2024 (10) TMI 690
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....ioner is a sole proprietorship firm, engaged in the export of handicrafts. 3. During the period 08.12.2014 to 13.12.2014, petitioner had exported 24 consignments of brass, copper and iron handicrafts to foreign buyer M/s. Metal Masters, UAE. Petitioner availed duty drawback on the export of aforesaid 24 consignments. The drawback of Rs. 89,77,007/- was assessed and duly allowed to be credited to the petitioner's bank. 4. On the basis of information received from IndusInd Bank, Moradabad Branch that the petitioner had multiple receipts in their bank accounts, which were claimed to be the duty drawback receipts, an enquiry was conducted and as a consequence of the same, the bank account of the petitioner was frozen by the Department. During enquiry, it was revealed that the exports were affected by the petitioner, having claimed to have purchased the exported goods from another firm named M/s. Maxwell Impex, which on enquiry, was found out to be non-existent. Further, it was noticed that the export proceeds against the subject exports was not from consignees but from third parties. 5 Show Cause Notice dated 27.06.2017 was issued to the petitioner for the recovery of drawback avail....
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.... US$ 1125500.64 had been received from the consignee M/s. Metal Masters while rest of the payment was received from three other entities which were not notified as third parties in the export documents. It is further submitted that neither the petitioner nor the bank submitted any documents to support the third party payments and the entity from whom the export goods were purchased, was non-existent. 9. In rebuttal, learned counsel for the petitioner submits that RBI Master Circular No. 14/2014-15 dated 01.07.2014 permits third party payments for export transactions subject to certain conditions specified in B-2 (v) of the said Circular. It is submitted that every condition has been fulfilled by the petitioner. It is further submitted that petitioner had submitted a copy of Tripartite Agreement dated 05.10.2014, which was signed between the petitioner and buyer M/s. Metal Masters, as per which, petitioner was to receive payments from M/s. Bright View General Trading LLC, UAE, M/s. Radya Baqer Trading LLC, UAE, Galaxy Impex HK Ltd., Hong Kong and Allied Trend (HK) Trading Ltd., Hong Kong and the copy of the said Tripartite Agreement was submitted at the Office of the Customs Depart....
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....tion and the sale proceeds in respect of such goods are not received by or on behalf of the exporter in India within the time allowed under the [Foreign Exchange Management Act, 1999 (42 of 1999)], such drawback shall [except under such circumstances or such conditions as the Central Government may, by rule, specify,] be deemed never to have been allowed and the Central Government may, by rules made under sub-section (2), specify the procedure for the recovery or adjustment of the amount of such drawback." 11. A plain reading of the aforesaid provisions makes it clear that the drawback shall not be allowed in case the sale proceeds in respect of the exports are not received in India within the time allowed under Foreign Exchange Management Act, ["FEMA"] 1999. However, RBI Master Circular No. 14/2013-14 dated 01.07.2013 (proceeded by Master Circular No. 14/2014-15 dated 01.07.2014) ["RBI Circular"] vide Rule B.2 (V) permits the receipt of foreign remittances from an entity other than consignee of the exported goods subject to the conditions prescribed therein. Rule B.2(V) of the said RBI Circular is reproduced below:- "(V) Third party payments for export/import transactions T....
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....aken by the petitioner is that the Tripartite Agreement dated 05.10.2014 was produced before the Authorized Bank and the respondent department. 13. Tripartite Agreement dated 05.10.2014 (Annexure P-14) has been executed between the petitioner M/s. Innovative Crafts and foreign buyer M/s. Metal Masters, FZC. Article 4 of the agreement provides for third party payments, which reads as under:- "Article 4 : Third Party Payments: The buyer will be sending payments from its Alfardan Exchange account which is the primary bank account of the buyer in U.A.E. and in case of any problems the buyer will be sending the payments from accounts of its sister concerns and/or related companies. The related companies from which the payments can be made are: 1. Bright View General Trading LLC, UAE (Business Partner/Customer) 2. Radya Baqer Trading LLC UAE (Business Partner/Customer) 3. Galaxy Impex HK Ltd., Hongkong (Business Partner/Customer) 4. Allied Trend HK Trading Ltd., Hongkong (Business Partner/Customer)" 14. The agreement therefore permits the third party payments on behalf of buyer M/s. Metal Masters. 15. The reasoning given in the impugned order passed in revision is that ....
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....he Third party payments for export/ Import transactions under the above said master circular is as under: "(v) Third party payments for export/Import transactions Taking into account the evolving international trade practices, it has been decided to permit third party payments for export/Import transactions can be made subject to conditions as under: a) Firm irrevocable order backed by a tripartite agreement should be in place. However, it may not be insisted upon in cases where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order/ invoice has been produced subject to: (i) AD bank should be satisfied with the bona-fides of the transaction and export documents, such as, invoice / FIRC. (ii) AD bank should consider the FATF statements while handling such transaction. b) Third party payment should be routed through the banking channel only; c) The exporter should declare the third party remittance in the Export Declaration Form and it would be responsibility of the Exporter to realize and repatriate the export proceeds from such third party named in the EDF; d) It would be respons....
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....ing Bill is treated as Export Declaration form. The party has submitted the Exchange Control Copy of Shipping Bill, Original SDF Form to our bank. The computerized shipping bills issued from the EDI port have no provision to insert the name of the third party in SB/SDF. The party has also submitted the letter to the bank for third party remittance wherein they submitted the name of the parties from the remittance was received. d) In the instant case, the party has submitted the letter to the bank for third party remittance wherein they submitted the name of the parties from the remittance was received. e) In the instant case, the party has already submitted the documents prior to 06 months as per RBI Master Circular, hence, in XOS reporting of the said client has not been done. f) In the instant case, the remittance has been received from UAE and Hongkong, which are not comes under Group II of Restricted Cover Countries. g) Not applicable in the instant case I state that in respect of the internal guidelines of our bank, this case falls under the EDI port option wherein AD satisfaction and Basic declaration from the client is required. In the instant cases, the shipm....
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....hrough the banking channel, which Implies that the overseas parties are having an account with the banks. In this case, we have process the transactions as per the RBI Guidelines and as per internal process. Question: Please intimate whether any action has been taken in respect of M/s Harshita overseas and M/s Modern Crafts which is owned by the family members of Smt. Meena Agarwal, the owner of M/s Innovative Crafts where third party remittance has been shown fraudulently (reference from letter of even no. 30081 dated 22.12.2016). Answer: I state that the accounts in our branch have already been closed by both the parties l.e. M/s Harshita overseas and M/s Modern Crafts. The advices have already been provided to your office. This is my true and correct statement tendered voluntarily without any duress, pressure, greed or threat. I will request you that Mr. Kapli Chawla, Associate Vice president, Office Address: Kotak Mahindra Bank, A-23, Yojna Vihar, Delhi-110092 (Mobile No. 9999195951) would be available locally as and when called for further enquiry in the case. This statement is typed by me on the computer installed in the SIIB office on my request." 17. It may be no....