2003 (9) TMI 425 - AT - Customs

Summary

Issues:
- Denial of DEPB benefit and imposition of penalties on the exporter and the clearing agent.
- Contention regarding verification of market value and imposition of penalty.
- Justification for denial of DEPB benefit and penalties.
- Role of the clearing agent in the alleged fraud.

Analysis:
1. Denial of DEPB Benefit and Imposition of Penalties:
The case involved two appeals against an Order passed by the Commissioner of Customs, where DEPB benefit of Rs. 7 lakhs was denied to the exporter and penalties of Rs. 5 lakhs and Rs. 1 lakh were imposed on the exporter and the clearing agent, respectively. The appellants exported Non-Pyrogenic Sterile Infusion Sets under the DEPB scheme, but the Customs authorities held up a consignment for verification of value, leading to the denial of DEPB benefit and imposition of penalties.

2. Contention Regarding Verification of Market Value:
The appellants contended that the market value verification was not accurate, and the actual value of the goods was higher than what was determined. They argued that the Commissioner should not have denied the DEPB benefit, especially if it was based on the market values ascertained. Additionally, they claimed that there was no justification for penalizing the exporter for negotiating export prices higher than domestic prices.

3. Justification for Denial of DEPB Benefit and Penalties:
The Department justified the denial of DEPB benefit and penalties by asserting that the case involved overvaluation and misdeclaration of export prices to gain undue DEPB benefit. The exporter voluntarily gave up the DEPB benefit and sought export under non-DEPB shipping bills. The Department argued that allowing the exporter to retract after accepting verifications would encourage export frauds that harm revenue.

4. Role of the Clearing Agent in the Alleged Fraud:
The clearing agent was accused of abetting the fraud by making false statements during the investigation. The agent claimed to have verified the price of the goods and produced bills supporting the procurement prices, but market verifications revealed a significantly lower market price. The agent's false statements and involvement in the fraud led to the imposition of a penalty on him.

5. Judgment:
The Appellate Tribunal upheld the Order of the Commissioner, stating that the price declarations by the appellants were false, as confirmed during market verifications. The Tribunal found no merit in the appellants' submissions, emphasizing the significant value of the goods involved and the lack of supporting documents. The clearing agent was also deemed complicit in the fraud, as his false statements contradicted the facts established during investigations. Consequently, the appeals were rejected, and no interference with the adjudication order was warranted.