2004 (2) TMI 465 - AT - Customs

Issues Involved:
1. Misdeclaration of the composition of export goods.
2. Determination of FOB values and PMVs.
3. Entitlement to DEPB credits.
4. Confiscation of goods and imposition of penalty.

Issue-wise Detailed Analysis:

1. Misdeclaration of the Composition of Export Goods:
The appellants were found to have misdeclared the composition of goods in Shipping Bills (S/B) Nos. 1000 and 2106. The chemical test report from the Custom House Laboratory showed discrepancies between the declared and actual compositions. For S/B No. 1000, the declared composition was wool 12%, acrylic fibre 9.7%, polyester fibre 57.7%, and other fibres 20.6%, while the test report showed acrylic fibre 89.5% and cellulosic fibre 10.5%. For S/B No. 2106, the declared composition was synthetic fibre 69.4 - 70.5%, but the test report indicated 55% synthetic fibre and 45% animal hair (wool). The Commissioner relied on these test reports to determine the DEPB credits and found that the appellants had misdeclared the composition to claim higher DEPB credits.

2. Determination of FOB Values and PMVs:
The Commissioner fixed lower FOB values and PMVs than those declared by the appellants based on market enquiries conducted at Ludhiana. The declared and determined values were as follows:
- For S/B No. 1000: Declared FOB value Rs. 677/-, PMV Rs. 375/-; Determined FOB value Rs. 236/-, PMV Rs. 225/-.
- For S/B No. 2088: Declared FOB value Rs. 1252/-, PMV Rs. 1200/-; Determined FOB value Rs. 709/-, PMV Rs. 675/-.
- For S/B No. 2106: Declared FOB value Rs. 1252/-, PMV Rs. 1250/-; Determined FOB value Rs. 788/-, PMV Rs. 750/-.

The appellants contested the market enquiry results, arguing that the purchase invoices should have been considered as per CBEC Circular No. 69/97. The Tribunal found the market enquiry results unreliable due to subsequent clarifications from the Bajwa Nagar Hosiery Association and the lack of evidence that M/s. Chawla Knitwears had dealt in similar goods. The Tribunal followed its previous decision in the appellants' own case, accepting the purchase invoices as reliable evidence for determining PMVs.

3. Entitlement to DEPB Credits:
The DEPB credits were determined based on the chemical test reports and the declared FOB values. The Commissioner allowed DEPB credits at the rates of 15%, 16%, and 13% for the goods covered under S/B Nos. 1000, 2088, and 2106, respectively. The Tribunal upheld these rates but ordered that the credits be calculated based on the declared FOB values and PMVs, subject to the limits prescribed in CBEC Circular No. 69/97.

4. Confiscation of Goods and Imposition of Penalty:
The Commissioner found the goods covered under S/B Nos. 1000 and 2106 liable for confiscation under Section 113 of the Customs Act due to misdeclaration of composition. As the goods were no longer available for confiscation, a penalty of Rs. 25,000/- was imposed on the appellants under Section 114 of the Customs Act. The Tribunal upheld this penalty, finding it reasonable given the circumstances.

Conclusion:
(a) The appellants are entitled to DEPB credits based on the declared FOB values and PMVs, subject to the limits prescribed in CBEC Circular No. 69/97. The credits are to be calculated at the rates of 15%, 16%, and 13% for the goods covered under S/B Nos. 1000, 2088, and 2106, respectively.
(b) The penalty of Rs. 25,000/- imposed under Section 114 of the Customs Act is upheld.
(c) The impugned order is modified to the above extent, and the appeal is disposed of accordingly.

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