2013 (8) TMI 799 - AT - Customs

Excessive claim of duty drawback - Suppression of quantity of goods - Whether there was wilful suppression of the quantity/number area and measurement of carpets and goods were overvalued to claim excess drawback for such non-existing or short accounted exports Held that - The test reports relating to attempted exports clearly established material discrepancy in composition of the goods attempted to be exported - declaration relating to contents of the carpets attempted to be exported, quality as well as measurement thereof resulted in serious discrepancy found in physical examination - there was no mention of other misc. materials used in the manufacturing process. Misdeclaration of goods - Whether the quality of the carpets and the value declared by the exporter in their export documents was correct or the same was liable to be rejected for misdeclaration Held that - There was misdeclaration of description, quantity, quality and shortage of goods which were attempted to be exported. Stay application waiver of pre deposit - Duty drawback - Whether the assessee deliberately facilitated fraudulent exports for claim of higher drawback rendering them to penal action Held that - Fraudulent past exports were proved to be making fictitious purchases recorded by the appellant without explaining the manufacture and cost data of the exports -Its records were fabricated - So also the cost data relating to attempted exports were not furnished - it was difficult to appreciate assessee s pleadings to be merited at this stage since fraud nullifies everything since draw back was availed in excess of admissibility - assessee was ordered to submit some amount as pre deposit decided against assessee.

Issues Involved:
1. Misdeclaration of FOB value and quantity in Shipping Bills.
2. Misdeclaration of quality and composition of carpets.
3. Overvaluation of past exports to claim higher drawback.
4. Confiscation and redemption of misdeclared goods.
5. Imposition of penalties on the exporter and partners.
6. Recovery of excess drawback amount.
7. Enforcement of bank guarantees.

Detailed Analysis:

1. Misdeclaration of FOB Value and Quantity in Shipping Bills:
The exporter, M/s Kaka Carpets, declared an FOB value of Rs. 2,45,11,179/- in Shipping Bills Nos. 702, 703, and 704 dated 07/06/2008, which was rejected and re-determined at Rs. 34,43,972/- due to misdeclaration. The Drawback amount of Rs. 32,59,016/- claimed was disallowed, and the goods were confiscated but allowed to be redeemed on payment of a redemption fine of Rs. 10,00,000/-.

2. Misdeclaration of Quality and Composition of Carpets:
The physical examination and testing by IICT, Bhadohi, revealed that the carpets were of inferior quality and did not match the declared composition of 80% wool and 20% cotton. Instead, the composition included other materials ranging from 5.58% to 14.08%. This misdeclaration was intended to claim a higher drawback.

3. Overvaluation of Past Exports to Claim Higher Drawback:
For exports made during 2004-05 to 2008-09, the declared FOB value of Rs. 1,59,66,35,071/- was rejected and re-determined at Rs. 53,91,27,751/-. The Drawback claim of Rs. 16,93,96,338/- was reduced to Rs. 4,93,16,928/-. The excess drawback amount of Rs. 12,00,79,410/- was ordered to be recovered from the exporter.

4. Confiscation and Redemption of Misdeclared Goods:
The carpets exported during 2004-09 from various ports were confiscated for misdeclaration of quantity, quality, and value. However, as the goods were not physically available, no redemption fine was imposed in lieu of confiscation.

5. Imposition of Penalties on the Exporter and Partners:
A penalty of Rs. 5,00,00,000/- was imposed on M/s Kaka Carpets under Section 114 (iii) of the Customs Act, 1962. Additionally, penalties of Rs. 1,00,00,000/- each were imposed on Mr. Y.K. Roy and Mrs. Rita Roy, partners, under Sections 114 (iii) and 114AA for their role in improper exportation and furnishing false declarations.

6. Recovery of Excess Drawback Amount:
The excess drawback amount of Rs. 12,00,79,410/- availed was ordered to be recovered from the exporter. The enforcement of bank guarantees of Rs. 20 lacs and Rs. 50 lacs furnished against provisional release of the export goods was ordered for appropriation towards recovery of the inadmissible drawback amount, redemption fine, and personal penalties.

7. Enforcement of Bank Guarantees:
The bank guarantees furnished against provisional release of the export goods were ordered to be appropriated towards recovery of the inadmissible drawback amount, redemption fine, and personal penalties imposed on M/s Kaka Carpets and its partners.

Conclusion:
The Tribunal found that the exporter misdeclared the quality, quantity, and value of the carpets to claim higher drawbacks, resulting in significant financial penalties and recovery of excess amounts. The Tribunal directed M/s Kaka Carpets to deposit Rs. 12 crores and the partners to deposit Rs. 20 lakhs each within eight weeks, in addition to appropriating the bank guarantees of Rs. 70 lakhs. The judgment underscores the importance of accurate declarations in export documentation and the severe consequences of fraudulent practices.

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