B. A. International Vs Commissioner of Customs (CESTAT Delhi)
The Customs Excise and Service Tax Appellate Tribunal, Delhi decided appeals challenging an order that directed recovery of customs duty drawback with interest and imposed penalties under the Customs Act, 1962. The Tribunal first examined the penalties imposed under Section 114 and held that such penalties can be sustained only where export goods are confiscated or held liable to confiscation under Section 113. As the impugned order neither confiscated the export goods nor recorded a finding that they were liable to confiscation, the penalties imposed under Section 114 on the exporter and associated individuals were unsustainable and were set aside.
The Tribunal then considered the recovery of drawback ordered under Rules 16 and 16A of the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995, read with Section 75 of the Customs Act. The case related to exports of readymade garments and gems made between 1999 and 2003, for which drawback had been availed. Investigations revealed that the exporter had claimed to be a manufacturer exporter to obtain a higher rate of drawback, though no manufacturing activity was carried out at the declared premises. Verification showed that the premises were not used for manufacturing, and the exporter admitted that no production took place there. Certain purported suppliers were also found to be fictitious, with bank accounts opened in the names of employees and funds withdrawn after routing payments.
