2016 (1) TMI 1003 - AT - Customs

Claim of duty drawback - export of readymade garments, leather goods, etc. - On enquiry, it was found that either the supporting manufacturer did not exist or had not manufactured the goods and were simply traders. On account of such fraudulent declaration, the proceedings were initiated which culminated into the impugned order. - Held that - even in cases where goods were procured from the open market, the central excise portion of the drawback was admissible during the relevant period also. The issue is squarely covered in favour of the appellants by the judgements of CESTAT in the case of Kultar Exports 2014 (1) TMI 531 - CESTAT NEW DELHI . Accordingly, following the binding precedent and for the reasons alike, we set aside the impugned order and allow the appeals. - Decided in favor of assessee.

Summary

Issues:
- Confiscation of impugned goods
- Central excise portion of drawback
- Penalties imposed on the appellants
- Validity of supporting manufacturers' declarations
- Interpretation of legal provisions on central excise portion of drawback
- Applicability of previous judgments by CESTAT and Delhi High Court

Confiscation of Impugned Goods:
The appeals were filed against an Order-in-Original that held readymade garments and leather goods liable to confiscation, valued at Rs. 12,93,50,999.40. Although the goods were not confiscated due to unavailability, the central excise portion of drawback amounting to Rs. 88,18,084 was ordered for recovery, and penalties were imposed on the appellants.

Validity of Supporting Manufacturers' Declarations:
The proprietor of the exporting company claimed that the impugned goods were manufactured by supporting manufacturers based on submitted declarations. However, an inquiry revealed that the supporting manufacturers either did not exist or did not manufacture the goods, acting as mere traders. This led to the initiation of proceedings culminating in the impugned order.

Interpretation of Legal Provisions on Central Excise Portion of Drawback:
The key contention revolved around the interpretation of legal provisions regarding the central excise portion of drawback. The appellants argued that similar cases in the past, such as Kultar Export Vs. CC (Export), had been decided in their favor by CESTAT and upheld by the Delhi High Court. They cited circulars and judgments to support their claim that central excise portion of drawback was admissible even when goods were procured from the open market.

Applicability of Previous Judgments:
The Departmental Representative argued that the present case differed from the precedent set by Kultar Export (supra) as false declarations were submitted in the appellant's case. However, the Tribunal found that the facts in the current appeal were akin to those in the Kultar Export case. The Tribunal analyzed the matter in detail and concluded that even when goods were acquired from the open market, the central excise portion of drawback was admissible during the relevant period.

Decision:
After considering the contentions of both sides and reviewing the precedents, the Tribunal found that the issue was squarely covered in favor of the appellants by the judgments of CESTAT in the Kultar Exports case. Therefore, following the binding precedent and similar reasons, the impugned order was set aside, and the appeals were allowed.