TaxTMI 
TaxTMI 
2022 (8) TMI 1009
X X X X Extracts X X X X
X X X X Extracts X X X X
....for availing undue Drawback/DEPB benefits. 2. Shri Dinesh Sharma, proprietor of M/s. Balaji (Appeal no. C/445/2009) are in the export of textiles from year 2001; they have obtained IEC certificate and obtained permission for transaction in foreign exchange and have accordingly opened up current accounts in Punjab National Bank etc; they have exported fabric, apparel, made ups to CIS countries and availed DEPB and drawback benefits. Other importers who are similarly placed are as below: Name of the appellant Proprietor / Partner 1. M/s. BalajiImpex India, East Patel Nagar, New Delhi Shri Dinesh Sharma 2. M/s. Darbar Exports, Paharganj, New Delhi. Shri Jugal Kishore Dawer 3. M/s. G.T.B. Exports, Paharganj, New Delhi Ms. Kiran Dawer 4. M/s. Hazrat Mart, Paharganj, New Delhi Ms. Isha Dawer 5. M/s. G.H. Creation, Paharganj, New Delhi Shri Bharat Ghambhir 6. M/s. Samriti Enterprises, Moti Nagar, New Delhi. Shri Dinesh Sakhuja 7. M/s. Ganpati Incorporation, PaschimVihar, Delhi Shri Varun Bhandari 2.1. On the basis of the intelligence received to the effect that one Shri Davinder Singh Dawar alias Goldy was infact managing the exports i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by Shri Goldy was in violation of Customs Circular No. 61/98 dated 25th August,1998. • drawback of Rs. 10,75,15,922 and DEPB credit of Rs.10,18,30,387 is liable to be recovered, jointly and/or severally from Shri Goldy and other exporting firms, under Proviso to Section 75 of the Customs Act read with Rule 16 and Rule 16A of the Customs & Central Excise Duties Drawback Rules, 1995. 3. Accordingly, a common show cause notice, dated 08.12.2006 was issued, by the Directorate of Revenue Intelligence, Delhi Zonal Unit, New Delhi, to several persons, proposing to hold the goods exported, valued at Rs.32,68,91,021, liable for confiscation under Section 113 (d) and (i) of the Act; to recover the drawback of Rs. 10,75,15,922 and DEPB credit of Rs.10,18,30,387form exporters as well as importers; to impose penalties and to appropriate the amount deposited by the exporting firms - M/s. Darbar Exports etc. during investigation. The SCN was adjudicated, Order-in-Original No.03/APSS/CC/DRI/NCH/2009 dated 27.03.2009, passed by the Commissioner of Central Excise (Adjudication), New Delhi, confirming the confiscation of goods already exported but not imposing any fine in lieu of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... severally, without clearly specifying the amount to be recovered from each of them; therefore, in view of the following decisions the order is legally bad and liable to be set-aside. (i).Famous Textile Vs CCE -2005 (190) ELT 361 (T-Mumbai) (ii). Shree Aravindh Steels Ltd. Vs CCE - 2007 (216) ELT 332 (T-Chennai) (iii). Golden Tobacco Ltd. Vs CCE - 2015(317) ELT164Z(T-Delhi) (iv). Thar Dry Port Vs CC, Jodhpur-2017(358) ELT 1214 (T-Delhi) He submits that vide above orders, it was held that to demand the customs duty, it is necessary to identify the person, who is liable to pay such duty in terms of the provisions of the Customs Act; duty cannot be confirmed jointly and severally against multiple persons; duty demanded jointly and severally on more than one person is not legally sustainable. 4.2. Learned counsel submits also that the impugned order is also bad for demanding the amount of drawback jointly under Rule 16 and 16 A of the Drawback Rules, without separately specifying the amount recoverable under each Rule, in as much as Rule 16 and Rule 16 A operate in different situations; Rule 16 provides, "for recovery of drawback, which has bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Customs Act,1962 ; such confiscation cannot be sustained as the goods have already been exported and do not fall within the definition of "Export Goods" as defined under Section 2(19) ibid, which defines Export Goods as - goods, which are about to be taken out of India (still lying within India). 4.5. Learned Counsel further urges that the finding of learned Commissioner that the foreign exchange transactions were done in violation of Regulation 13 of the Foreign Exchange Management (Export of Goods and Services Regulation 2000) is not sustainable; all the payments for export of goods were received in accordance with Regulation 4 of Foreign Exchange Management (manner of receipt and payment) Regulations, 2000 and within the period specified in Regulation 9 of the FEMA (export of goods and services) Regulation, 2000; till date Foreign Exchange Management Authority have not questioned the Foreign Exchange Transactions; there is no evidence on record to suggest that the appellants contravened any of the provisions of the Foreign Exchange Management Act or the Regulations made thereunder. 4.6. Learned Counsel further urges that order imposing penalty under Section 114 of Customs ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... court observed - from a cogent reading of Section 2(34) and 28 of the Act, it is manifest that only such a customs officer, who has been assigned the specific functions of assessment and re-assessment of duty in jurisdictional area, where the import/export concerned have been affected, by either the Board or the Commissioner of Customs in terms of Section 2(34) of the Act, is competent to issue notice under Section 28 of the Act; Any other reading of Section 28 would render the provisions of Section 2(34) of the Act otiose, in as much as, as contemplated under Section 2(34) of Act, for specific conferment of such functions. He submits that the ruling of Hon'ble Supreme Court in the case of Canon India has been followed and reiterated in the subsequent rulings by the Apex Court in the case of M/s. Agarwal Metals & Alloys in Civil Appeal No. 3411 of 2020; in CC, Kandla Vs Sunland Metal Recycling Industries, C.A. No. 5053/2021; in Kitchen Essentials and others versus Union of India - 2021-TIOL-2015-HC- MUM-CUS and by Tribunal in Dhiren Enterprises Vs CCE(Adj.) and Switzer Engineering Labs Vs CC (Import). 5.2. Learned Counsel further submits that the jurisdiction of DRI with re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Section 28 is concerned, there was no such provision empowering the Customs Department to recover the import duty from the exporters; to overcome the situation, the Government inserted Section 28AAA w.e.f. 28.05.2012 by which, it has been provided that "where an instrument issued to a person has been obtained by means of collusion or willful mis-statement or suppression of facts and such instrument is used by a person other than the person, to whom the instrument is issued, the duty relatable to utilization of such instrument shall be deemed never to have been exempted or debited and such duty shall be recovered from person to whom, the said instrument was issued''; during the material time, no recovery of DEPB credit can be made from these appellants /exporters by invoking Section 28 of the Customs Act, 1962. 5.5. Learned Counsel submits also that allegation has been made against the appellant - M/s. D.S. Dawar alias Goldy with respect to 14 firms, which made exports of readymade garments to CIS countries; Shri Goldy is concerned with only 6 out of 14 firms viz.:- M/s. Darbar Exports, M/s.GTB Exports, M/s.Hazrat Mart, M/s.G.H. Creation, M/s. Smriti Enterprises and M/s.Ganpati I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....existence; their independent nature is also corroborated by the statement of Sh. Benkichidanand, Manager of M/s Global Trust Bank, where all the fourteen exporting firms have their bank accounts. 5.7. Learned Counsel have further relies on the CBEC Circular No. 61/98-Cus., dated 25.08.1998, dealing with the issue of buyers coming to India from CIS countries for making purchases of readymade garments, etc; the said circular provides and clarifies that so long as there is clear linkage between the goods purchased in India and their export on an appropriate shipping bill filed under Section 50 of the Customs Act, prescribed for DBK/DEPB Scheme, even if the buyer is a tourist visa holder and the foreign exchange was declared by him on arrival to the Customs on a Currency declaration form and the same was duly en-cashed with an authorized dealer, then such goods will have to be treated as export from India; the provisions of Exchange Control Manual also allow such goods to be exported and paid for under the Regulations framed under FERA (now FEMA) against convertible currency brought into India and converted into Indian rupees; the Circular further provides the conditions to be fulfi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) ELT 161 (SC) and Sarabhai M. Chemicals vs. CCE, Vadodara -2005 (179) ELT 3 (SC). 5.10. He further submits that no reliance can be placed on the statements recorded during investigation; the statement of Mr. Goldy was recorded for four days continuously and thereafter he was arrested and produced before the Magistrate Court; at the very first opportunity on being produced before the Magistrate Court, he retracted, stating that the same have been recorded under coercion and the statement was recorded as dictated by the Officers; so far the statements of the other co-noticees are concerned, all have retracted from their statements in their reply to the show cause notices; further, two witnesses examined during adjudication have also not supported the case of Revenue; several persons, whose statements were relied upon by the Revenue, were not examined in the adjudication proceedings; such statements are not reliable in terms of the provisions of Section 138B of the Customs Act as held in Andaman Timber Industries V/s CCE. 5.11. He further submits that the show cause notice and the impugned order are self-contradictory; on the one hand, it has been alleged that the goods exporte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts that Shri D.S.Dawar @ Goldy, in the statements recorded on 29.06.2004, 30.06.2004, 01.07.2004 and 02.07.2004,inter alia, admitted that he was controlling and managing all the activities of the 6 firms, which were owned by his family members/friends; he has claimed more drawback by overvaluation; he has claimed drawback illegally on the goods purchased by the foreign buyers/tourists by showing the same as exports from his aforementioned 6 firms by way of over-invoicing; there was stiff competition; foreign buyers/tourists used to bargain for some extra facilities like free boarding/lodging, lunch/dinner, free packing/or material, free customs clearance, free sightseeing, free transportation etc; to cover such expenses, he had to overvalue to the extent of 20%for claiming drawback/DEPB. 6.1. Authorised Representative further submits that the Proprietors of various firms i.e. Shri Jugal Kishore Dawar of Darbar Exports; Smt Kiran Dawar of M/s GTB Exports; Smt Esha Dawar of M/s Hazrat Marg; Shri Dinesh Sharma of M/s Balaji Impex; Shri Varun Bhandari of M/s Ganpati Incorporation and Shri Dinesh Sakhuja, of M/s Samriti Enterprises, in their voluntary statements, have stated, inter a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to 29 shipping bills; Shri Goldy could give details in this regard; Shri Dheeraj Anand, an employee of M/s Balaji Impex India, stated that he used to prepare export invoices of M/s Balaji Impex India and M/s Pawansut International in the office of Shri Dinesh Sharma; he used to prepare a new set of invoices mentioning the name of buyers in the prescribed column as shown in the exchange control copy; letters showing as written by foreigners were actually prepared by him; he did all this as directed by Shri Dinesh Sharma; he never received any message, e-mail or letter from any overseas buyers; he had never seen any buyer or his representative in his office. 6.4. Learned authorised representative submits further that on investigation, some of the garment suppliers/fabricators were found to be non-existent at the addresses provided by Shri Goldy; it appeared that some of the fabricators did not have infrastructure/manpower to supply the goods exported by Shri Goldy or the supply of the garments/fabric which was at much lower price when compared with the export prices of the goods; retracted statements have evidentiary value if there is corroborative evidence which supports the sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not applicable in the facts of the present case; he relies on Sevelle Products Ltd Final Order Nos. 52058 - 52059 dated 17th December 21; vide Section 87 of the Finance Act, 2022,Section 3of the Customs Act (classes of officers of Customs) has been substituted, which now includes the officers of DRI, officers of Preventive, officers of Audit Wing as officers of Customs; further, Section 88 of the Finance Act, 2022 amends Section 5 of the Customs Act, wherein under Section 5(1) of the Customs Act - (powers of officers of customs), subsection (1A)have been inserted; sub Section (1A) which provides that without prejudice to the provisions contained in subsection (1), the Board may, by notification, assign such functions as it may deem fit, to an officer of customs, who shall be the proper officer' in relation to such functions; sub-section (1B) provides that within their jurisdiction assigned by the Board or the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may, by order, assign such functions, as he may deem fit, to an officer of Customs, who shall be the proper officer in relation to such functions; new sub-section (4) stipulates conditions and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us, by this Section all actions taken under these chapters have been declared to have been validly taken even if there is a contrary decision of any court, in the matter; thus, the show cause notice issued by the officers of DRI in the instant case has been validated by the provisions of the Finance Act, 2022 with retrospective effect; accordingly, the appeals be dismissed. 7. Heard both the sides and perused the records of the case.The main allegation in the instant case is that Shri Goldy has manipulated the exports and has wrongly availed the export benefits; he has collected money from the visiting tourists from CIS countries and deposited such amounts in to the accounts of various manufacturers showing the same to be advance payment for the fabrics / clothes purchased or imported by such tourists; he has procured foreign currency from local money lenders and such money was arranged to be put to the different companies in whose name the exports were made showing the same to be final payment; he used to withdraw money from the respective accounts. It appears that the main case of the Department is evidenced by the statement of Shri Goldy and other exporters and local ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and made-ups to CIS countries, Dubai, Poland, etc; in April, 2002;he opened another firms like GTB Exports, M/s. Hazrat Mart, M/s. G.H. Creations in the names of his sisters-in-law and nephew; • M/s. Pawansut Enterprises, and M/s. Nisha Overseas were not managed by him but he was helping these concerns in booking space in Airlines for the export of goods by them; • he came to know Shri Raghubir Prasad Sharma of Pawansut through one Shri Dinesh Sharma; Shri Raghubir Prasad Sharma required assistance in the export procedures particularly for booking of space in Airlines, etc; he had come in contact with one Shri Bagga of M/s. Nisha Overseas, about 8 months back; Shri Bagga requested to assist him in booking of space in Kyrgystan Airlines for export of goods in the name of M/s. Nisha Overseas; he provided assistance as and when requested by them. Sometimes, the buyers/consignee happened to be the same, whom he was helping. • as regards his interest, Mr. Goldy stated that since he was the exporter himself exporting the goods to the CIS countries, therefore, he was getting preference in sending the goods by the concerned Airlines • he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Goldy has retracted his statement at the time of first opportunity when he was arrested and produced before the Court of Magistrate on 2ndJuly 2004,which is in immediate succession after recording of statement over four days in continuity. We further find that the Adjudicating Authority also denied cross- examination of several persons, whose statements have been relied upon. Thus, we find that his statements are not reliable in view of the provisions of Section 138B and also in view of the ruling of Hon'ble Supreme Court in the case of Andaman Timber Industries. We also find that Revenue has not relied upon the statement of the suppliers and fabricators which were recorded in the course of investigation. Thus we find that the impugned order is bad for placing selective reliance on the evidence on record. 11. Further, on perusal of the statements of Shri Goldy, we find that the same are general in nature and are not at all inculpatory of his involvement as a freight forwarder, at least as far as the alleged dealings of the 14 companies are in question, as being brought out by Revenue. Shri Goldy has accepted to the extent of helping others in getting Airline Bookings and as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the documents to the Custom Broker does not make Shri Goldy a Freight forwarder. At best he could be a middle man facilitating the Customs Clearance and may have got a commission. These are not denied by Shri Goldy. Further we find that none of the persons, whose statements have been relied upon, have been examined by the adjudicating authority, in terms of Section 138 B of the Customs Act, 1962, to ascertain the facts of the so called inculpatory statements. In fact cross examination as requested by different exporters was not allowed. We further find that two of the persons, Mr.Sontokh Singh and Mr. Hemant Chowdhury, whose statements were relied upon, have not supported the allegations of Revenue during the cross examination. 14. In the facts and circumstances of the case, we find that the individual exporters have exported the goods, filed shipping bills and have received the drawback or DEPB as the case may be on completion of all the formalities. Neither the customs officers nor the RBI authorities have ever questioned their exports or the remittances received thereof. All the individual exporters had IEC in their names. In view of our discussion above, we find that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustoms / importing countries to take necessary action. The COIN reports did not indicate if any action has been initiated against the said importers in foreign countries. No evidence has been put forth to prove that the foreign buyers have remitted the amounts, over and above the prices indicated in invoices, through non banking channels. It is on record that the foreign exchange remittances have been received by the respective exporters in their bank accounts as per the FOB value declared in the respective shipping bills. This being the case the charge of over valuation is not conclusively established. Moreover we find that value for the purpose of exports, under the provisions of Customs Act 1962, is nothing but transaction value. If the Indian exporter can bargain and sell the goods at a higher price to the foreign buyer, the same cannot be held to be over valuation. It is the transaction value that constitutes the valuation for the purpose of exports and not certainly the intrinsic value of the goods in Indian markets. 16. Moreover, we find that in this case no samples were drawn and no market survey was also conducted to indicate the market prices vis-à-vis the FOB p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f accounts, all were registered with the Apparel Export Promotion Council, and all are granted the IEC code by the DGFT. They all have made independent purchase of the goods for export and/or purchased fabrics and got ready-made garments fabricated from fabricators, for which they have produced vouchers. Their independent nature is also corroborated by the statement of Sh. Benkichidanand, Manager of M/s Global Trust Bank, where all the fourteen exporting firms have their bank accounts. Further, they have properly documented the export transaction, filed shipping bills declaring the same to be under export incentives and after proper assessment and verification, the proper officer of customs have issued LET export order under Section 51 of the Customs Act. There is no allegation of any connivance between the appellant exporters and the customs officers and as such, we find that the allegations of Revenue are not corroborated. We further find that the appellant have satisfied all the conditions, as prescribed by the CBEC in Circular No. 61/98-Cus., dated 25.08.1998, for availing the export benefits in accordance with law. The instructions of the Board are binding on the Officers of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... per law. 21. We find further that the circular further provides that a written contract may not be insisted upon. However, the appellant exporters have produced written contracts at the time of clearance of the goods or at the time of examination of cargo. There is no dispute of any mis-match of any signature with respect of the contract. Thus we find that the export benefits have been rightly allowed to the appellant exporter. In view of the above, there are reasons to believe that there is genuine export as the goods have gone to a place outside India, the goods have been exported by a person who exports or intends to export having his IEC number and have received remittance from the foreign buyer in convertible foreign currency. 22. We further find that the impugned order is bad as in case of some of the appellants, they did not have proper opportunity to contest as they were not given the copy of the relied upon documents. In the case of Shri Goldy though provided the opportunity of inspection of the documents, was not provided sufficient time, which was prayed, for filing appropriate reply to the show cause notice. Shri Dinesh Sharma was made to run from pillar to post ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtment could not prove the other allegations in the Show Cause Notice with legally acceptable evidence, remanding the matter to the original authority for a fresh consideration would not serve any purpose. Therefore, we are not inclined to do so. 25. To sum up, we find, in view of our discussion above, that the impugned order suffers from the following incurable infirmities: (i) The show cause notice and the impugned order rely heavily on statements which are not corroborated; the main person who is alleged to be a freight forwarder was questioned continuously for four days and he has retracted the statements at the immediate opportunity; while others have retracted in the course of their submissions or written replies to the show cause notice. (ii) The order is issued in violation of the principles of natural justice; Some appellants were not given opportunity to inspect the relied upon documents and some have given a very minimal time; request for cross examination have not been acceded to by the adjudicating authority; The two persons who were cross examined did not support the allegations of the Revenue. (iii) Even when the Department heavily relie....