2023 (6) TMI 1163 - AT - Customs

DEPB Scheme - Wrongful claim of Export incentives - goods exported Ferro Silicon (FeSi) were of Bhutanese origin and the Appellant had mis-declared them as Indian origin goods - Confiscation - recovery of amount equivalent to import duties foregone due to imports made by different importers on the strength of the DEPB Scrip s purchased from the Appellant - levy of penalty u/s 114 and 114AA imposable on the Appellant and its Director separately for the same offence. Whether the goods exported by the Appellant were of Indian origin or of Bhutan origin? - HELD THAT - The department has taken statements from the suppliers of FeSi to the Appellant. Five suppliers or traders who have supplied the FeSi to the Appellant stated that the FeSi supplied by them were of Bhutanese origin.The statements from the suppliers indicate that even the FeSi procured by them from Indian market were also originally imported from Bhutan - the statements recorded from the suppliers clearly establish that the exported goods were of Bhutanese origin. Confiscation - HELD THAT - The exporter has accepted their liability and deposited an amount of amount of Rs 63,40,305/- and interest of Rs 11,83,617/- even before issue of the Notice. Since the exports were made by declaring the country of origin as India , it is observed that there is a misdeclaration in the country orgin at the time of export. Accordingly, the confiscation of 2169 MT of FeSi in the impugned order is legally tenable. Whether penalty under section 114 and 114AA are imposable on the the Appellant and it s Director, for the same offence even after imposition of penalty by DGFT? - HELD THAT - Once DGFT initiates action and impose penalty for the violations, then Customs cannot initiate separate action to impose penalty for the same violation - Reliance placed in the case of M/S. GAYSON COMPANY (P) LTD., SRI CHETAN AGGARWALA, DIRECTOR VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA 2018 (12) TMI 880 - CESTAT KOLKATA where it was held that Taking into consideration of the fact that the DGFT authorities had already imposed penalty upon the appellant, the penalty imposed on the appellant company is not warranted - Following the decision, the penalties imposed on the Appellant and its Director Aditya Almal under Sections 114 and 114AA are not sustainable. Accordingly, the penalties imposed under sections 114 and 114 AA on the Appellant and it s Director set aside. Penalty on the Appellant and its Director under section 114 and 114AA of the Customs, Act, 1962 set aside - other part of demand upheld - appeal allowed in part.

Summary

Issues:
- Whether 2169 MT of FeSi exported by the Appellant are liable for confiscation?
- Whether an amount equivalent to import duties foregone due to imports made by different importers on the strength of the DEPB Scrip's purchased from the Appellant can be recovered from the Appellant along with interest?
- Whether penalties under Section 114 and 114AA imposable on the Appellant and its Director separately for the same offence?

Issue 1:
The Appellant exported Ferro Silicon (FeSi) under DEPB claims, declaring them as Indian origin. The department alleged that the goods were actually of Bhutanese origin. Statements from suppliers confirmed the FeSi was of Bhutanese origin, even those procured from the Indian market. The exported goods were found to be of Bhutanese origin, leading to the confiscation of 2169 MT of FeSi.

Issue 2:
The Appellant processed the exported goods before export, but the processing did not meet the required value addition criteria to change the country of origin. The Appellant admitted to not meeting the value addition requirement, leading to a misdeclaration of the country of origin as 'India'. As a result, the confiscation of 2169 MT of FeSi was deemed legally valid.

Issue 3:
The DGFT imposed a penalty on the Appellant, indicating acceptance of mis-declaration. Citing previous decisions, penalties under Sections 114 and 114AA were found not sustainable as DGFT had already imposed penalties for the same violation. Therefore, penalties imposed on the Appellant and its Director were set aside.

In conclusion, the Appellate Tribunal upheld the confiscation of FeSi, allowed the recovery of import duties foregone, and set aside penalties under Sections 114 and 114AA imposed on the Appellant and its Director. The Appeals were disposed of accordingly.