2005 (98) ECC 443 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

West Zonal Bench -- Mumbai

Shri S.S. Sekhon, Member (T) and Shri T. Anjaneyulu, Member (J)

Sanjay Kapoor & M/s. Bijoux Impex

Versus

Commissioner of Customs (Import), Mumbai

Appeals No. C/1251 & 1252/V/99/Mum

[Arising out of Order-in-Original No. 412/99 CAC-CC-RS dated 14.9.1999 passed by the Commissioner of Customs (Exports), Mumbai]

Order No. A-692-93/WZB/2004/C-III, dated 12.7.2004, Certified on 11.8.2004

Drawback

Revaluation of drawback cannot be made when export value was indeed more than the amount of drawback claimed -- Order of repayment of a part of drawback amount fails to sustain -- Customs Act, 1962, Section 76(1)(b).

[Para 6]

Drawback Rules, 1995

Rule 3 -- Computation of Drawback -- Rule 3 nowhere specifies any ingredients of FOB value, which are not to be accepted or to be deduced for computed drawback -- The drawback rates are fixed on an all India Industrial Average of deemed duty incidence and on a particular class of product -- Held, Commissioner had no jurisdiction bring in his own interpretation, to determine and exclude certain elements of costs when the statute does not prescribe -- Findings of Commissioner on this aspect, set aside.

[Para 5]

Appeal is allowed

PRESENT :

Shri Ravinder Jain, Consultant for the appellant.

Shri Bidhan Chandra, SDR for the respondent.

Case Cited :

Mitexco v. Commissioner of Customs (E.P.), Mumbai, 2003 (155) ELT 69 (Tri-Mumbai) [Para 6]

Per : T. Anjaneyulu

Heard both sides.

2. The assessee is in appeal. The Asst. Commissioner of Customs, S.I.I.B. (Export), Mumbai 400 038, held that the appellant has violated the provisions of Section 50(2) 75 of the Customs Act, 1962 and Rule 3 of Drawback Rules, 1995, Section 3(3) of the Foreign Trade Development Act, 1992 and the provisions of Section 114(iii) of the Customs Act, 1962 and ordered confiscation of five subject consignments entered for export under provisions of Section 113(d) of the Customs Act, 1962. He also gave option to redeem the same on payment of fine amount as indicated in the order and imposed penalty of Rs. 1,00,000 on Shri Sanjay Kapoor.

2. Aggrieved by the same, the assessee filed the present appeal before this Tribunal.

3. The appellant, M/s. Bijoux Impex, Mumbai, filed five shipping bills under drawback scheme for export of 100% cotton vests and 100% cotton T-shirts (readymade garments) to M/s. Ali Al Moammari Trading Establishment, 204,1/128, Naif Road, P.O. Box 1494, Dubai, U.A.E. The consignments sought for export were taken up for investigation on the basis of the information received in S.I.I.B. (Export) relating to the aspect of over-valuation.

4. It is also admitted by one of the staff of the appellant that the Department gathered the evidence with regard to the price of the goods. Hence, the Asst. Commissioner of Customs confirmed the demand.

5. It is found that the Commissioner of Exports has failed to appreciate that the item under export was free of any restrictions under Export-Import Policy or any other law. The only requirement was that the goods should be exported under proper shipping bill and they should be correctly declared. There is no misdeclaration found as regards the quantity of the goods, merely because the market value of goods has been questioned and for that, they are comparing the prices with the goods being exported by some other exporters, will not be a reason to doubt this export to be impugned, and/or the claim to be made for drawback ineligible. Since there is no material on market enquiry in this case, to convince us that the market value of goods declared was less than the drawback eligible. It was submitted by the learned Consultant appearing for the appellant that full payments have since been received; no foreign buyer will send the payments, if the goods are not of the quality, which were intended by him. We, therefore, find no reason to uphold the order of the Commissioner, and set it aside for want of material evidence to sustain the same.

5(a) We also find that the Commissioner has erred in concluding that in this case since the export was being made on a credit of 180 days and the appellants had therefore added the elements of interest in their price and that such element was not acceptable for payment of drawback under the provisions of Rule 3 of the Drawback Rules, 1995 is not the correct interpretation of law for the reasons--

(i) the value of export is fixed after negotiation and all elements of costs, including the interest of credit of 180 days would be included in such negotiated prices. In any case, this element of interest of credit of 180 days would be only a very small factor in determining the export price. The major factor for such determination should be the element of risk and other costs, since the exports were not covered by any insurance. It was also a risk of a factor to ensure that they obtain the foreign payment remittance as failure would result in the recovery of drawback so obtained as well as risking action and the Foreign Exchange Regulations of the country. Therefore, the factoring of all these reasons in the export price would be a normal commercial reason for negotiation for an exporter. Nothing would turn on the element of interest as determined by the Commissioner. All costs that go to compute the export price i.e. FOB value would be eligible for reckoning the drawback payable.

(ii) Rule 3 of the Drawback Rules `95, no where specifies any ingredients of FOB value, which are not to be accepted or to be deducted for computation of drawback. The drawback rates are fixed on an all India Industrial Average of deemed duty incidence and on a particular class of product. Commissioner had no jurisdiction to bring in his own interpretations, to determine and exclude certain elements of costs when the statute does not prescribe. Therefore, the Commissioner's findings on this aspect would render the present order to be not as per law, therefore it requires to be side aside.

6. In the case of M/s. Mitexco v. Commissioner of Customs (E.P.), Mumbai, 2003 (155) ELT 69 (Tri-Mumbai), it is observed that in case of readymade garments, the profit of margin are tremendous and the margin would depend upon many causes, including the skill of the seller and the gullibility of the buyer -- Government on one hand may have to give higher quantum of drawback, but at the same time, the country gets significant amount of foreign exchange. Revaluation of drawback cannot be made when export value was indeed more than the amount of drawback claimed. Order of repayment of a part of drawback amount fails to sustain as per Section 76(1)(b) of Customs Act, 1962.

7. In the light of the above observation and the facts covered by this case, the appeal has to be allowed. Accordingly, the appeal is allowed.

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