2015 (12) TMI 1143 - AT - Customs

Availment of CENVAT Credit while claiming Duty drawback - Misdeclaration - Held that - Fact of availment of Cenvat credit and the fact of making wrong declaration in the ARE-I has not been disputed by the appellant. The Commissioner has observed that inasmuch as the appellant has intentionally mis-declared the facts and have claimed the excess drawback, the goods in question are liable for confiscation under Section 113 (h)(ii) of the Customs Act, 1962. As the same are not physically available, having been exported, the appellant is liable to penalty under Section 114. Appellants are regular exporter their product in question and were aware of the legal position that no Cenvat credit is admissible if the exports are being made under drawback scheme. It is precisely for this reason that they availed the credit but did not declare the same in the export documents. On the contrary, they declared that no such credit has been availed. This fact cannot be held to be a human error so as to extend the benefit to the appellant. Huge drawback to the extent of around ₹ 11 lakhs stand availed by the appellant on the basis of mis-declaration made by them. I find no reasons to accept the appellants contention that the penalty should not have been imposed upon them neither do I find justifiable reason to reduce the penalty amount. - Decided against assessee.

Summary

Issues:
1. Availment of Cenvat credit and mis-declaration in export documents.
2. Imposition of penalty under Section 114 of the Customs Act, 1962.

Analysis:

Issue 1: Availment of Cenvat credit and mis-declaration in export documents
The appellant, engaged in the production of Glass Refills Silver Coated for Vacuum Flask, availed Cenvat credit on inputs received from a supplier. However, during the export period, they declared in their export documents that no Cenvat credit was availed. The Revenue detected this mis-declaration, leading to the appellant paying back the drawback claimed, along with interest. The Commissioner imposed a penalty of Rs. 3 lakhs under Section 114 due to intentional mis-declaration by the appellant.

Issue 2: Imposition of penalty under Section 114 of the Customs Act, 1962
The appellant argued that the mis-declaration was not intentional and did not warrant the penalty. The Revenue contended that as regular exporters, the appellant was aware that Cenvat credit cannot be claimed when exporting under drawback scheme. Despite this knowledge, the appellant availed the credit and made false declarations. The Tribunal upheld the penalty, stating that the appellant's actions were not a mere human error but a deliberate attempt to benefit from both schemes. The Tribunal found no grounds to reduce or eliminate the penalty amount, given the substantial drawback availed through mis-declaration.

In conclusion, the Tribunal rejected the appeal, affirming the penalty imposed on the appellant for mis-declaration and wrongful availment of Cenvat credit during exports under the drawback scheme.