Customs, Excise and Gold Tribunal - Mumbai
Kobian Ecs India Pvt. Ltd. vs Commissioner Of Customs on 4 September, 2003
Equivalent citations: 2003(90)ECC383, 2003(157)ELT662(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. Since the Commissioner has found that the goods were not entitled for DEPB under Serial No. 86 of the product code 83 of the DEPB schedule and held that the goods covered by such shipping bills liable for confiscation under Section 113(d) and (i) of the Customs Act, 1962 and since the goods had been already allowed to be exported and were not available for confiscation thus the appellants, as exporter, were liable for a penalty of Rs. 9 lakhs under Section 114(1) of the Customs Act, 1962. Hence this appeal.
2. The appellants submit -
(a) They are engaged in the manufacture of Accelerated Grahic Processor (AGP card), falling under Heading 8.73 as parts and accessories of automatic data processing machines. The AGP card is fixed inside the computer for providing connection between computer and Monitor (visual display unit). This AGP card is nothing but populated printed circuit board i.e. printed circuit board on which components such as transistors, resistors are mounted.
(b) They exported the AGP card under DEPB Scheme under cover of the shipping bills for claim under DEPB. In the shipping bill as well as in the export invoice, they described the goods as under :-
"Printed Circuit Board-Double Sided, AGP Card (TNT 2 M64)"
(c) In respect of the exports, the appellants had claimed DEPB credit under Sl. No. 86 of the DEPB Schedule, under the category Product Group "Electronics" (Product code 83). Sl. No. 86 of DEPB Schedule reads as under : -
"PC BOARDS"
(d) According to the Customs, the description "PC Boards" will cover only bare or unpopulated printed circuit boards and will not cover populated printed circuit boards and in the proceeding the Commissioner imposed penalty under Section 113(d) and (i) of the Customs Act, 1962 for alleged misdeclaration of the goods in the shipping bills.
3. After hearing both sides and considering the material it is found -
(a) The provisions regarding DEPB Scheme are contained in Paras 7.14 to 7.17 of Import-Export Policy, 1997-2002 (April, 2000 Edition). The procedure regarding applying for DEPB and obtaining credit are contained in Paras 7.38 to 7.53 of the Handbook of Procedures, Vol. 1. During the period in question, DEPB on post-export basis alone was to be granted. The provisions regarding grant of DEPB credit on pre-export basis have been deleted during the periods in question. Perusal of the relevant policy paras reveal that when the exporter, exports the goods under cover of DEPB Shipping Bills. At the time of export, the Customs Department will examine the goods vis-a-vis the description given on the shipping bill to ensure that the goods described on the shipping bill alone are actually exported. The Customs Department would also verify the FOB value declared by the exporter with regard to Present Market Value (PMV), and hand over the Export Promotion Copy of Shipping Bill to the Exporter.
(b) The exporter after realising the export sale proceeds, will apply to the prescribed authority in the office of the Director General Foreign Trade Ministry of Commerce (herein after refer to a DGFT) in the form prescribed in Appendix 11C of the Handbook of Procedures, along with prescribed documents, such as Export Promotion Copy of Shipping Bills, export realisation certificate. The applicant also indicates the product description and the rate of credit available to the said goods as per the rate prescribed by the DGFT in the DEPB Schedule. The DGFT issue Duty Entitlement Pass Book licence and a Pass Book after scrutiny of the application form in Appendix 11C. The DGFT grants the DEPB rates, as claimed, on the export goods, which had been verified by the Customs Department. The credit given in the Passbook can be utilized for payment of duty on the imported goods. At the time of payment of duty on the imported goods debit the Passbook, the Customs once again verify the DEPB Licence.
(c) The Central Board of Excise and Customs vide Circular dated 17-4-97 has described the procedure to be followed under DEPB Scheme. In its circular dated 3-6-1997 in paras 1 and 2 the Board has directed as under.
"Attention is invited to Circular No. 10/97-Cus. dated 17-4-97 whereby detailed guidelines for operation of duty entitlement passbook scheme were issued. The said circular provides for the exporters to declare in the shipping bill the serial number of the export products in the public notice issued by the DGFT and the rate claimed. It was further provided that correctness of this declaration should be verified by processing the shipping bill and also at the time of examination of the goods.
2. This matter has been re-examined. It has been decided that the role of customs authorities should be confined to verification of correctness of exporter's declaration regarding description, quantity and FOB value of the export product. It will be for the licensing authorities granting credit to ensure that credit is permitted by them at the correct rate as notified by the DGFT."
(d) The CEGAT in the case of M.K. Fisheries v. Commissioner of Customs - 2002 (150) E.L.T. 998 has held in Para 5 as under :
"............Therefore we find that while the Customs cannot sit in judgment over any decision regarding quantum of DEPB to be credited in the passbook, yet in all fairness justice require that if the Customs find any variation between the description of the goods as declared on the shipping bill and as declared in terms of public notice issued by the Customs House for the same consignment they would be entitled to bring such discrepancy to the notice of the DGFT and await for further orders on the quantum of credit to be given under DEPB from DGFT."
Similar view was taken by the Calcutta High Court in the case of Kanhaiya Exports v. Commissioner of Customs - 2001 (133) E.L.T. 280 with regard to verification of the documents. This decision of the Calcutta High Court has been confirmed by the Division Bench of High Court as reported in 2001 (133) E.L.T. 537.
(e) In this view, of the policy, procedure instructions and the law, in the matter of DEPB, we cannot uphold the decision arrived at by the Commissioner to have impugned the exports and come to a finding that the exports made in this case were not entitled to DEPB under serial No. 86 of the Product Code 83 of the DEPB Schedule. Since all that was required, in the case was for the Commissioner to have reported the matter to the DGFT authorities and not sit in judgments over the grant and or determine entitlement of DEPB which were not within the jurisdiction of the Customs to do so. The order of determination of the eligibility or otherwise of DEPB as made in this case cannot be upheld.
(f) The DEPB Schedule describe PC Boards' without any qualification or restrictions. Relying on the case of Atari (India) Electronics - 1990 (45) E.L.T. 321 it could be held that both kinds of Circuit Boards i.e. plain or unpopulated or printed and populated could be covered as PC Boards. The Commissioner has come to a finding 'In fact the items imported was fully assembled item to be used as an add on card for computer' is a finding arrived without any material or expert agencies reports on record. Para 1 of the impugned order reads as -
"..........Examination of the goods by the customs officers showed that goods were misdeclared. The item being exported was not a PC board as claimed, but was a Populated Printed Circuit Board containing various components and was infact a fully assembled component of computer system. The goods were infact thus found to be Populated PCB. 'Mercury multimedia KOB N 620, Graphic Processor with 32 MB memory size optimized for Pentium III SSB and AMD-3D NOW. The item is also described as Graphic Accela-tor. The packing list also showed that the goods were described by the exporter as 'Graphic Accelerator Multimedia for graphic processing and video acceleration purposes for enhanced screen resolution, colour depths and refresh rate'. This description was not appearing either in the invoice or in the Shipping Bill. It, therefore, appeared that the goods were misdeclared with an attempt to claim DEPB that was not available..............."
These charges, as made and how the goods constitute to be an add on card and why add on card cannot be a PCB, have not been clearly and conclusively established by giving reasons in the findings. The declaration in the Shipping Bills need not always be in technical details explaining the functions. It is not brought out in the order that the packing list was suppressed or kept away from the Customs Officers. In fact the declaration made on the Shipping Bill, as seen from Para 1 of the impugned order was 'Printed Circuit Board Double Sided (AGP Card TNT2/M84)'; which would indicate that the 'Card nature' with technical specification was indeed declared. The charge of misdeclaration therefore cannot be upheld.
(g) The finding of the Commissioner that Rule 14 of the Foreign Trade (Regulation) Rules, 1993 especially Sub-rule (2) thereof read with Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 the goods should be deemed to render the export goods, prohibited goods and therefore liable for confiscation under Section 113(d) and 113(i) of the Customs Act, 1962 on consideration is found to be not correct interpretation of law. Even if the alleged misdeclaration finding is to be upheld. It is found that Foreign Trade (Regulation) Rules, 1993 issued vide Ministry of Commerce Notification No. GBR 791(E), dated 30-12-1993 have been issued under the powers confirmed by Section 19 of the Foreign Trade (Development and Regulation) Act, 1992 by the Central Government and not under the powers which would be exercised by the Central Govt. to issue an order under Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992, which would vide Sub-section (3), would then deem then to be a prohibition under Section 11 of the Customs Act, 1962. Besides of Rule 14(1) and 14(2) of Foreign Trade (Regulation) Rules, 1993 on a plain reading, would cover declaration for obtaining a licence and import any goods and DEPB's would not be covered by the word 'Licence' as defined in the Foreign Trade (Development and Regulation) Act, 1992. A claim for DEPB export would not be a declaration for import. In this view of the matter, the liability for confiscation of the goods, being prohibited goods, under Section 113(d) and/or 113(i), as brought out by the Commissioner cannot be upheld. Confiscation arrived at under Section 113(d) or/and 113(i) cannot be upheld.
(h) Ones goods are not found to be liable for confiscation, penalty under Section 114(i) of the Customs Act, 1962 cannot be sustained. The penalty imposed is required to be set aside.
4. In view of the forgoing, herein, the order is set aside and appeal allowed.