2010 (6) TMI 366 - AT - Customs

Drawback Deemed export by DTA units fraud payment not received subsequently and bills admitted to be inflated for commission raised bills in name of mechanic fabricator in his company Held that - absence of evidence for payment - absence of evidence of any litigation seeking payment, fabrication of documents relating to supply of the goods throw serious doubt on the prices of the consignments declared by them for deemed export

Summary

Issues Involved:

1. Legality of the seizure and confiscation of goods.
2. Validity of the declared transaction value and alleged overvaluation.
3. Entitlement to drawback claims.
4. Imposition and quantum of penalties on various appellants.

Issue-wise Detailed Analysis:

1. Legality of the Seizure and Confiscation of Goods:

The appellant, M/s. S.F. Overseas Pvt. Ltd., argued that no actual export had occurred as they had requested the cancellation of their shipping bills due to the non-receipt of the Letter of Credit (LC) from the buyer's bank. They contended that the seizure of the consignment by Customs was illegal as per para 2.42 of the Exim policy, which does not permit stopping an export consignment. The Tribunal found that the goods had already moved from the Falta zone to Haldia Port under Customs seals and were allowed for shipment. The Tribunal upheld the confiscation of the goods under Section 113(d) and 113(i) of the Customs Act but reduced the redemption fine from Rs. 25.00 Lakhs to Rs. 10.00 Lakhs.

2. Validity of the Declared Transaction Value and Alleged Overvaluation:

The Department argued that the export consignment was overvalued to claim undue export benefits. The investigation revealed that the actual value of the goods was significantly lower than the declared value of Rs. 250/- per piece. The Tribunal noted that the domestic suppliers had shown supplies on a deemed export basis at inflated values and that the transactions were dubious, involving fabricated documents and billing irregularities. The Tribunal relied on the Supreme Court's decision in OM Prakash Bhatia, which held that overvalued export goods are to be treated as prohibited goods and liable for confiscation under Section 113(d).

3. Entitlement to Drawback Claims:

M/s. S.F. Overseas Pvt. Ltd. claimed that since no export had occurred, the question of drawback did not arise. The Tribunal upheld the Commissioner's order rejecting the drawback claims, noting that the goods were not exported and the drawback claims had not been sanctioned. The Tribunal also found that the transactions were intended to claim undue export benefits, which justified the rejection of the drawback claims.

4. Imposition and Quantum of Penalties on Various Appellants:

The penalties imposed by the Commissioner were challenged by the appellants. The Tribunal found that all appellants were involved in inflating the value of deemed exports to claim undue benefits. The penalties were considered warranted due to the collective involvement in misdeclaration of value. However, the Tribunal reduced the penalties as follows:
- M/s. S.F. Overseas Pvt. Ltd.: Reduced from Rs. 15.00 Lakhs to Rs. 10.00 Lakhs.
- Shri Falguni Mukherjee, Shri Debangshu Mukherjee, Shri Shyamal Ghosh, and Shri S.K. Sachadeva: Reduced to Rs. 2.00 Lakhs each.
- Penalties on Shri Saurav Sardar, Shri N. Mitra Mustafi, and Shri Uttam Surana (Rs. 1.00 Lakh each) were upheld as not excessive.

Conclusion:

The Tribunal upheld the confiscation of goods and the rejection of drawback claims but reduced the quantum of redemption fine and penalties for certain appellants. The appeals were disposed of accordingly.