TaxTMI 
TaxTMI 
2015 (1) TMI 1266
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....wo exporters viz. M/s. Hem Chand Gupta (Appeal No. C/46/2009) and GEE DEE International (Appeal No. C/47/2009) exported garment during the period 1-10-1999 to 10-10-2003 under "Repayments of State Credit Scheme" to Russia. Revenue alleging that these exporters did not make export to Russia, ordered recovery of the drawback paid to them on such exports. These exporters along with their proprietors were accordingly brought to adjudication and a order dated 6-11-2008 was passed against them in view of common cause, facts and issues involved on the basis of common investigation result and evidence gathered by DRI against them. Such adjudication gave rise to the consequences hereinafter described against which they came in appeal before Tribunal. Having heard all the appeal analogous and noticing common facts in issues involved and common evidence used against all of them in adjudication, all the appeals are disposed by this common order. 2.1 In the appeals filed by the exporter, M/s. Hem Chand Gupta and Sons and its proprietor Shri Jaydev Gupta, they have challenged following consequences of Adjudication :- (i) Confiscation of the ready-ma....
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.... International, B-16, Lawrence Road Industrial Area, Delhi under Section 114 of the Customs Act, 1962. (v) Penalty of rupees fifty lakhs was imposed on Shri Kapil Dev Gupta, R/o 6/844-45, Main Bazar, Mehrauli, New Delhi-110030 under Section 114 of the Customs Act, 1962. 2.4 Rs. 25 Lakhs deposited by M/s. GEE DEE International was appropriated towards payment of fine/penalty/drawback amounts demanded in adjudication. 3. Investigation made following allegations :- (a) M/s. Hem Chand Gupta and Sons and M/s. GEE DEE International had exported ready-made garments to Russia during the period 1-10-1999 to 10-10-2003 under "Repayments of State Credit Scheme." Investigation with the concerned shipping lines brought to light that the exported consignments were delivered at Dubai/Bander Abbas and in Kotka Port. Freights were collected by the shipping line for that destination only. The shipping lines mentioned final destination as Russia/Rostov on the Bill of Lading issued by them. They transported none of the consignment to the declared destination in Russia. Further it was reported by Consulate General of Indi....
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....icy, 2002-07, making the exported goods liable to confiscation under Section 113(d) of the Customs Act, 1962 by virtue of Section 11 of the Foreign Trade (Development & Regulation) Act, 1992 read with Section 3(2) & 3(3) of the Foreign Trade (Development & Regulation) Act, 1992. (g) As per the RBI A.D. (G.P. Series), Circular No. 5, dated May 31, 1999, while outlining the scheme on Export of goods to the Russian Federation on consignment basis against repayment of State Credits provided that under this facility, Indian exporters who have been granted permission by Reserve Bank to export goods to Russian Federation on consignment basis would first ship the goods and store them in Customs Bonded Warehouses (CBW) of their choice in the Russian Federation. There was no allowance for or provisions to have the storage in and disposal in third countries. (h) There was a clear attempt to subvert and mislead the investigations by one Mr. Gandhi of M/s. Auto Trans shipping Co. LLC, Dubai, an associate and connected with the business of the Indian exporters, who prima facie, was only incidentally involved in the movement of the expor....
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....; The exporting firms M/s. Hem Chand Gupta and Sons and M/s. Gee Dee International were liable to pay interest on the drawback taken under Section 75A(2) of the Customs Act, 1962. 4. Ld. Adjudicating Authority hearing the Parties and examining the materials before him framed following issues :- (i) "Whether the export goods have reached the buyers of the goods in Russia." (ii) "Whether the goods were overvalued." 5. Search was conducted to different premises of both the exporters on 15-10-2003. Various documents were recovered therefrom and taken into custody by investigation. Statements were also recorded from the proprietors of exporters as well as shipping line, bank and others. Overseas enquiry was conducted to examine whether there was overvaluation of export consignments and also whether the exports were made in accordance with RBI Circular and law. 6. Shri Jaidev Gupta stated that most of the readymade garments were exported to Russia and also to Ukraine, Bishkek and Mexico. Final destination, ports of discharge for ultimate destination were given as per address intimated by the b....
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....gnee was taken delivery by the nominated agents of consignee against production of original bill of lading. Thereafter the container load cargo was further transported upto final destination under own arrangement of the consignee. 7.2 Shri Gaurav Sethi marketing manager of M/s. Omega Shipping Agency Pvt. Ltd. gave details of 27 containers sent to port of discharge which were destined to Dubai which were delivered there at. 7.3 M/s. Dragon Shipping Pvt. Ltd. informed status of 16 bill of lading, issued to M/s. Miracle shipping line on account of M/s. Hemchand Gupta & Sons & M/s. Gee Dee International. Proof of delivery of containers in Dubai was submitted by them. 7.4 M/s. Stalian System Pvt. Ltd. informed about 40 bills of lading issued to M/s. Miracle Shipping on account of both the appellants. They also showed proof of delivery of the goods in Dubai. 7.5 Similarly M/s. Cosco Shipping Pvt. Ltd. confirmed about 45 bills of lading and delivery of containers in Dubai. 7.6 Overseas enquiry from Consulate General of India in Dubai revealed that one M/s. Happy Life Pvt. LLC, trading Company had cleared goods in Dubai declaring much lower value of ....
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....pening his arguments, Dr. Sarkar, ld. counsel submitted that by an interim order/proceeding recorded on 22-4-2009, Tribunal directed Revenue to furnish certain information and reply which goes to the root of the matter. But that has not yet been furnished by Revenue and stay order against appellants was passed with utter disregard to such fact. Therefore, such fact has been brought to the notice of the Hon'ble Supreme Court along with synopsis to the civil appeal by appellants explaining the dates and events of the case. Also, there is a ground in the civil appeal to the effect that the direction made by Tribunal as above ought to have been considered by the coordinate Bench while passing stay order subsequent to that. The appellants are prejudiced when the Revenue has not complied to the above direction of the Bench. This ground alone is enough to remand the matter to the ld. adjudicating authority to grant fair opportunity to the appellants for hearing afresh and pass appropriate re-adjudication order taking into consideration the direction of the Tribunal passed on 22-4-2009 and the directions if any that may be given in these appeals upon disposal thereof. 8.3 With the ....
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....was condition precedent for exporters to ship their goods and store them in customs bonded warehouses in Russia before clearance thereof. In the present appeals, such condition was not existing since Circular No. 4, dated 19-5-1999 applies. 8.7 There was no dispute in respect of bank realisation against all the exports made through PNB. Against an application made by appellants under RTI Act, 2005 to the RBI, they clarified that there was no dispute at all in respect of the exports made by the appellant in respect of the documentation made through PNB. This is verifiable from Page 94 of the appeal folder (running Page 64 of Order-in-Original). Appellants say that the reply to RTI application is verifiable from Pages 72 and 73 of the additional evidences submitted. Those two pages deal with reply of RBI by letter No. DAP.CO.RIA.7051/07.50.01/2009-10, dated 24-11-2009. According to ld. counsel, considering Page 294 of the appeal folder and Page 72 of the additional evidence in paper book, it can be construed that none of the LCs were recalled nor readjustments made. RBI could not trace the documents related to LC No. 5861, dated 17-9-1999. Both the banks, i.e., PNB and RBI ha....
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....respective paragraphs in those judgments, it is the submission of the ld. counsel that the DRI has no power to issue the notice in respect of the cases, where jurisdiction is exercisable by the "customs officers" only, who has assessed the appellants. 8.10 It was further submitted by the ld. counsel that soon after the judgment of the Apex Court in the case of Syed Ali (supra), even Board has issued Circular No. 24/2011-Cus., dated 31-5-2011 explaining the position that the officer who has assessed the Bill of Entry and Shipping Bill is the proper officer to initiate proceeding arising out of his assessment or adjudication. Relying on para 5 of the circular, he says that so far as Rule 16 or 16A is concerned, it is only the appropriate "jurisdictional customs authority" has power to issue notice, if he opines to call back the drawback earlier ordered by him for the reasons stated in those rules. Therefore, DRI has no jurisdiction to sit over the jurisdiction of jurisdictional customs officer to proceed against appellants issuing the impugned Show Cause Notice. Accordingly, the adjudication touching the jurisdiction issue which goes to the root of the matter is liable to be ....
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.... such allegation. Thus, the very Show Cause Notice issued on 27-3-2006 was baseless and attempted to cure the defect by addendum dated 31-8-2006. When there was no basis in law to make allegation, the addendum cannot make allegations which were not made in original Show Cause Notice. 8.14 Arguing on the point of limitation, ld. counsel submitted that there is no limitation prescribed by Rule 16 or 16A of Drawback Rules, 1995. Therefore, the litigation should not be protracted by Revenue beyond the period laid down by Hon'ble High Court of Gujarat in the case of Padmini Exports v. Union of India [2012 (284) E.L.T. 490 (Guj.)] and followed in the case of Pratibha Syntex Ltd. v. Union of India [2013 (287) E.L.T. 290 (Guj.)]. Hon'ble High Court was guided by the decision of the Apex Court in the cases of Govt. of India v. Citedal Fine Pharmaceuticals [1989 (42) E.L.T. 515 (S.C.)] and Collector of Central Excise, Jaipur v. Raghuvar (India) Ltd. [2000 (118) E.L.T. 311 (S.C.)]. 8.15 Placing reliance on para 13 of the decision in the case of Collector of Central Excise, Jaipur v. Raghuvar (India) Ltd. (supra), it is the submission of the appellant that a reasonable period i....
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....or return of such NRUDs but that was turned down. 9.3 Inviting attention to Circular No. 42/88, dated 24-5-1988 of C.B.E. & C., ld. Counsel submitted that Ministry of Finance required the return of the NRUDs soon after the show cause notice is issued. This was with a view to substantially reduce the time taken by the parties to inspect the documents. Object of the said circular was again reiterated by Circular No. 171/05/96-CX, dated 2-2-1996. Thereafter, again Ministry of Finance vide letter F. No. 207/09/2006-CX.6, dated 8-9-2006 required the field officer to return back the NRUDs to the person from whose custody that was seized. It was also categorically conveyed by Government that such documents are not only required to discharge various statutory obligations but also unnecessarily occupies space of offices. Therefore, C.B.E. & C. expected that show cause notice should incorporate a clause therein that NRUDs and records may be collected by the concerned persons within 30 days of receipt of show cause notice. The said notice is also required to state the designation and address of the officer responsible for returning the NRUDs and record. Therefore, no return of NRUDs d....
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....defence nor cross-examination allowed. 9.8 Reliance was placed on the decision in the case of Subhnen Decor Private Limited v. CCE, Vapi reported in 2010 (251) E.L.T. 105 (Tri.-Ahmd.), Shri Ganesh Dyeing and Textile Processing Company Surat v. CCE, Baroda reported in 1986 (23) E.L.T. 257 (Tribunal) for cross-examination. It was submitted that when such examination not allowed that result in denial of justice. 9.9 The Tribunal by its order dated 22-4-2009 had specifically directed Revenue to bring to the notice of the Tribunal as to the request on cross-examination whether made by appellant and whether copies of statements recorded were provided to the appellant. Till today, there is no reply by Revenue. 9.10 At this stage. ld. DR objected to the position of the appellant on the ground that in para 38.6 at Page 71 of the Order-in-Original, ld. Adjudicating Authority very well dealt about NRUDs without remaining silence. Similarly, ld. Commissioner in para 38.14 at Page 103 of the appeal folder dealt no reliance on the statement recorded for adjudication. Since certain statements were not relied upon by the Adjudicating Authority, those were irrelevant for the....
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....lso placed to show how bias has resulted by pre-determined mind by use of the language appearing in paras 26.2, 25.2 and 25.3 of show cause notice. Precisely, ld. Counsel argued that an empty ritual was only followed without a real exercise being done to do justice to the appellant. 9.13 Arguing that denial of cross-examination has resulted in denial of natural justice. ld. Counsel invited attention to the order of the Tribunal passed on 22-4-2009. It was submitted that Tribunal consciously asked for details relating to cross-examination. But Revenue has failed to provide relevant information. Inviting attention to Pages 196 and 197 of the appeal folder, it was submitted that ld. Authority had total disregard to the prayer for cross-examination of the authors of the depositions and the persons who were given reports against appellant. Without testing of the material used against the appellant, by cross-examination, grave injury was caused to them. 9.14 With the aforesaid submissions, ld. Counsel says that once Tribunal comes to a conclusion that the issue of jurisdiction goes to the root of the matter as argued on 27-10-2014, there is no necessity to look into other....
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....aperbook, appellants submitted that even Russian Authorities have stated that no criminal proceedings were initiated against Russian importers. Therefore, the allegation made suspiciously on the basis of Xerox copies of correspondences of Dubai Customs has no fore in law. 10.1 Ld. Counsel for all the four appellants submitted that the letter dated 30-12-2003 relied upon by investigation and Ld. Adjudicating Authority at Pages 70 and 125 of Adjudication order has no relevance since there Is no reference about any of the appellants in that letter. Baseless allegation in bold letters has been made against the appellants. That can be appreciated from Page 125 of the appeal folder. That disclosed pre-conceived mind of investigation. They biased ld. Adjudicating Authority for adjudicating against the appellant. To support his contention, he relies on the decision reported in the case of Oryx Fisheries Pvt. Ltd. v. UOI [2011 (266) E.L.T. 422 (S.C.). The haste and hurry allegation of the investigation is patently clear from the communication received from Dubai Customs. This can be appreciated from letter dated 21-6-2004 wherein Indian Customs were informed that actual movement of ....
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....ies received is not admissible in evidence following the judgment of Supreme Court reported in the case of C.C.E., Bombay v. East Punjab Traders [1997 (89) E.L.T. 11 (S.C.)] [paras 5 & 6]. According to him, the contents of the fax message in photocopies are doubtful and these documents (refer Pages 1223-1224 RUD-29, Page 1633 RUD-35, Page 1636-1637 RUD-36) suffers from various Irregularities like difference in signature of Shri P.I. Margun and variations in his designation. At this juncture, Revenue opposed to the proposition on the ground that if Government has conducted enquiry through Government machinery of other country, that cannot be doubted. 10.5 It was further argued by ld. Counsel that para 6.10 of SCN and Pages 198-199 deals with allegation made in addendum. An addendum at Page 199 has no basis since there was no advance payment received by the appellant at any time from any of the Russian importers. 10.6 Entire adjudication having been made on suspicion, following para 13 of Apex Court judgment reported in the case of C.C., New Delhi v. Prodelin India Pvt. Ltd., 2006 (202) E.L.T. 13 (S.C.), it was pointed out that if contradiction or rebuttal to the plea....
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....legation without any market enquiry done or any contemporaneous evidence exposed to appellants. Rather Pages 260 to 291 of the appeal memos which are contemporaneous shipping bills placed by the appellant as evidence exhibits the value of goods which do not show over valuation made by appellant. 10.9 Appellants submitted that the value declared in the shipping bills, were not at all inflated when a bunch of compilation of contemporaneous evidence filed in the course of hearing shows no overvaluation of goods made. Specifically inviting attention to Page 265 and Page 291 of appeal folder, it was submitted by the appellant that the whole allegation of overvaluation has no basis in absence of any contemporaneous evidence or market enquiry reports brought by revenue to record. In short, appellant's submission was that ld. Adjudicating Authority as well as investigating authority acted arbitrarily alleging overvaluation of the goods baselessly. 10.10 Placing Pages 16 and 19 of reported decision in the case of Siddachalam Exports Pvt. Ltd. v. C.C.E., Delhi-III, 2011 (267) E.L.T. 3 (S.C.), appellants submitted that there is a codified procedure to determine the assessable ....
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....ion fine is not imposable following the Large Bench decision reported in Shiv Kripa Ispst Pvt. Ltd. v. C.C.E. and Cus., Nasik reported in 2009 (235) E.L.T. 623 (Tri.-LB), Chinku Exports v. C.C., Calcutta in 1999 (112) E.L.T. 400 (Tri.) affirmed by Supreme Court reported in 2005 (184) E.L.T. A36 (S.C.), C.C.I., Mumbai v. Finesse Creation Inc. reported in 2009 (248) E.L.T. 122 (Bom.) and in the case of C.C., Amritsar v. Raja Impex Pvt. Ltd. reported in 2008 (229) E.L.T. 185 (P & H). 10.13 Appellants further submitted that when there was no confiscation, there was no scope to levy penalty either under Section 113(d) or under Section 113(i) read with Section 114 of Customs Act, 1962. Since goods were not prohibited no penalty can be imposed under Section 114 read with Section 113(d). Similarly when there was no evidence of mis-declaration no penalty is imposable under Section 114 taking Section 113(i) of Customs Act, 1962 into account. It is also curious to note that the clause under which penalty was imposable was absent in the show cause notice. That deprived the appellant from defending. Therefore without mentioning relevant clause any penalty imposed under Section 114 is co....
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.... "customs officers" under Section 2(34) of the Act and they had jurisdiction to issue Show Cause Notice even against violation of Rules 16 and 16A of Drawback Rules, 1995. He further pointed out that much before the judgment in the case of Syed Ali (supra) and the judgment of Hon'ble High Court Gujarat cited above, the Tribunal in the case of Sun Knitwear Pvt. Ltd. v. CC, (Adjudication), Mumbai [2008 (10) S.T.R. 523 (Tri. - Bang.) = 2006 (202) E.L.T. 689 (T)] had declared that DRI officers have power to issue notice against violation of Rules 16 and 16A of Drawback Rules, 1995. For this, he relied on para 4 of the decision. So also, he reads para 8 thereof to emphasis on proper jurisdiction of such officers. 11.4 To support his arguments, ld. Departmental Representative further says that Hon'ble High Court of Karnataka in the case of Sri Meenakshi Apparels Pvt. Ltd. v. CC, Mumbai [2010 (258) E.L.T. 481 (Kar.)] has held that DRI has jurisdiction to issue notice against violation of Rule 16 or 16A of the Drawback Rules, 1995. Ld. Departmental Representative places reliance on para 5 of the decision in this regard. 11.5 Arguing on the point of applicability of Circular....
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....no plea of bar of limitation can be entertained when fraud was committed against Revenue. 11.7 On the count of NRUDs, it was submitted by ld. Departmental Representative that one Shri Jaidev Gupta has taken back such NRUDs for Shri Hemchand Gupta as proprietor and M/s. Gee Dee International as authorised signatory thereof. A copy of the same forming part of Annexure C to the Show Cause Notice was filed. It was observed by the Bench that the said Annexure does not bear any date on it proving date of return of NRUDs to Shri Jaidev Gupta. It was the submission of the ld. counsel that NRUDs were not provided to the appellant for which this is specifically stated in the interim reply to the Show Cause Notice filed on 25-7-2007 and specifically pleading was that the reply was an interim reply. 11.8 In view of the above controversy, ld. Departmental Representative was directed to produce the investigating record to substantiate Page 124 of Annexure C claimed to have formed part of the Show Cause Notice itself and prove whether this was brought to the notice of the appellant while issuing the original Show Cause Notice or addendum thereto. It may be mentioned that Page 125,....
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.... Russia. 12.2 Many documents, received from the Consulate General Office, showed that major part of the consignments did not reach Russia although the appellant claims that the exports were made to Russia. Inquiry was caused at Dubai sea port and also at Bander Abbas. That revealed no receipt of goods in Russia. He places para 22 from Page 48 of appeal folder in this regard. Reading Pages 20 and 40 of Order-in-Original, ld. DR, submits that it is a full proof case of Revenue that the containers did not reach even Dubai in many cases. He lays emphasis on para 24 of Order-in-Original at para 23 thereof as well as para 24.2 at Page 25. Customs made every effort to cause the investigation to ascertain whether the goods reached Russia. But there was no cooperation by Bander Abbas Customs. Therefore, further enquiry could not be proceeded. The outcome of investigation appears in para 27 at Page 24 of the show cause notice. 12.3 Ld. DR further submitted that State Credit Scheme has been explained in para 7 of the judgment reported in Rajiv Verma v. Union of India - 2007 (218) E.L.T. 200 (Del.). According to the ld. DR, it is the responsibility and obligation of the exporte....
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....n record and found out that the letter dated 28-4-2006 (which is annexed as Page 9 of his written submissions) shows that "OOO Business Kant" was not at all an importer or exporter and during the period December, 2002 to June, 2003 money was returned to that concern in respect of different contracts. Therefore, there was no question of any export made by appellant to that concern during the period October, 1999 till 10-10-2003. Thereafter, the payments received from that importer were returned back by appellant as was informed by letter dated 28-4-2006 of the First Secretary (Trade) Import of India in Moscow. There were various contracts entered into by that importer with the appellant as appearing in that letter. 14.2 It was further submission of ld. DR that letter dated 11-7-2005 of the First Secretary (Ref: Page 11 of written submission filed by DR on 13-11-2014) brings out that the parties listed in that letter were registered in Russia as foreign trade participants. But they did not make any export or import operations during 2000 to 2005. He emphasizes that those two letters having come to the First Secretary from Russian Customs that cannot be disbelieved. Therefore,....
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.... to the appellant. Rejoinder of appellants 15.1 In rejoinder, Dr. G.K. Sarkar, ld. Counsel for the appellants submitted that allegation of no export made to Russia, violating RBI's circulars is baseless since none of the provisions of the Customs Act, 1962 have been invoked to prove that the exports were not made. Therefore, there was no violation made by the appellant, so far as the RBI's Circular No. 4 is concerned. Because the goods have gone and not available physically, no confiscation was made. That proves that there was export of goods made by appellants to the destination. RBI Circular No. 4 prescribes the procedure for "outright export" and that circular was followed. Appellant not being required to keep the goods in any of the warehouse in Russia, RBI's Circular No. 5 is not applicable to the case of the Appellant. Circular No. 4 when read, that leads to the conclusion that export of goods to Russia under State Credit is an essential element but warehousing of the goods in Russia was not relevant for that circular. Therefore, the Circular No. 5 cannot be pressed to the case of the appellant since Circular No. 4 applies. The most important requirement of Circula....
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....nbelievable. Further, two letters, i.e., 28-4-2006 and 11-7-2005 being zerox copy that is not admissible in evidence following the Apex Court Judgment in East Punjab Traders - 1997 (87) E.L.T. 11 (S.C.). 16.1 In further rejoinder, ld. Counsel further submitted that judgment in the case of Syed Ali - 2011 (265) E.L.T. 17 (S.C.) has been successively followed by Hon'ble Supreme Court in the case of Chandna Impex Pvt. Ltd. v. CC, New Delhi - 2011 (269) E.L.T. 433 (S.C.). Ratio laid down therein was also followed by Hon'ble High Court of Punjab and Haryana in the case of Era International v. Union of India - 2011 (274) E.L.T. 6 (P & H). Similarly the ratio was followed in the case of Sree Enterprises v. CC, Hyderabad - 2011 (274) E.L.T. 12 (A.P.). Ratio of Syed Ali judgment was also accepted by the Government for which Notification No. 44/2011-Cus., dated 6-7-2011 was issued conveying the position that officers notified therein shall be the "proper officer" for the purpose of Section 17 and 28 of Customs Act, 1962. That was also clarified by Circular No. 44/2011-Cus., dated 23-9-2011. This notification shall be prospective in nature and ADG DRI became "proper officer" from the ....
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....b-section (11) to Section 28 of Customs Act, 1962 was incorporated. Therefore according to para 27 of the judgment, for the purpose of Sections 17 and 28, the officer may be proper officer. But to act as a "proper officer" for the purpose of Rule 16 and 16A of the Drawback Rules, 1995 they should be officer notified under Section 2(34) of Customs Act, 1962 read with these Rules. Furthermore para 27 of the judgment erroneously quoted the notification. The proper notification is as per Page 15 of the documents filed on 14-11-2014 by the appellant. Therefore, Swati Menthol case is not applicable to the present case of the appellant. 16.5 On limitation, ld. Counsel submitted that there is no limitation prescribed by Rule 16 and 16A of Drawback Rules, 1995. Therefore, Revenue cannot make any improvement to its case submitting judgment of Hon'ble High Court of Gujarat in the case of Dadri Inorganics Pvt. Ltd. v. CC - 2010 (260) E.L.T. 61 (Guj.). Like Section 28, there is no extended period prescribed for the purpose of Rules 16 and 16A. Therefore ratio laid in the case of Pratibha Syntex Ltd. v. Union of India - 2013 (287) E.L.T. 290 (Guj.) and Padmini Exports v. Union of India -....
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....orate Notification No. 40/2012-Cus., dated 2-5-2012 was issued clearly describing different sections under which "proper officer" is empowered to exercise the power conferred by that section. Such notification was not there prior to 2-5-2012. As a result of which position is very clear that para 17 of Supreme Court judgment in Syed Ali case still holds field. 16.9 For appellants it was submitted that Revenue's submission that case was made by Adjudicating Authority under Circular No. 4 of RBI, suffers from fallacy when para 38.3, para 38.41, para 38.8, para 38.11 and 38.12 of order of adjudication appearing at Pages 44 to 95, 97, 101 to 104 of appeal memo is read. Department proceeded under Circular No. 5 erroneously and grave error was committed. Therefore adjudication is baseless following apex court decision respected in - 2003 (151) E.L.T. 481 (S.C.). Similarly, when adjudication is beyond the scope of show cause notice, following judgments also declared that to be bad : (1) CCE, Nagpur v. Ballapur Industries Ltd. - 2007 (215) E.L.T. 489 (S.C.). (2) CCE, Bhubaneswar-I v. Champdany Industries Ltd. - 2009 (....
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....tor General". The expression "import" occurring in the said section means bringing into India of goods as defined under Section 2(e). There is nothing in the law which requires an importer to be either the consumer or even the buyer of the goods also. Even otherwise, we are of the opinion that it is a matter of common sense that no importer would consume all the materials imported. Necessarily, the goods imported are meant for sale to the consumer, in which case, if an importer, who enjoys the facility of I.E. Code imports certain goods in the normal course of business on the strength of a contract entered by such importer with either a consumer or a trader who eventually sells the imported goods to consumers. We do not understand what can be the legal objection for such a transaction especially where the import of such goods is otherwise not prohibited by law. At any rate, if the respondents have any tenable legal objection on that count, the respondents must pass an appropriate order indicating the legal basis on which the action is proposed and also the nature of the action proposed for such perceived violation of law on the part of the respondents after giving a reason....
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....her persons not provided to the appellants; order of the Tribunal passed on 22-4-2009 was failed to be complied by Revenue depriving appellant to the course of natural justice; statements recorded from different persons which were beneficial to the appellants to lead defence were not provided; adjudication based on Circular No. 5 of RBI while Circular No. 4 was applicable; the Notice issuing authority had a clear bias to pre-judge the matter as evident from the Show Cause Notice; allegations were made under suspicion without cogent evidence; allegations made against the appellants were without discharge of burden of proof by Revenue; appellant was prevented to file final reply while interim reply to Show Cause Notice was filed due to non-supply of NRUDs; market enquiry was conducted behind back of the appellants; overseas enquiry made behind back of the appellants were not supported by evidence and mere Xerox copies of certain papers were provided without allowing cross-examination of authors thereof which was contrary to the decision of the Hon'ble Apex Court; without any evidence of money trail, return back of advance to certain Russian importers were alleged baselessly and burde....
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....Business Kant". AIR shipping bills not disputed 20. There were exports of garments in 101 containers to Russia during the impugned period. 27 containers were sent through Kotka and 74 containers were sent through Dubai and Bander Abbas since Russia is and land lock country. The details of shipping bills in Annexure-A to SCN show that 6 (six) shipping bills relating to M/s. Hem Chand Gupta & Sons and 8 (eight) shipping appearing in Annexure-B to SCN relating to M/s. Gee Dee International were Air cargo Shipments consigning goods to Russia. Export of goods to the importers thereof remained unquestioned by customs and no evidence was led by Revenue to show that no exports were made to Russia. Similarly there was also no allegation against exports made to the concerns viz., "000 Firma Ageti", "000 Sters", "000 Orlan", "000 Leotek Company", "000 Alros Trading" through sea. There was no allegation of return back of any money to the accounts of those importers. Therefore drawback claimed in respect of the exports made by Air Cargo and sea to those 5 (Five) importers is neither questionable nor drawback against exports recoverable without any evidence to the contrary led by Reve....
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....n the contrary, appellants' plea was that Russia being a land locked country, there was no direct transportation to that country except air and shipment made through Dubai, Bander Abbas and Kotka ports. Upon landing of the export goods in Dubai, those have gone to Bander Abbas by small ferries and thereafter the goods have gone by trucks to the final destination in Russia at the cost of the importers. Agents of importers took delivery of goods at the ports of discharge and they had responsibility to deliver the same to the importers in Russia. Revenue confirms that the goods went to the ports of discharge. But failed to find trail of movement of goods shipping bill wise even though drawback was claimed on that basis. 21.4 In absence of objective enquiry, the respondent Revenue had no answer on each shipping bill when the overseas report relied by them was challenged by appellant on two counts viz., (1) the reports were made on hearsay material and (2) authenticity thereof doubted since signature of foreign agency officer differed on each document and following the Apex Court decision in Collector of Customs, Bombay v. East Punjab Traders - 1997 (89) E.L.T. 11 (S.C.), copy o....
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.... with RBI, nor with FEMA authority to ascertain remittance particulars. If the money had been remitted into the account of above importer, extensive enquiry ought to have been made. But that was not done. Added to that, the correspondence received from Central Enforcement Russia only stated that the money had gone to the account of "000 Business Kant". That communication does not exhibit the nature and manner of enquiry conducted in Russia. The correspondence was unauthentic being copy of copy for which that is inadmissible in advance following the ratio laid down in East Punjab Traders case (supra). Revenue failed to discharge its burden to prove who remitted the money and through which channel that had gone following the ratio laid down in the case of Kishan Chand Chelaram v. Commissioner of Income Tax - 1980 (Supp) SCC 660. There was no material evidence on record to demonstrate that the appellants send back money to the account of "000 Business Kant" in Russia nor there is any evidence on record to show the channel through which money had gone when foreign remittance cannot go without RBI permission. No enquiry was done with RBI nor any proceeding initiated under FEMA. Whether ....
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....were cleared at the ports of discharge at Dubai, Bander Abbas and Kotka. This proves that goods have gone from India to a place outside India satisfying the meaning of the term "export" defined by Section 2(18) of the Act. There may be misdeclaration in the shipping bills for which penal provision are enacted in law to deal such aspect. But drawback on export to Dubai, Bander Abbas and Kotka to the extent permissible in law is undeniable. 22.5 In the case of British India Steam Navigation Co. Ltd. v. Shanmugha Vilas Cashew Industries - (1990) 3 SSC 481, it has been held that bill of lading passes title over goods from consigner to consignee. The goods having gone from India to outside India, there was export and title over goods passed on issuance of bill of lading. Applicability of Circular No. 4 23.1 The appellants contended that their exports were made on outright sale basis, which remained undisputed by Revenue. Accordingly Circular No. 4, dated 19-5-1999 of RBI, was applicable to the exports made by Appellant. But adjudication was completed under RBI Circular No. 5, dated 31-5-1999 as has been recorded in the adjudication order while show cause notice was is....
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....prior to 1-7-1999. 23.3 Circular No. 5, dated 31-5-1999 issued by RBI dealt with export of goods on consignment basis to the Russian Federation against repayment of state credits. This facility was extended to the export of tea and tobacco initially. But the appellants were exporters of garments. Therefore this circular was not at all applicable to them in absence of extension of the facility under that circular to other goods like garments. This Circular also prescribed that the exporter was required to submit application to RBI through nominated bank to make export on consignment basis. Only on receipt of approval from RBI the exporter may ship the goods and stock them in Customs Bonded Warehouse of his choice in the Russian Federation, The exporter after identifying the buyer was to finalise the sale contract and arrange with the latter to open irrevocable LC in his favour through BEFA. The delivery order was to be issued by exporter authorizing the warehouse in Russian Federation to release the specified quantity of goods. All such stipulations and conditions of prior approval and warehousing of goods was not prescribed by Circular No. 4, dated 19-5-1999. 23.4 L....
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....er Section 80-IB. They belong to the category of ancillary profits of such Undertakings. 17. The next question is - what is duty drawback? Section 75 of the Customs Act, 1962 and Section 37 of the Central Excise Act, 1944 empower Government of India to provide for repayment of customs and excise duty paid by an assessee. The refund is of the average amount of duty paid on materials, of any particular class or description of goods used in the manufacture of export goods of specified class. The Rules do not envisage a refund of an amount arithmetically equal to customs duty or central excise duty actually paid by an individual importer-cum-manufacturer. Sub-section (2) of Section 75 of the Customs Act requires the amount of drawback to be determined on a consideration of all the circumstances prevalent in a particular trade and also based on the facts situation relevant in respect of each of various classes of goods imported. Basically, the source of duty drawback receipt lies in Section 75 of the Customs Act and Section 37 of the Central Excise Act."                     &em....
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.... his authorised agent from the provisions of this clause]; Furnish to the proper officer of Customs, a copy of shipment (b) invoice or any other document giving particulars of the description, quantity and value of the goods to be exported. Where the amount or rate of drawback has been determined (2) Under Rule 6 or Rule 7, the exporter shall make an additional declaration on the relevant shipping bill or bill of export that - there is no change in the manufacturing formula and in the (a) quantum per unit of the imported materials or components, if any, utilised in the manufacture of export goods; and the materials or components, which have been stated in the (b) application under Rule 6 or Rule 7 to have been imported, continue to be so imported and are not being obtained from indigenous sources." 24.6 Rule 13 prescribes the manner and time for claiming drawback on goods exported, which reads as under :- "Manner and time for claiming drawback on goods exported other than by post. Triplicate copy of the Shi....
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....evant shipping bill of the export that a claim of drawback under 1995 Rules is made. The claim of drawback is to accompany copy of export contract or letter of credit (LC) as the case may be. 24.8 Rule 16 of 1995 Rules has empowered a "proper officer" of customs who has acted as such under Section 51 or 82 of the Act as the case may be to demand the drawback with interest if any, if such drawback was paid erroneously or paid in excess than that is due and such drawback recovered in terms of Section 142(1) of Customs Act, 1962. Rule 16 reads as under : "Repayment of erroneous or excess payment of drawback and interest. - Where an amount of drawback and interest, if any, has been paid erroneously or the amount so paid is in excess of what the claimant is entitled to, the claimant shall, on demand by a proper officer of Customs repay the amount so paid erroneously or in excess, as the case may be, and where the claimant fails to repay the amount it shall be recovered in the manner laid down in sub-section (1) of Section 142 of the Customs Act, 1962 (52 of 1962)." 24.9 Rule 16A of 1995 Rules which deals with recovery of amount of drawback in certain circumstanc....
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....hin a period of three months from the date of realisation of sale proceeds, the amount of drawback so recovered shall be repaid by the Assistant Commissioner of Customs or Deputy Commissioner of Customs to the claimant provided the sale proceeds have been realised within the period permitted by the Reserve Bank of India : Provided that - (i) the Commissioner of Customs or Commissioner of Customs and Central Excise, as the case may be, may extend the aforesaid period of three months by a period of nine months provided the sale proceeds have been realised within the period permitted by the Reserve Bank of India; (ii) an application fee equivalent to 1% of the FOB value of exports or Rs. 1000/- whichever is less, shall be payable for applying for grant of extension by the Commissioner of Customs or Commissioner of Customs and Central Excise, as the case may be. Where sale proceeds are not realised by an exporter [(5) within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), but such non-realisation of sale proceeds is compensated by the Export Credit Guarantee Corpor....
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....er of Customs v. Sayed Ali, 2011 (265) E.L.T. 17 (S.C.) in Para 13 of the judgment is as under : "13. Section 2(34) of the Act defines a "proper officer", thus : "2. Definitions. - (34) "proper officer", in relation to any functions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the Commissioner of Customs; It is clear from a mere look at the provision that only such officers of customs who have been assigned specific functions would be "proper officers" in terms of Section 2(34) of the Act. Specific entrustment of function by either the Board or the Commissioner of Customs is therefore, the governing test to determine whether an "officer of customs" is the "proper officer"."                         [Emphasis supplied] 25.3 Following the principle laid down by Apex Court in above case it is clear that only the Customs officer who is assigned the "specific functions" of assessment and reassessment of duty in the Jurisdictional area where....
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....ferred by consent of parties or acquiescence or waiver. 25.7 Law is well settled that if a court has no jurisdiction over a matter, but passes an order, it would amount to nullity. When the legislature intended to confer jurisdiction to perform certain specific assignment that has to be done by assigning and not merely by consent. The question of lack of jurisdiction can be raised at any stage of the proceeding. Once the forum is found to have no jurisdiction, the finding of the court becomes irrelevant and becomes non-executable. Neither an authority nor a court can derive jurisdiction apart from statute. Therefore, the "proper officer" to perform certain function under the respective provision of law has to be conferred jurisdiction in terms of Section 2(34) of the Act by Board or the commissioner to perform such functions in terms of a mandate. 25.8 An officer without specific assignment under Rule 16 of 1995 Rules has no power to usurp jurisdiction on any ground whatsoever in case such an authority does not have jurisdiction on the subject matter. It is a cardinal principle of law that an authority lacking jurisdiction unless restrains him, he causes prejudice t....
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....es. With great respect it may be stated that law declared in the case of Syed Ali (supra) holds the field. The judgment in Sri Meenakshi Apparels Pvt. Ltd. v. CC, Mumbai [2010 (258) E.L.T. 481 (Kar.)] was rendered on 30-8-2010, which was before the decision in the case of Syed Ali made on 18-2-2011. Therefore, law declared in the case of Syed Ali applies in terms of Article 141 of the Constitution. 27.1 Under Section 17(2) of the Customs Act, 1962, the "proper officer" conducts verification of the self-assessment of the goods assessed, to satisfy as to, whether self assessment was done correctly or re-assessment is warranted. Upon examination and satisfaction of shipping bills he allows the export consignment to leave India in terms of under Section 51 of the Act, issuing "let export" order. Thus the verification in the Customs area is done by "proper officer" under Section 17 of the Act and let export order is given under Section 51 of the Act. This let export order is given by "proper officer". Recognition of such "proper officer" by these two sections of the law is significant because the officer who acted under Section 51 of the Act is envisaged by law to perform an ass....
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....n 2 of Customs (Amendment and Validation) Act, 2011 with the legislative mandate that the persons appointed as officers of Customs shall be deemed to have and always had the power of the assessment under Section 17 and shall be deemed to have been and always had been "proper officer" for the purposes of this section. Even this amendment does not speak whether the officer envisaged by sub-section (11) of Section 28 shall be the proper officer for the purpose of Section 75 of the Act to perform the functions under Rule 16 of 1995 Rules. Sub-section (11) of Section 28 was introduced on 16-9-2011. Hon'ble High Court of Delhi in Writ Petition (C) No. 441/2013 in the case of Mangli Impex by an order dated 4-2-2013 observed that there appears to be an apparent conflict between the explanation 2 which appeared under sub-section (11), which was introduced subsequently. The conflict arises because sub-section (11) of the Act has a non obstante provision, is non obstante in relation to any judgment, decree or order of any Court of law. Tribunal or other authority and not in relation to other provisions of the Act, which includes Explanation 2 to Section 28 of the Act, which had come into forc....
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....rnational Ltd. v. Union of India [2012 (280) E.L.T. 321 (All.)] was looked into. This decision was rendered on 21-5-2012 under Central Excise Act, 1944 without considering the law laid down by Hon'ble Supreme Court in the case of Syed Ali (supra), which is a latest decision with logical reasons stated therein analysing the meaning of "proper officer" under Section 2(34) of the Act. This clearly throws light that the word "proper officer" used in various parts of the Customs law scattered through different provisions therein needs specific assignment to be performed under different sections of the Statute to serve respective purpose of the relevant sections. The meaning of "proper officer" given under Section 2(34) in Customs Act, 1962 does not exist in Central Excise Act, 1944 due to different object of both the statutes. Confiscation 28. Section 113(d) of the Act requires any goods attempted to be exported or brought within the limits of Customs area for the purpose of being exported, contrary to any provisions imposed by or under the Customs Act, 1962 or any other law for the time being in force are liable to confiscation. Hon'ble Supreme Court in the case of Om Prakas....
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....1(d) must be considered as a total prohibition and that the expression does not bring within its fold the restrictions imposed by clause (3) of the Import Control Order, 1955. The Court negatived the said contention and held thus : - "...What clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to "any prohibition imposed by any law for the time being in force in this country" is liable to be confiscated. "Any prohibition" referred to in that section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition" in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions "prohibiting", "restricting" or "otherwise controlling", we cannot cut down the amplitude of the word "any prohibition" in Section 111(d) of the Act, "Any prohibition" means every prohibition. In other words all types of prohibitions. Restrictions is one type of prohibition. From item (I) of Schedule I, Part IV to Import Cont....
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....ction 2(33) of the Act indicates that if the conditions prescribed for import or export of the goods are not complied with, it would be considered to be "prohibited goods". It was held that for determining the export value of the goods, it is necessary to refer to the meaning of the word "value" as defined in Section 2(41) of the Act and the same must be determined in accordance with the provisions of sub-section (1) of Section 14 of the Act. The Court observed thus : "...For determining the export value of the goods, we have to refer to the meaning of the word "value" given in Section 2(41) of the Act, which specifically provides that value in relation to any goods means the value thereof determined in accordance with the provisions of sub-section (1) of Section 14. Section 14 specifically provides that in case of assessing the value for the purpose of export, value is to be determined at the price at which such or like goods are ordinarily sold or offered for sale at the place of exportation in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for sale. No doub....
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....ik reported in 2009 (235) E.L.T. 623 (Tri.-LB), Chinku Exports v. C.C. Calcutta in 1999 (112) E.L.T. 400 (Tri.) affirmed by Supreme Court reported in 2005 (184) E.L.T. A36 (S.C.), C.C.E., Mumbai v. Finesse Creation Inc. reported in 2009 (248) E.L.T. 122 (Bom.) and the High Court in the case of C.C. Amritsar v. Raja Impex Pvt. Ltd. reported in 2008 (229) E.L.T. 185 (P & H). Overvaluation 33. There was also an allegation that FOB was inflated to get higher drawback. Against the contention of the appellants that on a number of occasions, market enquiries were conducted by customs authorities and in all cases wherever market enquiries were conducted, the declared values were found to be in consonance with the market price, was rejected by ld. Adjudicating authority for no good reason. The only reason stated by that Authority was that the same did not relate to the goods shipped or covered in the impugned Show Cause Notice. Appellant also contested that during the course of investigation, DRI had resumed a number of samples from the premises of the appellants for the purpose of enquiry and recorded statements from certain persons. But copies of those statements were not give ....
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....arket price of ready-made cloths. It is the exporter who has to establish that true export value was stated in the shipping bills. Section 14 of the Act contemplates that the price at which such like goods are ordinarily sold or offered for sale in the course of international sale that would be value of goods. 36. Keeping in view of the aforesaid guidelines, value of exported goods ought have been determined following the principle laid down in para 16 of the judgment by Hon'ble Supreme Court in the case of Siddachalam Exports Pvt. Ltd. (supra) which is reproduced as under for convenience of reading : - "16. It is settled that the procedure prescribed under Section 14(1) of the Act and particularized in Rule 4 of the 1988 Rules has to be adopted to determine the value of goods entered for exports, irrespective of the fact whether any duty is leviable or not. It is also trite that ordinarily, the price received by the exporter in the ordinary course of business shall be taken to be the transaction value for determination of value of goods under export, in absence of any special circumstances indicated under Section 14(1) of the Act and Rule 4(2) of the 1988 Rul....
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....ed vide show cause notice dated 11th September, 2003. Similarly, it is manifest from the CESTAT's order that revenue's appeal has been accepted mainly on the ground that report of M/s. Skipper International was worthy of credence and the exporter had failed to produce any evidence to establish that export value stated in the shipping bills was the true export value. In our opinion, both the said authorities have failed to apply the correct principles of law and therefore, their orders cannot be sustained. 20. Resultantly, for the reasons as enumerated, the appeal is allowed; the orders passed by the CESTAT and the Commissioner are set aside and the matter is remitted back to the adjudicating authority for fresh consideration in accordance with law, after affording adequate opportunity of hearing to the exporter. The entire exercise, in terms of this order, shall be completed within six months from the date of receipt of a copy of this judgment. Needless to add that we have not expressed any opinion on the merits of the opinion rendered by M/s. Skipper International or on the conduct of the exporter in not adducing any evidence in support of the export value stated in ....