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M/s Pawan Kumar Singh Kaka Carpets Yadavendra Kumar Roy Rita Roy & S.K. Vishwakarma Versus Commissioner of Central Excise (Adjudication)

Duty drawback - carpet rolls - valuation - whether drawback already disbursed was in excess of their admissibility? - shortage of goods - Held that: - the container was not inspected immediately after it was removed from ICD, Bhadohi. The counting of the contents of container was carried out much later after eighteen days of container being out of the control of Officers. For counting contents of the goods at the Gate Way Port several times it was reopened, resealed, & shifted from one container .....

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r but the less payment by the Sunshine Overseas importer was on account of short delivery of goods. Therefore, the market enquiries conducted in respect of goods which were exported through the said three Shipping Bills is not established to be correct since importer in foreign country has remitted full amount for the quantity received. - Further, we find that for the valuation of goods which were exported from 02-02-2004 to 24-06-2008, the Show Cause Notice has resorted to Section 14 of Cus .....

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ft the shore of Indian Territory and the export of which has already taken place. Therefore, we hold that all the allegations and findings in respect of goods which were exported during the period from 02-02-2004 to 24-06-2008 are totally unsustainable. We also find that the penalty under Section 114 of Customs Act, 1962 cannot be imposed for dereliction duty on the part of the Officers. We, therefore, hold that penalty imposed on Shri Pawan Kumar Singh & Shri S.K. Vishwakarma is not sustainable .....

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the quantity of goods exported and allow drawback as per provisions of law. We set aside the remaining part of the Order-in-Original impugned and remand to the drawback disbursement Authority for disbursal of drawback on the goods exported through said Shipping Bill No. 702/703/704/DBK/2008 all dated 07-06-2008 on the basis of actual quantity of export and on the basis of actual foreign exchange realized as per the provisions of law. - Appeal allowed by way of remand. - Appeal No. C/3593, 3 .....

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e issued with a common Show Cause Notice bearing No. DRI/LZU/LRU/SEIZ/23/08/3755 dated 16-02-2010 & common Adjudication Order was passed therefore, above stated appeals are taken together for decision. 2. Brief facts of the case are that the M/s Kaka Carpets presented three Shipping Bills bearing Nos. 702/DBK//2008, 703/DBK/2008 & 704/DBK/2008, all dated 07/06/2008, under claim for drawback for export of commodity Indian Hand Knotted Woollen Carpets with ICD, Bhadohi which was functionin .....

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was conducted by Superintendent, ICD, Bhadohi & cleared by him by giving let export order. The consignment was carried in Container No. ESPU-8012774. The said container contained the goods covered by said three Shipping Bills and it was cleared by ICD, Bhadohi on 07/06/2008 and the gateway port for the said container was JNPT, Nhava Sheva. The custodian at ICD, Bhadohi was CWC. On 20-06-2008 the said container lying at Hind Terminals, CFS, Nhava Sheva was opened by DRI Officers of JNPT, Nha .....

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said rolls of carpet in polythene bags were unloaded and it was requested by the representative of M/s Kaka Carpets that after the examination of 1011 rolls of carpets it would be difficult to repack them without the help of skilled manpower. The goods were once again re-stuffed in the same container and the container was re-sealed with bottle seal No. 043186 on 20-06-2008. On 24-06-2008 Officers of DRI, Lucknow in presence of Panchas, representative of shipping line M/s Emirates Shipping line a .....

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rpets were stuffed in container were stuffed in the Container No. TGHU-0617350 on 24-06-2008 and bottle seal No. 009573 was used to seal the said 20 ft. container. The cargo left to be examined was again allowed to remain in Container No. ESPU-8012774 and it was sealed by use of bottle seal No. 009572 on 24-06-2008. On 25-06-2008 in presence of same Panchas who were presented on 24-06-2008 for opening the container were again present on 25-06-2008, in presence of said Panchas, in presence of rep .....

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pping Bills. Subsequently, they have carried out investigation on four aspects:- (i) The value declared by the exporter in respect of goods presented for export through said three Shipping Bills dated 07-06-2008, (ii) Total Square meters of carpets declared in respect of goods presented for export through said three Shipping Bills No. 702,703 & 704 all dated 07-06-2008 (iii) Value of similar goods exported for the period from 2004-05 to 2008-09 to examine whether drawback already disbursed w .....

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enquiries were conducted by DRI Officers and it appeared to them that when they arrived at value of goods declared in said Shipping Bills determined under Rule 5 of Customs Valuation (Determination of Export Goods) Rules, 2007 read with Section 14 of the Customs Act, 1962, the value should have been ₹ 6,47,173/- in respect of said Shipping Bill No.702/DBK/2008 instead of declared FOB value of ₹ 790398.24/-. It appeared to Revenue that in a similar manner the value determined in resp .....

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heir admissibility. 5. On the basis of market enquiries about quality and value of carpets exported by M/s Kaka Carpets, it appeared to Revenue by invoking provisions of Rule 5 the Customs (Valuation of Export Goods) Rules, 2007 read with Section 14 of the Customs Act, 1962 to the goods already exported from 02-02-2004 to 24-06-2008, the value declared by M/s Kaka Carpets in various Shipping Bills from 02-02-2004 to 24-06-2008 where the goods were already exported was ₹ 1,59,66,35,071/- on .....

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eady exported was to be ₹ 4,93,16,928/- and it appeared to Revenue that excess drawback to the tune of ₹ 12,00,79,410/- was disbursed to M/s Kaka Carpets from 02-02-2004 to 24-06-2008. 6. The DRI Officers also examined the role played by officers who examined the goods presented through the said three Shipping Bills dated 07-06-2008. The said Shipping Bills were assessed by Shri Rajendra Kumar, Superintendent. The said Shipping Bills were processed by Shri Ajay Shukla, Inspector. The .....

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able to penalty under Section 114 of Customs Act, 1962. 7. It appeared to Revenue that Shri Pawan Kumar Singh, Superintendent scrutinized Examination Order, Examination Report, Shipping Bills, Invoices & other documents and stuffing conducted was under his supervision in the presence of CWC Officers, representatives of shipping line and exporter. It appeared to Revenue, further, that export was permitted by Shri Pawan Kumar Singh, Superintendent after superficial examination of documents onl .....

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basis of above stated investigations said Show Cause Notice dated 16-02-2010 was issued which had following proposals:- (i) Why the goods covered by Shipping Bill Nos. 702, 703, 704/DBK/2008 all dated 07-06-2008 should not be confiscated under section 113(i), 113(ii) and 113(d) of Customs Act, 1962 for attempting improper exportation by resorting to misdeclaration in respect to material particulars like- quantity, description, value and drawback amount furnished in the said Shipping Bills, (ii) .....

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t value of the export goods is ₹ 6,47,173/- which is lower than the drawback amount claimed in the said Shipping Bill, (iv) Why drawback amount admissible in respect of said Shipping Bill No. 703 & 704 respectively should not be arrived at ₹ 1,59,015/- and ₹ 2,12,959/- and why assessment of goods by said Shipping Bills should not be finalized at F.O.B. value of ₹ 11,95,603/- & ₹ 16,01,196/- respectively and why excess amount of drawback of ₹ 18,23,026/ .....

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59,285/- on the basis of F.O.B. value of ₹ 5,03,34,314/- and excess drawback of ₹ 1,37,91,203/- (1,92,50,488/- ₹ 54,59,285/-) should not be disallowed and recovered in terms of Sub-Section 1 of Section 75 of Customs Act, 1962 read with Customs, Central Excise duties & Service Tax Drawback Rules, 1995 and why interest in terms of Section 75A(2) of said Rules should not be recovered, (vii) Why penalty under Section 114(iii) & Section114AA of the Act should not be imposed .....

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Rajendra Kumar, Superintendent; Shri Pawan Kumar Singh, Superintendent; Shri Ajay Shukla, Inspector; Shri S.K. Vishwarkarma, Inspector; M/s Kataria Carriers; M/s Cleared Shipping Forwarders and Shri Rajeev Ranjan, Assistant commissioner, (x) Why value of the export goods exported during the period from 02-02-2004 to 24-06-2008 covered by Annexure-8 of said Show Cause Notice should not be determined at ₹ 48,30,47,470/- under Rule 5 of Customs (Valuation of Export Goods) Rules, 2007 and Sec .....

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o 16-06-2008 covered by Shipping Bills Shown in the Chart at Annexure-IX the said Show Cause Notice should not be determined at ₹ 57,45,965/- under Rule 5 of Customs (Valuation of Export Goods) Rules, 2007 and Section 14 of Customs Act, 1962, (xiii) Why drawback should not be determined at ₹ 4,11,139/- on FOB value of ₹ 57,45,965/- and why excess drawback of ₹ 2,73,463/- should not be disallowed in terms of Section 75(1) of Customs Act, 1962 read with Customs, Central Exc .....

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ave been duly received through designated authorized agents which have been duly certified by the concerned bank. (b) The four stray invoices relied upon (RUD 93) in the Show Cause Notice in support of the allegation of overvaluation of the goods have not evidentiary value and do not demonstrate the incorrectness of the declared values. (c) The prices of the carpet, a handicraft material, fluctuate enormously depending on design, variety, quality of the raw material used, wastage percentage of t .....

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ect of any goods the market price of which is less than the amount of drawback due thereon. The said provision is not applicable in their case because the purported market enquiry to determine PMV is patently erroneous. (g) In respect of shortage of 63 rolls it was stated at the time of examination of goods in ICD, Bhadohi no discrepancies were noticed and that at the time of sealing of container at ICD, Bhadohi, containers contained 1011 rolls. (h) All the payments were made to and received by .....

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ent which is received and credited in exporters account. 10 Shri Pawan Kumar Singh, Superintendent submitted before the Original Authority that the allegations against him in para 113 of impugned Show Cause Notice were denied by him and further submitted as follows:- (a) His implication in the instant case on the basis of presumption that the examination carried out was superficial was incorrect and he performed his duties with utmost diligence and in accordance with the practice that was follow .....

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ri. Bangalore) that if the Officer is found to be involved in dereliction of duty penalty under Section 114 of Customs Act, 1962 is not imposable on him. 11. Shri S.K. Vishwakarma, Inspector submitted before the Original Authority that the Show Cause Notice has wrongly applied provisions of Section 114 of Customs Act, 1962 and that under the said section penalty can be imposed on attempt to improper export and only on confiscation of goods under Section 113 of Customs Act, 1962. He has further s .....

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The shortage of 63 rolls was detected at a subsequent date to the date of opening of the container which was sealed at ICD, Bhadohi. 12. The Original Authority did not appreciate any of the submissions made by above stated noticees. 13. The Original Authority has accepted all the allegations against M/s Kaka Carpets and Mrs. Rita Roy. In respect of Shri Pawan Kumar Singh, Superintendent the finding of the Original Authority is that Shri Pawan did not discharge his duty properly. He has further o .....

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findings the Original Authority has passed the order which is reproduced below:- (i) I order rejection of FOB value of ₹ 2,45,11,179/- declared by the exporter in the Shipping Bills No. 702,703 & 704 all dated 07-06-2008 as per the provisions contained in Explanation (iii) of Rule 8 of Customs (Determination of Price of Export Goods) read with clause (iii) of the second proviso to Section 14 of the Customs Act, 1962. (ii) I order re-determination of FOB value of exported goods covered .....

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on the Shipping Bills No. 702,703 & 704 all dated 07-06-2008 in terms of Section 76(1) (b) of the Customs Act, 1962. (iv) I order confiscation of carpets exported vide Shipping Bills No. 702,703 & 704 all dated 07-06-2008 with a declared FOB value of ₹ 2,45,11,179/- under claim of drawback of ₹ 32,59,016/- under Section 113(i), 113(ii) & 113(d) of the Customs act, 1962 for being attempted to be improperly exported in contravention of the provisions of Section 11, Section .....

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377; 1,59,66,35,071/- (Rupees One Fifty Nine Crores Sixty Six Lacs Thirty Five Thousand and Seventy One only) declared by the exporter in respect of exports made during the year 2004-05 to 2008-09 as per the provisions contained in Explanation (iii) of the second proviso to Section 14 of the Customs Act, 1962. (vi) I order the re-determination of FOB value of goods exported during the year 2004-05 to 2008-09 at ₹ 53,91,27,751/- (Rupees Fifty Three Crores Ninety One Lacs Twenty Seven Thousa .....

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ted during the period 2004-05 to 2008-09 is hereby calculated at ₹ 4,93,16,928/- (Rupees Four Crores ninety Three Lacs Sixteen Thousand Nine Hundred Twenty Eight only). (ix) I order that the drawback amount of ₹ 12,00,79,410/- (Rupees Twelve Crores Seventy Nine Thousand Forty Hundred ten only) paid in excess than actually due, to be recovered under the provisions of Section 75 of Customs act, 1962 read with Customs, Central Excise Duties & Service Tax Drawback Rules, 1995. The in .....

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ished by the exporter i.e. M/s Kaka Carpets on the shipping bills. However, as the goods are not physically available, I refrain from imposing any redemption file in lieu of confiscation. (xi) I impose a penalty of ₹ 5,00,00,000/- (Rupees Five Crores only) on M/s Kaka Carpets under section 114(iii) of the Customs act, 1962 for contravention of aforesaid provisions. (xii) I impose a penalty of ₹ 1,00,00,000/- (Rupees One Crore only) each on Mr. Y.K. Roy & Mrs. Rita Roy, Partners u .....

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k amount of ₹ 12,00,79,410/- paid on the past exports, redemption fine and personal penalties imposed on M/s Kaka Carpets and it s two partners. (xiv) I drop the proceedings against Mr. Rajiv Ranjan, the then Assistant Commissioner, as the charges levelled against him is not substantiated and does not stand proved. (xv) I also drop the proceedings against Mr. Rajender Kumar, Superintendent and Mr. Ajay Shukla, Inspector as the Show Cause Notice does not indicate any specific omissions or c .....

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D: Bhadohi, M/s Clearship Forwarders (P) Ltd. & M/s Kataria Carriers as they have not violated any provisions of Customs Act, 1962. 16. Aggrieved by the said Order-in-Original the appellants have filed these appeals before this Tribunal. 17. Heard the ld. Counsel for M/s Kaka Carpets, Yadavendra Kumar Roy & Mrs. Rita Roy. He has submitted that the Original Authority has summarized the issues involved in this case at Para 200 of impugned order and further submitted that when the goods wer .....

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was assessed, the goods were exported, drawback claimed was found to be admissible, the export proceeds were received and therefore, there is no reason to reopen the assessment of goods exported during the past period. In respect of the goods under seizure, he has submitted that Page 75 of the Show Cause Notice takes cognizance of the same wherein it is stated that out of the declared value of ₹ 2.45 crore since after resealing and export of consignment with 63 rolls less than the declared .....

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Tex-Age Versus Commissioner of Customs (Exports), Nhava Sheva reported at 2008 (221) E.L.T. 395 (Tri. Mumbai) and submitted that in the said case law it has been held that when there are no allegations made that remittances by foreign firms were made from their own pockets or proprietor of those firms were under control of exporters and that ultimately the issue was carried before Hon ble Supreme Court of India which was decided in Civil Appeal No. 4465-4473/2008 through its ruling dated 05-09-2 .....

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were being made and that the entire amount as reflected in the said invoices was received by the exporters and in view of such finding of fact and in the absence of any evidence to show that the money was remitted by way of Hawala, the Hon ble Supreme Court has held that the case of over-invoicing has not been established by the Department. He has further submitted that out of ₹ 2.45 crore FOB value declared in the said three Shipping Bills as stated at para 17 (Supra) ₹ 2.15 crore .....

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hri Pawan Kumar Singh, Superintendent submitted as follows:- (a) The Panchnama was made and the measurements were recorded by the DRI Officers in the presence of their chosen witness behind the back of Shri Pawan Kumar Singh, who was the officer of the ICD, Bhadohi and that the Panchnama is the sole evidence for making allegations of shortage, and the same cannot be construed as evidence sufficient to confirm the charge of less quantity or allegation of negligence on the part of Shri Pawan Kumar .....

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of them have given any statement in respect of Shri Pawan Kumar Singh indicating that Shri Pawan Kumar Singh was remotely aware of any misdeclaration or he had connived with the exporters and that there were no allegations about the pecuniary gain by Shri Pawan Kumar Singh in the whole case. (d) There is no provisions in Section 114 of the Customs Act, 1962 for imposition of penalty for dereliction of duty and failure to perform duty efficiently and relied upon various Final Orders issued by thi .....

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rma submitted that when the container No. ESPU-8012774 was opened on 20-06-2008 the seal which was fixed on the said container at ICD, Bhadohi was broken but immediately the counting of the said goods contained therein was not taken up. The said container was once again resealed by bottle seal in the absence of Shri S.K. Vishwakarma but in the presence of representative of exporter. The said container was once again opened on 24-06-2008 in order to examine the goods. The container with leftover .....

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not responsible for shortage of goods after several times goods stuffed & de-stuffed from one container to another. He has further submitted that had the container been intercepted immediately after it left the control of Shri S.K. Vishwakarma and had such shortage was found then only he was responsible for negligence of his duty. The ld. Counsel relied on various case laws such as Sunshine Overseas Versus Commissioner of Customs & Central Excise, Daman Vapi reported at 2011 (263) E.L.T. .....

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hortage of goods found in the container on 25-06-2008 at Gate Way Port. (iii) Valuation of goods already exported and recovery of disbursed drawback in respect of them & (iv) Personal penalty imposed on Departmental Officers. 22. We find from various submissions as stated above that the container was not inspected immediately after it was removed from ICD, Bhadohi. The counting of the contents of container was carried out much later after eighteen days of container being out of the control o .....

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red in the said three Shipping Bills but the valuation of the goods exported through said three Shipping Bills was not reduced by the importer but the less payment by the Sunshine Overseas importer was on account of short delivery of goods. Therefore, the market enquiries conducted in respect of goods which were exported through the said three Shipping Bills is not established to be correct since importer in foreign country has remitted full amount for the quantity received. Further, we find tha .....

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