Custom, Excise & Service Tax Tribunal
Asian Exports vs The Commissioner Of Customs (Exports) on 4 December, 2008
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.II APPEAL No. C/38 to 41/03 (Arising out of Order-in-Original No.454/99 CAC-CC-RS dated 30/09/99 passed by Commissioner of Customs (Exports), Mumbai) For approval and signature: Honble Mr.P.G.Chacko, Member (Judicial) Honble Mr.K.K. Agarwal, Member (Technical) ====================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
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Asian Exports
Shri Muffazal Hakim
Shri. Hakim Ismail Appellants
Air Trade International
Vs.
The Commissioner of Customs (Exports),
Mumbai Respondents
Appearance:
Shri.A. K. Chatterjee, Advocate for the Appellants
Shri.Manish Mohan, SDR for the Respondents
CORAM:
Mr.P.G. Chacko, Member (Judicial)
Mr.K.K. Agarwal, Member (Technical)
Date of hearing : 04/12/2008
Date of decision : 04/12/2008
O R D E R No:..
Per: P.G. Chacko
1. M/s.Asian Exports (appellant in Appeal No.C/38/03) had filed four shipping bills on 04/08/99 for export of metallic/non-metallic writing instruments under claim for DEPB benefit. These shipping bills covered a total number of 10 lakhs pieces of pens with total FOB value of Rs.1,29,17,068/-. The DEPB credit claimed under these bills was to the extent of 21%. All the consignments were detained by SIIB (Export) of the department suspecting overvaluation of the goods for higher DEPB credit. Samples were drawn from all the consignments and were examined, whereupon only one type of pens was found. A statement of Shri Muffazal Hakim (appellant in Appeal No.C/39/03), partner of M/s.Asian Exports, was recorded under Section 108 of the Customs Act, wherein he admitted that the correct value of each ball point pen was Rs.4.20 (FOB) as against the declared value of Rs.12.93 per piece. On this basis, he also admitted overvaluation of Rs.87,37,068/- for the entire quantity of pens covered by the four shipping bills. He also admitted that extra DEPB credit was claimed to the tune of Rs.18,34,784/-. Shri Hakim also produced a local invoice indicating Rs.20 lakhs as the value of 10 lakhs pieces of pens. From the results of investigations, it appeared to the department that M/s.Asian Exports had misdeclared the value of the export goods with intent to gain undue DEPB benefit thereby attracting the provisions of Sections 113 & 114 of the Customs Act. After hearing them, the Commissioner ordered confiscation of the goods under Section 113 of the Customs Act with option for redeeming the same on payment of fine totaling to Rs.8.45 lakhs. The Commissioner also imposed a total penalty of Rs.2 lakhs on Shri Muffazal Hakim and a separate penalty of Rs.2 lakhs on Hakim Ismail (appellant in Appeal No.C/40/03), another partner of M/s.Asian Exports. The said appeals are directed against the Commissioners order.
2. In a separate order, the Commissioner confiscated similar goods covered by a shipping bill filed by M/s.Asian Trade International (appellant in Appeal No.C/41/03), imposed a fine of Rs.2.5 lakhs in lieu of confiscation and also imposed a penalty of Rs.1 lakh on the exporter. Shri Hakim Ismail was the proprietor of M/s.Air Trade International. The grounds raised in Appeal No.C/41/03 are similar to those raised in Appeal No.C/38/03 of M/s.Asian Exports. The facts of the two cases are also similar.
3. Heard both sides. Ld. Counsel for the appellants submitted that it was not correct on the part of Ld. Commissioner to have enhanced the value of the goods on the basis of the invoice produced by the appellants inasmuch as that invoice was produced for the limited purpose of expediting the shipment. It was not open to Ld. Commissioner to record a finding of overvaluation of the goods solely on the basis of statements. The export value of the goods as indicated in the export invoices and declared in the shipping bills has been realized by the appellants through normal banking channels and, therefore, there was no question of misdeclaration of value in these cases. In this connection, Counsel relied on the Tribunals decision in Shilpi Exports Vs. Commissioner of Customs, Calcultta (1996 (83) ELT 302 (Tribunal). He also pointed out that a Civil Appeal filed by the department against the Tribunals decision was dismissed by the Supreme Court. Counsel also relied on the decision of the Tribunal in Mercantile India Vs. CC, Chennai (2007 (214) ELT 540 (Tri.-Chennai) and the apex Courts judgement in Commissioner of Central Excise & Customs, AP. Vs. Suresh Jhunjhunwala (2006 (203) ELT 353 (SC). Ld. Counsel also refered to Boards Circular No.15/97/Cus dated 03/06/97 on market enquires for determining Present Market Value (PMV) of export goods under DEPB scheme. He also referred to the provisions of Sections 113 & 114 of the Customs Act as they stood at the material.
4. Ld. DR submitted that the appellants had admitted their offence under Section 108 of the Customs Act and never retracted their confessional statement. He also submitted that the cases cited by the Counsel were distinguishable on facts. Further, he reiterated the findings of the Commissioner.
5. After giving careful consideration to the submissions, we have not found any valid grounds in these appeals against the decision of the Commissioner. In the absence of evidence of any coercion having been exerted by departmental officers on the appellants to produce adverse evidence in the form of invoice stating higher market value for the export goods, it has to be held that the invoice showing a value of Rs.20 lakhs for 10 lakhs pieces of pens was produced by the appellant voluntarily in support of their own admission of overvaluation of the goods. In their statements, the appellants categorically admitted the offence of overvaluation with intent to acquire undue DEPB benefit. They only wanted the cases to be adjudicated expeditiously in terms of the FOB value determined by the Customs authorities. Overvaluation of the goods with intent to obtain undue DEPB benefit stands established in this case, thereby attracting Section 113 of the Customs Act. Incidentally, the conduct of the appellants also squarely attracted the provisions of Section 114 of the Customs Act inasmuch as, by misdeclaring the value of the goods with ulterior purpose of obtaining undue DEPB benefit, they were rendering the goods liable to confiscation under Section 113 and rendering themselves liable to be penalized under Section 114. Having regard to the FOB value of the goods determined by the department on the basis of evidence adduced by the exporters and subsequently accepted by the latter, we find that the redemption fine determined by the Commissioner is not exorbitant. The quanta of penalties imposed on the appellants are also reasonable. In the result, the decision of the Commissioner has only to be sustained.
6. We have also considered the case law cited by the Counsel. None of those cases involved categorical confession of offence by the exporter. Therefore, as rightly pointed out by the SDR, those decisions cannot be made applicable to the facts of the instant case. On the other hand, some of the decisions cited by Ld. Counsel would support the Departments case. For instance, in the case of Suresh Jhunjhunwala (supra), the Honble Supreme Court was only remanding the case to the Tribunal for reconsidering the question whether the party had indulged in overvaluation of export goods for claiming higher DEPB benefit. Pursuant to the remand, this Tribunal vide in Suresh Jhunjhunwala Vs. Commissioner of Customs, Hyderabad (2007 (220) ELT 842 (Tri.-Mumbai) found that the party had overvalued the goods for undue DEPB benefit. In the case of Mercantile India (supra) also, it was found that the quantity and the value of export goods were misdeclared with intent to avail DEPB credit and accordingly confiscation was upheld. In our view, the appellants case is worse inasmuch as they consistently confessed to having overvalued the goods for claiming undue DEPB benefit and even produced documentary evidence of Present Market Value (PMV), Counsel has referred to a Circular of CBEC wherein the procedure for determining PMV of export goods was clarified. As we have already noted, in the instant case, the appellants themselves produced evidence of PMV making it un-necessary for the department to conduct any market enquiry. In this scenario, the above circular has no bearing on this case.
7. For the reasons noted above, we sustain the orders of the Commissioner and dismiss these appeals.
(Pronounced in Court) (K..K.Agarwal) Member (Technical) (P.G.Chacko) Member (Judicial) pj 1 6 2