2014 (4) TMI 983 - HC - Customs

Manipulation of export documents - Refund of duty drawback along with interest - Section 75A(2) r/w Section 28AB of the Customs Act Reduction of penalty - Section 114AA Held that - There were parallel or two separate sets of shipping bills, invoices, and packing lists - Incriminating statement of the petitioner was recorded - The dispute is factual and there is no document or material to show that the discrepancies pointed out by the authorities require any interference on the ground that the decision is perverse and the findings recorded could not have been reached by a reasonable and fair adjudicating authority. Export of candle sticks - brass or aluminium candle sticks Held that;- Authorities have not only noticed and gone on the brochure or catalogue of the petitioner, but have also referred to the discrepancies in weight and recorded their findings that the weight of aluminium candle sticks would be much less than the weight of brass candle sticks - Again reliance has been placed on the duplicate papers/documents Since the findings recorded on the said aspect are also factual and thus, need not require any interference by this Court. Reduction of penalty Held That - As penalty was reduced by the first appellate authority to Rs. 9,86,922/-, i.e., the value of the duty drawback wrongly or fraudulently availed of by the petitioner This Court need not examine the contention on merits as the Central Government has not gone into and examined the said aspect - The issue/question remained unanswered and has not been decided Therefore, a limited order of remand directing the Central Government to consider the question of quantum of penalty is passed - Decided partly in favour of assesses.

Summary

Issues:
Challenge to order under Section 129DD of the Customs Act, 1962 - Refund of duty drawback, imposition of penalty under Section 114AA, quantum of penalty, factual discrepancies in export documents.

Analysis:

1. Refund of Duty Drawback:
The petitioner contested the order directing the refund of duty drawback of Rs. 9,89,922/- along with interest under Sections 75A(2) and 28AB of the Act. The petitioner argued that the goods had been exported, and physical verification was not feasible. Purchase bills from foreign buyers were submitted to prove the export of brass candle sticks, not aluminum ones. However, specific information indicated fraudulent manipulation of export documents. The authorities found discrepancies in the export documents, leading to the petitioner depositing Rs. 10 lacs towards the wrongly claimed duty drawback. The High Court upheld the authorities' findings, citing incriminating statements and discrepancies in documents as evidence of the fraudulent claim.

2. Factual Discrepancies in Export Documents:
Regarding the export of candle sticks, the authorities observed weight variances and discrepancies in the export documents. The petitioner's brochure and catalog were considered, but discrepancies in weight and documents led to suspicions of fraud. The High Court agreed with the authorities' findings, emphasizing the reliance on duplicate documents and factual discrepancies in the weight of aluminum versus brass candle sticks.

3. Imposition and Quantum of Penalty:
The original penalty of Rs. 1,30,81,962/- under Section 114AA was reduced to Rs. 9,86,922/- by the first appellate authority. The petitioner argued that the penalty amount was already deposited before the show cause notice was issued. The High Court noted that the Central Government did not address the quantum of penalty in its order under Section 129DD. As a result, the High Court remanded the issue back to the Central Government for reevaluation, allowing the petitioner an opportunity for an oral hearing to present a case for a lower penalty within the legal framework.

In conclusion, the High Court dismissed the writ petition after addressing the issues raised by the petitioner regarding the duty drawback refund, factual discrepancies in export documents, and the quantum of penalty. The judgment highlighted the importance of adhering to legal procedures and ensuring proper examination of penalty amounts in accordance with the law.