2018 (12) TMI 797 - AT - Customs

Penalty - DEPB Scheme - duty drawback - it was alleged that the appellant company availed Export incentive mis-declaring the same as of Indian Origin in the export documents - Held that - The appellant company exported FeSi during the period from 2008-09 to 2012-13 against 18 Consignments and availed export incentive in the form of Duty Entitled Pass Book (DEPB)/ Duty Draw Back (DBK). It has also availed in some cases, incentive under Focus Marketing Scheme (FMS) in addition to DEPB/DBK against the export consignment. It was found that the exported FeSi, against which DEPB and FMS was availed, was procured from Traders/ Suppliers of Local Market in India. Once the issue referred to DGFT for cancellation of DEPB/FMS Scrips and the adjudication order passed by DGFT had imposed fiscal penalty only, without cancelling the said Scrips and hence, credits allowed cannot be denied. Further, Customs had no authority to take any parallel action under different law making the case a double jeopardy - Goods were not available for seizure and no specific evidence could be adduced to justify mis-declaration and hence, penalty is not imposable. Taking into consideration of the fact that the DGFT authorities had already imposed penalty upon the appellant, the penalty imposed on the appellant company is not warranted. Further, after going through the statements and the conduct of the appellant no. 2 in so far as they have returned the incentive immediately, the penalty imposed under Section 114 (iii) on the appellant no. 2 needs to be waived. Penalty set aside - appeal disposed off.

Summary

Issues: Mis-declaration of country of origin in export documents, availing export incentives, imposition of duty, penalty, and interest, challenge to the Show Cause Notice, imposition of penalty on the Director, double jeopardy, enforcement of Customs Act, seizure of goods, imposition of penalty by DGFT.

In this judgment, the Appellate Tribunal CESTAT Kolkata addressed the issue of mis-declaration of the country of origin in export documents by M/s. Black Stone Overseas Private Limited, leading to the availing of export incentives such as Duty Entitlement Pass Book Scheme and Draw Back during 2008-09 to 2012-13. The Directorate of Revenue Intelligence initiated an investigation, alleging that the exported Ferro Silicon (FeSi) was of third-country origin, contrary to the declaration. A Show Cause Notice was issued proposing duty recovery, interest, and penalties on the company and its Director. The Commissioner of Customs confirmed the duty amount and imposed penalties, which led to the appeals. The company argued that the Notice was based on incomplete evidence, the assessment orders were final, and the penalties imposed by DGFT should preclude further penalties under the Customs Act, citing double jeopardy concerns.

The Tribunal observed that the company exported FeSi procured locally against which export incentives were availed, and the Director admitted lack of awareness regarding the eligibility of Bhutanese goods for export incentives. The company had returned the entire incentive amount upon realizing the error. The Tribunal noted that the company did not dispute the availment of export incentives and had paid the duty, indicating cooperation.

Regarding the imposition of penalties, the Tribunal considered the penalties imposed by DGFT and the Customs authorities. It highlighted the need for conclusive evidence, the lapse of time in taking action, and the lack of specific evidence to justify penalties. The Tribunal emphasized that the Customs Act's Section 28AAA could be enforced only in cases of apparent misstatement and that seizure of goods without sufficient evidence was not justified. Additionally, it noted that the absence of export duty on Ferro Silicon under the Customs Tariff Act further complicated the penalty imposition.

Ultimately, the Tribunal modified the impugned order, setting aside the penalties imposed on the company and the Director. It considered the penalties imposed by DGFT, the immediate return of incentives by the company, and the conduct of the Director in waiving the penalties under Section 114(iii) of the Customs Act. The appeals were disposed of accordingly, emphasizing fairness and legal principles in the adjudication process.