2005 (6) TMI 158 - AT - Customs

Appellate Tribunal Overturns Decision on Goods Confiscation and Penalties Due to Insufficient Evidence; Allows Appeal.

The Appellate Tribunal CESTAT, Mumbai, overturned the Commissioner's decision regarding the confiscation of goods and penalties under Sections 113(d) and ... Confiscation of goods - Penalty - EXIM - DEPB credit - Jurisdiction of Customs authorities - HELD THAT:- As regards the orders on DEPB reversals and restrictions as ordered, the reliance of the ld. Advocate on the decision of Kobian ECS India Pvt. Ltd. 2003 (9) TMI 378 - CESTAT, MUMBAI] is well founded, wherein it has been held that decisions on eligibility for and jurisdiction of Customs Authority were not competent to sit over decision of DGFT to grant DEPB credit determined. The credits, if required, on material obtained, could be altered by DGFT & the matter could be reported to them for that purpose. The order of the Commissioner of Customs in this regard cannot be upheld. Following that decision of the Tribunal, the confiscation & penalty under Sections 113(d) & 114 of the Customs Act, 1962 also not upheld. We are reinforced in our finding that Customs Authority havePolyfils no jurisdiction over the DEPB quantum & eligibility to credit per se by the decision of the Mumbai High Court in the case of Pradeep Polyfils v. CC,[2004 (1) TMI 93 - BOMBAY HIGH COURT]. Following the same, the orders on DEPB as made cannot be upheld. In view following findings herein, the order are to be set aside & appeal allowed. Issues:1. Alleged fraudulent over-invoicing and misdeclaration of exported goods.2. Confiscation of goods under Section 113(d) of the Customs Act, 1962.3. Imposition of penalties under Section 114 of the Customs Act, 1962.4. Demand for excess DEPB benefits.5. Restrictions on DEPB benefits.Analysis:1. The case involved allegations of fraudulent practices by the exporter, including over-invoicing of goods exported. The investigation revealed discrepancies in the declared values and the actual manufacturing processes carried out by job workers and sub-job workers. The exporter was found to have created fictitious firms and obtained bogus invoices to inflate the value of exported goods, aiming to benefit from duty credits under the DEPB scheme.2. The Commissioner found the goods liable for confiscation under Section 113(d) of the Customs Act, 1962, due to the fraudulent practices observed. A fine of Rs. 25 lakhs was imposed on the exporting firm, and excess DEPB credit already availed was ordered to be refunded with interest. The DEPB benefits for certain shipping bills were restricted, and a penalty of Rs. 25 lakhs was imposed on the proprietor.3. The advocate for the exporter cited various legal precedents to argue against the applicability of Section 113(d) in their case, emphasizing the lack of evidence supporting non-exportation of goods. The Tribunal agreed with this position, setting aside the liability for confiscation and penalties under Sections 113(d) and 114 of the Customs Act, 1962.4. Regarding the demand for excess DEPB benefits, the Tribunal upheld the argument that Customs authorities do not have jurisdiction over DEPB quantum and eligibility, citing a decision that only the DGFT can alter credits if required. Therefore, the orders related to DEPB reversals and restrictions were not upheld.5. The Tribunal concluded that Customs authorities lack jurisdiction over DEPB matters, following legal precedents and decisions. Consequently, the orders related to DEPB benefits were set aside, and the appeal was allowed, overturning the previous decisions.This comprehensive analysis covers the fraudulent practices, confiscation of goods, penalties, DEPB benefits, and jurisdictional issues addressed in the judgment delivered by the Appellate Tribunal CESTAT, Mumbai in 2005.