The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) while quashing the penalty against the exporter held that the customs department was unable to establish that the meat was exported using pre-signed and pre-stamped veterinary certificates.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that after extensive investigation spanning several years, the SCN was issued relying on as many as 22 documents including 14 statements of different persons recorded by the officers under section 108 of the Act. By not following the mandatory procedure under section 138B, the adjudicating authority brought to naught 14 of the 22 relied upon documents effectively destroying the case of the department.
Table of Contents
Background
The appellant/assessee, M/s. Hind Agro Industries Ltd. (HAIL) is engaged in slaughtering animals and exporting their meat during the relevant period.
It availed the benefit of Vishesh Krishi and Gram Udyog Yojna (VKGUY) scheme of the DGFT under which exporters of agricultural and village industry products are given an incentive in the form of scrips issued by DGFT which can be either used by the person to whom they are issued to pay duty on imports or transferred or sold to others who can use them to pay duty on imports. HAIL was issued scrips worth Rs. 42,16,084/- which it had sold to others.
Acting on intelligence which indicated that HAIL was exporting meat with invalid Veterinary Health Certificates, Officers of the Customs (Preventive) visited the premises of HAIL on 30.10.2010 and recovered several documents under a Panchnama, including a bunch of blank Veterinary Health Certificates signed and stamped by the Government Veterinary doctor Dr. Shiv Kumar.
These certificates were supposed to be issued by the Veterinarian after pre-mortem as well as post-mortem examination of the animals. Instead, these certificates were found without the details of the animals and the dates.
HAIL could easily fill the details and use them. Effectively, the Veterinarian’s certificates of the animals which ensure the health of the consumers of the meat were issued without any examination or even looking at the animal or even identifying the animal to be slaughtered.
The matter was further investigated and several statements were recorded and the Officers felt that HAIL had obtained the VKGUY certificates fraudulently by exporting meat violating the conditions of export by using invalid Veterinary Health Certificates.
A SCN was issued proposing to recover the duty foregone on account of VKGUY scrips issued to HAIL under section 28 read with its legal undertaking and also to impose penalties on HAIL and the individuals.
Arguments
The assessee contended that while it is true that books containing several blank Veterinary Health Certificates signed and stamped by Dr. Shiv Kumar were recovered from the premises of the appellant, these would only show that the appellant could have used them to clear meat without the veterinarian examining the animals pre-mortem and post mortem and certifying it. The appellant could have filled in the details of the animal on the certificates which were already signed and stamped by the veterinarian.
The assessee argued that the recovery does not prove that the consignments of meat exported before the date of the panchnama were also exported under the cover of certificates issued by veterinarian without examining the animals pre-mortem and post-mortem. As far as the statements enclosed as relied upon documents in the SCN are concerned, they are not relevant to prove the case against the appellant because the mandatory procedure under section 138B was not followed by the adjudicating authority nor were they allowed to be cross-examined.
Conclusion
The tribunal noted that the recovered pre-signed and pre-stamped certificates were not used to export meat. The case of the department is built on the premise that previous meat consignments were also exported based on such certificates without actual inspection of the animals pre-mortem and post-mortem.
The tribunal held that once the case against HAIL is not established, the penalties on HAIL and other appellants also cannot be sustained. Therefore, the impugned order upholding the OIO cannot be sustained and needs to be set aside.
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Case Details
Case Title: M/s Hind Agro Industries Ltd. Versus Commissioner of Customs (Preventive)
Case No.: Customs Appeal No. 52892 Of 2019
Date: 19.11.2024
Counsel For Appellant: Bipin Garg
Counsel For Respondent: S.K. Rahman
