2013 (10) TMI 724 - AT - Customs

Waiver of pre deposit - overvaluation to claim higher duty drawback - Export of readymade garments - Held - There is enough evidence on record to show that the exports made by him were grossly over-valued and were to the firms which were not actual buyers. The entire scenario in Russia was being managed by his close relataive, Shri Surinder Singh. The said exporting firms have already been received the drawback amount and as such, cannot plead any financial difficulty. As such, we deem it fit to direct the exporting firms to deposit 50% of the drawback availed by them as a condition of hearing their appeals - Any deposit made by any exporting firms during the course of investigation would be taken into consideration for calculating amount of 50%. - stay granted partly.

Summary

Issues:
1. Stay applications filed by exporting firms and fabric suppliers.
2. Allegations of over-valuation of exports and misuse of duty drawback benefit.
3. Evidence presented by Revenue regarding inflated export prices.
4. Decision on pre-deposit of drawback amount by exporting firms.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI pertains to multiple stay applications arising from a common impugned order. The exporting firms, controlled by Shri Pritpal Singh, engaged in exporting readymade garments under drawback and duty entitlement pass book schemes. The Revenue's subsequent investigations revealed that the exports were made at escalated prices to obtain higher duty drawback benefits. It was found that the foreign buyers were either non-existent or not the actual buyers. Statements from various suppliers indicated that they had not supplied raw materials and were involved in paper transactions with the exporting firms.

The Tribunal noted that substantial material evidence, including statements from suppliers and a close relative managing operations in Russia, supported the Revenue's claim of over-valuation of exports. Considering the balance of convenience, the Tribunal found in favor of the Revenue. It was observed that Shri Pritpal Singh, the proprietor of the exporting firms, had already received the drawback benefit, and there was sufficient evidence to suggest over-valuation and involvement of non-actual buyers. Therefore, the Tribunal directed the exporting firms to deposit 50% of the drawback amount they had availed as a condition for hearing their appeals.

Furthermore, any deposits made by the exporting firms during the investigation would be considered for the 50% deposit requirement. This deposit was to be made within eight weeks, following which the pre-deposit of the balance amount and penalties imposed on all applicants would be dispensed with, and recovery stayed pending the appeal's disposal. The compliance reporting date was set for 25.08.2013 to monitor the deposit fulfillment by the exporting firms.