TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 180
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....ing from the common issue of challenge to the show-cause notice issued by the respondent No.3- Additional Director General, Directorate of Revenue Intelligence, Mumbai (DRI) dated 27.8.2002. 3. Pursuant to the investigation carried out by the DRI, Gandhidham who gathered intelligence that M/s. RSI Ltd, Calcutta had exported CD ROMS at grossly over invoiced value under DEPB Scheme with intent to fraudulently obtain DEPB credit and thereby cause evasion of Customs duty. 4. Pursuant to such intelligence information, the Officers of the DRI carried out search at the business premises of the CHAs at Kandla/ Gandhidham on 12.1.1999, which resulted in recovery of various incriminating documents which were seized under four Panchnamas of the same date. It was the case of the DRI that on scrutiny of such seized documents, it was revealed that in September, 1997, M/s. RSI Ltd. had exported 2,00,000 Pcs of CD ROMS under DEPB Scheme from the Port of Kandla under 35 Shipping bills for a total declared value of Rs.16.60 Crores to M/s. Shebab International Pte Ltd, Singapore and the port of discharge was shown as New York. 5. Investigation further revealed that in respect of the 35 consignment....
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.... It was submitted that on perusal of the impugned show-cause notice, the petitioner is the importer and in the entire show-cause notice, there is not a single allegation of collusion or mis-statement or suppression of material facts with intent to evade the duty against the petitioner and, therefore, so far as the petitioners are concerned, the respondents could not have invoked the extended period of limitation. 12. In support of his submissions, learned advocate Mr. Shah referred to and relied upon the following decisions: 1. Collector of Central Excise Vs. Chemphar Drugs & Liniments, reported in 1989 (40) ELT 276 (SC); 2. Arora Matthey Ltd. vs. Commissioner of C. Ex., Calcutta-1, reported in 1999 (112) ELT 11 (Cal); 3. Panama Chemical Works vs. Union of India, reported in 1992 (62) ELT 241 (MP) 4. Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay, reported in 1995 Supp (3) SCC 462 (SC); 5. J.M. Baxi and Co. Vs. Commissioner of Customs, New Kandla, reported in 2000 (120) ELT 29 (SC). Referring to the above decisions, it was submitted that it is a settled position of law that for the purpose of invoking jurisdiction under Section 28 of the Ac....
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....gainst M/s.RSI Ltd, who has alleged to have obtained the Licencees by fraudulent export, is dropped, the petitioners who are beneficiary to the licencee cannot be subjected to any further proceedings pursuant to the same show-cause notice. 18. It was also pointed out by learned advocate Mr. Deepak Khanchandani that the order-in-original dated 2.5.2017 passed by the DRI Mumbai is subject matter of challenge before the CESTAT. 19. We are, therefore, of the opinion that even if the show-cause notice is permitted to proceeded following the decision in case of M/s. RSI Ltd, vide order dated 2.5.2017, the proceedings under the show-cause notice qua the petitioners have to be dropped. It would be, therefore, germane to refer to the findings arrived at by DRI Mumbai in the order-in-original dated 2.5.2017 as under: "4.1.2 I find that in nutshell, the nature of the exported CD ROMS and its valuation is the crux of this case and as per the evidences brought out, M/s RSI Ltd. had exported 2,00,000 pcs of CD ROMS under DEPB scheme, under 35 shipping bills for a total declared value of Rs. 16.60 Crores to M/s Shebab International Pte Ltd. Singapore. It is on record and never disputed that f....
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....ermination of value as Rs. 75,61,921/- from the declared value of approx. Rs. 16.6 Crores and thereby reduced the DEPB credit accordingly. Investigation concluded that the exporters M/s RSI Ltd. were entitled to DEPB credit of only Rs. 15,12,384/- as against availed credit of Rs. 3,32,17,874/-, based on re-determination of value. Thus, an amount of Rs. 3,17,06,429/- was allegedly the non-entitled one, which is proposed to be recovered from the importers and exporters. I find that it is an undisputable fact on record that the DEPB Licence, which is alleged to have been obtained fraudulently by M/s RSI Ltd., were subsequently transferred to M/s Adani Ltd. who in turn utilized, part of the Licence for their imports and also sold these licences to various other importers who also utilized the same for their respective imports. I find that the Show Cause has demanded the differential duty, from the exporters and importers, under Section 28 of the Customs Act, 1962. Besides demanding differential duty and interest leviable thereon, the Show Cause Notice also proposed confiscation of the impugned goods under Section 113(d) and 111(0) of the Customs Act, 1962. Similarly, penal provisions u....
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....d that the 0.5% of the domestic sale price totally corroborates the transaction value in case of the export. Similarly, the corroborative elements, which undoubtedly raises a suspicion, in linking the exports cannot in any manner, be confirmed as related party transaction, which could have been the basis for rejection of transaction value. It is also a fact on record that the domestic sale price totally corroborates with the FOB values declared in the Shipping Bill. Similarly, it is on record that M/s Padmini Polymers had levied Central Excise duty on the impugned goods. It is also on record that FOB value declared in the Shipping bills vis-à-vis the purchase price from the supplier i.e. Padmini Polymers depict a marginal increase, which undoubtedly, can be attributed to as "gain" in the transaction. Also the declared FOB value, in the instant case is less than 150% of AR4, thus complying with one of the prescribed criterion in the Board's Circular. Similarly, the Board's Circular had also given authority to the SIIB officers to prima facie examine, whether the declared value is 150% of AR4 or more. It has been prescribed that if it is more, market value needs to be ....
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....ng to duty free imports under the aforementioned licences by the importers. It is on record that the noticee importers utilized the scrips for the duty free imports which is alleged to have obtained fraudulently. It is noticed that the importers who imported by using the said DEPB scrips, which is alleged to have been obtained by fraudulent means by M/s RSI Ltd. (the exporter) and transferred to the importers by M/s Adani, Exports Ltd. who subsequently, utilized part of the same for their imports and sold the remaining to various importers, who also, in tum, utilized the same for their imports. The SCN alleged that since the respective imports are made by utilizing the DEPB obtained fraudulently, the import duty foregone amounting to Rs. 3,17,06,429/- is recoverable from the Importers and Exporters jointly and collectively under the proviso to Section 28(1) of the Customs Act, 1962. I find that the extant provisions which enables the department to recover duty in case of export incentives received by the exporters and a fraudulent intention against the said receipt is ruled in, is proviso to Section 28AAA of the Customs Act, 1962. It is expressly clear in terms of explanation (2) t....
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....ers had colluded with the exporters. Also, during the time of import of the goods the scrips were valid. I find that the Hon'ble Supreme Court in the case of Sneha Sales Corporation - 2000 (121) ELT 163 (SC) has held that the subsequent cancellation of notices could not affect the imports already made prior to such cancellation. Thus, the benefits of DEPB/ VKGUY scrips could not be denied to the importers. Therefore, I am of the view that there was no improper importation of the goods on the part of the importers and hence I find that no penalty can be imposed on the importers under section 112 of the Customs Act, 1962. Further, as there was no suppression or mis-declaration on the part of the noticee importers I find that no penalty under Section 114A of the Customs Act, 1962 is applicable. In support of my stand, I find that the CESTAT, WZB vide its order A/2919-2994/15/CB dated 18.08.2015 has in a similar issue held that "the confiscation of goods imported by the appellants who are transferees of the licenses scrips does not arise. The demands of duty against them are set aside". Accordingly, I refrain from demanding duty and also from imposing penalty on the importers." 2....