Whether drawback claimed by the assessee is available if there is misdeclaration in ARE-I regarding the availment of cenvat credit?

PJ/CASE LAW/2015-16/2799

Case-FIROZABAD GLASS SHELL INDUSTRIES VersusCOMMR. OF CUS., NEW DELHI

Citation-2015 (322) E.L.T. 524 (Tri. - Del.)

Brief Facts-The brief facts of the case are that the appellant is a unit engaged in the production of export of “Glass Refills Silver Coated for Vacuum Flask” falling under Chapter 70 of the Central Excise Tariff Act. It is seen that the appellant availed the Cenvat credit of duty paid on the inputs, received by them from one M/s. Om Glass Work, Firozabad, during the period December, 2006 to June, 2008. However, while making exports during the said period, under the claim of duty drawback, the declaration made by them in their ARE-I was to the effect that the appellant has not availed any Cenvat credit under the Cenvat Credit Rules, 2004. The said misdeclaration made by the appellant was detected by the Revenue. Correspondence was undertaken with the appellant and the fact that the appellant had availed the credit was accepted by them. Accordingly, the drawback claimed by them to the extent of Rs. 11,56,277/- was not available to them. The appellant paid back the drawback so received by them in violation of the provisions, along with payment of interest.

Appelants Contention-The appellant’s contention is that though the availment of Cenvat credit misdeclaration in the ARE-I was there but the same was not on account of any mala fide so as to invoke the penal provision against them.

Respondents Contention-On the other hand, Revenue’s contention is that the appellant is a regular exporter of goods and was well aware of the fact that if the exports are being made under drawback claim, they are not entitled to the Cenvat credit. In spite of that they not only took the credit but also misdeclared that no credit was being availed.

Reasoning Of Judgement-After hearing both the sides, tribunal find that the appellant is a unit engaged in the production of export of “Glass Refills Silver Coated for Vacuum Flask” falling under Chapter 70 of the Central Excise Tariff Act. It is seen that the appellant availed the Cenvat credit of duty paid on the inputs, received by them from one M/s. Om Glass Work, Firozabad, during the period December, 2006 to June, 2008. However, while making exports during the said period, under the claim of duty drawback, the declaration made by them in their ARE-I was to the effect that the appellant has not availed any Cenvat credit under the Cenvat Credit Rules, 2004. The said misdeclaration made by the appellant was detected by the Revenue. Correspondence was undertaken with the appellant and the fact that the appellant had availed the credit was accepted by them. Accordingly, the drawback claimed by them to the extent of Rs. 11,56,277/- was not available to them. The appellant paid back the drawback so received by them in violation of the provisions, along with payment of interest.
In above background, proceedings were initiated against the appellant for imposition of penalty resulting in passing of the present impugned prefer by Commissioner vide which penalty of Rs. 3 lakhs stands imposed upon them in terms of the provisions of Section 114.
After hearing both the sides duly represented by Shri Bipin Garg, ld. advocate for the appellant and Shri B. Sharma, ld. DR for the Revenue, tribunal find that the fact of availment of Cenvat credit and the fact of making wrong declaration in the ARE-I has not been disputed by the appellant. The Commissioner has observed that inasmuch as the appellant has intentionally misdeclared the facts and have claimed the excess drawback, the goods in question are liable for confiscation under Section 113(h)(ii) of the Customs Act, 1962. As the same are not physically available, having been exported, the appellant is liable to penalty under Section 114. Accordingly, he imposed penalty of Rs. 3 lakhs.
And, the tribunalfind force in the above contention of the ld. DR. Admittedly, the appellants are regular exporter their product in question and were aware of the legal position that no Cenvat credit is admissible if the exports are being made under drawback scheme. It is precisely for this reason that they availed the credit but did not declare the same in the export documents. On the contrary, they declared that no such credit has been availed. This fact cannot be held to be a human error so as to extend the benefit to the appellant. Huge drawback to the extent of around Rs. 11 lakhs stand availed by the appellant on the basis of misdeclaration made by them. Tribunal find no reasons to accept the appellant’s contention that the penalty should not have been imposed upon them neither do it find justifiable reason to reduce the penalty amount. In view of the above the appeal is rejected.

Decision-Appeal rejected

Comment-The crux of the case is that as the assessee is a regular exporter means that he was aware of the legal provisions that no cenvat credit is admissible if the exports are being made under drawback scheme. But in the given case the assessee has availed the credit and instead of declaring the same in export documents he misdeclared the facts by saying that no credit has been availed. Hence, this cannot be called as human error and as the amount involved is also too high so the penalty should be imposed on the assessee vide Section 114 of Customs Act, 1962.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2799

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