Government upholds duty drawback recovery for failure to produce export proceeds evidence. Penalty and interest imposed. Revision dismissed.

In Re : Primo Fashions

In Re : Primo Fashions - 2016 (344) E.L.T. 787 (G. O. I.) Issues Involved:
1. Recovery of already sanctioned duty drawback.
2. Alleged failure to produce evidence of realization of export proceeds.
3. Violation of principles of natural justice.
4. Delay in adjudication and issuance of Show Cause Notice.
5. Procedural lapses and factual inconsistencies in the adjudication process.
6. Compliance with statutory requirements under Customs Act and FEMA.

Issue-wise Detailed Analysis:

1. Recovery of Already Sanctioned Duty Drawback:
The applicant was initially granted a drawback for exports. A Show Cause Notice was later issued for the recovery of the sanctioned drawback on the grounds that the applicant failed to produce evidence of realization of export proceeds within the period allowed under the Foreign Exchange Management Act, 1999, including extensions granted by the Reserve Bank of India. The Original Authority confirmed the demand for the recovery of the sanctioned drawback and imposed a penalty, which was upheld by the Commissioner (Appeals).

2. Alleged Failure to Produce Evidence of Realization of Export Proceeds:
The applicants contended that they had submitted the Bank Realization Certificate (BRC) to the Customs Authorities well in advance, both on 7-12-2005 and again on 25-10-2012. However, the authorities claimed that the BRC did not show the date of realization of export proceeds, leading to the conclusion that the applicants had not realized the sale proceeds from their buyers abroad.

3. Violation of Principles of Natural Justice:
The applicants argued that the impugned order was passed in gross violation of the principles of natural justice. They claimed that the adjudicating authority did not examine the factual position or verify the records available in their office. The applicants also highlighted that the orders were passed without offering sufficient opportunities for personal hearings and without considering the documents submitted by them.

4. Delay in Adjudication and Issuance of Show Cause Notice:
The Show Cause Notice was issued on 18-1-2007, and the Order-in-Original was passed on 28-3-2013, indicating a delay of over six years. The applicants argued that they should have been given another opportunity to explain their stand or file necessary documents, considering the long gap between the notice and the order.

5. Procedural Lapses and Factual Inconsistencies in the Adjudication Process:
The applicants contended that the adjudicating authority failed to verify the records and facts available in their office and passed the order in haste. They also argued that the orders were based on inconsistent reasoning and without considering the reply filed by the applicants. The applicants emphasized that they had complied with the provisions of Section 75 of the Customs Act, 1962, and Rule 16A, and had provided evidence of realization of export proceeds within the stipulated time.

6. Compliance with Statutory Requirements under Customs Act and FEMA:
The government observed that it is a statutory requirement under Section 75(1) of the Customs Act, 1962, Rule 16A(1) of the Customs, Central Excise & Service Tax Drawback Rules, 1995, and Section 8 of FEMA, 1999, that export proceeds need to be realized within the time limit provided, subject to any extension allowed by the RBI. The government noted that the applicants failed to establish that the export proceeds were realized within the stipulated time, as the date of realization was not mentioned in the BRC.

Conclusion:
The government found that the applicants failed to comply with statutory requirements and fulfill their obligations, making the recovery of the drawback availed by them justified. The orders of the lower authorities confirming the recovery of the drawback amount along with interest and imposing a penalty were upheld. The revision application was rejected as devoid of merit.