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Monte International Versus Commissioner of Customs

Jurisdiction - Whether the show-cause notice issued by DRI for recovery of erroneously granted drawback in terms of Rule 16 of Customs and Central Excise and Service Tax Drawback Rules, 1995 can be held valid show-cause notice - Held that:- in the case of Era International v. Union of India [2011 (8)885 - Punjab and Haryana High Court] wherein the Hon'ble Punjab and Haryana High Court following the decision in the case of CC Vs. Sayed Ali [2011 (2)5 - Supreme Court] has held that the preventive .....

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vice Tax Drawback Rules, 1995. The said circular did not consider that the DRI officers are to be the proper officers under Rule 16 of Customs and Central Excise and Service Tax Drawback Rules, 1995 but as no retrospective amendment carried out in the said rule so far as conformation of jurisdiction by DRI officers for issuance of show-cause notice is concerned, therefore, the DRI officers have no jurisdiction to issue show-cause notice for recovery of erroneously drawback claim under Rule 16 of .....

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nments were examined found to be correct and the goods were assessed, thereafter let export order was issued. Further, it is found that no incriminating documents found by DRI during the course of search at the residence of various partners or the officers of the appellants. The only allegation against the appellant is that the Consulate General of India at Dubai has given report showing that only small fraction of iron was auctioned by Dubai DHS 31000 equivalent to ₹ 3,10,000/-. It was al .....

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was not made available for cross-examination. Therefore, the said statement cannot be relied on. During the course of investigation, it was found that the appellant exported bicycles parts which were procured from various suppliers who processed the bicycles parts. There is no single evidence on record to show that the appellant has manufactured/ used sub standard raw materials and all the suppliers have admitted that they have provided goods to the appellants. The appellant is a regular supplie .....

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agree for setting aside the demand on merits. - Decided in favour of appellant with consequential relief - CUSTOM APPEAL NOS. 528-531 & 603 OF 2008-CU[DB] - Dated:- 11-3-2016 - ASHOK JINDAL, JUDICIAL MEMBER (AS A THIRD MEMBER), MS. ARCHANA WADHWA JUDICIAL MEMBER, MANMOHAN SINGH AND B. RAVICHANDRAN, TECHNICAL MEMBER, JJ. For The Appellant : P.K. Mittal and N. Bindal, Advs. For The Respondent : Sanjay Jain, AR ORDER Ms. Archana Wadhwa, Judicial Member - All the five appeals are being disposed of b .....

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en to the said three exporting units, penalty of ₹ 40 lakhs stand imposed on Shri Kulbhushan Goyal, son of Shri Ramesh Goyal and penalty of ₹ 6 lakhs stand imposed on Shri Ramesh Goyal in terms of provisions of section 114 of the Customs Act, 1962. 3. As per the facts on record, three units are engaged in the manufacture and export of various cycles parts. The dispute in the present appeal relates to forty one consignment of bicycle parts exported by the appellant to Iran, Tehran and .....

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es, under export execution (sic : promotion) scheme like drawback DEPB etc, search operations were conducted at the factory cum residential premises of the noticee on 22.1.04. Nothing incriminating was recovered and as neither Shri Ramesh Goyal nor Shri Kulbhushan Goyal were present during the search operations, their statements could not be recorded immediately. Subsequently, the statements of Shri Kulbhushan Goyal were recorded on various dates i.e. 19.8.04, 23.8.04, 25.8.04, 16.9.04 and 30.3. .....

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ost of the cases. Sometimes he was receiving direct purchase orders from overseas buyers and sometimes the same were being finalized through merchant traders located in Dubai. He also clarified that inasmuch as it was very competitive market, they were receiving majority of the sale profits before the actual discharge of the goods either through the letter of credit or through telegraphical (sic : telegraphic) transfers. 5. As a result of disclosure made by Shri Kulbhushan Goyal, the statement o .....

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as mentioned in the Bill of lading. Bill of lading was prepared on the basis of their surveyor report (stuffing report) and E. P. copy dully signed by Customs officers and port of discharge and place of delivery on the bill of lading is given on the basis of shipping bills/E P copy. Their claim that the bill of discharge in the bill of lading could not be different from that mentioned on EP copy/shipping bills. He produced one bill of lading relatable to consignment in question whereas the final .....

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verifying its authenticity 8. The DRI also conducted inquiries at Dubai port and procured a letter dated 10.12.03 from. Consulate General of India, wherein he reported that consignment covered by 5 bills of lading were auctioned by Dubai Customs for a meagre amount of DHS 31,000 only. From the said report of the Consulate General of India, Dubai, Revenue entertained a view that the exports made by the appellants indicating Tehran as the port of despatch were actually deloaded at Dubai and inasm .....

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no company in the name and style of M/s. Clarion Logistics in Dubai and same was a non-existent unit. The fact of auction of the goods at ₹ 3,10,000 (Indian rupees) was taken as a ground that the goods exported were spurious and were junk goods and not bicycle parts. 10. On the above basis, proceedings were initiated against the appellant by way of issuance of show-cause notice in terms of Rule 16 of the Drawback Rules proposing to recover the drawback sanctioned to the appellant and also .....

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. They contended that inasmuch as the investigation conducted by the Revenue at the Indian end of the Indian supplier for supply of bicycle parts or for supply of raw materials for manufacture of said bicycle parts has not resulted in emergence of any contrary evidence, the appellant's claim has to be accepted. They also drew attention of the adjudicatging authority to the result of cross-examination of the officers i.e. Inspector and Superintendent wherein they admitted having inspected the .....

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the said report is only in respect of 5 consignments and for the reasons best known to the Dubai parties the goods stand auctioned. Based upon the said report, the entire duty draw-back claim by the appellant cannot be denied. As regards non-existence of M/s. Clarion Logistics Middle East, it stand submitted that said company is a multi-national company having its office all over the world. The address of the M/s. Clarion Logistics was produced on record from the Internet in support of the subm .....

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ause notice. Referring to the Hon'ble Supreme Court decision in the case of Commissioner of Customs v. Sayed Ali 2011 (2)5 - Supreme Court, he submitted that the DRI was not the proper officer for issuance of the said show-cause notice, in terms of provisions of Rule 16 of the Customs and Central Excise duty drawback Rules, 1995. He also assailed the impugned order on merits. Shri Verma appearing for the Revenue reiterated the reasoning of the adjudicating authority for holding against the a .....

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be demanded by a PROPER OFFICER of Customs. The proper officer stand defined under Explanation 2(34) of the Customs Act, 1962, which reads as under:- "'Proper Officer', in relation to any function to be performed under the said, means the officer of Customs, who is assigned those functions by the Board or the Commissioner of Customs." The issue whether Commissioner of Customs (Prev) was the proper officer for the purpose of issue of Show-cause notice in terms of Section 28 of .....

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s Officer who has been assigned the specific function of assessment and reassessment of duty in the jurisdictional area, where the import concern has been effected, either by the Board or by the Commissioner of Customs, can be held to be competent to issue notice under section 28 of the Act. As such, the Commissioner of Customs (Prev), who was having territorial jurisdiction but not the jurisdiction to issue show-cause notice under section 28 was held as not proper officer in terms of said secti .....

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and the matter was remanded to Hon'ble High Court to decide such substantial question of law in the light of decision in the case of Syed Ali. Hon'ble Punjab and Haryana High Court in the case of Era International v. Union of India 2011 (274) ELT 6 and Hon'ble Andhra Pradesh High Court in the case of Sree Enterprises v. Commissioner of Customs 2011 (274) ELT 12 (AP) while dealing with an identical issue held that in the light of decision of the Apex Court in the case of Sayed Ali (su .....

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ion No. 41/11-Cus (NT) dated 6.7.11 wherein the officers of DRI and Commissioner of Customs and other lower officers were declared to be the proper officer in terms of Section 2(34) of the Customs Act for the purpose of Section 17 and Section 28 of the Customs Act. The amendment was made by inserting clause 11 to Section 28 wherein any action taken by the officer of Customs before 6.7.2011 shall be deemed to have and always had the powers of assessment under Section 17 and shall be deemed to hav .....

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convenience is reproduced below: "RULE 16. Repayment of erroneous or excess payment of drawback and interest.- Where an amount of drawback and interest, if any, has been paid erroneously or the amount so paid is in excess of what the claimant is entitled to, the claimant shall, on demand by a proper officer of Customs repay the amount so paid erroneously or in excess, as the case may be, and where the claimant fails to repay the amount it shall be recovered in the manner laid down in sub-se .....

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e and without giving an opportunity to the persons concerned to put-forth his defence as against the alleged excess erroneously granted refund, stands answered by the Board's Circular No. 24/2011 Cus dated 31.5.11, Para 2 of which reads as under: "2. Reference have been received from the field formations for specifying the 'proper officer' for issuance of show-cause notice and adjudication of cases of export under the drawback and Export Promotion Schemes." Further para 5 o .....

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1995 within the monetary limit laid down in the said circular, before any recovery can be initiated. As such, we are of the view that though there is lacuna in the said Rule 16 inasmuch as the same does not specifically provide for issuance of show-cause notice and only refers to the demand made by the proper officer, but we hold that said demand has to be made by the Proper Officer by way of issuance of show-cause notice, as per the understanding of the Board also in the relevant portion of the .....

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upreme Court in the case of Sayed Ali (supra) the law was amended with retrospective effect conferring jurisdiction on DRI officers as also on Commissioner of Customs, (Prev) for the purpose of issuance of Show-cause notice in terms of Section 28 of the Customs Act with retrospective effect. However, no such amendment was made in respect of show-cause notices issued under Rule 16 of drawback Rules 1995. In fact it is seen that even when the law was amended subsequently, on 6.7.11 and section 28 .....

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on the DRI officer for issuance of show-cause notices. Bombay High Court in the case of Tejus Proprietary concern of Tejus Proprietary Concern of Tejus Rohitkumar Kapadia v. Union of India 2012 (275) ELT 175 has taken a very serious note of the fact that Tribunal has not given due regard to the law laid down by the Apex Court and deference to Supreme Court's judgment is constitutional principle and the Tribunal's Members were bound by rigorous/strict adherence to judicial discipline. CES .....

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root of the case. Accordingly, by following the Supreme Court decision in the case of Sayed Ali (supra), Tribunal struck down the show-cause notice issued by Commissioner (Preventive). As such, by applying the ratio of law, declared by the Hon'ble Supreme Court in the case of Sayed Ali (supra) and subsequently followed by various other High Court, it has to be held that DRI officer was not the proper officer for issuance of show-cause notice for the purpose of demand of allegedly erroneousl .....

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n issued by ADG, DRI Delhi, is without jurisdiction and consequently present impugned order become void ab initio and cannot be upheld. The same is liable to be set aside on the ground of jurisdiction itself. We order accordingly. 18. Though we have set aside the impugned order on the point of jurisdiction itself but for the sake of academic interest, we would like to consider the merits of the case. The entire case of the revenue is based over the overseas report of Consulate general of India a .....

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as Jabel ali, Dubai. Admittedly, the port of discharge on the shipping bills and the EP copy was Bandar Abbas, Tehran and as per the said statement Navdeep Goyal, the same has to be shown on the bill of lading. However, he has failed to show as to whether the port of discharge on the shipping bill and EP copy was different than the one mentioned in the bill of lading in the case of the appellant. Thus, it seems to be a contrary statement made by Shri Navdeep Goyal. 20. Apart from above, we note .....

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any evidentiary value when admittedly the bill of lading was neither issued either by him nor during his tenure as Branch Manager of the said shipping line. Further more, the said Navdeep Goyal never appeared for cross-examination in-spite of adjudicating authority issuing summons for the said purpose. It is seen that adjudicating authority has observed that inasmuch as Shri Navdeep Goyal could not tender himself for cross-examination and instead Captain Anil Ratra, Regional Head North India of .....

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asoning of the appellant. Admittedly, the revenue has relied upon the statement of Navdeep Goyal and not on the statement of Captain Anil Ratra or Shri Anil Sharma. The purpose of cross examination of any deponent is to test the veracity of the statement made by him during the course of investigation. It is the statement of Shri Navdeep Goyal made before the officer on which the Revenue has strongly relied upon. It was his cross-examination which was required to be conducted, for the purpose of .....

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during the period when exports took place, cannot be held to be a justifiable. It may not be out of place to mention that said bill of lading produced by the shipping line was shown to the Shri Kulbhushan Goyal. He very clearly deposed that said photocopy of shipping bill seems to be a fabricated documents. In the light of said statement of Shri Kulbhushan Goyal it becomes all the more necessary to cross-examine Shri Navdeep Goyal, who subsequently left the job of the shipping line. 21. Apart f .....

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ons conducted at their end also revealed that the said goods were supplied by the said manufacturers. Neither of them have agreed that supplied goods were either substandard or were of low value. The appellants are admittedly regular exporter of the goods in question and there has been no complaint either from their buyer or from customs authorities in the past. When the appellants have been able to establish the procurement of the goods from the other local supplier and no discrepancy have been .....

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ect and it is only thereafter that the material was stuffed in the containers and allowed for export. In the light of result of such cross-examination which has been ignored by the lower authorities on the sole ground that such an examination was only in respect of 5% of the goods whereas for the goods meant for export to Dubai at least 50% examination is required, it cannot be said that the goods were not examined. When the goods were admittedly meant for export of Iron/Tehran and it is only la .....

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f discharge are contrary to even the procedure adopted by the Customs authorities. The appellants had admittedly filed shipping bills where the discharge port was shown as Bandar Abbas, Tehran. The bills of lading are prepared as per the discharge port shown in the shipping bills. The said bills of lading are prepared by the shipping line, based upon the declaration made by the exporters on the shipping bills. The goods exported for Iran/Egypt or any middle east country are to be routed or trans .....

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bills showing three different Iran buyers and port of discharge as Bandar Abbas. There is no explanation in the statement of Shri Navdeep Goyal for different bill of lading showing Dubai as port of discharge while according to Shri Navdeep Goyal himself port of lading were prepared on the basis of EP shipping bills. Such Bill of lading produced by Navdeep Goyal was only the photocopy. Inasmuch as Shri Navdeep Goyal did not tender himself for cross-examination and keeping in view the entire circu .....

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late General that one of the Merchant trader was not in existence in Duabi was proved wrong by producing the address of said company through website. Further, there is no such report in respect of other Duabi Merchant Traders and the adjudicating authority has presumed that since the other merchant traders were dealing in the building materials etc., they could not have acted as merchant traders for bicycle parts. Similarly, we find that adjudicating authority has only made an observations simpl .....

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lusion that the appellants exported their goods to Dubai instead of Iran/Tehran. Apart from the fact that said report is only in respect of 5 consignments whereas the drawback is sought to be denied in respect of 41 consignments, we note that once the goods left the territorial water of India, export is said to have been effective thus extending the exporter the export benefits. Apart from that we also take into consideration the appellants contention that drawback rate in respect of cycle parts .....

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deny export benefits on the statement of Shri Navdeep Goyal which has been held to be of no evidentiary value and based upon the report of the Consulate General which is neither detailed report nor co-relate the goods with the export goods, denial of drawback cannot be upheld. For the same reason, imposition of penalty on the appellants is neither justified nor warranted. 26. In view of the foregoing discussions, we allow the appeals on the point of jurisdiction as also on merits. Manmohan Singh .....

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n such examination, merely on account of non-appearance of Navdeep Goyal for cross-examination his statement has not been considered even though, statement was based on records. Para 19 of the draft stay order recorded by Hon'ble Member (J) is referred as below:- "19. As per the statement of Shri Navdeep Goyal recorded on 30.3.05, the port of discharge in the Bill of lading could not be different from that mentioned on E P copy/shipping bill. The bills of lading at the end of the appell .....

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ferent than the one mentioned in the bill of lading in the case of the appellant. Thus, it seems to be a contrary statement made by Shri Navdeep Goyal." 29. Plea has been taken that statement of Navdeep Goyal cannot be relied as at the relevant time of export, he was not incharge. Further it is also held that bill of ladings are prepared by shipping line and goods exported for Iran/Egypt or any Middle East country are to be routed or transported through Dubai port only. Learned Member has a .....

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risdiction Issue 32. The Member (Judicial) has proposed to set aside recovery of the amount of drawback primarily on the ground of lack of jurisdiction on the part of the ADG, DRI, Delhi to issue show-cause notice. It has been, referring to the judgment of the Hon'ble Supreme Court in the case of Commissioner v. Syed Ali - 2011 (274) ELT A109, observed by the Member (J) that though retrospective amendment has been made by inserting clause 11 to Section 28 of the Customs Act, 1962 act with a .....

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back Rules ADG, DRI could not have issued the show-cause notice. 33. I find that the issue regarding jurisdiction of the DRI officials to issue show-cause notice for recovery of drawback under Rules 16/16A had come up for consideration before this Tribunal in the matter of Sun Knitwear (P.) Ltd. v. Commissioner of Customs (Adjudication) 2006 (6)43 - Appellate Tribunal Bangalore, which was later affirmed by the Hon'ble Karnataka High Court in the case of Sri Meenakshi Apparels (P.) Ltd. v. Co .....

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to the present cases for the reason that DRI officers have been empowered to act as officers of Customs under Notification No. 17/2002-Cus. (N.T.), dated 7-3-2002, which reproduced below:- Directorate of Revenue Intelligence (D.R.I.) officers appointed as Customs Officers - Notification No. 19/90-Cus. (N.T.) superseded In exercise of the powers conferred by sub-section (1) of Section 4 of the Customs Act, 1962 (52 of 1962) and in supersession of Notification of the Government of India in the Mi .....

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column (1) of the said Table with effect from the date to be notified by the Central Government in the Official Gazette :- Area of Jurisdiction Designation of the officers (1) (2) (3) (4) Whole of India Additional Director General, Directorate General of Revenue Intelligence posted at Headquarters and Zonal/regional units. Additional Directors, or Joint Directors, of Directorate of Revenue Intelligence posted at Headquarters and Zonal/regional units. Deputy Directors, or Assistant Directors, of .....

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r Section 4(1) of the Customs Act. 9. As regards the objection raised by the appellants for the Commissioner to adjudicate the case, it is seen that under Section 5(2) of the Customs Act, "An officer of Customs may exercise the powers and discharge the duties conferred or imposed under the Act on any other officer of Customs who is subordinate to him." In view of the above provisions, it is not illegal on the part of the Commissioner to adjudicate a case where the Show-Cause Notice was .....

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his order. 10. In the Hukam Chand Shyam Lal Case, telephone connections of certain people were disconnected on account of the fact that the telephones were used to carry on forward trading which was illegal. In that case, while interpreting Section 5 of the Telegraph Act and Rules 421 and 422 of the Telegraph Rules, the Apex Court observed "it is well settled that where a power is required to be exercised by a certain authority in a certain way, it should be exercised in that manner or not .....

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use Notice no prejudice is caused to the appellants and they cannot argue that principles of natural justice have been violated because DRI officer issued the Show-Cause Notice. This is an absurd argument which totally ignores Notification No. 17/2002-Cus.(N.T.)." 34. The ratio of this decision of the Tribunal was affirmed in Sri Meenakshi Apparels (P.) Ltd. (supra). The Hon'ble High Court of Karnataka went a step further and, apart from holding that the powers of DRI officials to inves .....

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the drawback is not disputed. What is disputed is the power of the said authority to adjudicate the dispute. Relying on the circular dated 15th February 1999, which is issued in pursuance of the Notification No. 19/90 conferring the similar power where it has been held, though they have been conferred the power to investigate and issue show-cause notice, adjudication is to be done as per Rule 16-A by the jurisdictional Commissioners, Additional Commissioners, Deputy Commissioners or Assistant Co .....

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ily, 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 drawback 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, .....

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concerned, there is no quarrel with the legal proposition. Section 5(2) of the Act specifically provides that, a higher Officer of the Customs also has the power to perform functions and duties of a lower Officer. Therefore, a person appointed under Section 4(1) of the Act. by virtue of Section 5(2) of the Act, has the jurisdiction to exercise the power of a subordinate or a lower authority and therefore, the power exercised by the Director of Revenue Intelligence is as stipulated under the Act .....

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show-cause notices. Held accordingly. Merit issue 36. However to appreciate the issue on merit in its full matrix, remaining facts already on record are also examined such as:- (a) Statements of all the accused recorded on 19.8.04, 23.08.04, 25.08.04, 16.09.04 and 30.05.2004. (b) Recovery of documents at the residence of Shri Kulbhushan Goyal. (c) Statement of so-called suppliers of cycle parts, items of supply and items which were exported and its relevancy. (d) Receipt of money in advance thro .....

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f the Consulate General of India at Dubai (h) Documents referred in DRI's letter addressed to Senior Departmental Representative. (i) Goods are later auctioned by Dubai Customs (j) If goods are not got released at Dubai and all containers are detained and auctioned at Dubai, how parallel sets of documents including bill of ladings were prepared showing good consigned to Egypt, Tehran etc. (k) It is on record that money has come in advance through TT through Banking Channel - without release .....

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ainers namely Shri Kulbhushan Goyal and Ramesh Goyal, all goods (so-called cycle parts) were consigned to Dubai only against parallel set of Bill of Ladings showing destination as Dubai. Details of all these containers are given in Annexure A, B & C to the show-cause notice. Overseas enquiry report dated 10.12.2003 received through Consulate General of India at Dubai is a proper reliable evidence as information has been gathered from Dubai Customs, a Sovereign Authority through diplomatic ch .....

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om outside India in the course of investigation as admissible evidence. 39. Appellants during their statements before customs have contended their stand that they were receiving orders from their agents in Dubai and were consigning so-called cycle parts to Egypt, Iran on the basis of such orders and accordingly they were declaring in their shipping bills. In their support, they also stated that various components/wire were being purchased from various buyers and later they were assembling/manufa .....

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ees had contended that the goods, in question, were physically examined by the officers of Customs at CFS, Ludhiana and the same were cleared by them as bicycle parts. In this regard, I find that Shri Kulbhushan Goyal was confronted with three lists marked as Annexure 'A', 'B' and 'C' containing details of export consignments to Iran of his firms which were abandoned at Dubai and never reached Iran or the merchant brokers at Dubai. In his statement dated 30.03.2005 record .....

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0 and 6619 in which the name of the shipper was M/s M.K. International Ludhiana, name of the notified party was M/s Clarion Logistics Middle East, Jebel Ali, port of discharge and place of destination was Jebel Ali, no. of packages were 604, gross weight was 14885 kgs net weight was 14585 kgs and container No. was CRXU-281449-4. The Noticee had further admitted having seen Bill of Lading No. LUHDXB-1612724A in respect of Shipping Bill No. 6620 in which the name of the shipper was M.K. internatio .....

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e no. of packages were 197, gross weight was 4975 kgs and net weight was 4875 kgs. He had also admitted having seen Bill of Lading No. LUH DXB-1612724 in respect of shipping bill No. 6619 in which the name of the shipper was M.K. International, name of notified party was Saeb Trade Company, Tehran, port of discharge was Bandar Abbas, place of destination was Tehran, No. of packages were 206, gross weight was 4925 kgs and net weight was 4825 kgs. He had further stated that in all the three Bills .....

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concerned Shipping Line was also shown the bills of lading No. LUH DXB-1612724, LUH DXB-1612724A, LUH DXB-1612724B and LUH JEA-1612724 and on being enquired about the discrepancies between the first three Bills of Lading and fourth one, he in his statement dated 30.03.2005 stated as under:- (a) The first three B/L NN copies seemed to be forged and prepared by the shipper himself showing final destination as Bandar Abbas and B/L prefix as DXB, (b) that normally term DXB was used for Dubai as dest .....

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oms by the shipper for claiming drawback and had nothing to do with the shipping line; that he again clarified that shipping line never submitted drawback copy of shipping bill to the customs; that there were similar discrepancies in three other B/L shown to him. He also stated that the words 'LUH' on a Bill of Lading defined the point of origin i.e. Ludhiana, 'JEA' defined port of discharge i.e. Jebel Ali and the digits 1612724 defined the Serial No. Further, the responsibility .....

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tement of Shri Navdeep Goyal that the place of delivery in respect of the goods as mentioned in Annexure 'A', 'B' & 'C' was Dubai and not Iran and port of discharge was Jebel Ali (Dubai) and not Bandar Abbas (Tehran) as mentioned in the copies of Bill of Lading submitted by the Noticees to the Customs department for availment of drawback. This is further corroborated from the fact that the said goods were actually shipped to Dubai as is evident from the overseas enqui .....

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of Ladings were prepared on parallel basis. First set was for Tehran. After Customs examination, all goods were consigned to Dubai for which parallel set of bill of ladings were prepared. As per Consulate General's report at Dubai all 41 consignments containing in 12 containers including 5 consignments/shipping bills stuffed in five containers were received at Dubai port. No release of these containers were taken by non-existent importers and later all these containers were auctioned by Duba .....

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legs to stand in view of numerous evidences coming on record evidencing that all containers landed at Dubai which were not got released by anyone and later auctioned. This is further supported by the facts that no export contracts have been produced. No LCs were opened. Actually advance payments from Dubai have been organized. The fact remains that payments were not received from the consignee. Actually factum of export, as such, has not been completed. 43. I have perused the report dated 10.12. .....

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contain bicycle parts exported to Dubai by M/s. Monte International and M/s. Monte Metals, controlled by S/Shri Kulbhushan and Ramesh Goyal of Ludhiana, under Bills of Lading No. LuhDxb 01612516,01612581,01612601,0162550a, 0162489a, 0162554a, 0162479a from ICD, Ludhiana during October and November, 2002 have been abandoned and the goods contained therein are being put up for auction by Dubai port authorities. Intelligence further indicates that the goods are junk and were consigned to building .....

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e containers were cleared at Dubai, the details of the importer, the description of goods and the price declared in the import bills filed before Dubai Customs; and (v) any other relevant information. A report along with documents generated during the inquiry may kindly be sent at the earliest so that we can initiate our enquiries here. In case of unavoidable delay, a line of confirmation about the containers lying at Dubai port for auction may be sent after necessary verification. Dated: 10.12. .....

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ount Dhs. 31,000/- only. Sl. No. B.No. Shipper Notify party Description of cargo 1 LUHDXBB1612670 M/s.Monte International, Nirmal Market, Oswal Street, Miller Ganj, Ludhiana Al Shams Building Material, PB No.12694 Dubai Bicycle Parts 2 LUHDXB1612651 M/s.Monte International, Nirmal Market, Oswal Street, Miller Ganj, Ludhiana Al Shams Building Material, PB No.12694 Dubai Bicycle Parts 3 LUHDXB162700A M/s.M.k. International, Nirmal Market, Oswal Street, Miller Ganj, Ludhiana Abbas Rostum Bld. Mater .....

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owever, all containers were later auctioned as junk material was found which only fetched only 31,000 (dh) which is only ₹ 3,10,000/- in Indian rupees against total value of export amounting to ₹ 1,21,49,086/- 45. Interestingly advance payment for all these containers were organized and sent to India. Commissioner has rightly pointed out in his order that these were only hawala payments as no goods were got released by non-existent buyers. 46. To confirm the DRI-s findings, further i .....

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nee for delivery. Copies of Bill of Ladings showing consignee country as Dubai were also submitted alongwith their letter. Letter of M/s. IAL Shipping Agencies (New Delhi) Ltd. also enclosed debit notes of charges incurred which included substantial storage charges/ post-landing charges. Debit Invoices clearly indicated vessel's name, BL No. (LdhDXB) and container No. & number of days for which charges claimed. Actually these documents were recovered from the residence of Shri Kulbhushan .....

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BL Number -LUHDXB1612651 Container No. CRXU 103105-7 Arrived: 15/12/2002 Cargo Moved for Auction 1/10/2003 Total Number of Days = 290 Days Total Charges: 11,641 (Dhs) = ₹ 1,40,507/- 48. There are other similar invoices raised by M/s.IAL Shipping Agencies (New Delhi) Ltd. (a) Invoice No. DN/LCL/552/2005 BL No. LUHDxB 612731 Number of days =267 Total charges 9346 Dhs =Rs.11,2,806/- (b) Invoice No. DN/LCL/548/2005 BL No. LUHDxB 1612700A Number of days=274 Total charges 9900 Dhs = ₹ 12,0 .....

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CL/543/2005 BL No. LUHDxB 1612670 Number of days=288 Total charges 10283 Dhs = ₹ 1,24,116/- (h) Invoice No. DN/LCL/551/2005 BL No. LUHDxB 1612724 Number of days=267 Total charges 9449 Dhs = ₹ 1,14,049/- (i) Invoice No. DN/LCL/546/2005 BL No. LUHDxB 162479A Number of days=337 Total charges 14825 Dhs = ₹ 1,78,938/- 49. Despite clear facts emerging out of investigation, appellant tried to confuse the matter by asking cross-examination of Shri Navdeep Goyal Branch Manger of Shippin .....

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and this fact was reported by Consulate General of India at Dubai. 50. Despite clear-cut fraudulent act emerging out of investigations, appellant's insistence of cross-examination of shipping line officials and departmental officers did not have any force. Mere insistence that goods were exported after examination was conducted by the departmental officers does not come to their rescue as investigations have unearthed modus operandi adopted by the appellants as discussed above. Despite non- .....

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fraud with a intent to defraud the Revenue Further, Bill of ladings were changed after documents were filed with Customs and customs examination were over. This was done to avoid examination by Customs. Role of Customs Officers is not beyond doubt and such large manipulations could not have been possible without their active participation. Restricting examination to 5% by showing importers at Tehran by the appellants was a link to this manipulation. 51. It also come out that no containers were .....

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elevant which are reproduced for ready reference. "I find that the Noticees had contended that as the payments of the goods in question has been realized by them in advance, they are not concerned with the further status of the goods. He had also contended that no enquiry under FEMA is pending against them which prove that payment was not realized through Hawala. They had further contended that the export was complete the moment the goods had left the territorial limits of the Indian waters .....

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ame were auctioned for a meagre amount of Dhs 31000/- (Rs.3,10,000/- approximately). As realization of foreign proceeds is an essential requirement for the purpose of claiming drawback. I find that the advance payments of the impugned goods were arranged through hawala channels as is apparently clear from fact that the impugned goods had neither reached the buyer in Iran nor the merchant broker in Dubai. It is self explanatory that no prudent businessman would continue making advance payments wi .....

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Foreign Trade Regulation Rules, 1993 and Customs & Central Excise Duties Drawback Rules ,1995 and therefore the disbursed amount of drawback appears to be recoverable from them under Rule 16 of Customs & Central Excise Duties Drawback Rules, 1995". 52. As all companies namely M/s. Monte International, M/s. Monte Metal and M/s. M.K, International are directly controlled by Shri Kulbhushan Goyal and Ramesh Goyal and they have indulged in fraudulent export of spurious/junk goods, which .....

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in Hawala transaction for transfer of money including money taken back as drawback and forging various documents clearly stand proved. They including their companies have rightly been put to penalties alongwith demand of erroneously claimed drawback. 53. In view of above discussion and findings, I uphold the order of the Commissioner of Customs confirming the recovery of drawback under Rule of Customs and Central Excise Duties Drawback Rules, 1995. No interference in respect of penalties imposed .....

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isdiction for issue of SCN and when there is fraudulent claim of drawback and evidenced from record requiring recovery on merit as held by Member (Technical) OR Whether appeals against the Order-in-Original passed by Commissioner of Customs is to be allowed in view of findings that there is no jurisdiction with DRI officers to issue SCN and recovery of drawback is not sustainable on merits as held by Member (Judicial). THIRD MEMBER ORDER Ashok Jindal, Judicial Member (As a Third Member) - The fo .....

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inal passed by Commissioner of Customs is to be allowed in view of findings that there is no jurisdiction with DRI officers to issue SCN and recovery of drawback is not sustainable on merit as held by Member (Judicial)." 55. The facts of the case are not in dispute, therefore, the same are not repeated for the sake of brevity. 56. As the issue of jurisdiction is a legal issue, therefore, first I deal with the issue whether the show-cause notice issued without jurisdiction or not. 57. I have .....

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who is assigned those functions by the Board or the Commissioner of Customs." 59. The issue whether Commissioner of Customs (Preventive) was the proper officer for the purpose of issue of show-cause notice under section 28 of the Customs Act, 1962 was considered by Hon'ble Apex Court in the case of Sayed Ali (supra) wherein Hon'ble Apex Court observed as under:- '13. Section 2(34) of the Act defines a "proper officer", thus : "2. 'Definitions. - (34) "pro .....

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to determine whether an "officer of customs" is the "proper officer". 14. From a conjoint reading of Sections 2(34) and 28 of the Act, it is manifest that only such a customs officer who has been assigned the specific functions of assessment and reassessment of duty in the jurisdictional area where the import concerned has been affected, by either the Board or the Commissioner of Customs, in terms of Section 2(34) of the Act is competent to issue notice under Section 28 of t .....

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s all officers of customs, in a particular area be it under the Collectorate of Customs (Imports) or the Preventive Collectorate, would be "proper officers". In our view therefore, it is only the officers of customs, who are assigned the functions of assessment, which of course, would include reassessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and the consignments had been cleared for home consu .....

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her I find that in the case of Chandna Impex (P.) Ltd. (supra), the issue as to whether the officer of DRI can be considered to be proper officer to demand duty under section 28 of the Customs Act came up before Hon'ble Supreme Court and the matter was remanded to Hon'ble High Court to decide such substantial question of law in the light of decision in the case of Sayed Ali. Hon'ble Punjab and Haryana High Court in the case of Era International (supra) and Hon'ble Andhra Pradesh .....

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of Hon'ble Karnataka High Court in the case of Meenakshi Apparels (P.) Ltd. (supra). I have gone through the said decision which was prior to the decision of Apex Court in the case of Sayed Ali (supra). Therefore, this decision cannot be relied upon before me. Further, reliance placed on the decision of the Tribunal in the case of Bhagwati Components Mfg. Co. v. Commissioner of Customs [Misc. Order No. 52995/2015, dated 4-9-2015]. I find that the said decision has been given by this Tribuna .....

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l be deemed to have been and always had been the proper officers for the purpose of this section. 63. However, in this case, the show-cause notice has been issued in terms of the provisions of Rule 16 Customs and Central Excise and Service Tax Drawback Rules, 1995. The said provisions of the Rule 16 are extracted below:- 'Rule 16. Repayment of erroneous or excess payment of drawback and interest-has been paid erroneously or the amount so paid is in excess of what the claimant is entitled to, .....

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n clear terms, refers to issuance of show-cause notice but the same refers to the demand. Definitely the demand can be made by issuance of show-cause notice after giving an opportunity to personal hearing to concerned recipient of drawback to put forth his defence as against alleged excess erroneously granted. The CBEC Circular No.24/2011-Cus dated 31.5.2011 which reads as under: "2. Reference have received from the field formations for specifying the proper officer for issuance of show-cau .....

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oms and Central Excise and Service Tax Drawback Rules, 1995 within the monetary limit laid down in the said circular, before any recovery can be initiated. I have seen that Rule 16 does not specifically provide for issuance of show-cause notice and only refers to demand made by the proper officer, but the said demand has to made by the proper officer by way of issuance of show-cause notice. Therefore, the question arises before me whether the SCN issued by DRI for recovery of erroneously granted .....

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ent was made under Rule 16 of Customs and Central Excise and Service Tax Drawback Rules, 1995 in respect of issuance of show-cause notice. In fact, the amendment dated 6.7.2011 was made only in section 28 was retrospective with effect from 16.9.2011 and the circular CBEC dated 31.5.2011 was only for the amendment limited for proper officer under Rule 16 of Customs and Central Excise and Service Tax Drawback Rules, 1995. The said circular did not consider that the DRI officers are to be the prope .....

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ax Drawback Rules, 1995. 67. With these observations, I agree with the view taken by Hon'ble Member (Judicial). The issue No.1 is answered accordingly. 68. On merits of the case, I have seen that the impugned goods was examined at the port of shipment and no single discrepancy was detected in regard to description, quality, quantity or value of the goods. All the consignments were examined found to be correct and the goods were assessed, thereafter let export order was issued. Further, I fin .....

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