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2022 (4) TMI 529 - AT - CustomsDuty Drawback - circular trading of footballs and other sports items - whether the appellants herein have connived in doing circular trading in order to claim wrongful benefit of duty drawback - admissibility of evidences - penalty u/s 114 and 114AA of Customs Act - HELD THAT:- It is found that the entire case of the Revenue is mainly based on the statements, which are not corroborated with any independent credible evidence - In the present case, the trail of flow back of money to the overseas buyer from the 1st Appellant, due to the alleged over-invoicing, is not established in the investigation. Further, the Respondent revenue has failed to establish the said money trail even during the hearing before this Tribunal. It is found from records that the Revenue has failed to prove even by probability that the footballs and other sports goods exported were subsequently imported back and again exported the same. The footballs exported by the 1st Appellant from India were of Indian origin, manufactured from Polyurethane. Further, the exports were under the claim for drawback. The officer who passed order under Section 51 of the Customs Act was satisfied after examination of the exports, that they are as declared in the shipping bill - it can be concluded that the declarations made in the import documents by the 3rd and 4thAppellants and the goods exported by the 1st Appellant are not disputed. It is clear that the case of the department is based on assumption and the investigation is not complete and conclusive. The case of circular trading is setup based on assumption and not proved definitively - It is constrained to observe that the contention of the Appellants that the goods imported and exported are different, deserves acceptance on merits. In a case of alleged circular trading, the crucial aspect is to prove that the goods exported and those subsequently imported are the same. Similarly, in case of alleged overvaluation of export goods with a claim of incentives, allegation of flow back of money from the exporter to the overseas buyer needs to be proved. It is found that the Revenue has failed to prove the same - there are considerable force in the argument that the goods exported by the 1st Appellant are common sports goods such as footballs manufactured with PU and other sports articles, for which the details of identical or similar contemporaneous goods are always available. Both the authorities below have grossly erred in holding that there were no records to determine the value under Rules 4 and 5 of the Valuation Rules and hence, the value is determined under Rule 6 of the Valuation Rules by resorting to market survey. There are considerable force in the argument of the Appellants that the authorities below have committed an error of law in admitting the statements of various persons in evidence, without complying with the mandatory requirement of Section 138B of the Customs Act - the statements made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceedings under the Customs Act shall be relevant, for the purpose of proving, in any proceedings under the Customs Act, the truth of the facts which it contains only when the person who made the statement is examined in the case before the adjudicating authority and the adjudicating authority is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. None of the exceptions contained in Section 138B (1)(a) are recorded as reasons by the authorities below to dispense with the mandatory requirement of Section 138B. Since the statements are the basis on which the entire case has been set up by the Revenue against the Appellants, cannot be relied upon for the want of following the procedure prescribed under Section 138B of the Customs Act. Thus the entire proceedings initiated by the Respondent Revenue fails, due to insufficient evidence - in absence of any material evidence corroborating and supplementing the allegations and/or the statements relied upon, and for the want of following the procedure prescribed under Section 138B of the Customs Act, it is found that the Revenue has failed to prove its case of purported overvaluation of the footballs and other sports goods exported, and that of circular trading. The authorities below have denied the drawback under Rule 16A by holding that the Appellant has failed to produce evidence in respect of realisation of export proceeds within the time allowed - the denial of claim for drawback under Rule 16A is liable to be set aside. Penalty under Section 114 and Section 114AA of the Customs Act - HELD THAT:- The revenue has failed to establish violation of any provisions of Section 113 of the Customs Act and/or any provisions of the Duty Drawback Rules and hence, no penalties can be imposed on any of the Appellants under Section 114 and Section 114AA of the Customs Act - In absence of any violation of provisions of Section 113 of the Customs Act, the goods are not liable to confiscation and seizure of goods is liable to be set aside. Appeal allowed - decided in favor of appellant.
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