2018 (2) TMI 653 - Commission - Customs

Duty Drawback - N/N. 43/2001-C.E. (N.T.), dated 26-6-2001 under Rule 19(2) of Central Excise Rules, 2002 - the applicant were procuring raw materials on payments of Excise duty for the manufacture of printed Diaries, Ruled/ Un-ruled/ Printed Exercise books, Single/Multi-coloured printed books and printed colouring books, etc., for which they had availed higher rate of Duty drawback as they were not availing the CENVAT credit - Penalty. Held that - It was noticed by the officers that the applicant had procured duty free raw materials, availing the provision of Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001 under Rule 19(2) of Central Excise Rules, 2002 and used the same in the manufacture of printed books and colouring books which were subsequently exported under Duty Drawback Scheme claiming higher rate of drawback, i.e., Customs, Central Excise and Service Tax components put together instead of eligible Customs portion of drawback and in certain cases have availed both Central Excise and Customs portion of drawback for the Cenvat availed goods for the period from 2011-12 (Oct, 2011) to 2015-16. The applicant has made true and full disclosure of the liability before the Bench and also co-operated in the proceedings before the Bench and investigations conducted. The Bench thus holds it a fit case to settle the ineligible duty drawback at ₹ 20,01,721/- and the interest thereon at ₹ 3,66,965/-. Applicability of provisions of Section 113 of the Customs Act, 1962 - Held that - The physical availability of the goods is necessary only for ordering confiscation which is different from holding the goods liable for confiscation. However in the instant case, Bench is not going into the question of confiscation of the exports made. It is a settled law that the goods can be held liable for confiscation if the commission or/omission of the importer or exporter have rendered the goods liable for confiscation. Demand of interest - Held that - The interest liability is settled at ₹ 3,66,965/-. As the applicant has already paid the said amount as confirmed by the Revenue, the same is appropriated and adjusted towards the interest liability and no further liability subsists in this regard. This case does not warrant imposition of Fine or Penalty on the applicant, M/s. Lovely Offset Printers, Sivakasi. Application settled u/s 127(5) of the Customs Act, 1962.

Summary

Issues Involved:
1. Ineligible duty drawback claims.
2. Confiscation of exported goods.
3. Imposition of penalties.

Detailed Analysis:

1. Ineligible Duty Drawback Claims:
The applicant, M/s. Lovely Offset Printers (P) Ltd., filed a settlement application related to ineligible duty drawback claims amounting to ?20,01,721/- and interest thereon. The applicant had procured duty-free raw materials under Notification No. 43/2001-C.E. (N.T.) and used them to manufacture printed books and other products, which were exported under the Duty Drawback Scheme. However, they claimed both Excise and Customs portions of the drawback, violating the Customs, Central Excise Duties, and Service Tax Drawback Rules, 1995. Upon scrutiny by DRI officers, it was found that the applicant had claimed higher rates of drawback for certain shipping bills. The applicant admitted the mistake, paid back the ineligible drawback amount of ?18,79,092/- along with interest of ?2,95,193/-, and further detected and paid an additional amount for other shipping bills.

2. Confiscation of Exported Goods:
The Show Cause Notice (SCN) proposed the confiscation of goods exported under certain shipping bills under Section 113(ii) of the Customs Act, 1962, and the imposition of penalties under Section 114(iii) of the Customs Act, 1962. The applicant argued that Section 113 could not be invoked for goods already exported and cited various judgments supporting their claim. The Revenue countered that the applicant's claim had been overruled by the Hon'ble Madras High Court in the case of Commissioner of Customs, Tuticorin v. Kamala Bai, where it was held that goods could be liable for confiscation even after exportation if false information was furnished.

3. Imposition of Penalties:
The applicant contended that there was no provision in the Drawback Rules for imposing penalties for erroneous claims and that penalties could not be imposed under Section 114 unless the goods were confiscated under Section 113. The Revenue argued that the applicant had not voluntarily repaid the ineligible drawback and thus penalties were warranted. The Bench noted that the applicant had filed 2501 shipping bills during the period in question and the error occurred in only 55 bills, showing a negligible error rate of 2.19%. The applicant's voluntary payment of the erroneous drawback amount and interest was seen as a sign of good faith.

Findings of the Bench:
The Bench found that the applicant had made a full and true disclosure of their liability and cooperated in the proceedings. The case was settled with the duty drawback liability confirmed at ?20,01,721/- and interest at ?3,66,965/-, both of which had already been paid by the applicant. The Bench refrained from imposing any fine or penalty on the applicant or the Director, citing the inadvertent nature of the mistake and the applicant's proactive measures to rectify it.

Order:
1. Duty Drawback: Settled at ?20,01,721/-, already paid by the applicant.
2. Interest: Settled at ?3,66,965/-, already paid by the applicant.
3. Fine & Penalty: No fine or penalty imposed on M/s. Lovely Offset Printers, Sivakasi, or the Director.

The immunity granted is subject to withdrawal if it is found that any material particulars were withheld or false evidence was given. A copy of this order was provided to the applicant and the Jurisdictional Commissioner for implementation.