TaxTMI 
TaxTMI 
2024 (12) TMI 540
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....ect, a thing of cold fire so white that it would appear electric blue in good light - but that fire had never been awakened, for it had been trapped in the total darkness across the ages...The forebears of these creatures had not even existed upon this earth when that single pure crystal achieved its present form, but now with each day the disturbance caused by their metal tools set up faint vibrations within the rock that had been dormant so long; and each day those vibrations were stronger, as the layer between it and the surface shrank from two hundred feet to a hundred and then to fifty, from ten feet to two, until now only inches separated the crystal from the brilliant sunlight which would at last bring to life its slumbering fires.', though recognisable as the description of the diamond that the fictional Zouga Ballantyne was serendipitously made to find by the author, is not here because diamonds are somewhere on the periphery of this dispute of several exporters who are aggrieved by the findings in the order of Commissioner of Customs (Exports), Inland Container Depot (ICD), Tughlakabad; it is here because this inimitable poetic narration of caging of fire in a crystal th....
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....ction of import or export. Those are the issues to be resolved in disposal of this appeal and before we turn to the rival submissions thereon, a look at the factual conspectus may not be out of place. 3. M/s GD Mangalam Exim Pvt Ltd, M/s Konark Exim Pvt, M/s DSM International Pvt Ltd, M/s Sidh Designer Pvt Ltd and M/s Yogmaya Traders Pvt Ltd had exported 13008 consignments of 'readymade garments' to the United Arab Emirates (UAE) from 2008-09 till March 2014 against shipping bills under claim for drawback provisioned for in section 75 of Customs Act, 1962 and 'duty credit scrips' enabled by Focus Product Scheme (FPS)/Focus Market Scheme (FMS) in the relevant Foreign Trade Policy (FTP) notified under the authority of Foreign Trade (Development & Regulation) Act, 1992. The former is paid out by customs authorities at port of export on assurance of realization of export proceeds, as set out in Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, and the latter by the Directorate General of Foreign Trade (DGFT), on application of exporter with exports duly authenticated by customs authorities, for being debited towards duty liability on eligible imports. Though export ....
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.... to be approximate as the tabular compilations are not consistent which, though, is no impediment to resolution of the dispute. The proposal for recovery of drawback and of duty foregone was initiated on the strength of deemed failure in repatriating export proceeds and proceedings for confiscation and penalties on the back of misdeclaration of value in shipping bills evidenced by import declaration before UAE customs authorities and low price of purchase paid in India to unknown suppliers. Interestingly, it was reported on behalf of the appellants that, despite suggestion from customs authorities to other agencies for action under respective statutes, no other proceedings are under way. It was also brought on record that, correspondence notwithstanding, the 'duty credit scrips' were not ever invalidated while the cancellation of the 'bank realization certificates' was quashed by judicial order [order dated 13th March 2020 in civil suit no. 1114/18] on plaint of the exporters. 5. The adjudicating authority limited the recovery of drawback to Rs. 28,33,16,942 and recovery of duty to Rs. 16,47,27,131 from M/s GD Mangalam Exim Pvt Ltd, recovery of drawback to Rs. 13,51,99,191 and rec....
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....inly out of place in determination of facts. He submitted that, in any case, it was upto the adjudicating authority to ascertain the status instead of indulging in adverse presumption. He further submitted that the impugned 'bank realization certificates' were withdrawn under pressure from the investigators which neither altered the receipt of payments for the exported goods nor the bank legally obliged to for the impugned circular of the Reserve Bank of India was held by the Hon'ble High Court of Punjab & Haryana, in Aura Creations v. Reserve Bank of India and another [order dated 27th July 2017 in CWP no. 9685 of 2017], to be devoid of amenability to such interpretation as was placed on that instrument by the show cause notice and adjudication order impugned before us. 7. Mr Rohatgi contended that drawback may be denied, adjusted or, if paid, recovered only for non-receipt of remittances within the prescribed deadline or by recourse to assessment under section 17 of Customs Act, 1962 and, with the former not inferable from facts or circumstances and the latter not having been contemplated at any time, the adjudicating authority has placed his order beyond the circle of legal san....
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....f Revenue, which not being memorandum of cross-objections, is about findings that are not legal and proper, the implied affirmation of the unchallenged determination undermines their very case. The approval of reliance on the absence of 'bank realization certificates', withdrawn at the behest of the investigation, to justify recovery of drawback and of duty foregone is the millstone attached to appeals of Revenue. Application of mind and attention to detail are the essence of review. Be that as it may, we proceed to examine the grounds on which Revenue seeks restoration of detriments and consequences proposed in the show cause notice. Before doing so, we may find it worthwhile to familiarize ourselves with the submissions of Learned Authorized Representative. 10. Mr S Khader Rahman elaborated for us the depth and reach of the investigation by drawing our attention to the 'relied upon documents (RUDs)' - comprising statements and inter-agency correspondence - and the picture that emerged therefrom. It would appear from his submissions that Directorate General of Revenue Intelligence (DRI) was activated by inputs on huge local remittances into and out of domestic accounts maintained....
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....wledge of any transaction that had their involvement in the declarations and that M/s Al Khat al FirzseLLC and M/s Al Wadi al Saeed General Trading LLC, intended as recipients of nine-tenths of the total exports, had apparently transferred these further in the United Arab Emirates or elsewhere in the world after clearance at values that were unacceptably below the prices declared in the shipping bills. 12. Learned Authorized Representative urged that, with this full picture as the backdrop, the minutiae of each transaction must necessarily be overwhelmed by the presence of the very ingredients both for voiding the remittances received, as not for 'such goods' intended in second proviso to section 75 of Customs Act, 1962, and for voiding eligibility to exemption available for 'duty credit scrips', as intended by section 28AAA of Customs Act, 1962. He contended that any other approach to the notice, as occurred in the adjudication order, would be compulsion of technicalities superseding the need to protect the economy. 13. To obviate the obvious hearkening of the jurisdiction vested for remedying in Customs Act, 1962, he placed reliance on the decisions of the Hon'ble Supreme Court....
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.... had before it a matter which, on uncontested facts, was about two mutually exclusive determinations of duty liability - each undeniable on its own set of facts and law - that was decided on applicable 'date of determination of duty' without touching upon the factual circumstances that guided the adjudication order. These clearly were not about recovery of tax but about jurisdictional limitation having been decided on technicality. The fraud that was remarked upon in these decisions is not only contextual but also begs the question of scope for invoking of fraud, in a larger context, by creations of a statute that does incorporate fraud as ingredient for invoking of extended period of limitation, and reach of adjudicating authority, for recovery of duties of customs. 15. The cited decisions pertain to civil law procedure and the attending presumption that rival litigants be before the court with clean hands. Though there is a large body of judicial authority that considers tax proceedings to be operation of quasi-criminal law but, as not being in the nature of criminal liability which arises from offence against the State in its 'protector' role and not excluded from the civil jur....
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....n as three activities that constitute fraud, contextually though, are mandated in section 28 and section 28AAA of Customs Act, 1962. Benefits are, certainly, deniable or truncated upon established finding of overvaluation which, under specific circumstances, may leave little room for doubt that collusion, willful misstatement or suppression of facts inhered therein. Learned Authorized Representative, instead of proceeding within the scope of provisions for recovery, suggests that the narrative of fraud excuses the compulsion of that mandate. If the submission on allusion to fraud as sufficing to justify discard of all circumscribing of jurisdiction is accepted, it would be akin to cart and horse locked perpetually in circular motion that is abhorrent to logic and the law. The larger story of fraud makes for eminently readable fiction but it is only specific contextual fraud that confers jurisdiction to recover. The former does not impress in disposal of an appeal while it is on evidence of the latter that the statute is transformed into the living spirit of the law. It is, thus, that the citation of judicially determined law does not advance the cause advocated by Learned Authorize....
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.... remittance has been inappropriately construed as embargo on such remittances in the past; we characterize it as 'inappropriately' because the clarification, alluded to by Learned Authorized Representative, offered by the Reserve Bank of India has merely stated that 'case-to-case' approval would be the norm in the absence of general permission and that does evince the existence of procedure or mechanism for the same. Customs authorities have presumed against such regularization and, having put the importers to notice, considered that to suffice to arrive at an adverse inference of such approval not being in existence. The reasoning in the impugned order that, in the absence of negation of 'bank realization certificate', conformity with the regulatory requirements would have to presumed is not flawed and the reviewing authority has not been able to put anything on record to suggest otherwise. This, in effect, is the ruling of the Hon'ble High Court of Punjab & Haryana in re Aura Creations, holding that: "On conjoint reading of the aforementioned circulars, it is beyond doubt that even RBI guidelines are not absolute embargo existed on receipt of the third party payment against the....
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....hermore, a plain reading of second proviso to section 75 of Customs Act, 1962 does not advance the case of Revenue that the expression 'such goods' is critical to the purpose, and context, of the insertion thereto. We do not hesitate from re-appreciating the letter of the law as it merely refers to 'sale proceeds' in 'respect of such goods' and 'not received by or on behalf of the exporters in India' in the context of time-limit for such being received and, by deeming it to have never been allowed, enables recovery under the notified Rules. It is clearly intended to convert the reality of 'non-receipt' into non-eligibility ab initio by legislative deeming with time as the determinant. There is no whisper therein either to the source of remittance or to another law for determination of source; indeed, the receipt on behalf of the exporter in India is broad enough to suggest that the contractual undertaking of the State, which drawback is, is not diluted except by non-export or non-remittance. There is, thus, no ground for altering the contours of a transaction for fitment within the specific intendment of section 75 of Customs Act, 1975 by such contrived reasoning. 20. Section 28AA....
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....w. 21. Both these supra, as well as confiscation under section 111 of Customs Act, 1962 with attendant penalties, rest upon the charge of overvaluation of the goods. Learned Senior Counsel pointed out the assessment under section 17 of Customs Act, 1962 before the goods were permitted for export remains untouched; Learned Authorized Representative has not disputed this. He, however, argued that evidence of overvaluation is not only sufficient but is overwhelming which, to us, begs the question of determination of overvaluation in the absence of legal authority to do so. Customs law is all about assessment of imported and exported goods and all else is but procedural stipulations to ensure that goods are subjected to assessment at the designated time and place. Value is, doubtlessly, crucial to such assessment under section 17 of Customs Act, 1962 when duties are ad valorem but, even if not , assessment, commenced under section 17 of Customs Act, 1962 upon entry made under section 46 of Customs Act, 1962 on import of goods and section 50 of Customs Act, 1962 on export of goods, as the case may be, must be taken to the conclusion intended by law without which neither section 47 nor ....
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....upport nor circumstantial credibility in the absence of resort to section 14 of Customs Act, 1962, as evidence of overvaluation, has no acknowledgement in the scheme of valuation. The decision in re KI Pavunny, cited by Learned Authorized Representative, does not authorize substitution of valuation mechanism with testimony of persons. Indeed, we find it conveniently opportunistic for customs authorities to sanctify declarations made by overseas parties or determination by customs authorities overseas as, respectively, honourable and appropriate while discarding the declarations made at load port, as well as assessment thereto, as dishonored without even venturing, by recourse to adjudicatory jurisdiction set out in law, to justify such oversimplified prioritization. In such circumstances, even if the ascertainment of movement and ultimate destination of the consignments had extended to all 13008 consignments, instead of the 75 referred to overseas missions, any outcome thereof would not matter a whit as export concludes once the goods are landed at the first destination and ceases to conform to export, as set out in section 2(18), or export goods, as set out in section 2(19) of Cus....