2021 (3) TMI 1377 - AT - Customs

Demand for recovery of drawback sanctioned and paid to the respective exporters - validity of recovery in the absence of bar of limitation in rule 16 of Customs and Central Excise Duties Drawback Rules 1995 - quantum of market value of export goods - HELD THAT - The entire proceedings is premised on the acceptance of market value of the export goods as being less than the drawback amount claimed and sanctioned to them. It is also noted that the Customs Central Excise Duties Drawback Rules 1995 invoked by the adjudicating authority and claimed by the Learned Authorised Representative to be invoked without bar of limitation arises from the power conferred under section 75 of Customs Act 1962 and section 37 of Central Excise and Salt Act 1944. There is no doubt that rule 16 of the Customs and Central Excise Duties Drawback Rules 1995 does not prescribe any limitation; indeed it should not have to as the empowerment of the sanctioning authority is limited to computation of eligibility from the scheduled rate. Though the time-limit has been held by the Tribunal to be non-existent in re Sun Exports 2008 (4) TMI 151 - CESTAT MUMBAI it is found that the decision of the Hon ble High Court of Gujarat in re Pratibha Syntex Ltd 2013 (3) TMI 480 - GUJARAT HIGH COURT has held that in the facts of the present case the show cause notices which have been issued after a period of more than three years from the date when the drawback came to be paid to the petitioners cannot by any stretch of imagination be said to have been issued within a reasonable period of time. Under the circumstances the show cause notices have to be held to be bad on the ground of being time barred. Once the show cause notices are held to be invalid the very substratum of all the orders passed pursuant thereto including the impugned orders would fall rendering the same unsustainable. Thus there are no record in the impugned order that the bar of limitation was considered by the adjudicating authority or that it was even raised before him. The appellant did not question the correctness of the valuation of export goods undertaken but did nevertheless seek cross-examination of certain persons which had been refused; in the light of the substantial delay between the exports and the initiation of proceedings for recovery this aspect is relevant. In order to enable proper appreciation of these issues now raised it would be appropriate to set aside the impugned order and remand the matter back to the original authority for disposal of the issues that the appellants may raise - appeal disposed off.

Summary

Issues involved:
Appeal against demand for recovery of drawback sanctioned to exporters, Bar of limitation for demands raised, Rejection of request for cross-examination, Alteration of proposal in the show cause notice, Disposal of contentions in response to show cause notice, Over-valuation of export goods, Prohibition under section 76 of Customs Act, 1962, Recovery under rule 16 of Customs and Central Excise Duties Drawback Rules, 1995, Confiscation of goods, Imposition of penalties, Market value of export goods, Interpretation of Customs Act provisions, Lack of limitation in rule 16, Judicial decisions on limitation period, Consideration of limitation by adjudicating authority, Necessity to decide on limitation before recovery, Remand of matter to original authority for disposal of raised issues.

Detailed Analysis:

1. Appeal against demand for recovery of drawback sanctioned to exporters:
The judgment deals with three appeals related to the confirmation of demand for recovery of drawback sanctioned and paid to exporters. The demands were confirmed in an order-in-original by the Commissioner of Customs, Mumbai.

2. Bar of limitation for demands raised:
The primary contention raised by the appellant's counsel was that the demands raised in the show cause notice were barred by limitation as they pertained to drawbacks sanctioned between 1995 to 1998. The counsel relied on a decision of the Hon'ble High Court of Gujarat to support this argument.

3. Rejection of request for cross-examination:
The appellant contended that their request for cross-examination of suppliers, whose statements were relevant to the findings, was rejected. They argued that this rejection contravened a decision of the Hon'ble High Court of Bombay.

4. Alteration of proposal in the show cause notice:
The proposal in the show cause notice for recovery from two individuals was altered in the impugned order to entities different from those named in the notice. The appellants argued that this alteration went beyond the framework of the show cause notice.

5. Disposal of contentions in response to show cause notice:
The appellants claimed that their contentions in response to the show cause notice were not disposed of in the impugned order, raising concerns about due process and fair consideration of their submissions.

6. Over-valuation of export goods and related actions:
The judgment highlighted that the investigation revealed that the market value of the exported goods was less than the claimed drawback amounts. This discrepancy led to the adjudicating authority invoking provisions for recovery, confiscation of goods, and imposition of penalties under the Customs Act, 1962.

7. Interpretation of Customs Act provisions and judicial decisions on limitation:
The judgment discussed various provisions of the Customs Act, 1962, and related rules. It also referred to judicial decisions regarding the interpretation of these provisions, especially concerning the bar of limitation in rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995.

8. Consideration of limitation by adjudicating authority and necessity to decide on limitation before recovery:
The judgment noted that the issue of limitation was not considered by the adjudicating authority, and it emphasized the importance of addressing the limitation aspect before proceeding with the recovery of amounts paid in excess of the prohibition under section 76 of the Customs Act, 1962.

9. Remand of matter to original authority for disposal of raised issues:
To ensure a proper examination of the raised issues, the judgment set aside the impugned order and remanded the matter back to the original authority for a comprehensive disposal of the issues raised by the appellants within a specified timeframe.

This detailed analysis encapsulates the key aspects and legal nuances of the judgment rendered by the Appellate Tribunal CESTAT Mumbai.