1993 (7) TMI 206 - AT - Customs

Tribunal upholds duty drawback disallowance and penalty imposition, waiver granted pending appeal

The Tribunal upheld the Department's decision to disallow duty drawback and impose a penalty on the applicant, treating Shri K.N. Garg as the proprietor ... Stay/Dispensation of pre-deposit Issues:1. Disallowance of duty drawback and penalty imposition under Customs Rules.2. Application to bring additional evidence regarding proprietorship.3. Waiver of predeposit of penalty and defense against fraud allegations.Issue 1: Disallowance of duty drawback and penalty imposition under Customs Rules:The case involved disallowance of duty drawback of Rs. 36,76,500 claimed by M/s. Rajdhani Electronics under Customs Rules. The Additional Collector imposed a penalty of Rs. 10 lakhs on Shri K.N. Garg, treated as the proprietor of M/s. Rajdhani Electronics. The applicant sought to introduce documents to prove Shri S.K. Jain as the actual proprietor, challenging the Department's findings. However, the Department argued that the documents lacked evidentiary value as they were not produced earlier. The Tribunal dismissed the application, upholding the Department's conclusion that S.K. Jain was fictitious, based on address verifications and bank account details.Issue 2: Application to bring additional evidence regarding proprietorship:The applicant attempted to introduce a letter of authority and an affidavit to establish Shri S.K. Jain as the proprietor of M/s. Rajdhani Electronics. The Department opposed, citing lack of justification for non-production earlier. The Tribunal agreed with the Department, emphasizing the failure to explain the delay in submitting the documents. The Tribunal dismissed the application, affirming the Department's findings regarding the proprietorship of Rajdhani Electronics.Issue 3: Waiver of predeposit of penalty and defense against fraud allegations:Regarding the penalty imposition, the applicant argued against the fraud allegations under Customs Rules. The applicant contended that no offense was established and that any violation pertained to the Foreign Exchange Regulation Act, not within the Customs authorities' jurisdiction. The applicant highlighted the lack of evidence supporting fraudulent claims and requested a waiver of the penalty due to financial constraints. The Tribunal found merit in the applicant's arguments, noting the absence of evidence proving the goods exported were different from declarations. Consequently, the Tribunal waived the predeposit of the penalty and stayed its recovery during the appeal process.This detailed analysis covers the issues of duty drawback disallowance, application for additional evidence, and the waiver of penalty predeposit, providing a comprehensive overview of the legal judgment.