2006 (7) TMI 381 - AT - Customs

Summary

Issues:
1. Claim of exemption under Notification No. 32/97-Cus.
2. Calculation of value addition in exports.
3. Discrepancy in FOB value and CIF value.

Analysis:
1. The appellants imported "Polyester micro ball trace fabric" and claimed duty-free release under Notification No. 32/97-Cus. They exported garments manufactured from the imported material to the raw material supplier as job workers. However, the Deputy Commissioner of Customs found no positive value addition in the exports, leading to a duty demand of Rs. 1,46,000. This decision was upheld by the Commissioner (Appeals), prompting the present appeal.

2. The appellants argued a value addition of 93.26% in their exports, fulfilling condition IV of the Notification. They presented a detailed calculation showing the cost of fabrics, job charges, and total value of the blouse to support their claim. In contrast, the Department contended that the FOB value in the Shipping Bills was lower than the CIF value of the imported materials, implying a negative value addition. The Tribunal examined the evidence and found that the FOB value was indeed higher than the CIF value by 93.26%, supporting the appellants' position.

3. The Tribunal noted that the raw materials were received free of cost, falling under the imports covered by the Notification. The dispute primarily revolved around an arithmetical error as the shipping bills declared that the FOB value did not include the imported raw material's value. The total FOB value, including the CIF value of fabrics and job work charges, exceeded the CIF value by 93.26%, corroborated by evidence of foreign exchange realization. The Tribunal concluded that the lower authorities had made an arithmetical error, leading to the dispute, and set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellants, finding that they had fulfilled the conditions of the Notification, and the discrepancy in value addition was due to an arithmetical error by the lower authorities.