Customs, Excise and Gold Tribunal - Delhi
Indo Export House, Shahana Ali, Prop. ... vs C.C.E. on 9 December, 2003
Equivalent citations: 2004(168)ELT142(TRI-DEL)
ORDER C.N.B. Nair , Member (T)
1. Under the order impugned in these appeals, Commissioner of Customs, ICD, Tughalakhabad, New Delhi has directed the first appellant M/s. Indo Export House to pay back an amount of Rs. 31 lakhs, which had been paid to it as drawback. Further, a penalty of Rs. 10 lakhs each has been imposed on the second appellant Smt. Shahana Ali, proprietor of M/s. Indo Export house and Shri Yunus Ali, who is the husband of the second appellant.
2. The proceedings leading to the passing of the order emanated from 8 exports of handicrafts, mainly the umbrella stands, by the first appellant to Europe in September and October 1998. These exports were made under drawback and an amount now ordered to be returned had been paid to the Indo Export House as drawback. The actions aforesaid have been ordered on nothing that "payments against all the exports were received after a delay of six months and in four cases beyond a period of three years and this was reported to RBI" (para 13 of the Order).
3. The proceedings are in terms of Section 75 (1) of the Customs Act, 1962 read with Rule 16 and 16A of the Duty (Drawback) Rules 1995. The order also nots that the goods in question were not taken delivery of by the original consignee abroad and were diverted to other parties. It also mentions that original consignee disowned placing order. It therefore, conclude that notices had deliberately mentioned fictitious name for the consignee in order to avail drawback. The order also observed that entire process of sale was fictitious and the goods in question were highly overvalued. The order, however, concluded that overvaluation aspect could not be proved as the export was fate accompli.
4. The contention of the appellants is that the proceedings are totally contrary to the relied upon provisions of Drawback Rules inasmuch as the Rules contemplate return of drawback only in the event of non-receipt of payments for export, and not for delay in receipt of payment. The appellants have also contended that the observations made in the order regarding the sale proceeds being fictitious,the goods being overvalued, are merely unfounded speculation. Instead, the goods were examined prior to export and the Customs authorities had certified the correctness of the particulars. Appellants have also submitted that much is being made of a normal occurrence in trade; a buyer refusing to take delivery of the goods, and upon that, goods being diverted to another buyer. apprehensions, have also expressed that disgruntled business associate of the appellant are using the Customs authorities to get at them.
5. We have perused the records and have considered the submissions made by the both sides. The allegations and counter-allegations are of no relevance to the determination of the issue raised in this case. The consignments were duly exported after Customs examination. These handicrafts are regular items under export. If there was a dispute about the quantity or value of exports, the time to raise them as when the goods were tendered for export. It is unfortunate that, instead of doing so, proceedings had been initiated belatedly and concluded with half-hearted allegations, of fictitious export, overvaluation, bogus buyers etc. That too with the simultaneous finding that overvaluation is not proved. This only casts doubts about the capacity of the Customs organisation to deal with matters competently and responsibly. Be that s it may, the untenability the present order becomes clear to the mind on a mere perusal of Rules 16A of the Drawback Rules, the Rule relied upon by the Commissioner for passing the order. We may read the rule ;
"16A. Recovery of amount of Drawback where export proceeds not realised. - (1) Where an amount of drawback has been paid t an exporter or a person authorised by him (hereinafter referred t as the claimant) but the sale proceeds in respect of such export goods have not been realised by or on behalf of the exporter in India within the period allowed under the Foreign Exchange Regulation Act, 1973 (46 of 1973), including any extension of such period, such drawback shall be recovered in the manner specified below.
(2) On receipt of relevant information form the Reserve Bank of India, (Assistant Commissioner of Customs or Deputy Commissioner of Customs] shall cause notice to be issued to the exporter for production of evidence of realisation of export proceeds within a period of thirty days from the date of receipt of such notice and where the exporter does not produce such evidence within the said period of thirty days, the [Assistant Commissioner of Customs or Deputy Commissioner of Customs/ 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.
Provided that where a par of the sale proceed had been realised, the amount of drawback to be recovered shall be the amount equal to that portion of the amount of drawback paid which bears the same proportion as the portion of the sale proceeds not realised bears to the total amount of sale proceeds :
(3) .........
(4) Where the sale proceeds are realised by the exporter after the amount of drawback has been recovered from him under sub-rule (2) or sub-rule (3) and the exporter produces evidence about such realisation within one year from the date of such recovery of the amount of drawback, the amount of drawback to recovered shall be repaid by the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] to the claimant."
6. It is evident from the very heading of the rule onwards that it comes into play only where export proceeds were not realised. In the present case, it is not in dispute that export proceeds are realised. The appellant's bank, namely SBI, Mysore,has certified the receipt of the payments. In such a case, this rule has no application and the Commissioner should have refrained from demanding the drawback amount. Penalties have no place, once the basis charge of failure to receive payment is untenable.
7. In the view we have taken, the appeals succeed and they are allowed after setting aside the impugned order.