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Manasa Impex Services, Cargomar (CHA) , Trans Asian Shipping Services (P) Ltd., Prasanna Kumar Versus CC & CCE Coimbatore

2018 (1) TMI 441 - CESTAT CHENNAI

Penalty u/s 114 (iii) of the CA, 1962 on the CHA/Shipping Lines - alleged drawback fraud committed by concerned exporters - Jurisdiction to issue SCN - Held that: - The decision in the case of Monte International [2016 (4) TMI 406 - CESTAT NEW DELHI] has categorically held that the SCN issued by DRI officers under Rule 16 & 16A of Customs and Central Excise Drawback Rules, 1995 is without jurisdiction and such SCN is ab initio void. - The issue whether SCNs issued by DRI for recovery of draw .....

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- The demands of duty and / or imposition of penalties on the appellants herein which have been confirmed in the impugned orders cannot sustain - appeal allowed. - C/289/2009, C/313/2009 C/314/2009 C/316/2009 C/317/2009 C/318/2009 C/319/2009 C/324/2009 C/325/2009 C/328/2009 C/329/2009 C/330/2009 C/331/2009 C/332/2009 C/333/2009 C/522/2009 C/523/2009 C/172/2010 - Final Order No. 40048-40065 / 2018 - Dated:- 9-1-2018 - Ms. Sulekha Beevi C.S. Member ( Judicial ) And Shri Madhu Mohan Damodhar, Me .....

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isposal. 2. The facts of the case are that on intelligence gathered by the Directorate of Revenue Intelligence (D.R.I.), investigations were conducted in respect of various consignments of shoe uppers, ready-made garments etc. which had been exported through ICD, Tiruppur, ICD Coimbatore. It appeared that concerned exporters had grossly over invoiced the value of the export goods with an intention to avail ineligible drawback benefits. It also appeared that this alleged fraud was facilitated by .....

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n of the offending goods was also ordered. Penalties were imposed on the concerned exporters as also on the appellants herein. The present appeals have been filed only by the concerned CHAs/shipping lines etc. who had been made noticees to the SCNs in respect of penalties imposed on them. 3. Today when the matter came up for hearing, the appellants were represented by the following Ld. Advocates: Appeal Nos. Name of the Appellant Name of Advocate C/289/2009 C/316-319/2009 C/328-333/2009 C/313-31 .....

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les 16 & 16A of the Drawback Rules read with Section 75 (1) of the Customs Act, 1962. (ii) The Tribunal in a recent decision in the case of Monte International Vs CC Amristar - 2016 (340) ELT 345 (Tri.-Del.) has held that show cause notices issued by D.R.I for recovery of erroneously granted drawback in terms of Rule 16 of the Drawback Rules cannot be held as valid show cause notices and that D.R.I officers have no jurisdiction to issue such SCNs. (iii) The proceedings in all these appeals w .....

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, in respect of other appellants there have been no proposals in the concerned SCNs for recovery of drawback from them and there is only proposal to impose penalty against them. Without determination or decision on the recoverability of the drawback amounts, there can be no imposition of penalty on persons who are the exporters or the CHAs/ freight forwarders/shipping line. (vii) A single SCN cannot be held as invalid for one portion and valid for another portion. 4. On the other hand, Ld.A.R Sh .....

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CHAs and other persons who have facilitated the fraud. (ii) In any case, the proposal for imposition of penalty on the appellants has been made in terms of Section 114 / 117 of the Customs Act. The proposal in the SCN is for imposition of penalty under Section 114 of the Customs Act and Section 117 for the acts or omissions of appellants in abetting and facilitating exporters in the said fraud. (iii) Hence the action that has been proposed against the appellants herein and also imposition of pe .....

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g fraud. Even in the case of Manasa Impex though show cause notice has proposed recovery of drawback from them also, jointly and severally, the penalties imposed are also for their other acts and omissions in facilitating fraud. 5.1 Heard both sides and have gone through the facts. The decision in the case of Monte International (supra) has categorically held that the SCN issued by DRI officers under Rule 16 & 16A of Customs and Central Excise Drawback Rules, 1995 is without jurisdiction and .....

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eclaration of law by the Hon ble Supreme Court in the case of Syed Ali, 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. Infact it is seen that even when the law was amended subsequently .....

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16 so as to confer jurisdiction on the DRI officer for issuance of show cause notices. Bombay High Court in the case of Tejus Proprietary Concern of Tejus Rohitkumar Kapadia v. Union of India reported as 2012 (275) E.L.T. 175 (Bom.) 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 judicia .....

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also as it goes to the root of the case. Accordingly, by following the Supreme Court s decision in the case of Sayed Ali, 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 Syed Ali 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 erroneo .....

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been 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." 5.2 The facts in all these cases are that various exporters had allegedly over invoiced the value of export of goods with intention to avail ineligible drawback benefits fraudulently. The SCNs initiated against these exporters were issued by the Directorate o .....

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cs Services etc. on the grounds that they have not observed due diligence in verifying the correctness of information given by their clients and have or otherwise by their acts and omissions abetted fraudulent claims of drawback by the exporters concerned. Penalties have been imposed on these agents etc. under Section 114 (iii) and 117 of the Customs Act, 1962. 5.4 The common contention of all the appellants herein is that SCNs have been issued by the DRI under Rule 16 and 16A of the Drawback Ru .....

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y DRI for recovery of drawback under Rule 16 & 16A of the Drawback Rules is valid or not is decided by the Tribunal. On this score, we have no reason to deviate from the decision of the Tribunal in Mante International case cited by the appellant. 7. The issue to be adjudged in these batch of appeals is in a very narrow compass, i.e., when the recovery of allegedly fraudulently availed drawback amounts cannot sustain, on account of the show cause notices having been issued apparently without .....

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ce proposed demand of drawback under Rule 16/16A of the Drawback Rules, even if held as invalid, cannot adversely affect the proposal for imposition of penalties on the other co-noticees. 8.2 We are not able to subscribe to this line of argument. The Show Cause Notice has to be viewed in its entirety and cannot be vivisected as may be convenient for the Revenue. Thus, if a show cause notice is found as not valid or issued without jurisdiction in respect of the main protagonist, the very same SCN .....

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