Customs, Excise and Gold Tribunal - Bangalore
Rioben International And Shri Vimal ... vs Commissioner Of Customs on 29 November, 2005
ORDER T.K. Jayaraman, Member (J)
1. These appeals have been filed against the Order-in-Appeal No. 213/2003 Cus dated 20.5.2003, passed by the Commissioner of Customs (Appeals), Bangalore.
2. The brief facts of the are as follows :
The Revenue proceeded against the appellants alleging that the appellants firm had entered for export, a consignment of 1500 piece of Quartz Analog Watches under DEPB Scheme, prescribed under Para 7.25 of the Exim Policy 1997-2002 by over-invoicing the goods to claim undue benefit under the said scheme. The consignment was detained at Export Terminal of Air Cargo Complex. Certain incriminating documents were seized from the premises of the appellants. The main charges against the appellants are that the Quarts Analog Watches were purchased at Rs. 73/- per piece but the value declared to the Customs was US $ 32.50 per piece. The expert opinion of the M/s HMT Ltd. fixes the value of the watches at Rs. 230/- per piece. Hence it was alleged that the inflated value had been given for getting undue benefit under the DEPB Scheme. The Original Authority in his order dated 3.4.2001 rejected the value of US $ 32.50 per piece and fixed the value at Rs. 230/- per piece for the purpose of DEPB credit. Further, he imposed a penalty of Rs. 5,00,000/- on M/s Rioben International, Bangalore under Section 114 of Customs Act, 1962. He imposed a penalty of Rs. 2,00,000/-on Shri G. Vimal Bhandari of M/s Marudhar Enterprises under Section 114 of the Customs Act, 1962. The appellants approached the Commissioner (Appeals) who upheld the Order-in-Original. The appellants are aggrieved over the impugned Order-in-Appeal dated 20.5.2003. Hence they have come before the Tribunal for relief.
3. Shri Laxminarayana, learned Advocate appeared for the appellants and Shri Ganesh Havanur, learned SDR appeared for the Revenue.
4. The learned Advocate advanced the following arguments.
(i) The statements of Shantilal Jain and Shri Vimal Bhandari have been retracted. Therefore no evidentary value can be attached to them.
(ii) The time limit for ascertaining the Present Market Value (PMV) of the export goods and for the issue of show cause notice for non-acceptance of PMV can be extended to 90 days only in cases of fraud/collusion/willful mis-statement or suppression facts. In the present case, this will not be applicable.
(iii) The show cause notice is barred by the limitation specified in Board's Circular 69/97-Cus dated 18.12.97 and 79/98-Cus dated 22.10.98. The provisions of Circular No. 23/99-Cus 11.5.99 cannot be invoked for consignment exported earlier. Para 4 of the Circular provides that the only Commissioner can make enquiry to deny the benefit if the circumstances mentioned in Para 3 exists.
(iv) There has been failure to note that the value in the shipping bill was the export value on the basis of which export proceeds in convertible Foreign Exchange had been received. Hence Section 113(d) will not apply and consequently penalty under Section 114(i) does not arise.
(v) The opinion dated 3.3.2000 of M/s HMT was assailed on the following grounds :
(a) The sample drawn and valued was of a particular model only while the export consignment contained assorted models.
(b) The sample relating to shipping bill No. 4891/24.2.2000 cannot be made applicable to all the consignments from which samples were not drawn.
(c) The valuation of samples was done in a hurry.
(d) The letter dated 3.3.200 of M/s HMT Ltd mentions the only costs of the parts, which is not indicated the value of the export.
(e) The opinion dated 3.3.2000 does not give the reason in support of the price of the goods.
(vi) The cross examination of Shri H. S. Raju, Deputy General Manager of HMT Ltd. was disallowed. These violates the principles of 'Natural Justice'.
(vii) There is no indication that the sample was drawn out of the export consignments.
(viii) The letter from the HMT has not given any market price of the watch but only given the price of the parts.
(ix) The value declared by the appellants at Rs. 1408.12 which was the sale value and not the market value. The appellants had made a declaration in the shipping bill that credit taken does not exist and hence the declared export price could not be adopted as the Present Market Value.
(x) There may be circumstances wherein the FOB value could be higher than the Present Market Value of the goods. The FOB value depends on the contract with the foreign buyers. The failure to invoke the provisions of Customs Act, to reduce the present market value having not been done, the order is bad in law.
(xi) Even though in the shipping bill, it has been declared that the watches were of assorted type, the adjudicating authority has recorded the finding in Para 36 on page 16 of the impugned order that the watches exported are of the same type and quality.
(xii) The lower authority has grossly erred in ignoring the mandate under Section 14 of the Customs Act, 1962, by adopting the domestic value of the watches as determined by an opinion of M/s HMT Ltd.
(xiii) For the earlier consignment, mis-declaration cannot be assumed on the basis of the mis-declaration notice in the present consignment in terms of decision of the Tribunal in Well Knot Apparels (P) Ltd. v. C.C. .
(xiv) The mis-declaration is not proved and therefore, mensrea cannot be said to be present. The confiscation of the export goods not having been invoked in the show cause notice, the penalty under Section 114(i) cannot be imposed.
(xv) There has been failure to take judicial note of the fact that the goods exported under DEPB would not come under the purview of the Customs Act. Only DGFT are competent to take action.
(xvi) The following case laws were relied on by the learned Advocate :
(a) MVT International v. CC, New Delhi
(b) Kobian ECN India Pvt Ltd. v. CC, Mumbai [2004 (60) RLT 112 (CESTAT - Mum)]
(c) Export goods - Over-valuation of - imported goods if not subject to any levy, value under sec 14 of Customs Act inapplicable.
(d) J.G. Exports v. CC, New Delhi
(e) Dear Impex v. CC, Mumbai [2004 (63) RLY 656 (CESTA-Mum)]
(f) Shilpi Exports v. CC, Calcutta
5. The learned SDR re-iterated the contentions in the Order-in-Original and in the Order-in-Appeal.
6. We have gone through the records of the case carefully. On the basis of certain investigations, the Revenue proceeded against the appellants for declaring inflated value in the shipping bill for getting undue DEPB credit As per the Government policy, the amount of DEPB credit shall not exceed 50% of the present market value of the export products. The ascertainment of present market value is entrusted to the Customs Department in terms of various Circulars issued by the Ministry of Finance. We would like to mention the particular Circular No. 15/97-Cus dated 3.6.97. Paras 4 & 5 of the said Circular are re-produced below :
4. The declared PMV may also be verified by the proper officer of the Customs at the time of examination of goods as is done in the case of drawback shipping bills. Where upon examination of goods the cramming officer finds mat in view of the quality or condition of the goods prima-facie the PMV declared, or the f.o.b. price, is unduly high, the matter may be referred to the Assistant Commissioner (Export) along with sample of goods wherever possible. In such cases the PMV may he verified/determined through market enquires, or by such process as the Asstt. Commissioner (Customs) may direct.
5. Before making such enquiries, the Asst. Commissioner (Export) must satisfy himself as to the necessity for causing such enquiries. The purpose of such enquiry is to ensure that the credit entitlement shall not exceed 50% of the actual PMV as ascertained through market enquiry. Samples may be drawn where necessary, but clearance of the consignment should not be held-up normally for this purpose. Such shipping hills should be endorsed as provisionally cleared for export so mat the designated authority of me DGFT does not accept the provisionally accepted PMV for fixing me upper-limit of me credit The market enquiry, or any other process of determining the PMV, should be completed within one month of 'let export order" & Snapping Bills should be finally assessed and only men released to the exporter to enable him to get his DEPB entitlement from the licensing authority.
In the scheme of things, whenever there is any doubt about the value declared, the assessment of shipping bill is done on a provisional basis. When the shipping bill is finally assessed, the same is released to the exporter to enable him to get his DEPB entitlement form the licensing authority. Since the DEPB credit is to be restricted to 50% of the PMV, the licensing authority would take care based on the assessment, information received from the Customs as regards PMV There is nothing in the Customs Act to enable the Customs authorities to determine the PMV. It is well known that the Customs department is undertaking a lot of agency function. The import/export statistics for the country is prepared by the Customs Department Various types of cess/fees for other departments are collected by the Customs. Similarly, the ascertainment of PMV is one such function undertaken by the Customs for the licensing authority. There is no provision under the Customs Act for levy of penalty for mis-declaration of PMV. As regards the present case, the Department has arrived at the PMV of the goods to be exported on the basis of expert opinion of HMT Moreover, the statements of Shri Shantilal Jain and Shri G. Vimal Bhandari testified the fact that the watches have been purchased at a lower price compare to what has been declared in the shipping bill. Prima facie, there is evidence of inflation of the value of the goods declared in the shipping bill However, the appellants contended that they have realized the entire Foreign Exchange. Revenue has not established that similar or identical goods have been exported at lesser value. Hence there is not any evidence to show that the value declared by the appellants in the shipping bill violates Section 14 of the Customs Act, 1962. Moreover, there is no findings by the Adjudicating authority that the export goods are liable for confiscation The fact that the goods are not available cannot be the reason for not holding them to be liable for confiscation. In fact, this omission on the part of the Adjudicating authority is very fatal to the case. As there is no finding that the export goods are liable for confiscation, no penalty under Section 114 of the Act can be imposed. Therefore, we set aside the penalties but uphold the determination of PMV at Rs. 230/- per piece for the purpose of DEPB credit as far as the present consignment is concerned. However, in respect of the earlier consignments, the value determined for the present consignment cannot be adopted. The appeal is disposed of in the above terms.
(Pronounced in the court on 29 Nov 2005)