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TMI Blog2007 (8) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Act and ordered this amount to be recovered under Rule 16 of the Customs Central Excise Duties Drawback Rules, 1995 together with interest in terms of Section 75A(2) of the Customs Act; (d) disallowed excess duty drawback of Rs.2,82,080/- out of the total duty drawback of Rs.3,49,556/- in respect of three shipping bills and ordered recovery of the same together with interest; (e) confiscated goods exported under drawback claim with declared value of Rs.10,53,40,623/-, under the provisions of Section 113(d) and (i) read with Section 3(3) and 11(1) of the Foreign Trade (Development and Regulation) Act, 1992 read with Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993 read with Section 50(2) of the Customs Act; (f) redetermined PMV of goods exported under claim of DEPB by Tex Age under 11 shipping bills as Rs.24,45,965/-; (g) rejected total FOB value declared of Rs.6,86,56,854/- in respect of goods exported under claim of DEPB by Tex Age and redetermined the value as Rs.30,57,456/-; (h) rejected the entire DEPB credit of Rs.95,85,068/- claimed by Tex Age; (i) ordered confiscation of goods exported under claim of DEPB; (j) imposed penalties as under on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co." cheques and "a/c payee" cheques. 3. On the basis of intelligence received in the Bombay zonal unit of DRI that the exporter was engaged in fraudulent exports of low quality readymade garments from Nhava Sheva sea port by resorting to overvaluation in order to claim undue export benefits, investigations were carried out, on the basis of which it appeared that (as stated in paragraph 27 of the impugned order):- 27 From the foregoing paras it appeared that : I.(i) A massive export fraud, was effected by the firm M/s. Tex-Age controlled by Mr. Subhash Choudhary, under Duty Drawback and DEPB scheme. The readymade garments viz. ladies long dresses, exclusive mens trousers cotton knitted hosiery socks T-shirts denim jeans and knitted mens vests etc exported by the impugned firm were misdeclared to the extent of its value, thereby seeking substantially higher drawback and DEPB credit, than what was actually entitled. Mr. Subhash Choudhary controlling all activities of M/s. Tex-Age with active participation and financial support of his younger brother Mr. Satish Choudhary, planned and carried out the said fraudulent exports of readymade garments so as to defraud the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The entire business activities of the firms M/s. Mohd Essa Al Marri Trading Co. LLC and M/s. Reem Al Maha Trading Est. were handled by Mr. Pankaj Jhunjhunwala (Manager of M/s Mohd Essa Al Marri Trading Co LLC) and Mr Navin Choudhary respectively as per the directions of Mr. Satish Choudhary. The bank accounts of the said four overseas firms were operated by Mr. Pankaj Jhunjhunwala and the bank account of the firm M/s. Reem Al Maha Trading Est. was also operated by Mr. Navin Choudhary. (v) For effecting these exports from M/s Tex Age and other firms Mr. Subhash Choudhary procured various Ready Made Garments viz mens exclusive trousers ladies long dresses (i e ladies maxis/night gowns), mens T-shirts, knitted mens vests, knitted hosiery socks and shirting fabrics mainly from Mr. Sheetal Jain, Mr. Prithvi Singh @ Gulla and Mr. Vikram Sikaria @ Vicky of Kolkata, Mr. Subhash/Sanjay Makharia and through Mr. Rajesh Bhagat. The goods were also procured on buy back basis from one Mr. Kamruddin through Mr. Rajesh Bhagat. The details of the other supplier of RMGs were not divulged by Mr. Subhash 'Choudhary. The terms and the conditions for procurement of these RMGs were finalized by Mr. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. He also prepared the export documents mentioning the details thereon as given by Mr. Subhash Choudhary. All the export documents were signed by the employees of Mr. Prithvi Singh without having any authority to do so. As the intention was to evade detection of the fraudulent nature of the consignments by Customs, fictitious name and address of consignees were mentioned in the export documents. The consignees so mentioned were shown to be of Netherlands, being non-sensitive ports apparently to avoid detailed examination by Customs. (viii) After shipment of the goods fresh export invoices were got prepared by Mr. Subhash Choudhary either in his own office or in the office of Mr. Satish Choudhary. These freshly prepared invoices mentioned the actual rates of the export goods as "Rate in US$ per dozen" as against the rates declared to the Customs "USS per piece". As per the statutory requirement, the Certificate of Origin was obtained from various Chambers of Commerce, for the clearance of goods at Dubai Port, on the basis of these freshly prepared invoices. This is apparent from some of the certificates of origins retrieved from Indo-Arab Chamber of Commerce, Mumbai, which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated by the firms viz. M/s. Awin Exim Co., M/s. Ceejay Exports and M/s. Ekta Exports and the remittances were arranged by Mr. Satish Choudhary mainly from four Dubai based remitting firms (i.e. M/s. Mohd. Essa, M/s. Reem Al Maha, etc.), irrespective of the consignees mentioned in the shipping bills of the impugned exports. The said 3rd party firms (controlled by Mr. Satish Choudhary) were enjoying huge foreign bill purchase credit limits totalling to Rs. 15.50 crores, amongst themselves, during the material period. The bank purchased the export bills from these 3rd party firms and against this, the bank immediately gave credit, equivalent to the FOB value mentioned in the shipping bills, in the accounts of the said 3rd party firms. The ex port bills purchased by Bank of Baroda, International Business Branch, Nariman Point, Mumbai were then sent by them to the over seas bank (i.e. BOB, Deira, Dubai) of the buyers for export realization. Further these 3rd party firms of Mr. Satish Choudhary transferred funds to M/s. Tex-Age in respect of exports bills negotiated by them. These payments made by the 3rd party firms were utilized by Mr. Subhash Choudhary to make payments to the so-call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Exim Co., M/s Ceejay Exports and M/s. Ekta Exports have knowingly and intentionally negotiated the export bills pertaining to the fraudulent exports of M/s. Tex-Age. These firms were collectively enjoying foreign bill purchase credit of Rs. 15.50 cores given to them by their banker Bank of Baroda, IBB, Nariman Point, Mumbai. The bank purchased the export bills from these 3rd party firms and against this, the bank gave credit, equivalent to the FOB value mentioned in the shipping bills. These 3rd party firms then transferred funds to M/s. Tex-Age which was utilized to make payments to the so called suppliers and to draw large number of " Co" cheques in favour of various non-existing firms and also "A/c payee" cheques in favour of firms who appear to be purely into the business of cheque discounting, in order to generate cash. This cash was subsequently utilized for sending the remittances against the fraudulent exports carried by M/s. Tex-Age. Thus the said firms appeared to have actively aided and abetted in the fraudulent exports of M/s. Tex-Age. (iii) Mr. Subhash Choudhary is the main brain behind the subject exports fraud. He with active co-operation and participation of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were his paid employees. Mr. Satish Choudhary financed the said exports through his firms and arranged for remittances against the impugned exports. He negotiated the export bills of M/s. Tex-Age through his firms and transferred huge funds to the subject export firms by utilizing the huge foreign bill purchase credit facility of Rs. 15.50 crores given to his firms by their bank. Mr. Satish Choudhary even provided advances through his firms to the said firm of Mr. Subhash Choudhary. Mr. Satish Choudhary arranged discounting of " Co" cheques as well as "A/c Payee" cheques, issued by Mr. Subhash Choudhary against these funds/advances, through persons like Mr. Sheetal Jain and Mr. Pradeep Dhelia, thereby generating huge cash. The said cash was then utilized by Mr. Satish Choudhary for generating foreign exchange through illegal means and then Mr. Satish Choudhary arranged for delivery of this foreign exchange to Mr. Pankaj Jhunjhunwala through persons like Mr. Salam, Mr. Paicher and Mr. Zaida. He instructed Mr. Pankaj Jhunjhunwala to deposit the said cash in Dirham in the bank accounts of Dubai based companies viz. M/s. Mohd Essa Al Maim Trading Co. LLC, M/s. Reem Al Maha Trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex-Age was looking after the accounts of impugned firm. Mr. Khetawat had total knowledge that the impugned goods being exported by M/s. Tex-Age by resorting to gross overvaluation was with an intention to claim undue export benefits. He actively aided and abetted in the violation of misdeclaration of the value of the exported goods with a view of defraud the Government. Based on the above, show cause notice dated 30.3.2005 was issued to the appellants, proposing rejection of the FOB value and proposing redetermination thereof, proposing determination of PMV of the goods exported under claim of drawback and proposing recovery of the entire drawback, confiscation of goods exported under drawback claim and DEPB claim and also proposing penal action against the appellants. The notice was adjudicated by the Commissioner who upheld the charge of over-invoicing inter alia on the basis of statements of the three suppliers of the goods, Prithvi Singh Kuntal, Sheetal Jain and Kamruddin Shaikh and on the invoice submitted to the Indo-Arab Chamber of Commerce showing a lower value and also on the ground that compensatory payments were made in India, which resulted in part of the remitta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 RKTOMAR 31-Mar-03 RKTOMAR dated 31-3-2003 at 05:40 P. M. Ref: SB No. 2122545 dated 29-2003 VARIFIED DECLARED PMV FAIR 6 . We also find that consignment of similar export goods of the appellants was examined 100% and found to be in order, as seen from the statement of Shri C.R. Unnikrishnan, partner of CHA firm, M/s. A.S. Vasan Sons. The viability of the export price is also borne out by the factum of export of identical goods made by one Vaishnodevi Exports on the same day at the same export price. In this view of the matter, oral evidence cannot be relied upon by the Revenue. In any event, the statements of the suppliers are mainly in respect of the alleged procurement price of the goods rather than the correctness or otherwise of the export price and the local suppliers cannot depose about the export price of the goods. The drawback claim was therefore less than PMV in all cases. 7. As regards allegation of flow-back of remittances by way of hawala, the stand of the department is that " Co." cheques issued by the appellants were discounted by Pradeep Delia etc. and the cash so generated was returned to the appellants who used it t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en relied upon, they have not been made co-noticees. (If their statements are to be believed, they were guilty of aiding and abetting Tex Age and penal action against them ought to have been proposed). In this view of the mater, the furnishing of lower export price by the appellants to the Indo-Arab Chamber of Commerce loses significance and further such invoices are not statutory records and cannot prevail over the report of physical examination of the goods by customs officers. The explanation of the appellants for showing names of the Netherlands firms in the shipping bills is that this was done under the instructions of the Dubai firms and this explanation has not been controverted by the Revenue. The shipping bills also show Dubai as the notified port. 8. In the light of the above, and in the light of the fact that the PMV was verified by customs officers and found to be fair, and that remittances equivalent to export invoices were received and there is no clinching evidence of hawala transactions, the finding of over-invoicing is not sustainable. We accordingly set aside the same. 9. The impugned order is set aside and the appeals allowed. (Pronounced in Court) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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