Order date – 02 August 2022

Facts

• The appellant, M/s. Bhavana Jindal Exim Pvt. Ltd., had exported two shipments covered under shipping bills both dated 27.01.2017. The goods to be exported were categorized under ‘Leather Apparels, Leather Gents Long Jacket and Leather Gents Jacket’ and were mentioned to be under drawback scheme.
• Officers of Directorate of Revenue Intelligence on basis of some doubt that some firms are indulging in fraudulent availment of drawback by way of overvaluation and misdeclaration. The authorities detained two shipments of appellant. During the examination of goods, the leather jackets were clearly visible to be old and used and as such found not to match the declared description of the goods. So goods were detained under the provisions of the Customs Act, 1962.
• A show cause notice was issued on 01.08.2017 alleging that the goods seized was exported deliberately by mis-declaring the description and inflating the value of the goods by wrongly availing the drawback in contravention of second proviso to Rule 3 (1) of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 and overvaluation in contravention of Section 50 (2) of the Customs Act, 1962.
• The authorities imposed penalties u/s 114(iii) and u/s 114 AA on the appellant as well as the Director of the appellant.
• Aggrieved, the appellant filed for appeal before the Tribunal.

Issue

• Whether the penalty imposed under Section 114 (iii) and Section 114 AA of the Customs Act, 1962 is maintainable for companies?
• Whether appellant can claim a duty drawback on the goods imported under Rule 3 (1) of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995?

Order

• The authorities observed that as per Rule 3 (1) of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, according to which no drawback shall be allowed on exports if the goods to be exported have been taken into use after being manufactured. Therefore, the appellant cannot avail the higher rate of drawback as goods are used.
• The authorities further observed that praying withdrawal of the shipment/cargo that too on the ground of ‘order being cancelled by the buyer due to the late delivery is deliberate concealment on the part of the appellant. 
• The concealment was to cover up the mistake that the appellant had already committed i.e. of mis-declaration of the goods and overvaluing them with the sole intention of availing a higher duty drawback.
• The authorities upheld the decision that the appellant as well as its Director is liable for penalty under Section 114 (iii) and 114 AA of Customs Act, 1962.