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TMI Blog2019 (3) TMI 1827X X X X Extracts X X X X X X X X Extracts X X X X ..... cant amounting to Rs. 5,25,527/- (Rs. 4,19,652/- + 1,05,875/-) and interest thereon. 1.2 The applicant company were manufacturers and exporters of Ductile Iron casting. During the course of scrutiny of documents, it was found that the applicant had resorted to misdeclaration of the Drawback Tariff Classification of the export goods., viz., "Ductile Iron Casting" with intent to receive excess duty drawback, thereby claimed an amount of Rs. 6,63,062/- as excess and ineligible drawback. 1.3 The applicant is having two manufacturing units., i.e. Unit I at A-14, SIDCO Industrial Estate, Coimbatore and Unit II at Malumichapatty, Coimbatore. On the basis of intelligence that the applicant were misdeclaring the tariff item classification of the said product under Duty Drawback scheme for availing higher and ineligible duty drawback, the officers of CIU, Coimbatore initiated investigation into the matter. 1.4 During the investigation, the Officers visited the premise of the applicant on 27-2-2013 and scrutinized the export related documents relevant to the period 2011-2014. From the scrutiny, the following facts emerged : * Out of the total sales turnover of Rs. 100 Cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurred inadvertently due to pressure of work on domestic clearances and the company staff could not go through the actual rate of drawback claimed and received along with interest shortly. 1.6 The investigation further revealed that : * As per the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 the description of the export product "Ductile Iron Casting (Rough/machined)" is specifically classifiable under "7325 15" * The tariff item classification 7325 01 adopted by the applicant in certain shipping bill was erroneous and wrong; * The applicant had misdeclared their export product "Ductile Iron Casting (Rough/machined)" in the shipping bills under tariff item classification 7325 01 instead of 7325 15 of AIR Duty Drawback Schedule and thus claimed ineligible excess duty drawback of Rs. 6,63,062/- from various customs ports during the period 2011 to 2013; * The applicant by not furnishing the correct particulars regarding the tariff item classification of the export product in the shipping Bills and other export documents failed to make a true declaration; * The act of omission to declare correct tariff item classification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Tax Drawback Rules, 1995 by not furnishing the correct particulars regarding the Tariff item classification of the export product in the Shipping Bills. Averment of the Applicant : 2.1 The applicant in their application filed on 20-9-2018, inter alia, submitted that : The demand in the SCN consists of two parts; * Demand of Rs. 4,19,653/- towards ineligible drawback claimed in respect of 72 shipping bills; * Demand of Rs. 1,05,875/- towards ineligible drawback claimed in respect of 28 shipping bills; * The applicant have admitted the mistake and paid the ineligible duty Drawback of Rs. 6,74,159/- vide challan, dated 31-3-2013; * Out of the above said amount the excess/ineligible drawback paid towards Chennai sea port is Rs. 4,19,652/- which is acknowledged in the SCN; * The rest of payment were pertaining to Customs House, Tuticorin and Air Customs, Coimbatore; * The interest of Rs. 35,025/- in respect of the above said ineligible drawback was admitted and the same has been paid; * The applicant has also admitted the ineligible drawback amount of Rs. 1,05,875/- along with interest of Rs. 1,04,819/- and paid the same; * With regard to the claiming of ineli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n spite of the applicant informing the respondent Deputy Commissioner in writing vide letter dated 20-9-2018 that an application has already been filed before the Settlement Commission against SCN F. No. S. Misc. 18/2017-DBK dated 31-8-2018, the Deputy Commissioner has passed Order-in-Original No. 65822/2018 dated 30-10-2018. * The Respondent Deputy Commissioner has clearly mentioned about the intimation letter for having filed the application before the Settlement Commission. * The applicant would like to settle the legal disputes once for all. Hence, in the interest of justice it is requested that the application may be heard at the earliest. Report from jurisdictional Commissioner dated 2-9-2018 : 5.1 The Commissioner of Customs, Chennai-IV, vide letter S. Misc. 18/2017-Drawback dated 2-1-2019 has reported that : * A SCN dated 31-8-2018 was issued to M/s. Indo Shell Cast P. Ltd demanding the balance of ineligible drawback of Rs. 1,05,875/- along with interest. In response to the SCN the party paid the ineligible drawback of Rs. 1,05,875/- vide TR-6 Challan No. MCM 0091229 dated 18-9-2018 and Rs. 38,025/- vide TR-6 Challan No. MCM 0091230 dated 18-9-2018. * The par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri S. Ravi, Advocate represented the applicant and Shri C. Mohan Gopu, Deputy Commissioner, Drawback and R. Ramesh, Superintendent of Customs, Drawback represented the jurisdictional Commissioner. 6.2 The Learned Advocate submitted that the applicant were manufacturers and exporters of Ductile Iron Casting. The Show Cause Notice has alleged that they had resorted to misdeclaration of Drawback Tariff Classification of the impugned goods under wrong Heading No. 7325 01 and 7325 10 with a drawback rate of 3%/2.4% instead of a specific Heading No. 7325 15 which has a rate of duty drawback of 2% of the FOB value in order to avail higher and ineligible duty drawback. The impugned goods were exported through ACC, Coimbatore, Custom House Tuticorin, Chennai Sea Port and ACC Chennai under Duty Drawback Scheme during the period October 2011 to 2014. They were availing EPP Scheme for exports till September 2011 and from October 2011 onwards they started availing Duty Drawback Scheme. Thus they have claimed excess duty drawback of Rs. 6,63,062/- during the period 2011 to 2013. Out of this, Rs. 2,41,812/- pertains to Tuticorin Customs, Rs. 4,19,652/- pertains to Chennai Sea Port and Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 114(ii) and Rs. 5,000/- under Section 114AA of the Customs Act, 1962 and the applicant has paid the amount on 14-12-2018. Commissioner has also enclosed two letters from the applicant, a copy of the letter addressed to the Deputy Commissioner dated 10-10-2018 pertaining to the Show Cause Notice dated 31-8-2018 that they have filed an application before the Settlement Commission requesting for release of the pending drawback and also copy of the letter addressed to the Deputy Commissioner dated 17-12-2018 informing that penalty of Rs. 52,000/- have been paid. 6.6 The above Order-in-Original was issued upon request made by the applicant; that he admitted that the O-in-O ought not have been issued when settlement application is pending decision; that he further stated that as per the directions of Commissioner an appeal has been filed before Commissioner (Appeals) to set aside the instant O-in-O. 6.7 The Bench directed the Deputy Commissioner to file status report immediately. Post hearing submissions dated 11-3-2019 of the Deputy Commissioner of Customs, Drawback, Customs House, Chennai : 7.1 As directed by the Bench in the hearing proceedings on 12-2-2019, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal hearing to bring the issue to a finality; and the submission that if the issue is settled by way of an order they would withdraw with the application made with Settlement Commission and an Order-in-Original was passed on 24-10-2018 imposing a penalty of Rs. 52,000/- under Section 114(ii) & Rs. 5,000/- under Section 114AA of the Customs Act, 1962. (i) Vide letter dated 13-2-2018 the exporter has informed that they have paid the penalty of Rs. 52,000/- vide TR-6 challan No. MCM0121055 dated 14-12-2018 and Rs. 5,000/- vide TR-6 Challan No. MCM0121056 dated 14-12-2018. (j) While reviewing the O-in-O the Commissioner of Customs, Chennai-IV has held that the O-in-O passed by the adjudicating authority did not appear to be legal and proper and hence ordered that it had to be appealed against to the Commissioner of Customs (Appeals-II) with the prayer that the O-in-O may be set aside and further the case may be remanded to the adjudicating authority with directions to keep the same in abeyance till the application of the exporter is disposed by the Settlement Commission. (k) Accordingly an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.5 As directed by the Bench, the Deputy Commissioner of Customs, filed status report vide File F.No. S. Misc. 18/2017-DBK, dated 11-3-2019 stating that while reviewing the Order-in-Original the Commissioner of Customs, Chennai-IV has held that the Order-in-Original passed by the adjudicating authority did not appear to be legal and proper and hence ordered that it had to be appealed against to the Commissioner of Customs (Appeals-II) with the prayer that the Order-in-Original in question may be set aside. 8.6 The Bench has considered the arguments of both the stake holders. Before further proceeding in this matter it is to be seen whether O-in-O passed has anything to do with the application filed by the applicant. It is seen that the applicant firm after filing their application for settlement on 20-9-2018 requested the Department in writing through a letter dated 10-10-2018 to issue the Order-in-Original. The Order-in-Original No. 65822/2018 in file S. Misc. 18/2017-DBK was issued on 30-10-2018. Thus it is seen that the Adjudication Order became effective only on 30-10-2018 by which time the applicant had already filed his application i.e., on 20-9-2018 with the Settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered null and void by setting aside. 8.11 The Bench proceeds with the application filed by the applicant on merits. The applicant firm was having two manufacturing Units, one at Industrial Estate, Coimbatore and another at Malumichampatty, Coimbatore and were engaged in the manufacture and export of Ductile iron casting. Based on information that the applicant company were misdeclaring the tariff item classification of the said product under Duty Drawback Scheme for availing higher and ineligible Duty Drawback, for the periods 2011-12, 2012-13 and 2013-14, investigations were taken up by the Officers of Customs Intelligence Unit, Coimbatore. 8.12 Investigations revealed that the applicant firm had resorted to misdeclaration of Drawback Tariff Classification of the impugned goods under wrong Heading No. 7325 01 and 7325 10 with a drawback rate of 3%/2.4% instead of a specific Heading No. 7325 15 which has a rate of duty drawback of 2% of the FOB value in order to avail higher and ineligible duty drawback. Investigations culminated in the issuance of the instant SCN demanding ineligible Duty Drawback of Rs. 4,19,652/- pertaining to 72 Shipping Bills that were proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the provisions of Section 50(2) of the Customs Act, 1962 read with Rule 12(1) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. Rule 12. Statement/Declaration to be made on exports other than by Post. - (1) In the case of exports other than by post, the exporters shall at the time of export of the goods - (a) state on the shipping bill or bill of export, the description, quantity and such other particulars as are necessary for deciding whether the goods are entitled to drawback, and if so, at what rate or rates and make a declaration on the relevant shipping bill or bill of export that..... 8.17 Thus, it can be seen that the applicant firm has not furnished the correct particulars regarding Tariff Classification of the export product in the Shipping Bills. The plea of the applicant that their CHA have wrongly mentioned the tariff classification which resulted in the applicant claim for ineligible drawback is not acceptable. The applicant had knowingly contravened the Provisions laid down in Section 75 of the Customs Act, 1962 read with relevant Drawback Rules issued by the Government of India in this behalf. It is worth mentioning her ..... X X X X Extracts X X X X X X X X Extracts X X X X
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