2004 (3) TMI 698 - AT - Customs

Summary

Issues: Misuse of DEEC Scheme, Confiscation of Export Goods, Imposition of Penalties

Misuse of DEEC Scheme:
The case involved the export of polyester fabrics under the DEEC Scheme, where exporters were suspected of falsely documenting exports to obtain duty-free imports of raw materials. The investigation revealed fraudulent documentation and misuse of the scheme by the company, leading to a show cause notice proposing confiscation of export goods and penalties on various parties involved.

Confiscation of Export Goods:
The Commissioner of Customs Kandla adjudicated the case, holding that the export goods were liable to confiscation due to fraudulent documentation. Penalties were imposed on the company, supporting manufacturers, transporter, and individuals involved in the scheme. The Commissioner imposed significant penalties under Section 114 of the Customs Act, 1962, based on the findings of misuse and fraudulent practices.

Imposition of Penalties:
The penalties imposed included a substantial amount on the company, supporting manufacturers, and individuals responsible for the fraudulent activities. The mastermind behind the fraud was specifically penalized, along with other directors and partners involved in the misdeclaration and collusion related to the bogus exports under the DEEC Scheme. The penalties were imposed based on the severity of the fraudulent activities and the roles played by the different parties.

The Appellate Tribunal, after hearing the arguments and examining the records, found that the goods exported were indeed fabrics made out of 100% Polyester Filament yarn, contrary to the Commissioner's findings. The Tribunal noted that the goods had been checked before export, and there was confirmation of the description, size, and weight matching the export documents. The net foreign exchange had been earned and realized, further supporting the legitimacy of the exports. Despite some discrepancies in documentation, the overwhelming evidence established that the exported goods were genuine, leading the Tribunal to set aside the impugned orders and allow the appeals. The Tribunal concluded that the findings of the Commissioner regarding confiscation and penalties were unsustainable in light of the evidence presented.

In summary, the judgment addressed the misuse of the DEEC Scheme, the confiscation of export goods, and the imposition of penalties on the involved parties. The Tribunal overturned the Commissioner's decision, ruling in favor of the appellants based on the evidence proving the legitimacy of the exported goods as fabrics made out of 100% Polyester Filament yarn.