Petitioner accused of exporting substandard goods

The Madras High Court Bench here has stayed the operation of an order passed by Customs, Excise and Service Tax Appellate Tribunal in Chennai directing an exporter, Kalandar Seeni Ahmed also based in Chennai, to deposit Rs. 65 lakh as a pre-condition to grant relief in a case relating to alleged export of sub-standard goods to Dubai and Malaysia through Tuticorin port.

Justice R. S. Ramanathan granted the interim stay following a writ petition filed by the exporter who alleged that the Tribunal had imposed the pre-condition only with respect to him and not to a co-accused.

Stating that there could not be arbitrariness while granting relief to two individuals, the judge ordered notices to the Tribunal as well as the Commissioner of Customs returnable by two weeks.

The petitioner, in his affidavit, said that he partnered with one Muthuraman of Puvarsh Impex in Chennai and decided to export shoe uppers to a firm in Malaysia in 2009. The buyer in Malaysia was an associate of one Mohamed Zipreel who had arranged for the export. The goods were exported through Meenakshi Agency of Tuticorin which had utilised a Customs House Agent (CHA) licence held by another firm.

However, officers from the Directorate of Revenue Intelligence examined the goods in April 2010 and found that 50 per cent of the consignment was only assorted pieces of rexin and plastic that was in the nature of “unusable used waste.” Even the rest of the goods did not possess the basic shape of shoe upper and they differed in size and colour.

The officers estimated the value of the entire goods to be just Rs. 1 lakh and accused the exporters of having overvalued them to the tune of Rs.1.94 crore in order to claim Duty Drawback, a special rebate given under the Indian Customs Act on exported products or materials used in processing of goods manufactured in the country and exported to foreign countries, for an amount of Rs. 18.45 lakh.

Immediately, the goods were seized and office premises of all those involved in the export were searched. Statements were also obtained from them. The enquiry revealed that many such incidents of overvaluation had taken place in the past and the exporters had unduly claimed a Duty Drawback amount for over Rs. 1.37 crore. Hence, notices were issued for recovering the amount.

It was also found that with respect to another consignment valued at Rs. 20.25 crore, the exporters had claimed ineligible drawback amount of Rs.1.94 crore. After completion of the enquiry, the Commissioner of Customs at Tuticorin passed an order on June 29 imposing a penalty of Rs. 2 crore on the petitioner on the ground that he was the one who conceived the idea of exporting sub standard goods.

The petitioner challenged the penalty order before the appellate tribunal along with an application for waiver of pre-deposit. But the tribunal, while staying the commissioner’s order, on December 11 directed the petitioner to deposit Rs. 50 lakh towards Duty Drawback demand and Rs. 15 lakh towards penalty within four weeks and hence the present writ petition.

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