TaxTMI 
TaxTMI 
2025 (10) TMI 830
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....om the CIF / C&F value of the goods. The officers of Directorate of Revenue Intelligence gathered specific intelligence that the appellant availed undue drawback by mis-declaration of the actual freight paid for the said export consignments. Investigation conducted by DRI revealed that the actual freight paid to the liners / freight forwarders was more than the freight declared in the shipping bills filed by the appellant. 2.2 Upon completion of investigation, a show cause notice dated 18.10.2023 was issued to the appellant by the Additional Director, DRI, Chennai Zonal Unit with the proposals to :- (i) reject the freight paid declared in the shipping bills and adopt the actual freight paid to arrive at the actual FOB value; (ii) deny the excess ineligible drawback amount of Rs. 10,19,720/- availed on account of mis-declaration of freight against shipping bills, as detailed in Annexure I to the show cause notice, and recover the same under Rule 16 of the Customs, Central Excise duties and Service tax drawback Rules 1995; (iii) demand the applicable interest on the above mentioned drawback amount under Section 75A(2) of the Customs Act, 1962; (....
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....e for arriving drawback. 5.2 The Ld. Advocate submitted that the appellant came to know about their availment of excess drawback only when the DRI officer informed them and they immediately repaid the excess drawback amount of Rs. 10,19,720/- along with interest of Rs.5,49,681/- well before the issuance of the Show Cause Notice to the Appellant. 5.3 Further, the Ld. Advocate pointed out that as per Sec. 75A (2) of Customs Act "Where any drawback has been paid to the claimant erroneously or it becomes otherwise recoverable under this Act or the rules made there under, the claimant shall within a period of two months from the date of demand, pay in addition to the said amount of drawback, interest at the rate fixed under (section 28AA) and the amount of interest shall be calculated for the period beginning from the date of payment of such drawback to the claimant till the date of recovery of such drawback". In this regard, he submitted that the above said drawback provisions did not provide for any penal proceedings. It was further submitted that no penalty is imposable in the present case as the appellant have paid the excess drawback amount along with the interest even before....
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....e appellant (A. Ramanathan, MD) was liable for penalty under Sections 114 and 114AA of Customs Act as: - i. the appellant was directly / indirectly the beneficiary of the ineligible drawback. ii. the appellant never informed to the Customs about the undue receipt of drawback, even though he was a responsible person. iii. Being in charge of company he was solely responsible for the misdeed. He submitted that the above contentions i to iii were not raised in the Show Cause Notice. Therefore, all the above charges, being beyons the scope of SCN, are legally not sustainable 6.2 The Ld. Advocate further submitted that as the Managing Director, the appellant had not been involved in drawback related works and these type of jobs were done by their staff. Their staff failed to review the shipments as required under Board's Circular No.44/2000-Cus dated 15.05.2000 and the appellant did not know it till DRI investigation. 6.3 The Ld. Advocate averred that the appellant raised some important submissions in their appeal to the lower appellate authority and cited many case laws but there are no findings in the Order-in-Appeal Nos. 2&3/2015 dated 13.01.201....
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....ished freight schedule. However, the exporter should review each case of shipment after export has taken place and if the freight borne by him is higher than the one declared in the shipping bill, he would immediately on his own pay back to the customs the excess amount of drawback claimed/received or any other export incentives claimed thereon. Any mis-declaration of freight paid or payable which results in loss of revenue by way of excess drawback payment, is liable be processed against under the Customs Act, 1962." In the present case the appellants have failed to pay on their own the excess drawback received which would not have come to light but for the investigation. 7.2 The Ld. AR further submitted that the appellant firm did not bring the actual freight amount paid to the liner to the knowledge of Customs and continued to avail ineligible excess drawback fraudulently. Thus, the appellant firm violated the provisions of Section 50 of the Customs Act, 1962 while filing the Shipping Bills and received excess drawback and for their acts of omission and commission, the appellant firm are liable for penal action under (a) Section 114; and (b) Section 114AA of Customs Act, 1962....
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....re freight as per Standard Published Freight Rates in case the freight was not known while filing Shipping Bills. In such cases, the exporter should review each case of shipment after export has taken place and if the freight borne by him is higher than the one declared in the shipping bill, he should immediately on his own pay back to the customs the excess amount of drawback claimed/received. iv. Any mis-declaration of freight paid or payable which results in loss of revenue by way of excess drawback payment, is liable be proceeded against under the Customs Act, 1962. 13. It is evident from the Circular issued by CBEC that generally the freight should be known to the exporters at the time of filing the shipping bills and it is only in exceptional cases that the freight amount is not known to the exporter while filing the shipping bills. The present case comes under such exception as the freight was not known to the appellant while making the declaration in the Shipping Bills under Section 50 of the Customs Act, 1962. 14. The case of the Department is not that the appellant exporter was aware at the time of filing of the shipping bills that the average freight decla....
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....ntary claims shall be entertained." 17.2 It is observed from the said para that such exceptional cases of drawback claims should have been cleared on the basis of the standard published freight schedule basis only with suitable undertaking. Therefore, the onus was on the department to take suitable undertaking to secure revenue while allowing / clearing drawback claims of the appellant on the basis of average freight declared by the appellant. The show cause notice, order of the adjudicating authority and the order passed by the lower appellate authority are all conspicuously silent on this aspect. 17.3 Further, the said para mandates that Commissioner of Customs should ensure that 10-15% of such drawback claims cleared on declared standard freight schedule basis are regularly test checked so as to verify the correctness of the declaration of freight by the exporter and take appropriate action against exporters who are found to have mis-declared the freight element to claim higher drawback. The show cause notice, order of the adjudicating authority and the order passed by the lower appellate authority are all conspicuously silent as to whether 10-15% of such drawback claims w....