2022 (8) TMI 1009 - AT - Customs

Manipulation of exports - wrongful availment of export benefits - collection of money from the visiting tourists from CIS countries and deposited such amounts in to the accounts of various manufacturers showing the same to be advance payment for the fabrics / clothes purchased or imported by such tourists - statement of Shri Goldy and other exporters and local manufacturers, relied upon by Revenue - reports received from Customs Overseas Network and statement of the CHA, also relied upon by revenue - HELD THAT - The appellants strongly contend that they are actual individual exporters; they have received payment for the export; they have received the foreign exchange as per guidelines issued by RBI; the customs officers have examined the cargo and have cleared for export; therefore, export benefits were rightly taken; DRI has no jurisdiction to issue the show cause notice to recover drawback or DEPB; Rule 16 and Rule 16A of the Drawback rules cannot be invoked and the impugned having confirmed the demands jointly and severely is bad in law and is liable to be set aside; as the goods held to be liable for confiscation are not export goods provisions of section 113 and 114 cannot be invoked. Reliability upon the statements of Shri Goldy and others - Retraction of statements or not - HELD THAT - Though the department relies upon heavily on the statement of Shri Goldy, Shri Goldy has retracted his statement at the time of first opportunity when he was arrested and produced before the Court of Magistrate on 2ndJuly 2004, which is in immediate succession after recording of statement over four days in continuity - Revenue has not relied upon the statement of the suppliers and fabricators which were recorded in the course of investigation - the impugned order is bad for placing selective reliance on the evidence on record. The Department has not conclusively established that Shri Goldy was a freight forwarder and does the export benefits have accrued to him. As we found above no action whatsoever has been taken on the CHA or custom broker though his statement was recorded to the effect that Shri Goldy used to handover all the documents like shipping bills, invoices, etc. in respect of the export consignments of the fourteen exporters in question - the appellant herein are genuine traders and exporters as they have done the transaction of purchase and sale on their own account which is supported by their documents particularly their bank accounts. A freight forwarder or a C F agent is engaged in the work of receiving the goods, storing and thereafter clearing and forwarding as per the directions of the principal. A C F agent does not purchase or sell the goods on his own account. It appears that Shri Goldy simply works as an agent of the principal. The value for the purpose of exports, under the provisions of Customs Act 1962, is nothing but transaction value. If the Indian exporter can bargain and sell the goods at a higher price to the foreign buyer, the same cannot be held to be over valuation. It is the transaction value that constitutes the valuation for the purpose of exports and not certainly the intrinsic value of the goods in Indian markets. Rule 16 of the Drawback Rules is not invokable, as admittedly, the appellant exporters have received the payment for the goods exported and presented the BRC before the Authority and only thereafter, they have been granted export incentives. So far the invocation of Rule 16A of the Drawback Rules is concerned, for recovery of drawback erroneously granted, the same is also bad in the facts and circumstances, and further action under the said rule can be taken only by the proper officer , who initially assessed the shipping bills - There is no allegation of any mismatch of currency declaration form and the encashment certificate. Further the circular also permits deposit of foreign currency received by the Indian exporter in the bank. Admittedly, the foreign buyers/tourists declared their foreign currency at the time of arrival in India to the customs officer who issued currency declaration form as per law. The impugned order confirmed the recovery of drawback or DEPB jointly and severally from Shri Goldy and other Exporters. Such confirmation would undoubtedly indicate that neither the show cause notice nor the adjudication order is convinced as to who are the persons that committed the alleged irregularity or is not sure of which amount is payable by whom. The department alleges that Shri Goldy was the kingpin or mastermind and has managed the exports in the name of various exporters. In case the department was convinced about the same, they should have called upon him alone to show cause and confirm the demands on him - Alternatively, they could have confirmed the same on individual exporters. But that would have contradicted the department s stand that Shri Goldy was the kingpin - this method of confirming demand jointly and /or severally has not found favour with the Tribunal and Courts in a number of cases, and as such is not legally tenable and acceptable. Jurisdiction of DRI to issue Show Cause Notice under Rule 16/Rule 16A of Drawback Rules and Section 28 of the Customs Act,1962 - HELD THAT - The impugned order is not maintainable on merits as no concrete tangible corroborative evidence is brought on record to sustain the allegations that Shri Goldy was a freight forwarder/kingpin exporting in the names of various firms for claiming undue export benefits; other exporters were dummy and that the goods were overvalued. The impugned order is liable to be set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the appellants are bona fide exporters or simply freight forwarders.
2. Whether the appellants are bogus firms.
3. Whether the appellants overvalued the exported goods for availing undue Drawback/DEPB benefits.

Detailed Analysis:

1. Bona Fide Exporters or Freight Forwarders:
The department alleged that Shri Goldy manipulated exports to avail benefits and over-invoiced exports. It was claimed that he managed exports for various firms and deposited foreign currencies collected from tourists into their accounts. The appellants contended they were genuine exporters, having received payments through proper banking channels and complied with all customs procedures. The Tribunal found that the department heavily relied on the statements of Shri Goldy and others, which were retracted and not corroborated as per Section 138B of the Customs Act. The Tribunal concluded that the appellants were genuine traders and exporters, conducting transactions on their own account, supported by their bank accounts and documentation.

2. Bogus Firms:
The department's case was that the firms were controlled by Shri Goldy and were merely name lenders. However, the Tribunal noted that the appellants had IEC codes, filed proper shipping bills, and received payments in foreign currency through legal channels. The independent nature of the firms was corroborated by bank statements and other documentation. The Tribunal found that the evidence presented by the department was insufficient to prove that the firms were bogus and that Shri Goldy was acting as a freight forwarder.

3. Overvaluation of Exported Goods:
The department alleged overvaluation based on reports from COIN Dubai and London, which indicated lower declared values in importing countries. However, the Tribunal found that no concrete evidence or market surveys were conducted to substantiate the overvaluation claims. The Tribunal highlighted that the transaction value declared by the exporters was accepted by customs officers, and no collusion was alleged between the exporters and customs officers. The Tribunal concluded that the charge of overvaluation was not conclusively established, as the transaction value for exports is based on the price agreed upon between the buyer and seller.

Additional Points:
- The Tribunal noted serious violations of principles of natural justice, as some appellants were not given the opportunity to inspect documents or cross-examine witnesses.
- The Tribunal found the order of confiscation under Section 113(d) & (i) of the Customs Act to be bad, as the goods were already exported and not available for confiscation.
- The demand for recovery of drawbacks or DEPB jointly and severally was found to be legally untenable.
- The Tribunal did not address the jurisdiction of the DRI to issue the show cause notice, keeping the issue open due to pending review petitions before the Hon'ble Apex Court.

Conclusion:
The Tribunal set aside the impugned order, finding it unsustainable due to lack of concrete evidence, procedural violations, and incorrect legal conclusions. All appeals were allowed with consequential relief as per law.