2007 (8) TMI 219 - AT - Customs

Duty drawback - Dept. failed to produce corroborative evidence to prove over invoicing or flow back of money through hawala Shipping bill in the name of different party of different country on request of buyer can t be the basis of disallowance of duty drawback Duty drawback allowed.

Issues Involved:
1. Rejection and redetermination of the declared FOB value.
2. Redetermination of the present market value (PMV) of the exported goods.
3. Disallowance and recovery of duty drawback.
4. Confiscation of exported goods.
5. Rejection of DEPB credit claims.
6. Imposition of penalties on various individuals and entities.

Issue-Wise Detailed Analysis:

1. Rejection and Redetermination of the Declared FOB Value:
The Commissioner of Customs (Exports) rejected the declared FOB value of Rs. 10,53,40,623/- for readymade garments exported under 69 shipping bills and redetermined the value as Rs. 75,81,720/-. The Tribunal noted that the goods were inspected and examined by customs officers, and the declared PMV was verified and found fair. The Tribunal emphasized that the verification was carried out by different officers, none of whom were indicted or arrayed as co-noticees. Therefore, the Tribunal concluded that the oral evidence from local suppliers could not be relied upon to discredit the declared PMV.

2. Redetermination of the Present Market Value (PMV) of the Exported Goods:
The Commissioner redetermined the total present market value of the goods exported as Rs. 60,65,376/-. The Tribunal found that the consignment of similar export goods was examined 100% and found to be in order, as evidenced by the statement of a partner of the CHA firm. The Tribunal also noted that the viability of the export price was supported by the fact that identical goods were exported by another entity at the same price. Thus, the Tribunal rejected the redetermination of the PMV.

3. Disallowance and Recovery of Duty Drawback:
The Commissioner disallowed the entire duty drawback of Rs. 1,21,73,997/- covered under 66 shipping bills and ordered recovery under Rule 16 of the Customs & Central Excise Duties Drawback Rules, 1995, together with interest. The Tribunal found that the drawback claim was less than the PMV in all cases and that remittances equivalent to the export prices were realized. The Tribunal also noted the lack of evidence to support the department's allegation of hawala transactions. Therefore, the Tribunal set aside the disallowance and recovery of the duty drawback.

4. Confiscation of Exported Goods:
The Commissioner ordered the confiscation of goods exported under the drawback claim with a declared value of Rs. 10,53,40,623/- under various sections of the Customs Act and the Foreign Trade (Development and Regulation) Act, 1992. The Tribunal found that the goods were actually exported, and remittances equivalent to the export prices were realized. The Tribunal also noted the lack of evidence to support the allegation of over-invoicing and hawala transactions. Therefore, the Tribunal set aside the order of confiscation.

5. Rejection of DEPB Credit Claims:
The Commissioner rejected the total FOB value declared of Rs. 6,86,56,854/- for goods exported under the DEPB scheme and redetermined the value as Rs. 30,57,456/-. The entire DEPB credit of Rs. 95,85,068/- claimed by the exporter was also rejected. The Tribunal found that the consignment of similar export goods was examined and found to be in order. The Tribunal also noted the lack of evidence to support the department's allegations. Therefore, the Tribunal set aside the rejection of the DEPB credit claims.

6. Imposition of Penalties on Various Individuals and Entities:
The Commissioner imposed penalties under Section 114(i) and (iii) of the Customs Act on various individuals and entities, including the exporter and its partners. The Tribunal found that the statements relied upon by the department were recorded under coercion and were retracted. The Tribunal also noted the lack of evidence to support the allegations of over-invoicing and hawala transactions. Therefore, the Tribunal set aside the imposition of penalties.

Conclusion:
The Tribunal set aside the impugned order of the Commissioner of Customs (Exports) and allowed the appeals. The findings of over-invoicing and hawala transactions were not sustainable due to the lack of clinching evidence. The declared PMV was verified by customs officers and found to be fair, and remittances equivalent to the export invoices were received.

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