2015 (11) TMI 1326 - AT - Customs

Waiver of pre deposit - Overvaluation to claim higher duty draw-back - Held that - Allegation is regarding over-valuation of the readymade garments and diversion of garments exported to Russia. While the entire findings of the adjudicating authority proceeds on this basic allegation as also various documentary evidences which were produced before him, we find that the entire case needs appreciation of the evidences which is in paper book. At the same time we do find that the Tribunal at Delhi in the case of Hem Chand Gupta & Sons wherein identical issue was agitated in final order dated 12.01.2015 considered all the evidences and held in favour of the appellants therein. The findings of the Tribunal are recorded in para 21.1, 21.2 and 21.3. We also find that the Tribunal has recorded that the jurisdiction of DRI officers to issue show cause notice for recovery of improper draw back is incorrect and has also been dealt with at para 25.1, 25.2, 25.3 and 25.4 of the said order which is also one of the issue in appeal. The Tribunal has addressed to all the decisions put forth by the Revenue in various paragraphs and has also addressed to the fact that the demand for incorrect duty draw back can be raised only by a proper officer and DRI officer is not considered as a proper officer. - prima facie these appellants have made out a case for waiver of pre-deposit of the entire amount of interest and penalties imposed. - Stay granted.

Summary

Issues:
Stay petitions dismissed for non-prosecution, diversion of export cargo, over-valuation of goods, improper draw-back claim, jurisdiction of DRI officers.

Analysis:
The judgment by the Appellate Tribunal CESTAT Mumbai, delivered by Mr. M.V. Ravindran, Member (Judicial), and Mr. P.S. Pruthi, Member (Technical), involved multiple issues arising from the same set of facts and an order-in-original. Initially, four stay petitions were disposed of collectively due to their common origin. Two parties, Shri Arun Gupta and M/s. R.A. Overseas, were not represented, leading to the dismissal of their stay petitions for non-prosecution. The Tribunal directed compliance with Section 129E of the Customs Act, 1962, and set a date for further proceedings.

Subsequently, the focus shifted to stay petitions filed by Manoj Gupta and M/s. Vision Inc. The core issue revolved around the alleged over-valuation of export cargo destined for Dubai on Dollar Terms, diversion of cargo intended for Russia under a Debt Repayment arrangement, and the claim of Drawback. The Directorate of Revenue Intelligence (DRI) conducted a thorough investigation, revealing discrepancies in the export destinations and transactions. Show cause notices were issued, leading to the imposition of penalties on M/s. Vision Inc. and Shri Manoj Gupta.

During the proceedings, the appellants' counsel argued that the exports reached Russia via Finland and were paid in foreign exchange, citing a favorable precedent from the Tribunal at Delhi. Conversely, the Departmental Representative contended that the appellants engaged in fraudulent activities, supported by evidence from Dubai customs authorities regarding inflated values and remittances. The authenticity of invoices from Russian and Dubai Customs was emphasized, highlighting irregularities in draw-back claims.

Upon reviewing the submissions and evidence, the Tribunal acknowledged the allegations of over-valuation and diversion of goods. However, referencing the Delhi Tribunal's decision in a similar case, the Tribunal found merit in the appellants' arguments. The Delhi Tribunal's judgment raised doubts about the jurisdiction of DRI officers in issuing show cause notices for draw-back recovery. Consequently, the Tribunal granted the stay applications, waiving the pre-deposit of interest and penalties until the appeal's final disposal, aligning with the principles established in the Hem Chand Gupta & Sons case.

In conclusion, the judgment addressed various legal intricacies, including evidentiary considerations, jurisdictional issues, and the interpretation of relevant statutes, ultimately granting relief to the appellants pending the appeal's resolution.