TaxTMI 
TaxTMI 
2018 (2) TMI 653
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.... demanding the total ineligible drawback amount claimed and received by the applicant amounting to Rs. 20,01,721/- and interest thereon. 1.2 Shri K. Selvakumar, Director of M/s. Lovely Offset Printers Pvt. Ltd., Sivakasi and M/s. Team Cargo Services, Customs Brokers, Tuticorin as well as Shri J. Manikandan, partner M/s. Team Cargo Services were co-noticees in this case, they have not filed any Settlement Applications before this Commission. 1.3 Briefly stated the facts of the case are as follows : * The applicant had procured duty free raw materials, availing the provision of Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001 under Rule 19(2) of Central Excise Rules, 2002 and used the same in the manufacture of printed books and colouring books which were subsequently exported under Duty Drawback Scheme. * They also procured duty paid raw materials for manufacture of Printed diaries and file folders availing CENVAT credit which were subsequently exported under Duty Drawback Scheme availing both the Excise and Customs portion instead of claiming only Customs portion of the drawback w....
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....products. * They were regularly importing machineries under EPCG Scheme as well as Open General Licence from various countries and were completing the export obligations through their regular exports; * The applicant firm had procured raw materials on payment of duty for which they availed Cenvat; they also procured raw materials without payment of duty under Annexure 1, in terms of Rule 19(2) of Central Excise Rules, 2002 and used the same in the manufacture of exported goods; * The manufactured goods were mostly for domestic market and sometimes they exported the same depending upon the export order; * They were availing DEPB facility for the export of goods prior to 2012 and after ceasing of the DEPB scheme, they started availing drawback benefits under Duty Drawback Scheme * At the time of switching over from the DEPB to the drawback scheme they did not verify whether they had availed only the Customs portion of drawback as they had procured the raw materials without payment of duty * They had claimed higher rate of drawback only in certain cases where the raw materials were procured without payment of duty * That they had not instructed their Customs Broker to cl....
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.... be adjusted against their interest liability; v. The goods exported under Shipping Bills mentioned in Annexure B and Annexure C by M/s. LOPP should not be held liable for confiscation under Section 113(ii) of the Customs Act, 1962. vi. A penalty should not be imposed on them under Section 114(iii) of the Customs Act 1962. 1.11 M/s. Team Cargo Services, Customs brokers, Tuticorin as well as Shri J. Manikandan, Partner M/s. Team Cargo Services were also called upon to show Cause Notice to the Additional Commissioner of Customs Duty (Drawback), Custom House, New Harbour Estate, Tuticorin as to why penalty should not be imposed on them under Section 114(iii) of the Customs Act, 1962. Averments of the applicant 2.1 The applicant in his application dated 7-3-2017 had inter alia averred that : * They had admitted the entire demand and paid the amount along with interest during the course of investigation and have prayed immunity from other penal proceedings. * They were manufacturers of diaries, exercise note books, single/ multi colo....
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....bsp; Regarding confiscation of goods already exported under Section 113, the applicant had stated that the provisions of Section 113 cannot be invoked for confiscation of goods already exported. Section 113 can be pressed into service only to confiscate goods which are "Attempted to be exported" in violation of any of the prohibitions mentioned in the various clauses thereof. Thus, the impugned exported goods cannot be confiscated under Section 113 as proposed in the notice and no penalty can be imposed under Section 114 of the Customs Act, 1962. * The applicant has quoted various judgments wherein it has been held by Hon'ble High Court/Tribunals that the goods already exported cannot be considered as "export goods" and cannot be confiscated under Section 113 and the penalty imposed under Section 114 was set aside. The applicant had submitted that penalty cannot be imposed unless the goods are confiscated under Section 113 of the Customs Act, 1962. 2.2 The applicant also submitted that there is a proposal in the SCN to impose penalty on Shri K. Selva Kumar, Director of M/s. Lovely Offset Printers Pvt. Lt....
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.... 2002 and also claimed higher rate of duty drawback rather than is actually eligible and violated the provisions. * In certain shipping bills the applicant have claimed higher rate of duty drawback for the goods where CENVAT credit was actually availed on the inputs used in the manufacture of the subject good, which is contrary to the provisions. * The applicant has not furnished the correct particulars in the Shipping Bills for their claim and claimed ineligible drawback contrary to the provisions which rendered the goods liable for confiscation, though the goods were exported already. * The sanction of duty drawback is based on the declaration furnished by the exporter. If there was any default in the declaration or any false information furnished by the exporter under Customs Act, 1962 in relation to the fixation of rate of drawback under Section 75, the sanctioned duty drawback becomes ineligible and has to be repaid voluntarily. * The exporters' act of not coming forward voluntarily to repay the ineligible d....
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....out payment of duty in terms of Notfn No. 43/2001-C.E. (N.T.), dated 26-6-2001 issued under Rule 19(2) of Central Excise Rules, 2002 and that initially, they were claiming the benefit under DEPB Scheme till 1-10-2011 and thereafter, they started claiming Drawback benefits;. 5.3 He further submitted that once the DRI officers visited their premises and pointed out that they have availed Drawback as well as CENVAT credit in respect of 48 Shipping Bills, they admitted their mistake and immediately paid the Drawback amount along with the interest on 21-7-2015, i.e., when they were deposing statement before the officers of DRI; that thereafter, on their own, scrutinized their records and found out that a similar mistake had happened in respect of 7 more Shipping Bills and paid the Drawback amount of Rs. 1,27,465/- along with the interest of Rs. 72,316/- on 21-12-2015. 5.4 The Consultant further submitted that considering the period of exports viz., from 2011-12 (Oct. 2011) to 2015-16 and the number of exports made (2501 Shipping Bills), such a mistake had happened inadvertently; that in the connected ARE1/ARE 2 filed along with the Shipping Bills, it has been clearly mention....
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....os. 1723 and 1724 of 2005 & C.M.P. Nos.9689 and 9690 of 2005 in the case of the Commissioner of Customs, Tutiorin v.. M/s. Kamalabhai, Chennai and the Full Bench case of the Hon'ble Calcutta High Court in the case of Euresian Equipment and Chemicals Ltd. and Others v. Collector of Customs and Others; that with regard to the applicant's submission that the proceedings ought to have been concluded in terms of Rule 16 of Drawback Rules, 1995 read with Sec.28(2) of the Customs Act, 1962, the Departmental Representative submitted that the Department has issued Notice invoking the provisions of Sec. 113 and Sec. 114 of the Customs Act, 1962 and hence penalty is imposable. Findings of the Bench 6.1 The Bench has carefully gone through the records of the case and taken note of the submissions made on behalf of the applicant as well as the Revenue. Customs Drawback and Interest 6.2 This is a case booked by the officers of DRI, Tuticorin and Madurai, after they visited and verified the documents with reference to the purchase of raw materials and Drawbacks availed by M/s. Lovely Offset Printers Pvt. Ltd., Sivakasi. During the scrutiny, it was noticed by the officers that the ap....
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....rted" in violation of any of the prohibitions mentioned in the various clauses thereof. Thus the proposal for confiscation of goods is bad in law. Where the goods had already been exported before the issue of Show Cause Notice, the goods concerned cannot be "export goods" in terms of Section 113 read with Section 2(19) of the Customs Act, 1962. In order to be liable to confiscation, the goods in question must come within the definition of "export goods" as contemplated in the Customs Act. Hence the impugned exported goods cannot be confiscated under Section 113 as proposed in the notice and no penalty can be imposed under Section 114 of the Customs Act, 1962. The applicant also relied on various case laws in support of their claim. 6.7 Regarding the applicant's contention that the proposal of the confiscation of the goods under Section 113 of the Customs Act, 1962 is bad in law as the goods have already been exported, the Revenue has stated that the applicant's claim and the case law relied by them has already been over-ruled by the Hon'ble High Court of Madras in the case of Commissioner of Customs, Tuticorin v. Kamala Bai as reported in 2015 (324) E.L.T. 70 (Mad). 6.8&emsp....
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....n of Hon'ble Madras High Court in the case of Commissioner of Customs, Tuticorin v. Kamala Bai as reported in 2015 (324) E.L.T. 70 (Mad.) in support of their contention that goods are liable for confiscation under Section 113(ii) of the Customs Act, 1962 and penalty is imposable under Section 114(iii) of Customs Act, 1962. The Bench has gone through the decision of the Hon'ble High Court of Madras and found that the facts of the case are distinctly different and hence distinguishable. The facts of the case referred by the Hon'ble High Court are as follows : "4........... in the course of investigation, it was found by the authorities that instead of exporting the Cassia Oil, to fulfill export obligation, the importers exported Castor Oil mixed with certain addictives with the help of supporting manufacturer and Transporter and clandestinely disposed the Cassia so imported in the local market....." This is a clear case of fraud committed by the importer which cannot be equated with the instant case where the applicant had inadvertently claimed Customs, Central Excise and Service Tax components put together instead of eligible Customs portion of drawback only in the case of 55 Ship....