2005 (98) ECC 146 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Bangalore

Dr. S.L. Peeran, Member (J) and Shri K.C. Mamgain, Member (T)

Radnick-v-Exports

Versus

Commissioner of Customs (ICD), T.K.D., New Delhi

Appeal No. C/276/2000

[Arising out of Order-in-Original No. BKG/CC/ICD/TKD/84/99, dated 30.12.1999, passed by the Commissioner of Customs, I.C.D., Tughlaqabad]

Final Order No. 1470/2004, dt. 17.9.2004, Certified on 6.9.2004

Confiscation and Penalty (Customs)

Misdeclaration -- Shipping bills -- Appellant over-valued the goods and also gave wrong declaration of the market price under Section 50 of the Customs Act in the declaration at the foot of the shipping bill -- Confiscation and penalty was affirmed -- Section 76 of the Customs Act, 1962 -- No drawback is admissible in respect of any goods, the mark price of which is less than the amount of drawback therein -- Section 114 of the Customs Act.

Appeal rejected

PRESENT :

Shri A.C. Jain, Adv. for the appellant.

Shri P.M. Saleem, SDR for the respondent.

Case Cited :

Om Prakash Bhatia v. CC, Delhi, 2001 (73) ECC 724 (Tri-LB)............................... [Para 4]

Per : K.C. Mamgain

This appeal is against the OIO No. BKG/CC/ICD/TKD/84/99 dated 30.12.99 passed by the Commissioner of Customs ICD Tughlakabad, New Delhi.

2. The facts in brief are that the appellants filed four shipping bills on 31.12.98 for export of ready made garments namely ladies blouses and ladies skirts to Canada and eight shipping bills for export of ladies blouses to USA. The consignment of the goods was examined on 5.1.99 in presence of Shri Rehman Khan, representative of the exporter and two independent witnesses. On examination, the garments were found to be of poor quality, highly over-invoiced and not worth for export. Representative samples of each type of these garments were taken out from the consignment of the goods under Panchnama and the goods were seized on the reasonable belief that these are liable for confiscation. On 8.1.99, Smt. Vijay Lakshmi manager of the appellant firm tendered her statement under Section 108 of the Customs Act wherein she stated that they have no objection if separate value is taken for drawback purposes after conducting market enquiry. On 30.3.99, the statement of Shri Sanjay Kumar, Proprietor of the appellant firm was recorded under Section 108 of the Customs Act wherein the representative samples of 15 numbers of garments were shown to him and he accepted that the sample belonged to the shipping bills under reference. He signed on the samples in token of having seen the same. He stated that these garments were of similar type and their value should be Rs. 50 to Rs. 60 per piece. On 26.4.99 an independent market enquiry was conducted and after seeing the sample, Shri Raj Kumar, Proprietor of M/s SS Group Exports New Delhi gave an opinion that the market value of blouses is Rs. 20 per piece and market value of skirts is Rs. 35 per piece. After market enquiry, it was found that the drawback claimed in the shipping bills for export to USA was in excess of the market value of the goods and in case of exports to Canada as per the market value of the goods, the drawback admissible would be Rs. 84,029 instead of drawback claim of Rs. 3,23,106 claimed in the shipping bills. Accordingly a show cause notice was issued to the appellants for refixing the correct value on the basis of market enquiry and reducing the amount to Rs. 84,029 in case of exports to Canada and denying drawback in respect of consignments to USA. The goods were also proposed to be confiscated for mis-declaring the market value of the goods on the shipping bills and penalty was proposed under Section 114 of the Customs Act. The case was adjudicated by the Commissioner after giving opportunities of hearing to the appellants and he accordingly confiscated the seized goods under Section 113 h(i) of the Customs Act but the appellants were given option to redeem the same on a fine of Rs. 1,30,000. He also refixed the duty drawback on the goods meant for export to Canada as Rs. 84.029 and imposed a penalty of Rs. 1,00,000 on the appellants under Section 114 of the Customs Act.

3. Shri A.C. Jain, learned advocate appearing for the appellants pleaded that the department has not supplied to them all the documents on which the show cause notice is based. The appellants had written a letter to the Commissioner for supply of relied upon documents and in reply they were supplied copy of statement of Smt. Vijaya Lakshmi, shipping bills, invoices and packing list. Other documents were not given to them for the purpose of export. The exporter is required to enter the FOB value of the export goods in the shipping bills. The FOB value is different and distinguished from the market value. The drawback claim is allowable to the exporter on advaloram based on the FOB value. The burden to prove the valuation of the goods is exclusively on the department. The appellant entered the contracted value with the buyer as the FOB value in the shipping bills. No document was supplied to the appellant alongwith show cause notice, regarding the alleged market enquiry. If according to the department the market value of the goods is less than the amount of drawback claimed then, department could at best deny the drawback claim in view of Section 76 of Customs Act but it cannot be said that the appellant had contravened Section 113 h (i) of the Customs Act. Wrong declaration in shipping bill may result in penalty but it can only be imposed under Section 117 and not under Section 114 of the Customs Act. The department has allowed the appellant to export the goods. The show cause notice proposed to confiscate the goods under Section 113(d) & 113h(ii) of the Customs Act. He pleaded that the Commissioner in his order has admitted that Section 113 (d) and 113 h(ii) is not applicable. Therefore, he cannot confiscate the goods. He finally pleaded that their appeal may be allowed.

4. Shri P.M. Saleem learned SDR appearing for revenue pleaded that under Section 50 of the Customs Act, the appellants are required to give the correct declaration regarding the market value and FOB value of the goods to be exported under section 76 of the Customs Act if the drawback claim is more than the market value of the goods, then no drawback is admissible. He stated that in the present case, the appellants for the same goods have declared different FOB value for goods exported to Canada declaring the value of blouse at Rs. 101.5 whereas for the same blouse for export to USA they have declared the value ranging from Rs. 132.57 to Rs. 471.65 per piece. He pleaded that on market enquiry the values of blouse piece was found as only Rs. 20 per piece, whereas the value of skirt was Rs. 35 per piece as these were of very inferior quality. Even Shri Sanjay Kumar Proprietor of the appellant firm in his statement has agreed that the value of these goods would be between Rs. 50 to Rs. 60 per piece where as drawback claimed by the appellants for blouses for export to USA was Rs. 78 to Rs. 82 per piece. Thus, the market value of the goods which is defined in the Section 2 (30) of the Customs Act was less than the amount of drawback claimed per piece. Therefore, the Commissioner has correctly denied the drawback for export to USA. He stated that the appellants were given personal hearing by the Commissioner and they have never disputed the market value of the goods. If the appellants were not provided with all the documents on which the allegations in the show cause notice have been made then they were free to get the copies of those documents for their defence which are referred to in the show cause notice. If all the documents were not supplied to them in reply to their letter, it does not preclude them from obtaining those documents if required by them which they have not done. They have also not contested the market value during the hearing before the Commissioner. They had full opportunity of cross-examining the persons during the adjudication proceedings which they have never done. Therefore, they cannot raise the plea at the appellate stage that all the documents were not provided to them.

--The department has never denied to give the documents to them nor they were denied any opportunity of hearing which was availed by them but they themselves did not ask for any cross-examination or any further documents. Therefore, the plea of the appellant is totally unwarranted that they were not provided the documents. Once allegations have been made against them and the contents of the documents have been referred to in the show cause notice it was for them to get the copies, if they wanted or at least plead before the Commissioner during the hearing regarding non-availability of documents which was not done by them. Therefore, at the appeal stage, they are precluded from raising such issue. He also stated that the market value of the blouses which was Rs. 20 in India, they have shown the FOB value for Canada as Rs. 101 and for USA as Rs. 471 which is much higher. In such a situation, a person will prefer to get these from Canada to USA instead of importing from India. Therefore, the Commissioner has correctly come to the conclusion that the declaration made by them under Section 50 was incorrect. He relied on the decision of the Tribunal's Larger Bench in case of Om Prakash Bhatia v. CC, Delhi, 2001 (73) ECC 724 (Tri-LB) : 2001 (127) ELT 81 (Tri-LB) wherein it was held that under Section 50 of the Customs Act, the exporter of any goods is required to make entry of such goods for exportation by presenting to the proper officer in case of goods to be exported in a vessel or air craft, a shipping bill and in the case of goods to exported by land, a bill of export in the prescribed form. The exporter of any goods while presenting a shipping bill or bill of export had to make and subscribe to a declaration at the foot of such shipping bill or bill of export, as to the truth of its contents. In the shipping bill for export of goods under claim for duty drawback, the value, free on board (FOB) was required to be declared alongwith the description of the goods, and other particulars. The declaration of FOB value was required to be declared irrespective of the fact whether the goods were chargeable to export duty or not. As defined in Section 2(41) `Value' in relation to any goods means the value thereof determined in accordance with the provisions of sub-section (1) of Section 14. Therefore, over-invoicing of the goods for exportation was an offence under Customs Act. In the present case, the appellant have over-invoiced the goods to claim higher drawback and therefore, these goods were liable for confiscation under Section 113 of the Customs Act. Wrong mention of Section 113 H (ii) was taken up before the Commissioner and he had given finding in his order that it was a typographical error for writing 113 H (i). He also pleaded that even mentioning wrong section does not vitiate the show cause notice if the charge of over-invoicing is properly brought out in the show cause notice. He therefore pleaded that there is no merit in the appeal and same deserves rejection.

5. We have carefully considered the submissions made by both the sides. We find that the plea of the appellant that all the documents were not given to them and therefore they have replied the show cause notice only on the basis of the documents supplied to them cannot be considered in violation of the principles of natural justice as the show cause notice mentioned all the allegations based on the contents of the documents and if the appellants had not received copy of any documents then they were free to get those documents from the department. The department has never denied them to give any documents. It was in their own interest to get the documents if they wanted their case to be properly defended. However the allegations on which the case is built up were clearly given in the show cause notice and the basis on which they allegations were made was also given in the show cause notice mentioning the contents of the statement of Shri Sanjay Kumar proprietor of appellant firm and also the contents of the market enquiry. We also find that the appellant did not challenge these by cross-examining the concerned persons therefore we do not find that there was been any violation of principles of natural justice. We find that the market price is defined in Section 2(30) of the Customs Act as under:

--"Market price in relation to any goods means the wholesale price of the goods in the ordinary course of trade in India."

--The market price of the goods on market enquiry was found very low than the declared price. Even the market price as admitted by Shri Sanjay Kumar Proprietor of the appellant firm was Rs. 50 to Rs. 60 per piece whereas the drawback claimed by them was between Rs. 78 to Rs. 82 per piece. Therefore, according to Section 76 of the Customs Act, no drawback was allowable in respect of any goods, the market price of which is less than the amount of drawback due therein. Therefore, the drawback was correctly denied by the Commissioner. We also find that the appellant had over-valued the goods and also gave wrong declaration of the market price under Section 50 of the Customs Act in the declaration at the foot of the shipping bill. Therefore, the Commissioner has correctly confiscated the goods and imposed penalty on the appellants. We, therefore, do not find any merit in the appeal and same is rejected.

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