2010 (11) TMI 273 - AT - Customs

Penalty - Confiscation - the amounts of drawback granted earlier to M/s. Neetu Fashions and M/s. Vecario International were ordered for recovery under Rule 16(A) of the Customs and Central Excise Duty Drawback Rules 1995, on the basis of the finding that the sale proceeds of the export goods were not received by the exporters - incorrect declaration of address - In order to constitute an offence under this provisions of law, the export goods should be found not to be corresponding in any material particulars with any information furnished by the exporter under the Act in relation to the fixation of rate of drawback under Section 75 - the appellant cannot be held to have done something or omitted to do something which rendered the goods liable to confiscation under Section 113(ii) of the Act - Decided in the favour of assessee

Issues:
Penalty imposed under Section 114 of the Customs Act for alleged involvement in export of goods under non-existent firms.

Analysis:
The appeal challenged a penalty of Rs. 10,00,000 imposed under Section 114 of the Customs Act on the appellant for his alleged role in the export of goods under non-existent firms. The appellant contended that he had no business relationship with the said firms and denied the allegations in the show-cause notice. The appellant argued that the Commissioner failed to establish any act or omission on his part rendering the export goods liable to confiscation under Section 113 of the Customs Act. The appellant emphasized that he did not sign the declarations in shipping bills or GR forms, and non-receipt of sale proceeds by the exporters could not be attributed to him. The appellant sought the penalty to be set aside based on these grounds.

The respondent, represented by the learned SDR, argued that evidence on record indicated the appellant's involvement in discounting and encashment of cheques issued to exporters by the Customs department. The respondent alleged that the appellant was part of a scheme involving the export of goods under non-existent firms for duty drawback benefits. It was claimed that both firms were found to be non-existent at the declared addresses, leading to confiscation of goods under Section 113 of the Act and imposition of penalties under Section 114. The respondent contended that the appellant, along with others, orchestrated the scheme for undue benefits. The SDR highlighted that the adjudicating authority should have invoked a specific clause under Section 113 for confiscation and penalization, and produced the relevant show-cause notice to support the allegations.

Upon review, the Tribunal found that the Commissioner's order for recovery of drawback amounts from the exporters and imposition of penalties on them had not been challenged. However, the legality of the penalty imposed on the appellant under Section 114 was disputed. The Tribunal examined the confiscation of export goods under Section 113, where the Commissioner's findings revealed that the firms under whose names the goods were exported were non-existent at the declared addresses. The Commissioner invoked Section 113(ii) for confiscation based on misdeclaration of addresses by the firms. The Tribunal noted that the misdeclaration of addresses did not constitute a material particular related to drawback claim under Section 75. As such, the decision to confiscate goods under Section 113(ii) was deemed legally unsustainable. Consequently, the penalty imposed on the appellant under Section 114 was set aside, and the appeal was allowed.

This detailed analysis of the legal judgment highlights the arguments presented by both parties, the Tribunal's assessment of the evidence and legal provisions, and the ultimate decision to set aside the penalty imposed on the appellant based on the lack of legal grounds for confiscation under Section 113(ii) of the Customs Act.

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