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TMI Blog2019 (3) TMI 1827X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,04,819/-. Thus, the total ineligible Duty Drawback worked out to ₹ 5,25,527/- (₹ 4,19,652/- + ₹ 1,05,875/-) and interest to the tune of ₹ 1,42,844/-. The applicant in their application admitted the entire ineligible Duty Drawback availed and paid the same along with applicable interest as demanded in the SCN. An amount of ₹ 4,19,653/- demanded in the SCN was proposed to be appropriated towards ineligible drawback from the amount of ₹ 6,74,159/- paid on 31-3-2013 in the SCN itself. The Revenue vide letter S. Misc. 18/2017-Drawback dated 2-1-2019 reported that the applicant paid an ineligible drawback of ₹ 1,05,875/- and interest of ₹ 1,04,819/- and ₹ 38,025/- on 18-9-2018. Interest - HELD THAT:- Interest @ 18% was calculated on ₹ 1,05,875/- in the impugned SCN from 4-2-2018 to 3-9-2018 only whereas the payment was made on 18-9-2018. The actual interest payable has to be worked out and paid by the applicant - the Bench is of the view that the applicant has made full and complete disclosure of the duty liability before the Bench, co-operated with the investigation and discharged their duty liability as confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on casting. During the course of scrutiny of documents, it was found that the applicant had resorted to misdeclaration of the Drawback Tariff Classification of the export goods., viz., Ductile Iron Casting with intent to receive excess duty drawback, thereby claimed an amount of ₹ 6,63,062/- as excess and ineligible drawback. 1.3 The applicant is having two manufacturing units., i.e. Unit I at A-14, SIDCO Industrial Estate, Coimbatore and Unit II at Malumichapatty, Coimbatore. On the basis of intelligence that the applicant were misdeclaring the tariff item classification of the said product under Duty Drawback scheme for availing higher and ineligible duty drawback, the officers of CIU, Coimbatore initiated investigation into the matter. 1.4 During the investigation, the Officers visited the premise of the applicant on 27-2-2013 and scrutinized the export related documents relevant to the period 2011-2014. From the scrutiny, the following facts emerged : Out of the total sales turnover of ₹ 100 Crores during the year 2011-12, ₹ 10 Crores (Approx.), accounted for income from export. The applicant were availing DEPB Scheme in respect of the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with interest shortly. 1.6 The investigation further revealed that : As per the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 the description of the export product Ductile Iron Casting (Rough/machined) is specifically classifiable under 7325 15 The tariff item classification 7325 01 adopted by the applicant in certain shipping bill was erroneous and wrong; The applicant had misdeclared their export product Ductile Iron Casting (Rough/machined) in the shipping bills under tariff item classification 7325 01 instead of 7325 15 of AIR Duty Drawback Schedule and thus claimed ineligible excess duty drawback of ₹ 6,63,062/- from various customs ports during the period 2011 to 2013; The applicant by not furnishing the correct particulars regarding the tariff item classification of the export product in the shipping Bills and other export documents failed to make a true declaration; The act of omission to declare correct tariff item classification of the export product as per the AIR Duty Drawback Schedule in the impugned shipping bills resulted in excess claiming of duty drawback; The total excess/inelig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the export product in the Shipping Bills. Averment of the Applicant : 2.1 The applicant in their application filed on 20-9-2018, inter alia, submitted that : The demand in the SCN consists of two parts; Demand of ₹ 4,19,653/- towards ineligible drawback claimed in respect of 72 shipping bills; Demand of ₹ 1,05,875/- towards ineligible drawback claimed in respect of 28 shipping bills; The applicant have admitted the mistake and paid the ineligible duty Drawback of ₹ 6,74,159/- vide challan, dated 31-3-2013; Out of the above said amount the excess/ineligible drawback paid towards Chennai sea port is ₹ 4,19,652/- which is acknowledged in the SCN; The rest of payment were pertaining to Customs House, Tuticorin and Air Customs, Coimbatore; The interest of ₹ 35,025/- in respect of the above said ineligible drawback was admitted and the same has been paid; The applicant has also admitted the ineligible drawback amount of ₹ 1,05,875/- along with interest of ₹ 1,04,819/- and paid the same; With regard to the claiming of ineligible drawback, while filing the Shipping Bills, the CHA had wrongly mentioned t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner in writing vide letter dated 20-9-2018 that an application has already been filed before the Settlement Commission against SCN F. No. S. Misc. 18/2017-DBK dated 31-8-2018, the Deputy Commissioner has passed Order-in-Original No. 65822/2018 dated 30-10-2018. The Respondent Deputy Commissioner has clearly mentioned about the intimation letter for having filed the application before the Settlement Commission. The applicant would like to settle the legal disputes once for all. Hence, in the interest of justice it is requested that the application may be heard at the earliest. Report from jurisdictional Commissioner dated 2-9-2018 : 5.1 The Commissioner of Customs, Chennai-IV, vide letter S. Misc. 18/2017-Drawback dated 2-1-2019 has reported that : A SCN dated 31-8-2018 was issued to M/s. Indo Shell Cast P. Ltd demanding the balance of ineligible drawback of ₹ 1,05,875/- along with interest. In response to the SCN the party paid the ineligible drawback of ₹ 1,05,875/- vide TR-6 Challan No. MCM 0091229 dated 18-9-2018 and ₹ 38,025/- vide TR-6 Challan No. MCM 0091230 dated 18-9-2018. The party vide letter dated 10-10-2018 requested for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate represented the applicant and Shri C. Mohan Gopu, Deputy Commissioner, Drawback and R. Ramesh, Superintendent of Customs, Drawback represented the jurisdictional Commissioner. 6.2 The Learned Advocate submitted that the applicant were manufacturers and exporters of Ductile Iron Casting. The Show Cause Notice has alleged that they had resorted to misdeclaration of Drawback Tariff Classification of the impugned goods under wrong Heading No. 7325 01 and 7325 10 with a drawback rate of 3%/2.4% instead of a specific Heading No. 7325 15 which has a rate of duty drawback of 2% of the FOB value in order to avail higher and ineligible duty drawback. The impugned goods were exported through ACC, Coimbatore, Custom House Tuticorin, Chennai Sea Port and ACC Chennai under Duty Drawback Scheme during the period October 2011 to 2014. They were availing EPP Scheme for exports till September 2011 and from October 2011 onwards they started availing Duty Drawback Scheme. Thus they have claimed excess duty drawback of ₹ 6,63,062/- during the period 2011 to 2013. Out of this, ₹ 2,41,812/- pertains to Tuticorin Customs, ₹ 4,19,652/- pertains to Chennai Sea Port and ₹ 1,597 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty of ₹ 52,000/- under Section 114(ii) and ₹ 5,000/- under Section 114AA of the Customs Act, 1962 and the applicant has paid the amount on 14-12-2018. Commissioner has also enclosed two letters from the applicant, a copy of the letter addressed to the Deputy Commissioner dated 10-10-2018 pertaining to the Show Cause Notice dated 31-8-2018 that they have filed an application before the Settlement Commission requesting for release of the pending drawback and also copy of the letter addressed to the Deputy Commissioner dated 17-12-2018 informing that penalty of ₹ 52,000/- have been paid. 6.6 The above Order-in-Original was issued upon request made by the applicant; that he admitted that the O-in-O ought not have been issued when settlement application is pending decision; that he further stated that as per the directions of Commissioner an appeal has been filed before Commissioner (Appeals) to set aside the instant O-in-O. 6.7 The Bench directed the Deputy Commissioner to file status report immediately. Post hearing submissions dated 11-3-2019 of the Deputy Commissioner of Customs, Drawback, Customs House, Chennai : 7.1 As directed by the Bench in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue is settled by way of an order they would withdraw with the application made with Settlement Commission and an Order-in-Original was passed on 24-10-2018 imposing a penalty of ₹ 52,000/- under Section 114(ii) ₹ 5,000/- under Section 114AA of the Customs Act, 1962. (i) Vide letter dated 13-2-2018 the exporter has informed that they have paid the penalty of ₹ 52,000/- vide TR-6 challan No. MCM0121055 dated 14-12-2018 and ₹ 5,000/- vide TR-6 Challan No. MCM0121056 dated 14-12-2018. (j) While reviewing the O-in-O the Commissioner of Customs, Chennai-IV has held that the O-in-O passed by the adjudicating authority did not appear to be legal and proper and hence ordered that it had to be appealed against to the Commissioner of Customs (Appeals-II) with the prayer that the O-in-O may be set aside and further the case may be remanded to the adjudicating authority with directions to keep the same in abeyance till the application of the exporter is disposed by the Settlement Commission. (k) Accordingly an appeal was filed before the Commissioner of Customs (Appeals) on 18-2-2019. Findings of the Bench : 8.1 The Bench has considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-DBK, dated 11-3-2019 stating that while reviewing the Order-in-Original the Commissioner of Customs, Chennai-IV has held that the Order-in-Original passed by the adjudicating authority did not appear to be legal and proper and hence ordered that it had to be appealed against to the Commissioner of Customs (Appeals-II) with the prayer that the Order-in-Original in question may be set aside. 8.6 The Bench has considered the arguments of both the stake holders. Before further proceeding in this matter it is to be seen whether O-in-O passed has anything to do with the application filed by the applicant. It is seen that the applicant firm after filing their application for settlement on 20-9-2018 requested the Department in writing through a letter dated 10-10-2018 to issue the Order-in-Original. The Order-in-Original No. 65822/2018 in file S. Misc. 18/2017-DBK was issued on 30-10-2018. Thus it is seen that the Adjudication Order became effective only on 30-10-2018 by which time the applicant had already filed his application i.e., on 20-9-2018 with the Settlement Commission and as such the applicant had complied with the requirement of the Provisions under Section 127A(b) of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was having two manufacturing Units, one at Industrial Estate, Coimbatore and another at Malumichampatty, Coimbatore and were engaged in the manufacture and export of Ductile iron casting. Based on information that the applicant company were misdeclaring the tariff item classification of the said product under Duty Drawback Scheme for availing higher and ineligible Duty Drawback, for the periods 2011-12, 2012-13 and 2013-14, investigations were taken up by the Officers of Customs Intelligence Unit, Coimbatore. 8.12 Investigations revealed that the applicant firm had resorted to mis declaration of Drawback Tariff Classification of the impugned goods under wrong Heading No. 7325 01 and 7325 10 with a drawback rate of 3%/2.4% instead of a specific Heading No. 7325 15 which has a rate of duty drawback of 2% of the FOB value in order to avail higher and ineligible duty drawback. Investigations culminated in the issuance of the instant SCN demanding ineligible Duty Drawback of ₹ 4,19,652/- pertaining to 72 Shipping Bills that were processed at Chennai Sea Port for the period 2011-12 along with interest of ₹ 38,025/-. Further, the SCN demanded ineligible Duty Drawback for 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms, Central Excise Duties and Service Tax Drawback Rules, 1995. Rule 12. Statement/Declaration to be made on exports other than by Post. - (1) In the case of exports other than by post, the exporters shall at the time of export of the goods - (a) state on the shipping bill or bill of export, the description, quantity and such other particulars as are necessary for deciding whether the goods are entitled to drawback, and if so, at what rate or rates and make a declaration on the relevant shipping bill or bill of export that .. 8.17 Thus, it can be seen that the applicant firm has not furnished the correct particulars regarding Tariff Classification of the export product in the Shipping Bills. The plea of the applicant that their CHA have wrongly mentioned the tariff classification which resulted in the applicant claim for ineligible drawback is not acceptable. The applicant had knowingly contravened the Provisions laid down in Section 75 of the Customs Act, 1962 read with relevant Drawback Rules issued by the Government of India in this behalf. It is worth mentioning here that the applicant did not approach the Department, suo motu, for re-crediting the ineligible duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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