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TMI Blog2012 (8) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-Cus (NT) dated 29/05/2002 as amended and 26/2003 (Cus) (NT) dated 01/04/2003 under claim for all-industry rate of drawback under Section 75 of the Customs Act, 1962. Detailed enquiries conducted with the exporter revealed that the goods under export are Steering Knuckles, fully machined. All the documents related to the exports such as export invoice, packing list, ARE-1, shipping bill, bill of lading, insurance certificate, etc. were examined and it appeared that the appellant exporter had not given full description of the articles under export in the export documents. For example in the export invoice the product was described as "steel forging machined, manufactured through forging process" along with the customer part no. and in the remarks column, they had mentioned the product as "steering knuckle, full machined". Similarly in the ARE 1 document also similar description had been given. It was found that the product under export was steering knuckles, a sub-assembly of motor-vehicle part, falling under heading No. 87.08 of the Customs Tariff. There was no All-Industry Rate of Drawback available for "steering knuckle" under any sub-serial no. under Chapter 87 in the Drawback ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he description of the goods in the ARE1 and the goods exported conformed to the relevant entry in the drawback schedule. In the case of steering knucle, the shipping bills additionally described the product as "steering knuckle - fully machined" in addition to "alloy steel forging manufactured through forging process" which was the broad description given in the drawback schedule. 3.3 The impugned order proceeds on the basis that the entire items exported are only steering knuckles which is factually incorrect. This position is evident from the statement of Mr. Vilas P. Panse and the certificate dated 30-5-03 of the Central Excise Department certifying the description of the goods under export also shows that the appellants have not only exported steering knuckle but also other goods as mentioned above. The ld. Commissioner has rejected this contention as an "after thought" and his finding in this regard is not sustainable in law. 3.4 The Drawback schedule was aligned with the Customs Tariff at the 4 digit level, only w.e.f. 02/05/2005, vide notification No. 36/05-Cus (NT). Prior to 2005, the drawback schedule was not aligned with customs tariff at all and hence the principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The number of bushes used in the said knuckles is 26134, that is 2 nos. each in one steering knuckle. The weight of bushes is 13067.70 kgs. Hence, the appellants are eligible for drawback on 235435.30 kgs of steering knuckles excluding the weight of the bushes. 3.10 In respect of other export goods (other than steering knuckles), denial of drawback is not correct. 3.11 The goods are otherwise covered by Sl.No.589 of the DEPB schedule which the appellants were claiming prior to the present exports and after the present exports. Therefore, if their claim is not found to be eligible under drawback, they should be permitted to convert the drawback shipping bills to DEPB shipping bills in the case of impugned exports and places reliance, inter alia, on the following case laws, namely:- ( a) Man Industries (India) Ltd. v. CC [2006 (202) ELT 433] (b) CC v. Man Industries [2007 (216) ELT 15] (c) CC v. Metallic Bellows [2009 (241) ELT 181] 3.12 No penalty is imposable on the any of the appellants and claiming drawback under a particular entry of the drawback schedule can not be treated as mis-declaration. Imposition of redemption fine when the goods are not seized or available fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and steel, whereas the fact was that they were motor vehicle parts falling under heading no. 87.08 of the Customs Tariff. These goods falling under the said heading were not specified under the drawback schedule as being eligible for all industry drawback rate. Thus there was a deliberate attempt to claim ineligible drawback. 4.5. From the drawings of the product and the manufacturing plan, it is very evident that the product was subjected to about 26 processes after forging and the product was fully finished and ready to use motor vehicle part/sub-assembly. Yet the benefit of drawback was sought to be claimed by mis-declaring the product as forged product of alloy/non-alloy steel. 4.6 The all industry rate of drawback schedule lists the products chapter wise. Under each chapter, the products eligible for the drawback are described sl. No. wise. From the first two digits of the sl. No., the Chapter under which the product should fall is made clear. A perusal of the drawback scheduled for the impugned period would make this point very clear. Though several products under chapter 87 and particularly, motor vehicle parts, are listed in the drawback schedule, none of the products exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Cestat (Procedure) Rules, the appellant can not be allowed to raise a new plea which was not raised or considered by the adjudication authority. The general principle is that the appellate authority should not travel outside the records before the adjudicating authority. Though Rule 23 of the Cestat (Procedure) Rules permit an exception, the same should be exercised sparely and judiciously. Additional evidence should not be permitted to be produced to enable the party to fill up any lacuna. He relies on the judgment of the apex court in the Jain Exports Pvt. Ltd. case [1993 (66) ELT 537 (SC)] and Doypack Systems (Pvt.) Ltd. case [1998 (36) ELT 201 (SC)] in support of his above contention. He further submits that vide letter F. No. 609/112/2002-DBK dated 18 th July, 2008, the CBE&C has informed the appellant that since the matter is pending before the CESTAT, they should await the final decision of the CESTAT on the same. He further points out the appellant has not brought on record how they have obtained copies of the notings in the Ministry's file and whether source is legitimate or not. 5.1 The ld. Counsel fairly submits that they have not obtained copies of these notings unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Customs Tariff. In other words, to be eligible for drawback, the goods should fall under the Chapter of the Customs Tariff first and thereafter, it should satisfy the description given therein, as all goods in a chapter are not covered for all industry rate of drawback and only selected items falling in a Chapter are covered. In the instant case, the appellant has claimed drawback under Serial no. 73.29 and 73.30 which read as under: "73.29 Non-alloy steel/carbon steel forgings (rough)/unmachined/semi-finished/ machined/identifiable ready-to-use machined parts/components, manufactured through forging process, When CENVAT facility has not been availed. Rs.19 Rs.12 Rs.7 73.30 Alloy steel forgings (rough)/ Unmachined/semi-finished/identifiable ready-to-use machined parts of steel Components, manufactured through forging content Process, When CENVAT facility has not been availed. Rs.30 Rs.19.50 Rs.10.50" per kg 7.1 The Ministry vide circular No.67/95-DBK dated 15-6-95 had made the following clarification with respect to duty drawback all industry rates effective from 16-6-95. "2. The most significant change made relates to harmonizing of the drawback TABLE with the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processes undertaken, the item steering knuckle falls under chapter 87 of the Customs Tariff and hence the all industry rate of drawback for the said item can not be claimed against goods for which rate has been prescribed under chapter 73. In respect other items of export also such as crankshafts, axle beams, valves, spindle assembly, etc. the same principle would apply. From the description of the goods given in the purchase order as also the coverage of CTH 87.08 of the Customs Tariff, it is abundantly clear that these are motor vehicle parts suitable for use as such and have been subjected to various processes after forging. Therefore, the claim of the appellant that these goods are eligible for drawback under serial nos. 73.29 and 73.30 as fully machined parts lacks substance and merit and we hold accordingly. Under Chapter 87, none of the products involved in the impugned order are covered either specifically or generally. Since the goods are not covered in the drawback schedule, the question of extending the benefit of drawback does not arise at all and we hold accordingly. It is also relevant to mention here that in the Drawback Schedule aligned at the 4 digit level with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinct and distinguishable from those involved in the Shivaji Works Ltd. case and the ratio can not apply to the present case. So is the position with respect to the other judgments relied upon by the appellant. 7.4 The next issue for consideration is whether the goods already exported are liable to confiscation and if so, whether penalty is imposable in the instant case. Section 113 of the Customs Act reads as follows:- "113 The following export goods shall be liable to confiscation:- (a) .................................... ................................................................... (i) any goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this Act or in the case of baggage with the declaration made under section 77; (ii) any goods entered for exportation under claim for drawback which do not correspond in any material particular with any information furnished by the exporter or manufacturer under this Act in relation to the fixation of rate of drawback under section 75; ..................................................................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and so on. It does not refer to any particular Chapter or heading of the Customs Tariff. However, the drawback schedule categorises the products under different chapters of the Customs Tariff. Thus the basis of classification adopted for DEPB and Drawback are completely different and distinct and therefore, we do not find any merit in this contention. It is relevant to point out here that there was a doubt regarding eligibility of DEPB credit to steering knuckles. The matter was referred to the Ministry of Commerce & Industry who vide their letter No. 10/11-7-2003 clarified that export of steering knuckles (fully machined) made after 1-3-2000, DEPB benefit may be allowed under the separate entry created for parts/ready to use components. i.e., entry no. 589 of the DEPB schedule. When the matter itself was clarified only in July, 2003 how could the appellant, in respect of exports made in March to May 2003, be under the impression that the impugned goods are covered under 73.29 and 73.30 of the Drawback Schedule on the basis of similar entries in the DEPB schedule? This very clearly shows that this argument is only an afterthought so as to justify their wrongdoing. 7.7 The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case, the appellant has argued that the impugned goods were examined by the jurisdictional central excise officers who have certified the correctness of the declarations made and hence no malafide can be attributed on the part of the appellant. The export documents are shipping bills and export invoices which are filed before the customs authorities at the port of export. The documents filed before the excise officers are only the ARE 1s. The declaration as to the description and value and claim for drawback has to be made in the export documents which are filed before the customs. Therefore, merely because the goods have been examined by the central excise authorities does not absolve the appellants of their responsibility of making the correct declarations in the export documents. This can at best a factor for determination of quantum of penalty and not for imposition of penalty per se. As already stated above, mens rea is not required for imposition of penalty under section 114. In the instant case, the foods are liable to confiscation since the goods were attempted to be exported under a claim for ineligible drawback amounting to Rs. 5 crore approx. and this claim was no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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