2025 (11) TMI 142 - AT - Customs

Appeal partly allowed; matter remanded for fresh verification of banker's certificate and export realization before recovery decision

M/s Regent Rugs Versus Commissioner of Central Excise & Service Tax, Lucknow

CESTAT partially allowed the appeal and remanded the matter to the Original Authority for fresh verification of documents submitted by the appellant ... Recovery of duty drawback alongwith interest - non-submission of BRCs in time - realization of sale proceeds not supported by incontrovertible evidences - HELD THAT:- The orders of the lower authorities have failed to take note of the above documents and have proceeded to confirm the demand against the appellant for recovery of drawback in respect of these two shipping bills. A proper verification of these documents should be caused to determine whether the appellant has realized these export proceeds. The banker has in its Certificate dated 16.12.2021 given the details of the shipping bill, invoice no, bill amount and the details of the Inward No against which these amounts have been received. As this document was not before the adjudicating authority, it is deemed fit that the matter be remanded back to the Original Authority for consideration of these documents. The appeal is partially allowed and matter is remanded back to the Original Authority for consideration of the documents produced by the appellant evidencing the remittance of foreign exchange against these two shipping bills. ISSUES PRESENTED AND CONSIDERED 1. Whether drawback paid to claimant is recoverable under Rule 16A(2) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 where sale proceeds in foreign exchange were not supported by requisite evidence within the stipulated period under Rule 16A(1). 2. Whether production of TR-6 challans and deposit of amounts with interest discharges liability or affects the demand confirmed under Rule 16A(2). 3. Whether Banker's documents / DGFT Bank Realisation Statement (BRC/FIRC or machine-generated DGFT statement) furnished after adjudication can be the basis to set aside or remit confirmed drawback recovery demands, and what standard of verification is required. 4. Whether amount already deposited by the claimant should be appropriated against confirmed demand. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Recoverability of drawback under Rule 16A(2) for non-realisation within stipulated time Legal framework: Rule 16A(1) requires realization of export proceeds in foreign exchange within stipulated time; Rule 16A(2) authorises recovery of drawback where realisation is not proved; Sections 75A(2) and 28AA provide for interest and recovery mechanism. Precedent Treatment: The judgment contains no reference to earlier judicial decisions; determination rests on statutory rules and evidentiary assessment. Interpretation and reasoning: The Tribunal accepted that failure to produce incontrovertible evidence of realization within the stipulated period renders the claim unsustainable. For two shipping bills the appellant acknowledged that GR was not issued and the bank certificates/FIRC could not be correlated to relevant shipping bills or invoices; hence the lower authority's conclusion confirming demand under Rule 16A(2) was sustained for those items. The Tribunal emphasised the requirement of documentary correlation between shipping bills/invoices and bank realisation evidence to satisfy Rule 16A(1). Ratio vs. Obiter: Ratio - where export realisation is not supported by admissible and correlatable bank documentation within the statutory period, drawback payment is recoverable under Rule 16A(2) and interest is chargeable under Sections 75A(2)/28AA. Obiter - general observations on the nature of DGFT machine-generated statements as verifiable from the DGFT website (not necessary to decide the primary question where evidence was lacking). Conclusion: For shipping bills where realization could not be substantiated with proper documentary linkage, the confirmed recovery under Rule 16A(2) and interest was upheld. Issue 2 - Effect of TR-6 challans and prior deposit of amounts with interest Legal framework: Payments into Government account evidenced by challan (TR-6) indicate discharge or part-discharge of fiscal liability and can be appropriated against confirmed demands. Precedent Treatment: No case law cited; treatment based on statutory recovery and accounting principles. Interpretation and reasoning: The Tribunal found that TR-6 challans evidencing deposit of drawback with interest in respect of three shipping bills were produced and were acceptable to show payment. Therefore the demand in respect of those three shipping bills could not be faulted substantively but the amount already deposited should be appropriated against the confirmed demand. Ratio vs. Obiter: Ratio - production of TR-6 challans showing actual deposit with interest requires appropriation of those amounts against a confirmed demand; it removes the basis for sustaining a claim of non-payment for those specific items. Obiter - none beyond mechanics of appropriation. Conclusion: Demand sustained in substance for short-payment cannot be maintained as to recovery where claimant has already deposited the due amounts; deposited sums are to be appropriated against the demand. Issue 3 - Admissibility and sufficiency of Banker's documents / DGFT Bank Realisation Statement produced post-adjudication Legal framework: Proof of realisation of export proceeds may be established through bank realisation certificates (BRC/FIRC) or equivalent bank documents; DGFT machine-generated bank realisation statements reflect information received electronically from banks and are verifiable via DGFT portal. Precedent Treatment: No precedents considered or overruled; Tribunal relied on documentary sufficiency and need for verification by the adjudicating authority. Interpretation and reasoning: The Tribunal concluded that the lower authorities failed to consider DGFT bank realisation documents and banker's certificate dated 16.12.2021 which contained shipping bill, invoice and inward details. Because these documents were not before the original adjudicating authority, the Tribunal deemed it appropriate to remand for verification rather than decide on their sufficiency at appellate stage. The Tribunal directed the Original Authority to verify whether the DGFT/banker records correlate to the shipping bills and invoices and whether they satisfy Rule 16A(1) requirements. Ratio vs. Obiter: Ratio - where material documentary evidence (banker's certificate/DGFT statement) relevant to realisation is produced after adjudication, the matter should be remanded for verification rather than sustaining a recovery without examination of that evidence. Obiter - observations on the DGFT statement being machine-generated and verifiable on DGFT website are explanatory and not decisive of statutory interpretation. Conclusion: The two shipping bills supported by DGFT/Banker documents require remand to the Original Authority for verification; appellate court declined to confirm recovery without that verification and directed a decision within two months. Issue 4 - Appropriate remedy and directions on remand and appropriation Legal framework: Appellate power to remit for fresh consideration where new material was not considered by the original authority; accounting principles permit appropriation of previously deposited funds against outstanding demands. Precedent Treatment: No authority cited; action grounded in appellate remedial powers and statutory recovery/appropriation practice. Interpretation and reasoning: The Tribunal partially allowed the appeal: it upheld recovery for items lacking proof, ordered appropriation of amounts already deposited (TR-6) against confirmed demand for three shipping bills, and remanded the matter for two shipping bills supported by DGFT/banker documents for fresh verification. A two-month time frame was imposed for final decision by the Original Authority. Ratio vs. Obiter: Ratio - appropriate remedy where evidence emerges post-adjudication is remand for verification; appropriated payments must be adjusted against demands. Obiter - timeframe direction is procedural guidance. Conclusion: Appeal partially allowed; confirmed demands stand where evidence is absent; deposited amounts to be appropriated; remand directed for verification of banker/DGFT documents for two shipping bills with decision to be taken within two months.