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TMI Blog2013 (8) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... g not maintainable, as claimed by them on fraudulent export of old & used garments in the garb of readymade garments for the reasons mentioned earlier. (iii) I reject the claim of benefit of the said DEPB Scrips for issue of 04 TRA for Rs. 77,08,115.00 (Rupees Seventy Seven Lacs Eight Thousand One Hundred Fifteen only) (wrongly taken as Rs. 77,88,116.00 in the show cause notice) as submitted by M/s. Sukumar Chemicals (P) Ltd., 82/1, Railway Road, Meerut which are not admissible, as the same have been filed fraudulently against the fraudulent export of watches at inflated value. (iv) I reject the claim of benefit of the said DEPB Scrips for issue of 01 TRA for Rs. 25,45,761.00 (Rupees Twenty Five Five Lacs Forty Five Thousand Seven Hundred Sixty One only) as submitted by M/s. Agemo Leather Components (P) Ltd., Moradabad which are not admissible, as the same have been filed fraudulently against the fraudulent export of PVC Shoe Soles at inflated value. (v) I confiscate the goods i.e. old & used garments Rs. 11,89,50,027.00 (Rupees Eleven Crore Eighty Nine Lacs Fifty Thousand Twenty Seven only) which had been fraudulently exported by M/s. Sukumar Chemicals ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the findings that the appellant-companies have exported old and used garments, and substandard wrist watches and PVC soles at highly inflated prices and obtained higher and ineligible amounts as drawback; that the foreign buyer is closely related to Shri Ashwini Kumar Jain who runs the above two companies which exported the above consignments; the local suppliers of garments, wrist watches and PVC soles meant for export were either found to be non-existent in the addresses furnished in the documents or they were firms controlled by Shri Ashwini Kumar Jain giving rise to serious doubt about the quality of exported goods. 2.3 Further, consignments declared by the above exporters claiming them to readymade garments were found to be used and spoiled clothes as against declared items and were seized on 14-9-1998 and separate proceedings were initiated. 3.1 Shri Ashwini Kumar Jain appearing on behalf of the appellant-companies and himself submitted that the proceedings relating to seized goods alleged to have been misdeclared and seized on 14-9-1998 is totally a different proceedings. Merely because the consignments in three containers seized on 14-9-1998 were found to be misdec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been ignored by the Commissioner. 3.7 Referring to the investigation by the department from the suppliers of goods in India, he submits that mere absence of the suppliers in the given addresses during the investigation undertaken in 2003 does not indicate that suppliers did not exist in the given addresses during the relevant time. He submits that the purchases were made from the buyers as mentioned in the balance sheet and payments were made by cheques and therefore, there is no justification for treating their purchases as paper transactions. 3.8 He submits that when the goods have already been exported and the same have not been seized, the question of confiscating them and offering redemption does not arise. 3.9 When exports have been made, if there is any proposal to restrict the DEPB benefit on the ground the PMV is on the lower side, the notice is required to be issued within 30 days of the export as stipulated in Circular No. 69/97-Cus. issued from file F. No. 605/51/97-DBK, dated 8-12-1997. Therefore issue of show cause notice after several years proposing denial of drawback and DEPB benefits are not legal. 4.1 Learned SDR took us through the evidence relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eizure is not relevant to the present case. It is integrally connected inasmuch as the same exporters and the same buyer are involved in respect of past exports. Therefore the fact of seizure of misdeclared goods is certainly one of the relevant fact to be kept in mind. 6.2 It has been contended on behalf of the appellants that no show cause notices under Customs Act have been issued to the officers who examined the consignments, even though in the counter-affidavit filed in November, 1999 by the department in the writ petition filed by the appellant it was submitted that action was being taken against the officers also for collusion. Learned DR, however, submitted that the officers concerned were suspended immediately and thereafter departmental action has been taken against Shri A.K. Arora, Superintendent and Shri Manoj Sharma, Inspector imposing penalties by way of reduction of pay in two stages for a period of three years and one month. It is thus noticed that there was departmental action against the officers. In case it was felt that there is any violation of undertaking given by the Department before Hon'ble High Court, the same cannot be looked into in this proceeding. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t undoubtedly behind the back of the appellants. However, there is no right vested with appellants that they should be informed of investigation undertaken against the appellants at every stage. It is not the case of the appellants that the evidences so gathered have been held back from them and action has been taken based on such evidences. The outcome of the investigation and the evidences collected have been undisputedly disclosed in show cause notice dated 30-8-2005. 6.5 A submission has been made that if "the present market values" of export consignments were doubted by the customs authorities, notice was required to be issued within 30 days of export in terms of circular of the Board dated 8-12-1997. This is internal administrative direction aimed at helping the genuine exporters. This circular does not prevent an investigation of alleged fraud involving export. In the present case, undisputedly, consignments attempted to be exported by the appellant-company were found to be misdeclared in description and highly overvalued with a view to avail undue export benefit and the same were seized on 14-9-1998. Under these circumstances, the customs authorities have undertaken extens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit for manufacture of garments were found to be unsubstantiated. They had no machinery worth the name for the purpose of manufacture. They also did not produce any evidence to show that they had other infrastructure for manufacture. Therefore, their claim that some consignments were manufactured by them cannot be held to be correct. They only fall under the category of merchant-exporters. 7.2 Further, the claim was that they have undertaken "packing and storage" in their factory which cannot be believed as valuable export consignments were not shown to have been received in unpacked condition from the actual manufacturer. Mere packing and storage does not make them as manufacturer entitled to get the facility of factory stuffing. The appellants have claimed that they have obtained permission for factory stuffing from the jurisdictional Assistant Commissioner but have not produced the copy of any such permission. They are only relying on a letter written by Vigilance Directorate of CBEC to CBI wherein it was mentioned some officer has given permission for factory stuffing unauthorisedly. This was an allegation which was required to be looked into by the CBI. As the appellants hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losely related concerns; that the foreign buyer is closely related to the appellant-director. In the light of these, the burden of proving that the transaction of purchase and export are genuine is squarely on the appellants. As they have miserably failed to fulfil this obligation there is justification for denial of drawback claimed by them. 7.6 The Commissioner has in detail dealt with the manner in which the payments were received in bank accounts and withdrawn; he has also dealt with the verification about the genuineness of names and addresses of the suppliers of goods to appellant-company. The way the transactions have been dealt with do not show credibility especially when the suppliers were not found in the given addresses. The appellant-companies were found to have been operating from common premises located at basement at Parshvnath Delhi-Road Moradabad and there was no facility of manufacturing of ready made garments. Relevant documents sought for by the investigation officers were not provided on the ground that they were all destroyed during the riot which took place in October, 1999. If this is true, it is a bad luck for the appellants. In the absence any documents, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s should have been made for cancellation of that DEPB scrips. The appellant-company have asked for telegraphic release advice (TRA) only in respect of two DEPB scrips though they were issued totally five DEPB scsrips. The Commissioner has denied the request for TRA. The action to deny TRA without taking action to get the DEPB scrips cancelled has no meaning. There is no order on other DEPB scrips. However, it is clear that the validity of DEPB scrips was only one year and the grant of TRA has no significance as of now unless the DEPB scrips are revalidated by the DGFT authorities. In the event of any request for revalidation of DEPB scrips it would be necessary for the customs authorities to take it up for with the DGFT authorities against any such renewal if so advised. 8.3 The appellant-companies and the appellant-director have clearly involved themselves in exports involving misdeclaration and overvaluation rendering the goods liable for confiscation with a view to claim drawback and DEPB scrips not due and therefore they are liable to penalties. However, the penalties are very much on the higher side and requires reduction. 9. In view of the above, appeals are disposed of as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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