2014 (1) TMI 794 - AT - Customs

Denial of drawback claim - reexport of goods - Imposition of redemption fine and penalty - Confiscation u/s 113 - Penalty u/s 114(iii) - Held that - appellants have furnished detailed re-conciliation statements tally sheets and the records maintained by them to the lower authorities. These records establish a continuous link from the time of filing the bills of entry to the processing activities done and their re-export. These details include supplier name number of pieces appellant heat number test number lot number etc. Tally sheet and chartered engineers certificate is also furnished to that effect. It is not distinguished by the adjudicating authority as to why the documentary evidence produced by the appellant are not acceptable. There are no allegations of diversion of imported goods. It is also not the claim of the Revenue that 100% goods being exported are of indigenous manufacture. Even if it is presumed that goods being exported represent a mixed lot of imported and indigenous Flanges then also for imported goods proportionate drawback under Sec 74 of the Customs Act 1962 would be admissible to the appellant. Burden of proof to establish the indigenous nature of goods and the extent being exported lies with the investigation and an exporter cannot be denied the export incentives on the basis of presumptions/doubts raised by some statements for which even no cross examination was extended to the appellants. From the perusal of the case records it has not been declared by the appellant in the customs documents filed before the Revenue that goods being exported are manufactured in India. On the contrary appellant has always claimed it to be a case of re-export of imported goods under claims of Sec. 74 drawback. Therefore confiscation of export goods under Sec 113 of the Customs Act 1962 and imposition of redemption fine is not justified and needs to be set aside. Penalties imposed upon the appellants under Sec. 114(iii) are also required to be set aside - Decided in favour of assessee.

Summary

Issues:
- Whether drawback claims under Sec. 74 of the Customs Act 1962 can be reopened after being sanctioned without contesting the original assessments?
- Whether DBK claims can be denied based on the difficulty in differentiating between imported and indigenously manufactured goods?

Analysis:

Issue 1:
The appellant argued that once the identity of the imported goods was established at the time of re-export, as evidenced by examination reports, the assessments should not be reopened. Citing the CESTAT judgment in the case of M/s Mac Megha Agro Equipments (P) Ltd., vs. CC, Cochin, it was contended that assessments made after verification cannot be reopened without challenging them. The Revenue did not allege diversion of imported goods, and the lack of evidence and cross-examination further supported the appellant's case. Thus, the demand for drawback claims and penalties was deemed unsustainable.

Issue 2:
Regarding the denial of drawback claims on specific shipping bills, the appellant provided detailed reconciliation statements and records to establish a continuous link from bill filing to re-export. The documents included supplier details, heat numbers, test numbers, and more, supported by tally sheets and a chartered engineer's certificate. The adjudicating authority failed to explain why these documents were not accepted. Even if a mixed lot of imported and indigenous goods was presumed, proportionate drawback under Sec. 74 was deemed admissible. The burden of proof to establish the nature of goods lay with the investigation, and the appellant's claims of re-export were consistent. Consequently, confiscation of export goods and imposed penalties were set aside.

In conclusion, the appeals filed by the appellant were allowed based on the established identity of re-exported goods, lack of diversion evidence, and the failure to provide substantial reasons for denying drawback claims.