2002 (3) TMI 463 - Commission - Customs

Issues Involved:
1. Violation relating to DEEC
2. Violation relating to import and export of DEPB
3. Violation in relation to fraudulent drawback schemes

Detailed Analysis:

1. Violation relating to DEEC:
The applicant, a sole proprietorship formed in 1994-95, engaged in the manufacture and export of various goods, obtained about sixty duty-free advance licenses under the DEEC Scheme. These licenses allowed the import of duty-free items for manufacturing export products. However, due to financial losses and non-realization of export proceeds from Russia, the applicant faced difficulties in continuing exports and paying customs duty of Rs. 6,99,32,447/-.

The applicant requested the Settlement Commission to consider their application under Section 127B(1) of the Customs Act, 1962, and sought relief including a reduction of duty liability by at least 50%, waiver of fine, penalty, interest, and immunity from prosecution.

The Revenue reported misuse of advance licenses and DEEC scheme by the applicant, resulting in evasion of customs duty around Rs. 6 crores. The applicant admitted a duty liability of Rs. 6,54,32,447/- after deducting Rs. 45 lakhs already deposited with the DRI. The Settlement Commission allowed the application to proceed with the payment of the admitted liability and ordered the applicant to execute a bank or corporate guarantee for the remaining amount.

The applicant complied with the Commission's orders, and the Revenue confirmed the duty liability under the DEEC scheme as Rs. 8,63,25,976/-. The applicant admitted this liability.

2. Violation relating to import and export of DEPB:
The applicant faced allegations of over-invoicing in the value of pen nibs, leading to fraudulent DEPB benefits. The Revenue claimed that the DEPB credit availed by the applicant was Rs. 1,52,73,435/-, while the applicant argued that the value declared by the Dubai importer was manipulated to evade duty, and the certificate from the Delhi Chamber of Commerce was only for certifying the country of origin.

The Commission noted that the applicant realized the export proceeds and submitted relevant documents from the bank. The Commission found the applicant's argument reasonable and concluded that there was no liability under the DEPB scheme.

3. Violation in relation to fraudulent drawback schemes:
The applicant submitted shipping bills and export realization certificates for most shipments but faced issues with 19 shipping bills. The applicant agreed to pay Rs. 8,05,122/- for these 19 shipping bills.

The Revenue alleged fraudulent over-invoicing and manipulation of invoices to claim excess drawback. The Commission directed the applicant to provide all relevant documents, and the applicant submitted bank realization certificates for 211 shipping bills, with the remaining certificates expected shortly.

Based on the applicant's submissions and the Revenue's evidence, the Commission settled the case on payment of Rs. 8,71,31,098/- (Rs. 8,63,25,976/- for DEEC and Rs. 8,05,122/- for drawback). The applicant was allowed to pay the balance amount in installments with interest, and the corporate guarantee was to be continued until full payment was made.

The applicant was granted immunity from penalty, fine, and prosecution under the Customs Act, 1962, the Indian Penal Code, and the Foreign Exchange Regulation Act. The applicant's passport, released on execution of a bond with surety, would be discharged upon payment of dues.

The settlement would be void if obtained by fraud or misrepresentation of facts.

← Previous Next →