SATYENDER SINGH Vs. COMMISSIONER OF CUSTOMS, ICD

JUDGEMENT

(1.) THE appellant has filed this application for interim stay of the impugned order made by the Commissioner holding that the ready made garments exported vide 21 shipping bills as detailed in paragraph 2 of the show cause notice which declared the FOB value of Rs. 2,14,84,638/ - were liable for confiscation under Section 113 (i) of the Customs Act and imposing fine of Rs. 10 lacs on the exporters in lieu of confiscation and further declaring that the drawback of Rs. 26,23,075/ - was not admissible under Section 76(l)(b) of the Customs Act and directing recovery thereof from the exporter under Rule 16 and 16A of the Customs and Central Excise Duties Drawback Rules, 1995 with interest under Section 75A(2) of the Act and further imposing a penalty of Rs. 5 lacs on M/s. Varuna Overseas under Section 114 of the Act and a penalty of Rs. 2.5 lacs on Satyender Singh, Proprietor of that concern.

(2.) SATYENDER Singh was the proprietor of M/s. Varuna Overseas. The shipping bills of Varuna Overseas were collected by the customs authorities which revealed that the exported goods declared as ready made garments of ladies tops were exported under 21 shipping bills under a claim claimed for duty drawback. On the basis of the material on record from the statements of the appellant and the other persons, it was revealed during the investigation that the appellant, in collusion with Sanjay Kumar, Vinay Kumar Chauhan, Manish Yadav and Kailash Joshi, had exported cheap quality export surplus goods which were actually procured at a market price of Rs.14/ - per piece, but the same were grossly over -invoiced at US 7.25 per piece (equivalent to Rs. 347.27 per piece), with a view to fraudulently claim undue benefit of duty drawback. The investigations showed that while the market price of the garments being exported was Rs. 14/ - per piece only, an amount of Rs. 42.05 was being availed as drawback on each such garment. The investigations also revealed that the export proceeds in respect of garments exported by M/s. Varuna Overseas were not realised. Since the benefit of drawback duty was taken on the basis of mis -declaration, and export proceeds were not realised, show cause notice was issued in the context of provisions of Section 50(1), 50(2), 75A(2), 76(l)(b), 113(d), 113(i), 114 of the Customs Act and Rule 9(1) of the Foreign Exchange Management Act 1999 and Foreign Exchange (Export of Goods and Services) Regulations, 2000, Rules 16 and 16A of the Customs and Central Excise Duties Drawback Rules, 1995, Rule 11 and 14 of Foreign Trade (Regulation) Rules, 1993 and the appellant was called upon to show cause why the goods exported should not be liable to confiscation and the duty drawback availed should not be denied and as to why the amount should not be recovered under Rule 16 and 16A of the Drawback Rules with interest under Section 75A(2) of the said Act.

(3.) THE Commissioner on the basis of the material on record came to a finding that the appellant, in collusion with others, had exported cheap quality export surplus garments which were procured at a local market price of Rs. 14/ -per piece and that these were grossly over invoiced at Rs. 347.27 per piece with a view to claim duty drawback. It was held that the value of the goods was not correctly mentioned in the shipping bills under Section 50(1). Provisions of Section 50(2) were contravened and the goods were liable to be confiscated under Section 113(i) of the said Act and since the exporter and other noticees colluded in the fraud, they were liable to penal action under Section 114 of the Act. It was contended by the learned Counsel appearing on behalf of the appellant that the appellant was mentally sick and he could not have involved himself in this type of breaches. He submitted that there was no evidence except the statements recorded under Section 108 of the Customs Act for corroborating the allegations made against the appellant. Furthermore, the goods were already exported and, therefore, no proceedings could have been initiated against the appellant. It was also submitted that at the time of export, the valuation was not objected to. Moreover, since the goods were not prohibited goods, the provisions of Section 113(d) or (i) could not have been invoked in this case. It was also submitted that when the goods were not seized and were already exported, proceedings were misconceived.