2019 (11) TMI 69 - AT - Customs

Tribunal Upholds Denial of Drawback Claims & Confiscation, Reassesses Evidence, Overturns Penalties

The Tribunal upheld the denial of drawback claims and confiscation of goods due to misdeclaration, inflating values, and illegal benefits. Penalties ... Imposition of penalties on CHA u/s 114(i) of Customs Act, 1962 - ‘Custom House Agent’ allowed unauthorized use of their licence - Duty Drawback on export goods - over-valuation of goods - HELD THAT:- The exporter was proceeded against for claiming drawback on exports declared to be valued much higher than the actual procurement price. From this it should be apparent that the condition of the goods or any other physical characteristics, which an agent or its employee may be privy to, is not the subject of controversy - There is no allegation that the goods of a different description or of apparently of poor quality had been shipped but that the value of the goods has been inflated. In these circumstances, the penalties imposed on M/s HP Joshi & Co and Shri Ashwin Joshi under section 114(i) of Customs Act, 1962 would not sustain. The charge against Shri Ashwin Joshi was based upon a statement of Shri Shilpesh Ramakant Sawant which, despite retraction, was held to be relevant as the retraction claiming use of force was not corroborated with any other evidence of having been compelled. Thus, a proposition, which fails the test of reasonableness, must be corrected by evidence but a statement of retraction does not have to be. The findings that follow from this assumption on the part of adjudicating authority evidently lacks reason and logic. Therefore, the penalties imposed on the custom house agent, M/s HP Joshi & Co, and Shri Ashwin Joshi fail. Imposition of penalties on Shri Kiran Vohra and Shri Iqbal Mehra - HELD THAT:- In the absence of any material evidence that could overcome the findings of the original authority in favour of Shri Kiran Nagindas Vohra and of any material that could support the findings against Shri Iqbal Mohan Amritlal Mehra, without reference to the statements alone, the penalties against them will not sustain. Penalties set aside - appeal allowed - decided in favor of appellant. Issues Involved:1. Denial of drawback claims and confiscation of goods.2. Imposition of penalties on exporters and associated individuals.3. Validity and admissibility of retracted statements.4. Procedural fairness in adjudication and Tribunal proceedings.5. Abatement of appeals due to the death of an appellant.Issue-wise Detailed Analysis:1. Denial of Drawback Claims and Confiscation of Goods:The Tribunal dealt with appeals against two orders-in-original where drawback claims were denied, goods were confiscated, and penalties were imposed due to overvaluation of garments in shipping bills. The Tribunal noted that the exporting units, M/s Specialist Exports and M/s Radheyshyam Exports Pvt Ltd, were involved in a scheme to illegally avail drawback benefits by inflating the value of goods. The Tribunal upheld the denial of drawback and confiscation of goods, stating that the goods were misdeclared in terms of value and destination, making them liable for confiscation under sections 113(d) and 113(l) of the Customs Act, 1962.2. Imposition of Penalties on Exporters and Associated Individuals:Penalties were initially imposed on several individuals, including Shri Kiran Nagindas Vohra and Shri Iqbal Mohan Amritlal Mehra, for their alleged involvement in the scheme. The Tribunal noted that the original adjudicating authority had dropped proceedings against Shri Vohra but imposed penalties on others. Upon remand from the High Court, the Tribunal found no sufficient evidence to support the allegations against Shri Vohra and Shri Mehra, especially since the statements against them were retracted and lacked corroborative material. Consequently, the Tribunal set aside the penalties imposed on these individuals.3. Validity and Admissibility of Retracted Statements:The Tribunal addressed the issue of retracted statements, highlighting that such statements, if retracted, must be supported by independent corroborative material to be admissible. The High Court had emphasized that the Tribunal must refer to specific allegations and corroborative evidence rather than relying on general principles. The Tribunal found that the retracted statements against Shri Vohra and Shri Mehra were not corroborated by any independent evidence, rendering them inadmissible.4. Procedural Fairness in Adjudication and Tribunal Proceedings:The High Court had remanded the matter to the Tribunal, noting procedural lapses and the need for a fresh decision on merits. The Tribunal was directed to ignore its earlier conclusions and allow parties to present their contentions and evidence anew. The Tribunal adhered to this directive, reassessing the evidence and allegations independently. The Tribunal also addressed the procedural aspect of cross-examination and the reliance on statements, ensuring adherence to principles of natural justice.5. Abatement of Appeals Due to the Death of an Appellant:One of the appellants, Shri Kantilal H Shah, had passed away during the proceedings. The Tribunal noted that, according to the Customs, Excise & Service Tax Appellate Tribunal (Procedure) Rules, 1982, the appeal abates in the absence of an application to continue the proceedings. The Tribunal acknowledged the death certificate and declared the appeal abated, refraining from making further observations or directions.Conclusion:The Tribunal set aside the penalties imposed on the appellants, including Shri Kiran Nagindas Vohra and Shri Iqbal Mohan Amritlal Mehra, due to the lack of corroborative evidence supporting the retracted statements. The appeals of the Revenue for imposing penalties on Shri Vohra were dismissed. The Tribunal ensured procedural fairness and adherence to legal principles, particularly regarding the admissibility of evidence and the conduct of adjudication proceedings.