2024 (10) TMI 9 - HC - Central Excise

Rejection of rebate claim of the petitioners against the export of goods - penalty imposed u/s 11AC of the Central Excise Act, 1944 read with Rules 25 and 27 of the Central Excise Rules, 2002 - limitation for issuance of the SCN - HELD THAT - It is not in dispute that during the course of investigation it was found that the petitioners and other co-noticees have filed a rebate claim with forged documents like shipping bills and form ARE-I which is a mandatory requirement to claim the rebate claim - it is mandatory for the claimant to file original copy of ARE-I. The Form ARE-I is the export document which is prepared in quintuplicate five copies which are similar to erstwhile Form AR-4. Such Forms bear running Serial Numbers beginning from the first day of the financial year. From the prescribed procedure for claim of the rebate claim for the goods exported for the duty paid goods exported, it is apparent that the petitioners and the other co-noticees have not complied with the same. On the contrary, they have committed fraud and forged the Forms which is found during the course of investigation as per the concurrent findings of fact arrived at by the three Authorities below. In such circumstances it is opined that the respondent-Authorities have rightly rejected the rebate claim of the petitioner and no interference is called for. Levy of penalty - HELD THAT - In the show-cause notice as contemplated under Section 11A of the Act, time period is prescribed as five years from the date of knowledge. However, in the facts of the case, as the original documents were lying with the Court of Sessions and the reminders were sent which were provided by the respondent-Authorities in 2008 to the Police Authorities for investigation and the same were not made available till 2014, show-cause notice was thereafter issued in 2014 cannot be said to be beyond the period of limitation. However, the petitioner has never raised the issue of limitation before the Adjudicating Authority nor the Adjudicating Authority have therefore had any occasion to deal with such a contention raised by the petitioners. However, as the petitioners have raised such contentions before the Revisional Authority and before this Court, as the question of limitation is mixed question of facts and law, we have permitted the petitioners to raise such contention and is accordingly, dealt with. Thus, no interference is called for in the impugned orders rejecting the rebate claim and levy of penalty upon the petitioners while exercising the extra-ordinary jurisdiction under Article 227 of the Constitution of India and the petitions therefore being devoid of any merit are accordingly dismissed.

Summary

Issues Involved:

1. Rejection of rebate claims and imposition of penalties under Section 11AC of the Central Excise Act, 1944, and Rules 25 and 27 of the Central Excise Rules, 2002.
2. Allegations of document tampering and forgery related to export documentation.
3. Limitation period for issuing show-cause notices under Section 11A of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Rejection of Rebate Claims and Imposition of Penalties:

The petitioners challenged the rejection of their rebate claims and the penalties imposed under Section 11AC of the Central Excise Act, 1944, and Rules 25 and 27 of the Central Excise Rules, 2002. The petitioners had filed rebate claims amounting to Rs. 9,86,303/- for the export of goods. The authorities rejected these claims on the grounds that the petitioners had tampered with statutory documents, including shipping bills and ARE-I forms, which are mandatory for claiming rebates. The investigation revealed that the petitioners, in connivance with others, indulged in preparing fraudulent ARE-I forms with imaginary numbers, which were not registered with the Central Excise Authority. The authorities found that the petitioners presented these tampered documents to avail of the rebate fraudulently. The Revisional Authority upheld the orders of the Adjudicating Authority and the Appellate Authority, confirming the rejection of the rebate claims and the imposition of penalties.

2. Allegations of Document Tampering and Forgery:

The investigation conducted by the respondent authorities revealed that the petitioners and their associates tampered with ARE-I forms and other export documents. The statements recorded during the investigation indicated that manual corrections were made to the ARE-I forms and shipping bills, which are not permissible. The investigation further established that the signatures of customs officers on the shipping bills were forged. The authorities concluded that the petitioners, in collusion with others, engaged in fraudulent activities to claim rebates on exports. The Revisional Authority observed that the main reason for rejecting the rebate claims was the tampering of statutory documents with the intent to fraudulently avail of rebates.

3. Limitation Period for Issuing Show-Cause Notices:

The petitioners contended that the show-cause notice issued in 2014 was beyond the limitation period prescribed under Section 11A of the Central Excise Act, 1944. The petitioners argued that the notice was issued more than five years after the alleged fraud, which should render the penalties invalid. However, the court noted that the original documents were in the custody of the Sessions Court due to ongoing criminal proceedings, and repeated requests for their return delayed the issuance of the show-cause notice. The court found that the notice was not time-barred, as the limitation period begins from the date of knowledge of the fraud. The court concluded that the authorities acted within the permissible time frame, and the penalties were justified.

Conclusion:

The court dismissed the petitions, upholding the rejection of the rebate claims and the imposition of penalties. The court found no merit in the petitioners' arguments and concluded that the authorities had correctly applied the law in light of the fraudulent activities uncovered during the investigation. The court emphasized that the tampering of statutory documents and the attempt to fraudulently claim rebates warranted the actions taken by the authorities. The court also addressed the issue of limitation, clarifying that the delay in issuing the show-cause notice was justified due to the circumstances surrounding the custody of the original documents.