2014 (9) TMI 796 - HC - Customs

Duty drawback claim - Whether in the facts and circumstances of the case the CESTAT was right in holding that drawback claimed under sec.74 of the Customs Act, 1962, once sanctioned to the appellant after due verification can be reopened subsequently without contesting the original assessments made - Held that - The case is entirely based on factual matrix. It could be noticed that CESTAT has well laid down foundation of facts to conclude that nothing could be pointed out, which would lead to prove any of the allegations made in the show cause notice. The question that had been raised is whether the drawback claimed under section 74 of the Customs Act, which was already sanctioned to the respondent after the due verification could be reopened subsequently without contesting the original assessment. The main contest was to the identity of the imported goods, which was established at the time of reexport from the evidence which were before the authorities. There were examination reports where the authorities had compared the, weight, size, marks and numbers with respect of bills of entry and concluded beyond doubt that those were the cases of re-export. The Tribunal, therefore, was right in holding that once having accepted that the identification of the imports goods was duly verified, the reopening was not sustainable. No opportunity was made available for the cross-examination in respect of some of the statements said to have been recorded by the authorities. On the strength of this entire material, it concluded that there was no justification in upholding the grounds raised by the Revenue. It is a settled position that any party which seeks to rely upon any statement for the purpose of examining veracity of the contents of such documents, otherwise surely requires to give an opportunity to the concerned party to cross-examine the makers of such statements. Denying such opportunity may jeopardize in a major way the right of the concerned party. Hence, such denial would further vindicate the conclusion of the Tribunal. - No substantial question of law arises - Decided against Revenue.

Summary

Issues involved:
1. Interpretation of section 74 of the Customs Act, 1962 regarding reopening of drawback claims.
2. Validity of allowing drawback claims in the case of difficulty in differentiating between indigenously manufactured and imported goods.

Analysis:
1. The main issue in this judgment revolves around the interpretation of section 74 of the Customs Act, 1962, specifically regarding the reopening of drawback claims. The Revenue raised questions challenging the decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in allowing drawback claims without contesting the original assessments. The High Court, after considering the submissions, upheld CESTAT's decision. The Court emphasized that the identification of imported goods for re-export was duly verified, and there was no evidence of diversion or substitution by the respondent with indigenous products. The Tribunal's decision was based on a factual matrix, supported by examination reports and records, leading to the conclusion that the reopening of the drawback claims was not sustainable.

2. Another significant issue addressed in the judgment relates to the validity of allowing drawback claims when there is difficulty in differentiating between indigenously manufactured and imported goods. The Court noted that the Tribunal considered various factors, including the absence of opportunities for cross-examination regarding certain statements recorded by authorities. The lack of cross-examination could jeopardize the rights of the concerned party, and therefore, the Tribunal's decision to dismiss the grounds raised by the Revenue was justified. The Court found no perversity in the Tribunal's findings and agreed that the case presented genuine exports without evidence to the contrary.

3. Overall, the High Court dismissed the Tax Appeals as no substantial questions of law arose for consideration. The judgment highlights the importance of factual evidence, proper verification of imported goods, and the right to cross-examination in upholding decisions related to drawback claims under the Customs Act. The Court affirmed the Tribunal's conclusions, emphasizing the need for a continuous link between filing bills of entry, processing activities, and re-exporting goods to support genuine export claims.