2007 (2) TMI 509 - AT - Customs

Issues Involved:
1. Waiver of pre-deposit of drawback and penalties.
2. Allegations of over-valuation of exported goods.
3. Evidence supporting the allegations.
4. Role of various parties in the alleged misdeclaration.
5. Confiscation of goods post-export.
6. Retraction of statements and their credibility.
7. Discriminatory treatment in issuing Show Cause Notices.
8. Prima facie case and balance of convenience for granting waiver of pre-deposit.

Issue-wise Detailed Analysis:

1. Waiver of Pre-deposit of Drawback and Penalties:
The applications sought waiver of pre-deposit of a significant drawback amount and penalties imposed under Section 114(i) and (iii) of the Customs Act, 1962. The Tribunal had to consider whether the appellants had established a prima facie case to justify such a waiver.

2. Allegations of Over-valuation of Exported Goods:
The main allegation was that M/s. Tex-Age exported ready-made garments under the claim of drawback and DEPB Scheme, which were found to be highly over-valued upon investigation. Show Cause Notices were issued to redetermine the PMV and recover the duty drawback sanctioned and paid, along with denying the DEPB credit.

3. Evidence Supporting the Allegations:
The Show Cause Notice was based on several pieces of evidence:
- Statements from suppliers indicating over-invoicing.
- Declarations to the Indo-Arab Chamber of Commerce showing discrepancies in prices.
- Goods offloaded in Dubai and cleared by firms linked to the exporters.
- Two sets of invoices showing different values.
- Payments made by cheques, discounted by multiple persons.

4. Role of Various Parties in the Alleged Misdeclaration:
Penalties were imposed on various individuals and firms associated with M/s. Tex-Age. The Tribunal examined the involvement of each party, including the suppliers and those who discounted cheques, in the alleged misdeclaration.

5. Confiscation of Goods Post-export:
The goods were ordered to be confiscated under Section 113(d) & (i) of the Customs Act, 1962, despite not being available for confiscation. The Tribunal referenced the Supreme Court's decision in Weston Components Ltd. v. CC, New Delhi, which held that goods could be confiscated even if not available.

6. Retraction of Statements and Their Credibility:
The appellants argued that the statements used as evidence were retracted and obtained under duress. However, the Tribunal noted that the retractions did not specify how the statements were incorrect, and the statements were supported by other evidence like purchase bills and warehouse keeper statements.

7. Discriminatory Treatment in Issuing Show Cause Notices:
The appellants contended that similar exporters, like M/s. Vaishnodevi Industries, were not issued Show Cause Notices despite similar circumstances. The Tribunal found no reasonable explanation for this discrepancy, raising concerns about discriminatory treatment.

8. Prima Facie Case and Balance of Convenience for Granting Waiver of Pre-deposit:
The Tribunal's members differed on whether a prima facie case existed. The majority opinion, led by the Member (Judicial), found that the appellants had established a prima facie case for waiver of pre-deposit, citing discrepancies in evidence and the realization of remittances in foreign exchange.

Separate Judgments Delivered:
- Member (Technical) directed a pre-deposit of Rs. 25 lakhs, citing sufficient evidence against the appellants.
- Member (Judicial) found the evidence insufficient and granted a complete waiver of pre-deposit.
- The Vice-President agreed with the Member (Judicial), resulting in a majority order for complete waiver of pre-deposit and stay on recovery pending the appeal.

Majority Order:
There shall be a complete waiver of pre-deposit of duty drawback demanded by the Commissioner and penalties imposed on the appellants, with recovery stayed until the final disposal of the appeal.

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