CESTAT Quashes Recovery Proceedings Under Rule 16/16A Drawback Rules, Cites Limitations in Modifying Shipping Bills
CESTAT Quashes Recovery Proceedings Under Rule 16/16A Drawback Rules, Cites Limitations in Modifying Shipping Bills
Introduction
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that proceedings under Rule 16/16A of the Drawback Rules are merely execution proceedings and cannot be used to modify the value or any other parameter in the Shipping Bills.
Factual Background
The appellant, M/s Simran Exports, exported garments with a declared FOB value of Rs. 1,06,84,417/- and claimed drawback. The DGRI investigated and concluded that the goods were over-invoiced to avail ineligible drawback. The Joint Commissioner issued a Show Cause Notice, and the Additional Commissioner passed an order confiscating the goods and ordering recovery of the drawback.
Contentions of the Parties
Appellant: Argued that the drawback was paid as per the Shipping Bills cleared by the customs authorities, and the export proceeds were realized. Therefore, no recovery of the drawback could be made.
Respondent: Contended that the appellant had bought cheap, inferior goods and exported them with highly inflated prices to avail ineligible drawback. The drawback availed is recoverable under Rules 16 and 16A of the Drawback Rules, along with interest.
Reasoning and Analysis
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member)observed that the assessment can only be modified through one of the five methods available in the Act, and the shipping bills disputed in this appeal were not modified through any of these methods. The bench noted that since the BRCs have been issued by the bank in respect of the invoices, it must be accepted that the remittances have been received as per the invoices.
Decision
The Tribunal allowed the appeal, holding that no recovery of drawback under Rules 16/16A can be done in this case. The Tribunal also held that goods which have already been exported are not 'export goods' and hence cannot be confiscated under section 113. No penalty can be imposed under Section 114.
Implications
The decision clarifies that proceedings under Rule 16/16A of the Drawback Rules are execution proceedings and cannot be used to modify the value or any other parameter in the Shipping Bills. The judgment emphasizes the importance of following the procedures laid down in the Act for modifying assessments.
In this case the appellant was represented by Ms. Garima Agarwal, Advocate. Meanwhile the respondent was represented by Mr. Shiv Shankar, Advocate.
