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TMI Blog2022 (8) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... ort; therefore, export benefits were rightly taken; DRI has no jurisdiction to issue the show cause notice to recover drawback or DEPB; Rule 16 and Rule 16A of the Drawback rules cannot be invoked and the impugned having confirmed the demands jointly and severely is bad in law and is liable to be set aside; as the goods held to be liable for confiscation are not export goods provisions of section 113 and 114 cannot be invoked. Reliability upon the statements of Shri Goldy and others - Retraction of statements or not - HELD THAT:- Though the department relies upon heavily on the statement of Shri Goldy, Shri Goldy has retracted his statement at the time of first opportunity when he was arrested and produced before the Court of Magistrate on 2ndJuly 2004, which is in immediate succession after recording of statement over four days in continuity - Revenue has not relied upon the statement of the suppliers and fabricators which were recorded in the course of investigation - the impugned order is bad for placing selective reliance on the evidence on record. The Department has not conclusively established that Shri Goldy was a freight forwarder and does the export benefits have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to who are the persons that committed the alleged irregularity or is not sure of which amount is payable by whom. The department alleges that Shri Goldy was the kingpin or mastermind and has managed the exports in the name of various exporters. In case the department was convinced about the same, they should have called upon him alone to show cause and confirm the demands on him - Alternatively, they could have confirmed the same on individual exporters. But that would have contradicted the department s stand that Shri Goldy was the kingpin - this method of confirming demand jointly and /or severally has not found favour with the Tribunal and Courts in a number of cases, and as such is not legally tenable and acceptable. Jurisdiction of DRI to issue Show Cause Notice under Rule 16/Rule 16A of Drawback Rules and Section 28 of the Customs Act,1962 - HELD THAT:- The impugned order is not maintainable on merits as no concrete tangible corroborative evidence is brought on record to sustain the allegations that Shri Goldy was a freight forwarder/kingpin exporting in the names of various firms for claiming undue export benefits; other exporters were dummy and that the goods were o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also over invoicing the exports, investigations were re-initiated into the activities; various residential premises of the aforesaid exporters were searched and documents were recovered; statements of Shri Goldy and others were recorded; oversea enquiries were conducted through Customs Overseas Information Network (COIN). 2.2. On the basis of the investigation conducted, it appeared to the department that:- Shri Goldy was involved in manipulation of exports to avail benefits and in over invoicing exports; he used to purchase fabrics from local market and exported the same in the name of different exporters; He used to collect foreign currencies from the tourists from CIS countries visiting India and was depositing the same into the accounts of various exporters; He used to collect / procure foreign exchange from the local dealers and remitted this amount into the accounts of various exporters, allegedly for the exports made. Shri Goldy was the kingpin and has managed the Customs clearance and export procedures in the Air Cargo compliance as confirmed by CHA. Shri Goldy accepted that he prepared covering letters and the tenders on behalf of the foreign buyers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the DEPB scrips were dropped. Being aggrieved, the various appellants as cited above, have filed appeals under discussion. 4. Shri J.M Sharma, learned counsel, appearing for Mr. Dinesh Sharma, Proprietor of M/s Balaji Impex India, inter-alia submits that that the appellant had filed an interim reply to the SCN on 23.01.2007 denying the allegations; a prayer was made for an opportunity to cross-examine the witnesses in the adjudication proceedings; vide letter dated 15th June, 2007, a request was made for supply of the relied upon documents; vide another letter dated 24th July, 2008 his request for inspection of the original documents was repeated. He submits that as directed by the department, the appellant visited the office of the DRI on 26.09.2008, for inspection; but the inspection of documents could not be carried out as the concerned staff was not available and the fact was intimated to the Adjudicating Authority immediately vide letter dated 27.09.2008; the appellant again visited the office of the DRI in the 3rd week of October, 2008; inspection was not allowed on the flimsy ground that a written instruction from the Adjudicating Authority was required; Adjudicating A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through proper banking channel in accordance with the foreign exchange laws; therefore, the provisions of Rule 16A are not attracted; further, Rule 16 is also not attracted as the goods were properly presented for export by filing shipping bill along with the supporting documents and after proper inspection and verification and the customs have allowed the export and issued the export promotion copy of the shipping bill for availing the export benefits. He submits that the impugned order has been passed in gross violation and ignoring the instructions contained in Board Circular No. 61/98 Customs dated 28th August, 1998, particularly, the instructions contained in para-3 and 4 (i) and (iii). 4.3. Learned Counsel submits further that the show cause notice has been issued wholly without jurisdiction; the Additional Director General, DRI, DZU, New Delhi did not have jurisdiction to issue the show cause notice proposing recovery of duty drawback/DEPB under Section 28 of the Customs Act read with Rule 16 and 16 A of the Duty Drawback Rules, during the period of dispute; the functions as an Adjudicating Authority had not been assigned to the Additional Director General of DRI. He rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Davinder Singh Dawar @Goldy and other appellants, inter alia, submits that the show cause notice issued in the instant case by the ADG-DRI for recovery of draw back/DEPB credit in relation to export of goods during the year 2000-2004 is wholly without jurisdiction; Rule 16 of Drawback Rules provides for recovery of drawback by the proper officer and Section 28 also provides for recovery of duty by the proper officer; Hon'ble Supreme Court in the case of Canon India Private Ltd.,Vs. CCE - 2021 (376) ELT 3 (SC), while considering a case of demand raised by DRI under Section 28 held that DRI is not the proper officer and hence the show cause notice issued by DRI for recovery is without jurisdiction; Apex Court observed that it is necessary to see whether the DRI is an authority in law to issue show cause notice under Section 28 (4) of the Act for recovery of duty, when the goods have been cleared pursuant to import by the Deputy Commissioner of Customs, who decided that the goods are exempted; Section 28(4) of the Act empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion, willful mis-statement or suppression of facts and confers the powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to issue show cause notice for recovery; notification No. 40/2012 Cus., dated 2nd May, 2012 notified the DRI officers to be proper officers for the purpose of the specified sections and to carry out the object of Section 2(34) of the Act; such powers conferred for the 1st time vide Notification No. 44/2011 Cus., dated 06.07.2011 for the purposes of section 17 and 28 of the Act, to give effect to the objects of section 2(34); but they were not empowered to act under section 51 (assessment of bill of entry) or section 75 (export benefits). Thus, the DRI officers were not the proper officers prior to 06.07.2011; Revenue carried the order of this Tribunal in Hem Chand Gupta to Hon'ble Supreme Court and thereafter, withdrew the appeal for filing the same before Hon'ble High Court; subsequently, the High Court held the matter against Revenue; thus, the ruling in the case of Hem Chand Gupta (supra) specifically with respect to Rule 16 and Rule 16A of the Drawback rules, has attained finality. 5.3. Learned Counsel submits further that invocation of Rule 16 A is bad, as this Rule is applicable only in cases, where sale proceeds have not been realized; it is not the case of Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imran Impex India; demand in respect of other 8 firms has been fastened jointly or severally on Mr. Goldy by misreading by the statements recorded during the course of investigation. 5.6. Learned Counsel submits also that the show cause notice wrongly quotes the statement of Shri Goldy (in para-19); it has been quoted that his buyers used to visit Delhi and purchase the export goods themselves , whereas, he actually stated that my buyers of exported goods used to come to Delhi and purchase the export goods themselves from us. He submits that further, the statement of Mr. Ajay Verma, through whom the appellant Goldy and others sold DEPB licenses, has been mis-quoted (para-51) to say On being asked whether he had processed DEPB licenses or prepared export documents in respect of M/s.Pawansut International, M/s. Nisha Overseas, M/s. Simran Impex, M/s. Akshay Trading, M/s. S.K. Traders, M/s. Balaji Impex India, M/s. Shanawaz Garments and M/s.AKS International, Ajay Verma stated that he had processed around 05 DEPB licenses for M/s Akshay Trading and that Shri Goldy used to give him all the documents and commission in cash, however, the actual statement of Shri Ajay Verma, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar No. 61/98 has been complied with in the present case(s). 5.8. He further submits that the exporting firms having their valid IEC, were registered with AEPC (Apparel Export Promotion Council) had filed proper shipping bills alongwith supporting invoices, packing lists and declarations that the shipping bill is under export incentives (DEPB/drawback); such goods have been duly assessed and cleared by the proper officers of Customs following the due procedure of law as prescribed; remittances have been realized in accordance with the law; RBI Notification No. 14/2000-RB dated 03.05.2000, provides that notwithstanding anything contained in Regulation 3, payment for export may also be received by the exporter as under, namely, in the form of a bank draft, cheque, foreign currency notes/ travelers cheque from a buyer during his visits to India provided the foreign currency so received is surrendered within the specified period to the authorized dealer of which the exporter is a customer. He submits that there are several instances in the export(s) made by these appellants wherein part payment has been received in advance and part payment is received after export and Bank Realisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f trade transactions by the appellants, including the purchase of fabrics/readymade garments, fabrication of garments and thereafter export, supported by the turnover/ transactions in their bank statements and also declared before the tax authority, Income Tax etc, such allegations do not stand; so far the allegation of overvaluation is concerned, no alternate or fair price of the exported goods have been suggested and worked out by the Revenue as per rules, and as such the allegation of overvaluation is simply a bald allegation, which is not corroborated; in the case of allegation of overvaluation, Revenue have failed to support or corroborate with the evidences in the form of contemporaneous exports. 5.12. He further submits that the reports received from the COIN London, COIN Dubai and Embassy of India, Moscow, have supported the genuineness of the transaction of the exports; the only adverse remarks is that some of the importers in those countries have declared lesser value for clearance than the declared export value in India; no adverse inference can be drawn for such declared value (lower value) by the importers; it cannot form basis to support the allegations of overvalu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sign the export documents like invoices, packing list etc; they were signing the documents on the dotted line on being asked by Shri Goldy; these statements were never retracted. He submits that the proprietors of the other eight firms have stated to the effect that they were not knowing much details of exports through their firms; they used to sign blank cheques and handover the same to Shri Goldy; they were getting a paltry fixed sum or 20 25% of the export benefits for lending name of their firms; these statements too have not been retracted. 6.2. Shri Sunil Kumar further submits Shri G.S. Bagga of M/s. Nisha Overseas, Shri Dinesh Sharma of M/s. Balaji Impex India, Shri Akash Bansal of M/s AKS International, in the statements, inter alia, stated that Shri Goldy used to collect foreign currency from foreign tourists upon their arrival in India; deposit the same in bank accounts of his firms as advance payments received from foreign buyers; withdraw the entire amount in Indian currency and return the same to the tourists/buyers, who used to buy the merchandise of their choice from the open market and leave it with Shri Goldy for packing and forwarding to the destinations spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of afterthought to escape the consequences of violations of law committed. Learned authorised representative places reliance also on the report received from COIN Dubai and COIN London and submits that the information received from overseas also supports the case of Revenue. 6.5. Learned authorised representative further submits that it has been rightly held that the goods which have already been exported are liable to confiscation under Section 113(d) (i) and the appellant have been rightly held liable to penalty under Section 114 of the Act;the contention of the appellants that confiscation is bad as the goods have already been exported, and are not export goods as defined under Section 2(19) of the Customs Act, is incorrect as per Eurasian Equipment Chemicals Ltd., and others 1980 (6) ELT 38 (Cal.); it is a case of mis-declaration of value of goods in order to claim export incentives, which was otherwise not permissible; he relies on Merchant Exports Ltd., 2005 (190) ELT A175. He submits that even as per the Board Circular No. 61/1998 Cus., the appellants were not entitled to export incentives; they being not the genuine exporters but simply freight forwarders; it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods; d) cases or class of cases; e) computer assigned random assignment; and f) any other criterion as the Board may, by notification, specify; sub-section (5) provides that the Board may, by notification, wherever necessary or appropriate, require two or more officers of Customs (whether or not of the same class) to have concurrent powers and functions to be performed under this Act ; Section 97 of Finance Act, 2022 further provides that - notwithstanding anything contained in any judgement, decree or order of any court, tribunal, or other authority, or in the provisions of the Customs Act, 1962 (i) anything done or any duty performed or any action taken or purported to have been taken or done under Chapters V, VAA, VI, IX, X, XI, XII, XIIA, XIII, XIV, XVI and XVII of the Customs Act, as it stood prior to its amendment by this Act, shall be deemed to have been validly done or performed or taken; (ii) any notification issued under the Customs Act for appointing or assigning functions to any officer shall be deemed to have been validly issued for all purposes, including for the purposes of Section6, (iii) for the purposes of this section, sections 2, 3 and 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cargo and have cleared for export; therefore, export benefits were rightly taken; DRI has no jurisdiction to issue the show cause notice to recover drawback or DEPB; Rule 16 and Rule 16A of the Drawback rules cannot be invoked and the impugned having confirmed the demands jointly and severely is bad in law and is liable to be set aside; as the goods held to be liable for confiscation are not export goods provisions of section 113 and 114 cannot be invoked. 8. We find that the department has heavily relied upon the statements of Shri Goldy and others. Learned counsel for Shri Goldy submits that the statement was recorded continuously for 4 consecutive days and as such it can be inferred that the statement was given under duress and that the same is retracted on the first available opportunity when he was produced before a magistrate and others have retracted the statements during the course of submissions to the adjudicating authority; the Show Cause Notice extracted statements in part to suit the argument of the Revenue. We find that the department s case is that even retracted statements can be relied upon if corroboration is evident; investigation conducted corroborates th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and woolen garments and bills of fabrication, etc. he stated that he had the bills and would provide the same in due course; he used to keep such bills, invoices, packing lists, etc., in his office or with his Chartered Accountant; Purchase price of fabrics, garments and the fabrication charges depend upon the product; there were no minimum or maximum prices and that he could not give the exact price range of the goods purchased and fabricated; He used to make payment to fabrics and woolen garment suppliers through Account payee cheques and sometimes in cash; payments made to fabricators was generally in cash; he was the authorized signatory, who was operating bank accounts of M/s. Darbar Exports and M/s. GTB Exports; he used to receive advance payment and was also utilizing his own funds; he prepared covering letters and the tendering letters on behalf of the foreign buyers in his office at Pahar Ganj; approximately 50% of the foreign remittance in convertible foreign exchange were received in cash and remaining amount through telegraphic transfer TT; the DEPB licenses have been obtained from DGFT, Delhi and thereafter, sold through one broker, Shri Ajay Verma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the statements of Shri Goldy. This assumes significance as Shri Goldy retracted his statements and the other exporters and manufacturers and fabricators, whose statements were relied upon by the department, have not been examined by the adjudicating authority in terms of Section 138B of the Customs Act, 1962. We find that none of the foreign tourists/ Buyers was examined and their statements were recorded. 12. We further find that the statement recorded from Shri Goldy during investigation is not reliable piece of evidence, it has been recorded for four consecutive days by detaining him in the DRI office and on fourth day his arrest has been shown and produced before the Magistrate Court. The statement is also not reliable as the same has been retracted at the first available opportunity when Mr. Goldy was produced before the Magistrate. We also find that Revenue have, distorted version of the statement of Mr. Goldy and Mr. Ajay Verma in the show cause notice to suit their allegation. We also find that the statement of Mr. Bagga is not reliable as he has stated that he met Mr. Goldy at Dubai. It is pertinent to note that it was not independently proved that Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the provisions of the customs act and the CBEC circular cited above. We further find that the appellant herein are genuine traders and exporters as they have done the transaction of purchase and sale on their own account which is supported by their documents particularly their bank accounts. A freight forwarder or a C F agent is engaged in the work of receiving the goods, storing and thereafter clearing and forwarding as per the directions of the principal. A C F agent does not purchase or sell the goods on his own account. It appears that Shri Goldy simply works as an agent of the principal. We find , on the other hand, that the independent nature of the various exporters is corroborated by the statement of Sh. Benkichidanand, Manager of M/s Global Trust Bank, where all the fourteen exporting firms have their bank accounts. 15. It appears that the evidence for over valuation relied upon by the Revenue is nothing but a bald report from COIN Dubai / London stating that the prices declared by the foreign buyers in their countries of import are generally less than the prices declared to Indian customers; one of the foreign importers stated that he did not deal with the exporters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only conclusion that can be drawn is that the export benefits have been fraudulently or wrongly availed. In the facts and circumstances of the case the shipping bills were filed and customs officers have duly examined and cleared them for the exports and therefore, charge of wrong availment cannot be sustained in the absence of charge of collusion against the officers of customs also. In the instant case the same was not even alleged. Hence, we find that the charge of under valuation is not sustainable. 17. Thus, We find that Revenue have not discharged the onus to prove over valuation of the goods exported, as alleged. We further find the allegation of over valuation is vague, as there is no determination of actual or fair transaction value. We further find that the scheme for grant of DEPB/duty drawback benefits, works on the procedure of inspection/ verification by the Customs Authorities. There is no allegation of any mis-giving or connivance on the part of the customs officers, who have evaluated and assessed the shipping bills under export promotion. 18. We find that the show cause notice is self-contradictory. On one hand, it is alleged that the goods have been ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement was taken forcibly during investigation by the officers of DRI; their trade transactions including exports are genuine; they have also produced numerous documents in support of their contentions at the adjudication stage. 20. We further find that Rule 16 of the Drawback Rules is not invokable, as admittedly, the appellant exporters have received the payment for the goods exported and presented the BRC before the Authority and only thereafter, they have been granted export incentives. So far the invocation of Rule 16A of the Drawback Rules is concerned, for recovery of drawback erroneously granted, the same is also bad in the facts and circumstances, and further action under the said rule can be taken only by the proper officer , who initially assessed the shipping bills. We find further that no case is made for invoking Rule 16A has been made as no collusion etc has been alleged or proved consequent to which the said draw back could have been stated to have been wrongly issued. We further find that as required by Board Circular No 61/98 the appellants have fulfilled all the conditions for availing the exports benefits; they have filed appropriate shipping bill under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , under the facts and circumstances of the present case, the goods are no more available. Further, the allegation of Revenue, that the appellants are not the proper exporters or merchant exporters and are only freight forwarders/Packers, does not stand in view of the transactions, in foreign currency in the bank accounts of the appellant exporters. No prudent man will pay the price of the goods to the appellant exporters simply for the purpose of packing and forwarding, as alleged. We further find that no case of concealment, fraud, mis- statement etc. has been made out as alleged. Accordingly, we hold that the show cause notice is bad for invocation of extended period of limitation. 24. We further find that the impugned order confirmed the recovery of drawback or DEPB jointly and severally from Shri Goldy and other Exporters. Such confirmation would undoubtedly indicate that neither the show cause notice nor the adjudication order is convinced as to who are the persons that committed the alleged irregularity or is not sure of which amount is payable by whom. The department alleges that Shri Goldy was the kingpin or mastermind and has managed the exports in the name of various e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officers to avail export benefits wrongfully. (vii) No action appears to have been taken against the custom house agent and no collusion has been alleged with the said custom house agent, though he has stated that export documents in respect of fourteen exporters have been given to him by Shri Goldy and the fees for the said custom clearance was also paid by Shri Goldy. (viii) Even when the different exporters have separate IECs; exported goods separately; filed relevant shipping bills along with invoices; got the consignments cleared by customs after due examination; obtained exchange control copy of the shipping bill and realized the export proceeds in the designated bank accounts as permitted by the DGEFT, Department alleges that the exports are fraudulent without any evidence. (ix) The impugned order confirms the demands Jointly and/or severally; this action is neither legally acceptable nor practically implementable. 26. Further, we find that the appellants have also agitated the issue of jurisdiction of DRI to issue Show Cause Notice under Rule 16/Rule 16A of Drawback Rules and Section 28 of the Customs Act,1962 relying on the judgments in the case of Syed Ali, Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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