2006 (7) TMI 80 - AT - Customs

Overvaluation Alleged that appellant used to show overvaluation of exported good and accordingly penalty were imposed on him After considering the prior decision respective authority set aside the confiscation and penalty

Summary

Issues:
1. Alleged overvaluation of exported goods under DEEC scheme.
2. Confiscation of goods and imposition of penalties under Customs Act, 1962.
3. Jurisdiction of Customs Authority in DEPB exports.

Analysis:

Issue 1: Alleged overvaluation of exported goods under DEEC scheme
The case involved exporters who exported goods under the DEEC scheme, manufactured by a registered entity. The Department alleged overvaluation of the goods, leading to a discrepancy in the declared value and actual value of the goods. The appellants contended that they had received the full amount as per the declared FOB values and provided evidence to support their claim. The Tribunal found no rebuttal to this evidence and noted that the foreign buyers were not related to the exporters, and the price was negotiated with no benefits flowing to the buyers. The Department failed to provide contemporaneous pricing evidence, and the reliance on certain material was deemed insufficient to prove overvaluation.

Issue 2: Confiscation of goods and imposition of penalties under Customs Act, 1962
The Commissioner determined that the goods should be confiscated under Section 113(d) of the Customs Act, 1962, and imposed personal penalties on the exporters and directors of the manufacturing entity. However, the Tribunal observed that in cases of DEPB exports, the Customs authority lacks jurisdiction to order confiscation and penalties under Sections 113 and 114 of the Customs Act. Citing relevant case laws, the Tribunal held that misdeclaration, if any, in DEPB exports is not covered by the relevant regulations for confiscation. The orders of confiscation and penalties were set aside based on established legal principles and precedents.

Issue 3: Jurisdiction of Customs Authority in DEPB exports
The Tribunal emphasized that Customs authorities do not have the jurisdiction to sit over decisions in DEPB cases. Relying on previous judgments, the Tribunal concluded that no confiscation or penalty could be imposed on exports under DEPB claims. The legal position was clarified, highlighting that penalties under the Customs Act for exports under DEPB claims are not sustainable. The Tribunal set aside the confiscation and penalties imposed, emphasizing the lack of prohibition on the export of electrodes and the legal framework governing DEPB exports.

In conclusion, the Tribunal found no merit in the lower authority's order and set it aside, allowing the appeals in favor of the exporters. The judgment clarified the legal principles governing valuation, confiscation, and penalties in the context of DEEC and DEPB exports, establishing the boundaries of Customs authority jurisdiction in such cases.