2022 (7) TMI 104 - AT - Customs

Rejection of duty drawback - Evasion of payment of export duty and to avail duty drawback - fraudulent export of Semi-finished Leather - samples did not satisfy the norms and conditions laid down in the Public Notice No. 21/2009-14 dated 01.12.2009 - it is also alleged that the appellants have mis-declared the semi-finished goods as finished goods only to get duty drawback and to evade payment of export duty at 60% ad valorem - Confiscation - redemption fine - penalty - Extended period of limitation - HELD THAT - Even if it is to be assumed that samples were drawn on 14.10.2016, the Revenue has not brought out on record as to how and where the samples were preserved since more than three weeks after drawing the samples have they sent the samples to the CLRI for examination/report, since, as contended by the Learned Advocate for the appellants, leather is such a goods on which even the weather will have an impact; hence, preservation of the same is very much material. The Revenue has not satisfactorily and effectively shook the first report of the CLRI dated 07.10.2016 and hence, it has to be held that the norms and conditions laid down under the Public Notice No. 21/2009-14 dated 01.12.2009 are satisfied, as opined by the expert. Hence, the demand of confiscation apart from demand of duty liability and the various penalties levied on the appellants cannot sustain, since the very basis on which the case of the Revenue rests is not well-founded. In view of the above, the impugned orders are set aside and so also the various demands confirmed therein. The co-ordinate Bench of the CESTAT in the case of M/S. INTERGLOBE AVIATION LTD VERSUS C. C-THE PRINCIPAL COMMISSIONER CUSTOMS BANGALORE 2021 (7) TMI 1027 - CESTAT BANGALORE to justify the invoking of extended period of limitation - the Learned co-ordinate Bench has only upheld the invoking of the extended period of limitation since the Bench found that it was a clear case of mis-declaration, which is not the case here. The Revenue has only alleged switching of the samples without substantiating the same and has obtained report from the CLRI dated 09.11.2016 without drawing any samples. Appeal allowed.

Summary

Issues: Alleged switching of samples for fraudulent export of leather goods to evade export duty and avail duty drawback.

Analysis:
1. The exporters were issued Show Cause Notices alleging switching of samples sent to the Central Leather Research Institute (CLRI) for favorable certification of goods as 'Finished Leather' to facilitate fraudulent export of 'Semi-finished Leather' to evade export duty and avail duty drawback.
2. The Special Intelligence and Investigation Branch officers conducted surprise checks at the Container Freight Station (CFS) and found discrepancies in consignments of finished leather meant for export.
3. The appellants challenged the Orders-in-Original passed by the Joint Commissioner of Customs, which confirmed duty demands, penalties, and confiscation of goods.
4. The appellants appealed to the Commissioner of Customs (Appeals-II), who rejected their contentions, leading to the present appeals before the forum.
5. The appellants argued that the CLRI initially certified the samples as per norms, questioning the validity of sample drawing and preservation by the Revenue.
6. The Revenue alleged misdeclaration of semi-finished goods as finished goods for duty drawback, citing switching of samples in transit and reliance on a co-ordinate Bench's order for extended limitation period.
7. The forum consolidated the cases for common disposal and analyzed the discrepancies in CLRI reports, sample drawing, and switching allegations.
8. The forum found insufficient evidence to support the switching of samples, casting doubt on the Revenue's case and setting aside the demands and penalties confirmed in the impugned orders.
9. The forum distinguished the present case from the cited order, emphasizing the lack of substantiation for the switching allegations and the absence of drawn samples for testing.
10. Ultimately, the forum allowed the appeals on all grounds raised, overturning the impugned orders and demands, concluding the proceedings on 30.06.2022.