TaxTMI 
TaxTMI 
2026 (1) TMI 533
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....fits. They also allegedly mis-declared the port of discharge to be UK and other European Countries in the Shipping Bills to avoid a higher percentage of examination of export goods. But the goods were sent to Dubai, by manipulating Bills of Lading (BL), after obtaining the 'Let Export Order' (LEO). These alleged export of low cost textiles was done by willfully misusing the Importer Exporter Codes (IEC) of third parties without the knowledge of the said actual IEC holders. It was further alleged that bank accounts were established by these individuals solely for the purpose of encashing duty drawback cheques claimed from the department, with no genuine realization of foreign exchange resulting from these exports. After obtaining the duty drawback proceeds, the individuals involved would allegedly abscond. M/s. Sanco Trans Ltd. was the CHA in all these transactions, who allegedly filed the Shipping Bills (SB), without verifying the genuineness of exporters and also by conniving with the exporters. The issue being common in all these appeals, they were heard together and are disposed by this common order. 2. Brief facts of the case in the following appeals:- A. Appeal Nos....
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.... passed by the Commissioner of Central Excise, Salem. b. This appeal relates to a similar investigation initiated into the exports purportedly made by M/s. Feema Garments, Tiruppur. Investigation revealed that there existed no firm in the name of M/s. Feema Garments and the name P. Mahendran said to be the owner of the firm was also fictitious. It was also noticed that an amount of Rs.1,77,091/- towards duty drawback was presented and encashed against the shipping bill No. 164 dated 9.3.2006 for the exports made through ICD, Salem and a further amount of Rs.1,10,200/- was encashed against the export made under shipping bill No. 456 dated 30.6.2006. Since the exports were handled by M/s. Sanco Trans Ltd., the Senior Manager of Sanco Trans Ltd. was questioned and he admitted that the shipping bills and the related documents were filed by the appellant. The Senior Manager of Sanco Trans in his statement deposed that he handled the exports under duty drawback scheme for the exporters represented by Shri A. Kumar @ A. Satishkumar of Chennai, Arulkumaran, J. Wison and Dr. Shanmugasundaram. He also deposed that after the exports and after filing the necessary documents for duty d....
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....le for clearance at ICD Salem, facilitated the fraud by acting on behalf of non-exporters. After investigation, a Show Cause Notice was issued to various parties including Sanco Trans Ltd. The Commissioner ordered the recovery of the wrongly sanctioned duty drawback, from multiple individuals, along with penalties. Consequently, Sanco Trans Ltd. have appealed the penalty. c. Ld. Counsel for the appellant filed a petition under Rule 41 of Cestat Rules to correct an error made in their appeal memorandum, which stated that the appellants came forward and paid the amount involved in the alleged wrong availment of drawback benefits, when in reality they had not made such a payment. While accepting their petition, we caution the parties to be very careful while submitting facts, before the Tribunal. 3. The Ld. Advocate Shri T. Sundaranathan appeared for M/s. Sanco Trans Ltd. The Ld. Authorized Representative Smt. O.M. Reena appeared for the respondent. 3.1 The Ld. Advocate for M/s. Sanco Trans Ltd. submitted that the following Questions of Law arose in these appeals. A. Whether DRI can issue Show Cause Notice in respect of recovery of Drawback Amounts as provided ....
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....case of COMMISSIONER OF CUSTOMS Vs M/S CANON INDIA PVT. LTD. [2024 INSC 854] (Also referred to as Canon India -II), reviewed its earlier order which held that the officers of DRI are not 'proper officers' within the meaning of Section 28(4) of the Customs Act. The Hon'ble Court held that Circular No.4/99 dated 15.02.1999 issued by the Central Board of Excise and Customs (CBEC), which empowered officers of DRI to issue show-cause notices under S.28 of the Act as well as Notification no. 44/2011 dated 06.07.2011 which assigned the functions of "proper officers" for the purposes of Sections 17 and 28 to the officers of the DRI were not brought to the notice of the Apex Court during the proceedings in Civil Appeal No. 1827 of 2018, dated 09.03.202, titled M/s Canon India Private Ltd. Vs Commissioner of Customs (Also referred to as Canon India - I). The Judgment also set aside the decision of the Hon'ble High Court of Delhi rendered in the case of Mangali Impex Ltd. Vs Union of India reported [(2016) SCC Online Del 2597] and upheld the view taken by the Hon'ble High Court of Bombay in the case of Sunil Gupta Vs Union of India and Others [(2014) SCC Online Bom 1742]. It also upheld the c....
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....he case may be, shall pass an order to recover the amount of drawback paid to the claimant and the exporter shall repay the amount so demanded within sixty days of the receipt of the said order. Section 4 of the Act deals with the appointment of Officers of Customs. Section 4(1) empowers the Board to appoint such persons as it thinks fit to be Officers of Customs. Sub-Section (2) of the said Section provides, without prejudice to the provisions of sub-Section (1), the Board may authorize a Chief Commissioner of Customs or a Commissioner of Customs or a Joint or Assistant Commissioner of Customs or Deputy Commissioner of Customs to appoint Officers of Customs below the rank of Assistant Commissioner of Customs or Deputy Commissioner of Customs. By virtue of the powers so conferred under sub-Sections (1) and (2) of Section 4 of the Act, the Board has issued the Notification No.17/2002 No.CUS (NT) dated 7th March 2002 which reads as under: "Directorate of Revenue Intelligence (D.R.I.) officers appointed as Customs Officers - Notification No.19/90Cus(N.T.) superseded. In exercise of the powers conferred by sub-section (1) of Section 4 of the Customs Act, 1962 (52 of 1....
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....icer of Customs who is subordinate to him. Therefore, statutorily, it is provided that a higher Officer can perform the functions and duties of a subordinate Officer. It is by virtue of the statutory provision, the Director of Revenue Intelligence, who was appointed as Commissioner of Customs to investigate and issue show cause notice, has adjudicated the dispute regarding payment of duty draw back also. The Rule on which reliance is placed is attracted in the absence of a Notification. Once a Notification is issued in pursuance of Section 4 (1) of the Act. Then, the person so appointed has all the powers conferred under Section 5 (2) of the Act. That is precisely, what the Tribunal has said and therefore, it is not possible to accept the contention that the Director of Revenue Intelligence had no jurisdiction to adjudicate the dispute regarding duty drawback. Reliance is also placed on the judgment of the Apex Court which has held that when a statute specifically states who should exercise the power, how power should be exercised and the same fashion is concerned, there is no quarrel with the legal proposition. Section 5 (2) of the Act specifically provides that, a higher Officer ....
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....ntage of the duty demanded or penalty imposed prior to filing of appeal. 6. He also submits that drawback itself relates not just to customs duty but also to central excise duty and service tax and hence, would fall outside the scope of the term 'duty', as mentioned in Section 129E. 7. Per contra, Mr. Rajnish Pathiyil, learned Senior Panel Counsel for the respondents would point out that duty is defined under Section 2(15) of the Act to mean a duty of customs, drawback is nothing but duty, and there is hence no merit in the submission of the petitioner counsel. 8. I have heard learned counsel in detail and I agree with the respondents that there is no merit in the present writ petition. Section 75(1) of the Act provides for grant of drawback on imported materials used in the manufacture of goods that are exported, and is extracted below: Section 75. Drawback on imported materials used in the manufacture of goods which are exported. - (1) Where it appears to the Central Government that in respect of goods of any class or description [manufactured, processed or on which an operation has been carried out in India] [being goods which have bee....
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....llaneous petitions is closed. No costs." (emphasis added) *****. *****. ***** 17.2 The Hon'ble Supreme Court in Pahwa Chemicals Private Limited Vs Commissioner of Central Excise, Delhi, [2005 (181) E.L.T. 339 (S.C).] examined a similar matter and held: "13. In order to consider the powers of the Board one needs to see certain provisions of the Act. Section 2(b) defines the "Central Excise Officer" and it is mentioned therein that any Officer of the Central Excise Department or any person who has been invested by the Board with any of the powers of the Central Excise Officer would be a Central Excise Officer. Thus, the Board has power to invest any Central Excise Officer or any other Officer with powers of Central Excise Officer. By virtue of Section 37B the Board can issue orders, instructions or directions to the Central Excise Officers and such Officers must follow such orders, instructions or directions of the Board. However, these directions can only be for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods. It is thus clear that the Board has no power to issue instructio....
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....Pahwa Chemicals' case (supra). To the extent Section 33 permits the Board to reduce limits or confer power on other Officers the Board may do so. But this is in respect of adjudication. Significantly in respect of issuance of show-cause notices, no such power has been given to the Board. This itself indicates that where the Legislature so intended it specifically so provided. Thus where the Legislature has purposely omitted to so provide it clearly indicates that the Board was not authorised to limit powers under the Act. Section 37 merely gives rule making power to the Central Government. No Rule could be shown to us under which the Board could whittle down the jurisdiction of a Central Excise Officer as given to that Officer under the Act. 7. We, therefore, see no reason to take a different view and we reaffirm the decision given in Pahwa Chemicals' case (supra)." (emphasis added) The principle of law declared by the Apex Court in the two judgments above would be applicable under the Customs Act also. 17.4 Further the hierarchy of laws has been explained by the Hon'ble Supreme Court in M/S. Ispat Industries Ltd Vs Commissioner Of Customs, Mumba....
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....pellant on this issue of jurisdiction of DRI officers to issue a SCN in the case of drawback, must fail." Have answered the question upholding the issue of SCN by DRI, we now examine the second question. 6. Whether a subsequent act of manipulating BL to a different Port of Discharge, after obtaining the LEO upon completion of the Shipping Bills process, would amount to misdeclaration in the SB.? 6.1 Any document that is produced during the process of Customs procedure is not to satisfy an empty ritual, but to help the department carry out due diligence while clearing the export cargo. It means the diligence reasonable expected from, and ordinarily exercised by, an officer who seeks to satisfy himself that a legal requirement or an obligation of an exporter has been fully and truly discharged by the exporter. It is expected that the exporter or his agent submit the documents with clean hands and disclose all material facts pertaining to the export of goods faithfully. There should be no misrepresentation of facts. Customs Officers examining the export goods accept the details contained in a document or declaration to be prima facie correct and it would be unfair on the part....
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....vidence on fraud; as observed in Ram Preeti Yadav's case (supra). 18. In Lazarus Estate Ltd. Vs Beasley (1956) 1 QB 702, Lord Denning observed at pages 712 & 713, "No judgment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud. Fraud unravels everything." In the same judgment Lord Parker LJ observed that fraud vitiates all transactions known to the law of however high a degree of solemnity. (page 722) 19. These aspects were recently highlighted in the State of Andhra Pradesh and Anr. Vs T. Suryachandr Rao (2005 (5) SCALE 621)" [Emphasis added] Hence when a subsequent act of manipulating the BL to a different 'Port of Discharge' is done to perpetuate a fraud, then even if the act is done after obtaining the LEO upon completion of the Shipping Bills process, it would amount to mis-declaration in the SB. 7. Under Customs Act, 'person' does not include juristic persons like a Company. Then whether the appellant being a Public Company can be held liable as a 'person' as provided under Sec 114 Customs Act? 7.1 It is true that the word 'person' has not been defined under the Customs Act, 1962. When a word is not de....
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....port) - CESTAT, Chennai, FINAL ORDER NO. 40631/2025, Dated: 20.06.2025]. However, any person including a CHA may be involved in blame worthy acts with the intention of helping the importer/ exporter evade payment of duty, by entering into a conspiracy/ collusion with an importer/ exporter or abetting them to defraud the exchequer etc. In such cases the cause of action is different from the role of a CHA under the Regulations and penal action can be taken under the Customs Act 1962. Moreover, if violations of both the laws are evident then action taken under the Customs Act shall be without prejudice to the action taken under the Regulations and the proceedings can, if the situation warrants, go on simultaneously. 6. When the legislature makes a special law, the presumption is that a general enactment is not intended to interfere with the special provision unless that intention of the legislature is stated very clearly. The specific prevails over the general. Each enactment must be construed in that respect according to its own subject matter and its own terms. The Hon'ble Supreme Court in COMMERCIAL TAX OFFICER, RAJASTHAN v. M/S BINANI CEMENT LTD. & ANR. [(2014) 3 S.C.R. 1....
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....nst his employee is a challenging one and has to be based on the facts of the case. However, it cannot be held as a universal principle that the CHA-employer cannot be held liable for the mischief of its employees. What needs to be seen is firstly, whether the wrongful act of the employee, even if it were an error of judgment, was in the course of his employment and authorised by the employer or a wrongful one done by an unauthorised mode of doing some act authorised by the master. Secondly whether the action of the employee was outside the scope of his employment. [See: Sitaram Motilal Kalal Vs Santanuprasad Jaishankar Bhatt - AIR 1966 SUPREME COURT 1697, 1966 3 SCR 527 / N. Sridhar Vs Maruthi Jayaraman - Madras High Court, APPEAL SUIT NO.10 OF 2002, Dated: 16.06.2009]. It's only in the first scenario that the employer can be held liable. The acts of the employee done in excess of his authority or by defying express instructions or having been done recklessly, which clearly depart from the scope of his employment will not make his employer liable for his wrongful acts. Such a situation may be when the employee is engaged only in furthering his own interest's, pleasure or comfort e....
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....or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. This Section clearly states that the burden of proving a fact rests on the party who substantially asserts the affirmative of the issue and not upon the party who denies it; for a negative is usually incapable of proof. Simply put, it is easier to prove an affirmative than a negative. In other words, the burden of proving a fact always lies upon the person who asserts the same. Until such burden is discharged, the other party is not required to be called upon to prove his case. The court has to examine as to whether the person upon whom burden lies has been able to discharge his burden. Further, things which are admitted need not be proved. Whether the burden of proof has been discharged by a party to the lis or not would depend upon the facts and circumstances of the case. The party on whom the burden lies has to stand on his own and he cannot take advantage of the weakness or omissions of the opposite party. Thus, the burden of proving a claim or defence is on the p....
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....K. Arumugam of M/s Sanco Trans Ltd Salem. The findings at paras 22.07 and 22.08 0f the OIO clearly indicate that Shri Sainathan and Shri P.K. Arumugam acted in their individual capacity and hence the appellant-CHA cannot be blamed for their acts. There is nothing, in this case, to show that the CHA knowingly did or omitted to do an act or abetted an act and consequently rendered the export goods liable for confiscation. Even if there was a failure on the part of the CHA in fulfilling the actions required of him as a CHA it cannot be construed as abetment of offence. Hence no penal action lies against the CHA under the Customs Act in this case and the order imposing penalty on the appellant-CHA merits to be dropped. 11.2 Customs Appeal No. 177 of 2011 11.2.1 According to statements from Shri Sainathan of Sanco Trans Ltd., he managed export operations under the Duty Drawback scheme for exporters represented by Shri A. Kumar (alias Satish Kumar) and others. After exports and document submission, duty drawback cheques were issued by ICD, Salem. Shri Satish Kumar revealed that although Shipping Bills listed a UK port as the destination, goods were actually sent to Dubai due to str....