2006 (7) TMI 380 - AT - Customs

Summary

Issues involved:
1. Eligibility of Drawback claims under Section 76 of the Customs Act, 1962.
2. Confiscation liability under Section 113 of the Customs Act, 1962.
3. Permissibility of altering FOB value.
4. Redetermination of Drawback quantum and classification.

Analysis:

1. Eligibility of Drawback claims under Section 76:
The appellants presented a chart for 10 shipping bills, showing discrepancies in the Drawback claimed compared to the Present Market Values (PMV) determined by the Revenue. The tribunal noted that Section 76 of the Customs Act prohibits Drawback claims if the Market Price of goods is less than the Drawback amount. However, as the claims exceeded Rs. 50 per shipping bill and no other provision for denial was demonstrated, the tribunal found the claims eligible despite being lower than the PMV determined by the Revenue.

2. Confiscation liability under Section 113:
The tribunal examined the confiscation liability under Section 113 of the Customs Act, which pertains to misdeclaration of dutiable goods or goods for exportation under drawback claims. It was observed that the misdeclaration of Present Market Values (PMV) by 13.6% did not constitute a material misdeclaration, especially since the actual Market Values were higher than the claimed Drawback amounts. Therefore, the tribunal concluded that the confiscation order based on misdeclaration of PMV was not sustainable and needed to be set aside.

3. Permissibility of altering FOB value:
The tribunal addressed the issue of altering the Free on Board (FOB) value of goods, emphasizing that Customs officers lack the authority to modify FOB values, especially for goods not subject to duty. The tribunal highlighted that the FOB values could not be questioned or changed, particularly when the appellants confirmed receiving remittances based on these values through banks. Consequently, the tribunal ruled that FOB values should stand, and Drawback should be granted based on the scheduled rates.

4. Redetermination of Drawback quantum and classification:
In light of the above findings, the tribunal allowed the appeal and remanded the case to the Proper Officer for reassessment of the eligible Drawback quantum. The tribunal directed that exporters be given an opportunity to address any proposed changes in the Drawback schedule classification before determining the final quantum of Drawback payable. Ultimately, the tribunal set aside the order of confiscation and penalty, thereby concluding the appeals in favor of the appellants.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Kolkata addressed various issues related to Drawback claims, confiscation liability, FOB value alterations, and redetermination of Drawback quantum. The tribunal's detailed analysis and findings provided clarity on the legal aspects involved in the case, ensuring a fair and just resolution in favor of the appellants.