2017 (8) TMI 428 - AT - Customs

Confiscation of goods - shipping bills were not entered in export goods arrival register maintained at CFS, STT, ICD, Dadri - drawback claim - Held that - it is very clearly held by the Original Authority that the clearance for export of goods was given by the Customs Authorities that goods were exported and the export proceeds were realized. The Original Authority in the Order-in-Original has made some observations on few issues about the procedure followed. The appellant in the above stated grounds of appeal has very clearly submitted the procedure being followed in the EDI System and submitted that the entries in the EDI System are based on protection through password and therefore, we do not find any strength in the allegations leveled against the appellant in the said show cause notice about procedure being not followed. The requirement of admissibility of drawback is that the goods are exported and export proceeds are realized and at the time of export, shipping bills under the claim of drawback is filed and assessed accordingly - the appellant had followed the proper procedure and Let Export Order was given by Customs Authorities and goods were exported and export proceeds were realized. SCN not sustainable - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Alleged improper procedure for export of goods.
2. Alleged division of consignment to avoid scrutiny.
3. Alleged collusion with Customs Agents for fraudulent export.
4. Alleged misstatement of facts to Customs Officers.
5. Confiscation of goods and imposition of penalties.
6. Rejection of drawback claim.
7. Procedural adherence in EDI system for export clearance.

Detailed Analysis:

1. Alleged Improper Procedure for Export of Goods:
The appellant, a Merchant Exporter, filed 11 shipping bills for exporting garments to South Africa. The Revenue alleged that the appellant did not follow the proper procedure, as the shipping bills were not entered in the "export goods arrival register" at CFS, STT, ICD, Dadri. The Original Authority noted that the goods were exported but expressed doubts about the procedural adherence.

2. Alleged Division of Consignment to Avoid Scrutiny:
The Revenue alleged that the consignment was divided into 11 shipping bills to keep the drawback amount within ?1 lakh per bill, thus avoiding the scrutiny of the Assistant Commissioner of Customs. The appellant contended that the division was due to different sizes, styles, and varieties of garments.

3. Alleged Collusion with Customs Agents for Fraudulent Export:
The show cause notice alleged collusion between the appellant and various Customs Agents to export garments at inflated prices without following proper Customs procedures, intending to earn fraudulent drawback. Statements from several individuals associated with the export process were recorded to support these allegations.

4. Alleged Misstatement of Facts to Customs Officers:
The Revenue further alleged that the appellant mis-stated facts to Customs Officers, violating Sections 50, 51, and 75 of the Customs Act, 1962. Consequently, the appellant was called upon to show cause why the goods should not be confiscated and penalties imposed.

5. Confiscation of Goods and Imposition of Penalties:
The Original Authority ordered the confiscation of the garments valued at ?98,24,691/- under Sections 113(g) and 113(h)(i) of the Customs Act, 1962, and imposed a redemption fine of ?20,00,000/-. Additionally, a penalty of ?98,24,691/- was imposed on the appellant under Section 114AA of the Customs Act, 1962, for violating Sections 50, 51, and 113.

6. Rejection of Drawback Claim:
The Original Authority rejected the drawback claim of ?10,30,624/- under Section 75(1) of the Customs Act, 1962, citing procedural violations. The appellant argued that the goods were exported, and export proceeds were realized, thus fulfilling the requirements for drawback eligibility.

7. Procedural Adherence in EDI System for Export Clearance:
The appellant detailed the EDI system procedure, emphasizing that all stages from registration to Let Export Order (LEO) were handled by Customs Officers using unique passwords. The appellant argued that the EDI system's security measures ruled out any unauthorized entries, and the goods were cleared by Customs Authorities. The Tribunal found that the appellant followed the proper procedure, and the allegations in the show cause notice were unsubstantiated.

Conclusion:
The Tribunal concluded that the appellant had followed the proper procedure, the goods were exported, and export proceeds were realized. The allegations in the show cause notice lacked evidence, and both the Order-in-Original and Order-in-Appeal were set aside. The authorities were directed to allow the drawback involved in the 11 shipping bills within 60 days from the receipt of the order. The appeal was allowed in favor of the appellant.

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