TaxTMI 
TaxTMI 
2025 (11) TMI 1737
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....ion by the Directorate of Revenue Intelligence (DRI), Chennai, which inter alia unearthed a network of exports allegedly effected in fictitious names, inflated export values, non-realisation of export proceeds and encashment of drawback proceeds through newly opened bank accounts. Further the purported exporters could not be traced and export proceeds were not realised. 2.2 There are three Exporters i.e. Pathi Fashions, Tirupur, Starwin Exports, S & H Inc involved and various persons and entities involved on whom penalties were imposed. Verification by the Department disclosed no existence of the declared Exporter/supporting manufacturer at the stated address; and the Proprietors /Partners named in the IEC could not be traced. The bankers reported no overseas remittances in the cited accounts. 2.3 Diplomatic enquiries with overseas importers disclosed that declared import values were materially lower than the values declared to the Department in the shipments made by the above Exporters. As a result, three Separate SCN's were issued and adjudicated as mentioned in Table below and penalties were imposed. 2.4 Aggrieved, the Appellants have filed 6 Appeals before this Forum a....
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....id not issue 2 sets of Bills of Lading/ Additional Bill of Lading with different Ports of Discharge but that it issued only one Master Bill of Lading with Jebel Ali, UAE as the Port of Discharge which is not submitted to avail the fraudulent Duty Drawback. The document used to avail Duty Drawback are the Shipping bill and House bill of Lading which are documents submitted by the Shipper and Freight Forwarding Agents to Customs. 4.6 For the reasons stated above it was humbly prayed that this Tribunal may be pleased to set aside the Penalties imposed in all the Six Appeals. 5. In response, the Ld. Authorized Departmental Representative Ms. Anandalakshmi Ganeshram supported the findings in the Impugned Orders and controverted these arguments and submitted as under: - 5.1 The Appellants had falsified the Export documents to facilitate undervaluation and higher Drawback benefits. 5.2 The Appellants, acting as the liner and their employee, have issued two distinct sets of Bills of Lading for the same physical consignments - one set indicating Jebel Ali (Dubai) and the other indicating Southampton (U.K.) with no carrier declarations on file to explain lawful transshipment. Cer....
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....hmanan, Manager, of its Tuticorin Branch (Appellants) figure in all the three cases and Six Appeals have been filed between them. Various penalties have been imposed on them as detailed in the above Table. 8.2 I note that the Impugned Orders held that Shri Lakshamanan of M/s. Trans Asian Shipping Services Pvt Ltd., Tuticorin, as also the entity which he represented were responsible for the issuance of two sets of B/LS with two different ports of destination so as to enable the fraud and help to get the fraudulent drawback, that they have abetted the fraudsters and so, are liable for penalty under Section 114(i)/114(iii) of the Customs Act, 1962. 8.3 I observe that a Master Bill of Lading (MBL) is issued by the main carrier or shipping line, while a House Bill of Lading (HBL) is issued by a freight forwarder. The MBL covers the entire consolidated shipment and is given by the shipping line to the freight forwarder, whereas the HBL is a receipt for the individual shipper from the freight forwarder. 8.4 It is also observed that a shipping line or its employee cannot have direct knowledge of the contents of the goods covered in the Shipping Bills as they are in the final leg o....
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....ustoms. 8.6 I have weighed the submissions of both the sides, went through the Statements recorded, Shipping Bills, Bills of lading, Impugned Orders and find that the Appellants have issued Master Bill of Lading with destination as Dubai and the house Bill of lading was issued by the Freight forwarders, who have booked the cargo* (who are not part this present Appeal). There is no two Master Bills of lading for the same consignment to establish that they have falsified the documents for financial gain. They have not been named as Abettors or co-conspirators in any the statements recorded by the Investigation. 8.7 I find from the Appeal records that the Shipping Bills were assessed and LEO orders are accorded by the Customs Officers. There is no endorsement on the SBs of opening and Examination of the Export Cargo. The Examination norms as per CBIC Circular 6/2002 -Cus. is minimum of 10% for other destinations and 50% for sensitive destinations like Dubai for a drawback Shipping Bill. I have not found even a single instance of even 2% examination being done or recorded for the S.B. The same Circular in Para 2.2 makes a mention that "In all cases referred to above, in respect o....
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....te the Drawback fraud. 8.10 I also find that the Department has done overseas enquiry through diplomatic channels and the only charge is that the goods are highly undervalued. Once the Appellant has given a statement that the goods have reached Dubai and the goods were auctioned there. The proof of Export is clearly established in this case but the allegation of under valuation should have been detected by the Customs officers at the time of Examination, which was not done so. There is total systemic failure on the part of Examination Staff. The Department has not brought out any evidence of the participation of the Appellants in the controversy except for issuing two sets of BLs in conjunction with Freight Forwarders. Moreover, the statements recorded from the involved persons have not implicated/Named the Appellants. The BL issued by the Appellants is a consolidated/Master BL and it can be never used for processing the drawback claim. 8.11 I also find from the records before me that there is no direct link/interface between the Appellants and the Exporters nor recovery of any e-mails or any internal correspondence discussing routing to avoid detailed Customs scrutiny; or pr....
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.... "In this connection, it is to be stated that mere mis-quoting of Section "Section 114(i)" instead of "Section 114(ii)"] does not vitiate the demand. Misquoting of wrong rule or notification is of no consequence as held by Hon'ble CESTAT, East Regional Bench, Calcutta, in the case of Mohan B. Samtani vs. Collector of Customs reported in 1990 (50) ELT 592 (Tri.) and in the case of revision petition of M/s Rajasthan Spinning and Weaving Mills Ltd., reported in 1982(10)ELT 741 (GOI)." 8.16 I have perused that decision of CESTAT, East Regional Bench, Calcutta, in the case of Mohan B. Samtani vs. Collector of Customs reported in 1990 (50) ELT 592 (Tri.) wherein in Para 25 it is held as follows: - "25. It thus is seen that both under the 1947 Act as well as 1972 Act the export of antiquity is not lawful. If the same is made by any person under the 1947 Act a person can export it only under the authority of a licence. But under the 1972 Act it shall not be lawful for any person to export antiquity, and it is only the Central Government or any authority or agency authorised by the Central Government who can export the same, that too, in accordance with the terms and condit....
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.... it has not been mentioned in the second and the third show cause notices. It is well settled that the show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest. If there is no invocation of Rule 7 of the Valuation Rules 1975 in the show cause notice, it would not be open to the Commissioner to invoke the said rule." Respectfully following the ratio of the aforesaid judgement, I have no hesitation in holding that the Adjudicating authority has traversed beyond the SCN by altering the penal clause by invoking a different sub-section in the impugned order, without issuing a corrigendum or fresh notice. Such alteration amounts to changing the very foundation of the proceedings and violates the principles of natural justice. The Appellant/ noticee is entitled to know the exact clause under which penalty is proposed, so as to defend himself. Therefore, incorrect citation of penal provisions in the SCN, or imposition of penalty under a different provision in the adjudication order without amendment of the SCN, vitiates the impugned order in toto. 8.18 I have no hesitation in holding that all the three impugned orders have to be vitiated fo....