CISEXPORTSPVT.LTD. v. COMMISSIONER OF CUSTOMS AIRCARGO

5. Notice. Mr. Satish Kumar, learned Senior Standing counsel for the Respondent accepts notice.

6. Both these appeals are directed against orders passed by the Customs, Excise & Service Tax Appellate Tribunal('CESTAT'). The first impugned order ofthe CESTAT is dated 24^ November 2014 requiring the Appellant CIS Exports Pvt. Ltd. ('CISEPL') to make a pre-deposit of Rs.27 lakhs along with proportionate interest, with a further direction to report compliance by 15^*^ January 2015. The second impugned order of the CESTAT is dated 2"'^ March 2015 whereby it dismissed the appeal ofthe Appellant upon failure to comply with the pre-deposit order dated 24^^ November 2014.

7. The appeal filed by the Appellant before the CESTAT was against an order-in-original dated 6^ April 2009 ofthe adjudicating authority i.e. the CUSAA Nos.21of2015&23of2015 Page2of[8] Commissioner of Customs ('Commissioner'). The case against the Appellant by the Department was thatthe Appellant had made a fraudulent claim of duty drawback by giving a false declaration regarding the manufacture/supporting-manufacture work by M/s.Braun TextilesProcessor (BTP ),a partnership firm,ofwhich Mr.Rakesh Kumar Goyal,a Director ofthe Appellant,wasthe Managing Partner.

8. A perusal of the order-in-original dated 6^^ April 2009 of the Commissionershowsthatthe said Mr.Rakesh Kumar Goyal despite several notices he neither appeared during the investigation nor provided any documentforthe purpose ofverification ofthe genuineness ofthe annexures to the application for claiming drawback. The said annexures included a declaration purportedly issued by BTP in support ofhaving manufactured the goodsin question which were soughtto be exported undershipping bills againstwhichthe duty drawback wasclaimed bythe Appellant.

9. While written replies were given by the Appellant,the order-in-original notedthatnoneoftherelevantdocuments wassubmitted.Italso appearsthat the Appellant did not appear before the adjudicating authority despite various dates having beenfixed forthatpurpose.The Appellantclaimed that the relevantdocuments were with the Auditorforre-auditing and,therefore, could not be produced. By the order-in-original, the Commissioner proceeded to decide the show cause notice in the absence ofthe Appellant CVSAA Nos.21of2015&23of2015 and concluded that duty drawback had been claimed by the Appellant by providing wrong and incorrect information. It was found that all the declarations given by BTP were signed by employee ofthe Appellant. It showedthatMr.RakeshKumarGoyalwascontrolling boththeAppellantas well as the supporting manufacturer i.e.BTP and had created documents to falsely claim the duty drawback. A demand of Rs.67,42,724 along with corresponding interest, penalty ofRs.60 lakhs each on the Appellant, the supporting manufacturer BTPas well as Mr. Rakesh Kumar Goyal under Section 114 ofthe Customs Act, 1962('Act')and a penalty ofRs.l crore, Rs.75 lakhs and Rs.l crore respectively on each of them under Section 114AA ofthe Actwas confirmed bythe Commissioner.

10. The case ofthe Appellant is that it has a strong primafacie case for complete waiver of the pre-deposit amount. While no case of financial hardship has been pleaded or argued before the Court, Dr. G.K. Sarkar, learned counsel for the Appellant,relies on thejudgmentin SriKrishna v. Union ofIndia 1998(104)ELT325(Del)to urge that the CESTAT was obliged to decide whetherthe Appellant had aprimafacie case and that by insisting that the Appellant should make the pre-deposit,the CESTAT had subjected the Appellantto undue hardship.Reliance was also placed also on the decisions m' lTCLtd.v. Commissioner(184)ELT347(All.)andShukla &Brothers v. CESTAT2015(37)STR916(All.). CUSAA Nos.21of2015&23of2015 ^

11. Dr. Sarkar further submitted that the supporting manufacturer was eligible for exemption from paying excise duty and in any event was not manufacturing any dutiable goods.It was,therefore,notrequiredtofile any returns regarding the manufacture ofdutiable goods. Secondly,even ifthe supporting manufacturer did not manufacture the goods exported by the Appellantandthe goods were assumed to have been procuredfrom thelocal market, the Appellant was eligible to avail the duty drawback in view of Circular No. 16/2009-Cus-dated 25'^ May 2009 and the judgments in CommissionerofCustoms(Export)v.KultarExport2013(288)ELT187, AKS Apparels v. UOl2013(298)ELT 649(Del) and Maalvika Impex (India)v. CommissionerofCustoms2014(310)ELT868(Del). Lastly,it IS submitted that the Department has already apportioned a drawback amount ofRs.14,24,565 lying in the bank account ofthe Appellant against the aforementioned demand. Although no financial hardship as such has been pleaded,itissubmitted thatsincethe Appellanthasin any event made out ^primafacie case,the proportionate interest on the sum ofRs.27 lakhs should be waived and some time should be given to the Appellantto make the deposit ofRs.27lakhs.

12. The Courtfinds thatthe Appellant did notsubmitany ofthe documents during the course ofadjudication proceedings. Consequently,there was no occasion for the Commissioner to render a finding on the documents. CUSAANos.21of2015&23of2015 Page5of[8] Admittedly, it is only before the CESTAT for the first time that the Appellantsoughtto submit documents.As observed bythe CESTAT in the impugned order,the claim ofthe Appellantthatit would be entitled to duty drawback notwithstanding that the supporting manufacturer had no manufacturing facility or even where it was not manufacturing any dutiable goods, was required to be examined in some detail by the CESTAT with reference to the documents produced before it for the first time. The explanation offered by the Appellant for not appearing before the adjudicating authority and not producing the documents primafacie does not appear to be convincing to the Court atthis stage.In any event,this too wasrequired to be examined by the CESTAT.

13. Having perused the impugned order,the Court finds that the CESTAT has discussed the issue whether the Appellant had made out aprimafacie case. The view taken by the CESTAT, in the facts and circumstances, appears to be a plausible one. On the quantum of the pre-deposit, considering the demand and the penalties raised, the requirement that the Appellant should deposit Rs.27 lakhs does not appear to this Court to be disproportionate or even harsh.In any event,no case offinancial hardship has been pleaded bythe Appellant.

14. As regards the plea that there must be a waiver ofthe proportionate interest, it requires to be noticed that against the order-in-original dated 6^^ CUSAA Nos.21of2015&23of2015 ^ I /.. ' V April2009ofthe Commissioner,the Appellantfirstfiled arevision petition followed by a writ petition in the High Court ofPunjab & Haryana which was dismissed as withdrawn on 6""November2012.Itis only thereafterthat the Appellant approached the CESTAT by way ofthe statutory appeal.It is nearly two years thereafter that the pre-deposit order was made on 24^^ November 2014. By that time, more than five years had elapsed since the order-in-original had been passed. With further delaysin filing and re-filing the present appeals, the Appellant has avoided the prospect of having to make the pre-deposit for over six years. In these circumstances, the Court does not see any reason why the Appellant should be excused from having to paythe proportionate intereston the pre-depositamountofRs.27lakhs.

15. Consequently,the Court is not inclined to interfere with the impugned order dated 24th November 2014 of the CESTAT either as regards the quantum of the pre-deposit or the requirement of payment of the proportionate interestthereon.No substantial question oflaw arises as far as the appeal against the pre-deposit order dated 24th November 2014 is concerned.

16. However, considering that the Appellant has filed appeals before this Court,the Appellantis grantedtime till SO'*"November2015to comply with the order dated 24^'' November 2014 of the CESTAT failing which the appeal before the CESTAT will stand dismissed in accordance with the CUSAA Nos.21 of2015&23of2015 order dated 2"^^ March 2015 ofthe CESTAT.

17. In the result,the appeal againstthe impugned order dated 24^^November 2014 ofthe CESTAT is dismissed. The appeal against the order dated 2"'^ March 2015 is allowed subject to the Appellant making the pre-deposit as ordered by the CESTAT by its order dated 24th November 2014 on or before 30th November 2015.In that event,the appeal before the CESTAT and the pending applications,ifany,will be heard on merits.However,it is made clear that the said order dated 2"'' March 2015 of dismissal of the Appellant appeal before the CESTAT will revive ifthe Appellant fails to comply with the order dated 24^'' November 2014 of the CESTAT on or before 3O"^ November 2015.

NOVEMBER 3,2015 dn S.MURALIDHAR,J VIBHUBAKHRU,J CUSAA Nos.21 of2015&23of2015 Page8of[8]