2002 (7) TMI 720 - Commission - Customs

Issues Involved:
1. Overvaluation of exported CD ROMs.
2. Fraudulent DEPB credit claims.
3. Evasion of customs duty using DEPB licenses.
4. Non-fulfillment of export obligations under EPCG scheme.
5. Prosecution and jurisdiction of Settlement Commission.
6. Admission of additional duty liability by the applicant.
7. Objections by the Revenue department.

Detailed Analysis:

Overvaluation of Exported CD ROMs:
The Directorate of Revenue Intelligence (DRI) initiated inquiries into the exports of CD ROMs by the applicant under the DEPB Scheme. The investigation revealed that the applicant exported CD ROMs at grossly inflated prices to buyers in the USA and Europe. The prevailing wholesale price of identical CD titles in the USA market was much lower than the declared FOB price, indicating overvaluation.

Fraudulent DEPB Credit Claims:
The applicant fraudulently obtained 33 DEPB Licenses with a total credit value of Rs. 19,44,93,767/- without realizing substantial portions of the export proceeds. These licenses were transferred to various importers, leading to the evasion of customs duty. The applicant's transactions were not bona fide or genuine, and the DEPB credits were obtained excessively and fraudulently.

Evasion of Customs Duty Using DEPB Licenses:
The DEPB licenses obtained fraudulently were utilized by various importers for duty-free imports, resulting in customs duty evasion. The Show Cause Notice (SCN) demanded Rs. 19,44,83,561/- towards customs duty for goods imported using these DEPB licenses.

Non-fulfillment of Export Obligations under EPCG Scheme:
The applicant did not fulfill the export obligations under EPCG License No. 1500426, dated 14-5-96, as the export values were grossly mis-declared and over-invoiced. Consequently, the customs duty benefit of Rs. 1,39,91,998/- availed under the EPCG scheme was wrongly obtained.

Prosecution and Jurisdiction of Settlement Commission:
The DRI submitted that since prosecution had been launched against the applicant, the application for settlement was liable for rejection. However, the applicant argued that the Settlement Commission could entertain the application even if prosecution had been initiated, except for granting immunity from prosecution under the Customs Act.

Admission of Additional Duty Liability by the Applicant:
The applicant admitted an additional duty liability of Rs. 2,03,69,587/- for six DEPB exports where the export proceeds were not fully or partially realized. The applicant requested the Commission to determine the correct duty demandable and adjust the admitted duty liability against the Rs. 10 crores already deposited during the investigation.

Objections by the Revenue Department:
The Revenue department raised several objections, including:
- The case involved fraud and wilful mis-declaration, making it a case of smuggling, which is not permissible for settlement.
- The dispute did not pertain to levy, assessment, or collection of duty, thus falling outside the Commission's jurisdiction.
- The applicant was a habitual offender, and the application should not be admitted.
- The additional duty liability disclosed by the applicant was not full and true.

Commission's Decision:
The Commission analyzed the provisions of Section 127B, Section 127A(b), and Section 127C(1) of the Customs Act and concluded that the applicant satisfied the requirements for approaching the Settlement Commission. The Commission found that the case involved assessment of goods, and the applicant had filed the necessary shipping bills and bills of entry. The Commission did not find merit in the Revenue's objections and allowed the application to proceed under Section 127C(1).

The Commission ordered the appropriation of the admitted duty liability of Rs. 2,03,69,587/- from the Rs. 10 crores deposited by the applicant. The DRI was directed to submit all original records relied upon in the SCN, and the applicant was required to furnish a certificate from RBI regarding the remittances of export proceeds.

← Previous Next →