TaxTMI 
TaxTMI 
2019 (3) TMI 1827
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....mount claimed and received by the applicant amounting to Rs. 5,25,527/- (Rs. 4,19,652/- + 1,05,875/-) and interest thereon. 1.2 The applicant company were manufacturers and exporters of Ductile Iron casting. During the course of scrutiny of documents, it was found that the applicant had resorted to misdeclaration of the Drawback Tariff Classification of the export goods., viz., "Ductile Iron Casting" with intent to receive excess duty drawback, thereby claimed an amount of Rs. 6,63,062/- as excess and ineligible drawback. 1.3 The applicant is having two manufacturing units., i.e. Unit I at A-14, SIDCO Industrial Estate, Coimbatore and Unit II at Malumichapatty, Coimbatore. On the basis of intelligence that the applicant were misdeclaring the tariff item classification of the said product under Duty Drawback scheme for availing higher and ineligible duty drawback, the officers of CIU, Coimbatore initiated investigation into the matter. 1.4 During the investigation, the Officers visited the premise of the applicant on 27-2-2013 and scrutinized the export related documents relevant to the period 2011-2014. From the scrutiny, the following facts emerged : ....
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....iling the Shipping Bill mentioned wrong tariff classification as 7325 01 & 7325 10 instead of 7325 15 and claimed excess Duty Drawback; • The mistake had occurred inadvertently due to pressure of work on domestic clearances and the company staff could not go through the actual rate of drawback claimed and received along with interest shortly. 1.6 The investigation further revealed that : • As per the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 the description of the export product "Ductile Iron Casting (Rough/machined)" is specifically classifiable under "7325 15" • The tariff item classification 7325 01 adopted by the applicant in certain shipping bill was erroneous and wrong; • The applicant had misdeclared their export product "Ductile Iron Casting (Rough/machined)" in the shipping bills under tariff item classification 7325 01 instead of 7325 15 of AIR Duty Drawback Schedule and thus claimed ineligible excess duty drawback of Rs. 6,63,062/- from various customs ports during the period 2011 to 2013; • The applicant by not furnishing the correct particulars rega....
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.... dated 31-3-2013; • Penalty should not be imposed on the applicant under Sections 114(ii) and 114AA of Customs Act, 1962 for contravening the provisions of Section 50(2) of the Customs Act, 1962 read with Rule 12(1) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 by not furnishing the correct particulars regarding the Tariff item classification of the export product in the Shipping Bills. Averment of the Applicant : 2.1 The applicant in their application filed on 20-9-2018, inter alia, submitted that : The demand in the SCN consists of two parts; • Demand of Rs. 4,19,653/- towards ineligible drawback claimed in respect of 72 shipping bills; • Demand of Rs. 1,05,875/- towards ineligible drawback claimed in respect of 28 shipping bills; • The applicant have admitted the mistake and paid the ineligible duty Drawback of Rs. 6,74,159/- vide challan, dated 31-3-2013; • Out of the above said amount the excess/ineligible drawback paid towards Chennai sea port is Rs. 4,19,652/- which is acknowledged in the SCN; • The rest of payment were pertaining to Customs House, Tuticorin ....
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.... 4,19,652/- + Rs. 1,05,875/-) along with the interest of Rs. 1,42,844/- (Rs. 1,04,819/- + Rs. 38,025/-) as demanded in the SCN. • Notice under Section 127C(1) of the Customs Act, 1962 was issued to the applicant and in response to the same, the applicant has sent a reply dated 1-10-2018. The Hon'ble Settlement Commission vide F. No. S.A. Cus/33/2018-SC, dated 4-10-2018 has admitted the application filed by the applicant. • In spite of the applicant informing the respondent Deputy Commissioner in writing vide letter dated 20-9-2018 that an application has already been filed before the Settlement Commission against SCN F. No. S. Misc. 18/2017-DBK dated 31-8-2018, the Deputy Commissioner has passed Order-in-Original No. 65822/2018 dated 30-10-2018. • The Respondent Deputy Commissioner has clearly mentioned about the intimation letter for having filed the application before the Settlement Commission. • The applicant would like to settle the legal disputes once for all. Hence, in the interest of justice it is requested that the application may be heard at the earliest. Report from jurisdictional Commissioner dated 2-9-2018 : 5.1&....
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.... the applicant company written request letter dated 25-9-2018 and 10-10-2018 requesting the Deputy Commissioner of Customs (Drawback), Chennai-IV Commissionerate to release the pending drawback after passing order without personal hearing. As per Section 127B of the Customs Act, 1962 the applicant cannot withdraw the application filed before the Hon'ble Settlement Commission. Hence to settle the matter, they have paid the penalties imposed and requested for release of the pending drawback. Hearing : 6.1 The case was heard on 12-2-2019. Shri S. Ravi, Advocate represented the applicant and Shri C. Mohan Gopu, Deputy Commissioner, Drawback and R. Ramesh, Superintendent of Customs, Drawback represented the jurisdictional Commissioner. 6.2 The Learned Advocate submitted that the applicant were manufacturers and exporters of Ductile Iron Casting. The Show Cause Notice has alleged that they had resorted to misdeclaration of Drawback Tariff Classification of the impugned goods under wrong Heading No. 7325 01 and 7325 10 with a drawback rate of 3%/2.4% instead of a specific Heading No. 7325 15 which has a rate of duty drawback of 2% of the FOB value in order to avail high....
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....h interest and seeking immunity from penalty and prosecution. 6.5 Shri C. Mohan Gopu, DC, Drawback, appeared on behalf of the Department. Commissioner vide his report dated 2-1-2019 has admitted that the party has paid the ineligible drawback of Rs. 1,05,875/- and interest amount of Rs. 38,025/- on 18-9-2018. The applicant vide their letter dated 10-10-2018 requested for release of pending drawback after passing order without personal hearing. Accordingly, Order-in-Original was passed on 30-10-2018 imposing the penalty of Rs. 52,000/- under Section 114(ii) and Rs. 5,000/- under Section 114AA of the Customs Act, 1962 and the applicant has paid the amount on 14-12-2018. Commissioner has also enclosed two letters from the applicant, a copy of the letter addressed to the Deputy Commissioner dated 10-10-2018 pertaining to the Show Cause Notice dated 31-8-2018 that they have filed an application before the Settlement Commission requesting for release of the pending drawback and also copy of the letter addressed to the Deputy Commissioner dated 17-12-2018 informing that penalty of Rs. 52,000/- have been paid. 6.6 The above Order-in-Original was issued upon request made by ....
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....they submitted another letter requesting for release of pending drawback after passing the Order without Personal Hearing. When it was pointed out that the issue was pending with Settlement Commission they informed that they would withdraw the petition with Settlement Commission and requested that an order may be issued immediately as the issue is pending from 2013. (h) Considering that the issue was pending for more than 5 years the party has pleaded that their drawback claims are pending because the issue remained not settled; party gave two written requests to issue an order without personal hearing to bring the issue to a finality; and the submission that if the issue is settled by way of an order they would withdraw with the application made with Settlement Commission and an Order-in-Original was passed on 24-10-2018 imposing a penalty of Rs. 52,000/- under Section 114(ii) & Rs. 5,000/- under Section 114AA of the Customs Act, 1962. (i) Vide letter dated 13-2-2018 the exporter has informed that they have paid the penalty of Rs. 52,000/- vide TR-6 challan No. MCM0121055 dated 14-12-2018 and Rs. 5,000/- vide TR-6 C....
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....ating that they have filed an application before the Hon'ble Settlement Commission at Chennai and requested him to release the pending drawback after passing the order without personal hearing. The Deputy Commissioner of Customs (Drawback) in Para 15 of the Order-in-Original No. 65822/2018 dated 30-10-2018 in file S. Misc. 18/2017-DBK acknowledges the above facts. During the personal hearing held on 12-2-2019, the Deputy Commissioner of Customs, Drawback, admitted that above Order-in-Original was issued upon request made by the applicant and that the Order-in-Original ought not to have been issued when settlement application is pending decision. 8.5 As directed by the Bench, the Deputy Commissioner of Customs, filed status report vide File F.No. S. Misc. 18/2017-DBK, dated 11-3-2019 stating that while reviewing the Order-in-Original the Commissioner of Customs, Chennai-IV has held that the Order-in-Original passed by the adjudicating authority did not appear to be legal and proper and hence ordered that it had to be appealed against to the Commissioner of Customs (Appeals-II) with the prayer that the Order-in-Original in question may be set aside. 8.6 The Bench has ....
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....ment application. Therefore, it is to be deemed that the said Order cannot be given cognizance, as it is to be held as non est".... 8.10 In view of the above, the Bench holds that the Order-in-Original No. 65822/2018 dated 30-10-2018 in file S. Misc. 18/2017-DBK issued by the Deputy Commissioner of Customs, Drawback, Custom House, Chennai with reference to the Show Cause Notice F.No. S. Misc. 18/2017-DBK, dated 31-8-2018 cannot be given any cognizance as it is to be held as non est. However, Commissioner must ensure that the O-in-O is set aside by the higher appellate authority, otherwise the validity of that O-in-O would combine to have its effect, unless it is rendered null and void by setting aside. 8.11 The Bench proceeds with the application filed by the applicant on merits. The applicant firm was having two manufacturing Units, one at Industrial Estate, Coimbatore and another at Malumichampatty, Coimbatore and were engaged in the manufacture and export of Ductile iron casting. Based on information that the applicant company were misdeclaring the tariff item classification of the said product under Duty Drawback Scheme for availing higher and ineligible Duty Dr....
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..../machined)" in the Shipping Bills under Tariff item classification 7325 01 instead 7325 15 of Air Duty Drawback Scheme and thus claimed ineligible excess Duty Drawback from various Customs Ports during the period 2011-14. The said ineligible excess duty drawback is demandable along with interest under Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 read with [Section] 75A(2) of the Customs Act, 1962 the applicant firm had not furnished the particulars regarding the Tariff item classification of the export product in the Shipping Bills and other export documents. 8.16 The applicant firm [has] failed to make a true declaration and thus contravened the provisions of Section 50(2) of the Customs Act, 1962 read with Rule 12(1) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. Rule 12. Statement/Declaration to be made on exports other than by Post. - (1) In the case of exports other than by post, the exporters shall at the time of export of the goods - (a) state on the shipping bill or bill of export, the description, quantity and such other particulars as are necessary for deciding whether t....