The Customs and Central Excise Duties Drawback Rules 1995 do not contain any provision for prosecution of a person found to be fraudulently availing him self of the drawback scheme. An impression, therefore, exists that such persons cannot be prosecuted. This controversy has been set at rest by the Customs, Excise and Gold (Control) Appellate Tribunal in its order in the case of Avinas Dhawan and Others v. Collector of Customs, New Delhi.

Section 117 - Customs Act

The Tribunal in the above mentioned case has ruled that penalty under Section 117 of the Customs Act is attracted for contravention of the Customs and Central Excise Drawback Rules, as the said Rules, which were self-contained code, did not provide for any penalty. The Tribunal over-ruled the objection that the said Section 117 is a residuary section. It refers only to "Sections" of the Customs Act and not the "rules and regulations" made under the Act since the legislation has distinctly mentioned "rules" and "regulations" in other sections like Section 155 or Section 156 to 158, which rules that reference to rules and regulations in this section is not in contradistinction to sections of the Act. But by way of abundant caution to remove any doubt about applicability of ennunity to actions taken under rules and regulations. It is well settled that "Act" includes all rules and regulations made under the Act. Reference to "rules and regulations" in Sections 156 to 158 containing enabling power to make subordinate legislation by Central Government cannot be interpreted to mean that in the absence of the words "rules" or "regulations", the expression "provisions" of the Act would exclude "rules" and "regulations" from the scope of the Act or that "provision" of the "Act" covers only "sections" of the Act.

The Tribunal further observed that the Customs, and Central Excise Duty Drawback Rules were made pursuant to section 75 of the Customs Act, and in terms of Section 117 of the Act, any person contravening any provision of the Act or abetting such contravention is liable to penalty. There is no legal infirmity in holding the appellants liable to penalty under Section 117 of the Customs Act.