Customs Duty Drawback Evasion: Madras HC upholds CESTAT's Pre-Deposit Condition [Read Order]

The High Court of Madras, upheld the Customs, Excise, and Service Tax Appellate Tribunal's (CESTAT) pre-deposit condition in a customs duty drawback evasion case, citing the assessee's prolonged delay and non-compliance.

M. Vijay Anand,appellant-assessee, was found guilty of defrauding the Customs Department by misdeclaring goods to claim a higher duty drawback and was penalized. He filed an appeal with a stay application against the Order-in-Original.

The assessee claimed he had no fraudulent intent in filing the Shipping Bills. However, his statement under Section 108 of the Customs Act revealed his involvement with Shri Joseph John Britto and Shri Kalandar Seeni Ahmed in the fraudulent transactions. He was found to possess ATM cards and cheque books linked to accounts receiving the drawback amounts, which were credited to Shri Kalandar Seeni Ahmed’s accounts.

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The tribunal rejected his plea of innocence, imposed a penalty of ₹50 lakhs, and directed him to pre-deposit ₹20 lakhs within four weeks, with compliance to be reported by January 16, 2013. Upon compliance, a waiver and stay would be granted on the balance penalty and drawback amount.

Challenging the order, the assessee argued that the Order-in-Original wrongly imposed joint and several liability on 14 individuals, which was not applicable in customs duty evasion cases. He also contended that, under a subsequent amendment, only 10% of the penalty was required for filing an appeal, whereas the tribunal had mandated over 50% of the penalty.

The respondent countered that the fraudulent transactions occurred during 2009-2010, and the Order-in-Original, passed in 2012, found that the assessee misdeclared goods worth ₹1,94,26,197/- as shoe uppers, bed valances, inflatable balls, toys, garments, and fabrics. Upon revaluation, the actual value was determined to be ₹13,14,400/-. The Commissioner of Customs imposed penalties for misdeclaration.

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The Tribunal, considering the severity of the offence, upheld the pre-deposit condition for filing an appeal and found no flaw in the order.

The two member bench comprising Dr.G.Jayachandran (Justice) and R.Poornima (Justice) ruled that the 2019 taxation law could not be applied retrospectively.

Observing that the assessee kept the appeal pending for over eight years without pursuing them or paying the pre-deposit, the Court dismissed the appeals for lack of merit. It directed the appellants to pay the pre-deposit within six weeks if they wished to continue. Otherwise, the Department was permitted to take legal action against them.

To Read the full text of the Order CLICK HERE

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