2017 (8) TMI 53 - AT - Customs

DEPB benefit - export of 100% polyester fabrics - Revenue entertained a view that these goods which were exported were substantially over valued in order to avail inadmissible benefit under DEPB scheme - Held that - the legal provision regarding the demand of duty from the person who is the beneficiary of the instrument issued by the authorities under Foreign Trade (Development and Regulation) Act, 1992 has been introduced only w.e.f. 28.05.2012, as Section 28AAA in the Customs Act, 1962. Introduction of such provision in the substantive law itself makes it clear that there is no legal sanction prior to that date to hold the person to whom, the instrument was issued as a person liable to Customs duty. It is necessary for the officer adjudicating the customs duty liability, to identify the importer/ person who is liable to such duty in terms of the provisions of Customs Act, 1962. The present order in so far as it relates to confirmation of Customs duty jointly and severally on more than one person is accordingly, not legally sustainable. The rejection of FOB value originally assessed by the officers and comparing the value of different exporters to determine the FOB value of the main appellant - Held that - Since we find that the original authority has not properly arrived at, the identity of the person from whom, duty demand can be confirmed and ordered recovery of such duty jointly and severally, we set aside the impugned order and remand the matter back to the original authority to first examine this legal issue to fix the liability, if any, on the identified persons specifically. The cross examination sought for by the appellants have not been accepted by the original authority on the ground that the same is not a fundamental right. We note that it is a well settled legal principle that the cross examination of witnesses whose statements are admitted as evidence has to be considered in terms of section 138B of the Customs Act. The said provisions are identical to the provisions of Section 9D of the Central Excise Act, 1944 - this aspect requires re-examination. Penalties - Held that - no act or omission on the part of the custodian has been brought out in the impugned warranting penalties either under Customs Act or Regulation of 2009. As such these two appeals by The That Dry Port are allowed. Appeal allowed in part and part matter on remand.

Summary

Issues:
Appeal against demands of customs duty and penalties under Customs Act, 1962.

Analysis:
1. The appeals were made against an order passed by the Commissioner of Customs (Jodhpur) regarding demands of customs duty and penalties. The main issue revolved around the overvaluation of exported goods to claim ineligible DEPB benefits. The original authority re-determined the FOB value of exported goods, leading to the cancellation of DEPB benefits and the demand for customs duty forgone due to overvalued exports.

2. The main appellant contested the order on various grounds, including the rejection of declared FOB value, lack of proper comparison with similar goods, denial of cross-examination, and the legality of demanding customs duty from multiple persons jointly or severally. The Tribunal emphasized the importance of identifying the liable person for customs duty and highlighted legal precedents where demands for duty jointly and severally were deemed unsustainable.

3. The Tribunal found that the demands for customs duty were not legally sustainable as the legal provision for holding the beneficiary of the instrument liable was introduced after the relevant date. Additionally, the Tribunal emphasized the necessity of correctly determining liability and providing opportunities for noticees to present their case, including the right to cross-examination as per legal principles.

4. Specific appellants, such as M/s P.G. Foils and M/s Kasa Infra Ltd., also contested the penalties imposed on them for purchasing DEPB scripts and using them for import, arguing against joint and several demands for duty. The Tribunal highlighted the need to identify the liable person for customs duty and remanded the matter back to the original authority for further examination.

5. The Tribunal addressed penalties imposed on customs officers and other appellants, emphasizing the lack of evidence of abetment or statutory violations warranting penalties. The appeals by The Thar Dry Port against penalties were allowed, while other cases were remanded for fresh adjudication in line with the observations made by the Tribunal.

6. The judgment concluded by disposing of all appeals in the specified terms, providing clarity on legal issues surrounding demands of customs duty and penalties under the Customs Act, 1962.