50% for the Vice President considering the circumstances of the case.

Jurisdiction of Customs Authorities Over DEPB Issues:
The appellant argued that customs authorities had no jurisdiction over DEPB issues, relying on various judgments. However, the tribunal held that customs authorities have the duty to curb evils of mis-declaration and protect revenue. The tribunal found that the customs authorities acted within their jurisdiction.

Validity and Retrospective Application of Subsequent Amendments to DEPB Schedule:
The appellant claimed that a subsequent amendment to the DEPB schedule should apply retrospectively. The tribunal rejected this argument, stating that the amendment cannot be applied retrospectively to grant benefits for past exports made with mis-declaration.

Allegations of Fraud and Misrepresentation:
The tribunal found that the appellant company made deliberate mis-declarations to gain undue DEPB benefits, amounting to fraud. The tribunal emphasized that fraud nullifies all transactions and judgments, and undue gains made at the cost of revenue must be restored.

Findings and Order of Tribunal:
The tribunal upheld the findings of the adjudicating authority, confirming the recovery of customs duty and interest, and the imposition of fines and penalties. The tribunal reduced the penalties imposed on the company and its Vice President. The appeals were partly allowed to the extent of the reduction in penalties. The tribunal reaffirmed that fraud and justice do not coexist, and any undue gain made through fraud must be rectified.

Conclusion:
The tribunal concluded that the appellant company deliberately mis-declared the description of exported goods to gain undue DEPB benefits. The customs authorities acted within their jurisdiction to recover the undue benefits and impose penalties. The appeals were partly allowed with a reduction in penalties, but the findings of fraud and misrepresentation were upheld.

 

 

 

 

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