2014 (11) TMI 298 - HC - Customs

Fraudulent claims of duty drawbacks - Mis declaration of goods - Tribunal after examining the entire evidence and material on record upholding the claim of the revenue and also penalties imposed by the adjudicating authority affirmed the findings of the adjudicating authority relating to mis-declaration of the goods and wrongful claim of Duty Drawback/DEPB credit - Held that - The adjudicating authority on appreciation of evidence and analysing various reports and documents had concluded that the appellants had fraudulently claimed Duty Drawback/DEPB credit by way of exporting mis-declared goods through CFS (OWPL) Ludhiana. The appellants had exported the goods declaring them as Gear Cutting Tools of Cobalt bearing High Speed Steel, Heat Resistant Rubber Tension Tape and Gaskets under Drawback incentive schemes and had received/claimed drawback. It was concluded that the charges levelled in the show cause notice stood established against the appellants - The view taken by the Tribunal is a plausible view which has not been shown to be illegal or perverse in any manner - Decided against assessee.

Issues:
- Fraudulent claims of duty drawbacks
- Mis-declaration of goods in exports
- Confiscation of exported goods
- Recovery of drawback with interest
- Penalties imposed
- Appeal against Tribunal's decision

Fraudulent Claims of Duty Drawbacks:
The case involved fraudulent claims of duty drawbacks by exporting inferior quality goods under the guise of higher quality items. The investigation revealed mis-declaration of goods by certain firms, leading to the fraudulent claim of Duty Drawback/DEPB credit. The appellants exported goods misstated as gear cutting tools of cobalt bearing high-speed steel, heat-resistant rubber tension tape, and gaskets to claim higher drawbacks. The adjudicating authority found the charges established, leading to the confiscation of exported goods and the demand for drawback refund with interest.

Mis-declaration of Goods in Exports:
The Tribunal upheld the findings of the adjudicating authority regarding mis-declaration of goods and the wrongful claim of Duty Drawback/DEPB credit. It concluded that the appellants resorted to fraud consciously by misstating the description and value of the exported goods to gain undue benefits. The Tribunal highlighted the appellants' involvement in a racket aimed at defrauding customs authorities through misdeclaration, emphasizing the need to prevent fraud against the state by not entertaining pleas based on lack of customs checks or testing at the time of export.

Confiscation of Exported Goods and Recovery of Drawback with Interest:
The Commissioner's order dated 6.1.2006 confiscated the exported goods and demanded the refund of drawback along with interest, disallowing pending drawbacks and imposing penalties. The Tribunal affirmed these decisions, emphasizing the appellants' conscious involvement in fraudulent activities and their intent to make ill-gotten gains through deceptive practices.

Penalties Imposed:
The Tribunal upheld the penalties imposed by the adjudicating authority, citing evidence of mis-declaration and fraudulent claims. It emphasized the need to counter the presumption of innocence with the presumption of guilt in cases where fraud against customs authorities is established. The Tribunal referred to legal precedents highlighting the definition of fraud and the consequences of fraudulent activities in legal proceedings.

Appeal Against Tribunal's Decision:
The appellants challenged the Tribunal's decision, arguing that the findings were perverse and that no inferior quality material had been exported. However, the High Court found the Tribunal's view to be plausible and not shown to be illegal or perverse. Consequently, the appeals were dismissed for being devoid of merit.

This detailed analysis of the judgment highlights the issues of fraudulent claims of duty drawbacks, mis-declaration of goods in exports, confiscation of exported goods, recovery of drawback with interest, penalties imposed, and the appeal against the Tribunal's decision. The case underscores the importance of preventing fraudulent practices in international trade and upholding the integrity of customs regulations.

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