2006 (8) TMI 399 - AT - Customs

Valuation - FOB value - Overvaluation - shipping bills for export both under DEPB and drawback - Present Market Value of the goods - Whether the FOB value of US 7.5 to Rs. 338/- per piece of Cotton T-Shirts/Knitted T-Shirts ( the said goods ) as declared is correct ? - HELD THAT - We find that it is required for the Revenue to show that in the course of international trade, such or like goods have been exported at or about Rs. 35/- or Rs. 42/-, in the face of the language of Section 14 of the Customs Act, which provides that the value of goods for export shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of exportation in the course of international trade, where the buyer and the seller have no interest in the business of each other and the price is the sole consideration. In the absence of evidence of contemporaneous exports at the proposed value of Rs. 35/- per T-Shirt, the contention of the Revenue cannot be accepted. The value declared before Dubai Customs is not only not relevant, in law, but is also not the basis of the proposed valuation in the show cause notice. The Revenue s submission on date of let export order preceding date of Bill of Lading has no relevance to the determination of FOB value under Section 14 of the Customs Act, 1962. The further submission that the remittance in foreign currency does not relate to export goods is not tenable for the reason that terms of payment for the goods is a contractual obligation between the parties thereto and does not detract from the correctness of the FOB value declared. We, therefore, accept the contention of the exporter that the FOB value has been correctly declared by them and consequent thereto, hold that the goods are not liable to confiscation u/s 113(1), and reject the Revenue s appeal. Whether the determination of the Present Market Value (PMV) of Rs. 35/- per piece by the Commissioner is correct, as against the PMV of Rs. 120/- declared by the exporters and consequently, whether the exporters are entitled for drawback as claimed by them ? - The contention of the revenue that the declared PMV of Rs. 120/-per piece cannot be accepted in view of the fixation of the tariff value for articles of apparel falling under CETA sub-heading 6101.00 or 6201.00 @ 60% of the retail sale price declared or required to be declared on the retail packages under the provisions of the Standards of Weights and Measures Act, 1976 or the Rules made thereunder or under any other law for the time being in force, as per Notification 20/2001-C.E.(N.T.), under the provisions of Section 3(2) of the Central Excise Act, and the contention that the exporter has not produced any evidence of printing of Rs. 120/- RSP on the retail package of the goods cannot be accepted for the reason that this was not the ground in the show cause notice for which the declared PMV was proposed to be rejected and not the finding of the adjudicating authority. Thus, we hold that the PMV has been correctly declared by the exporters and they are, therefore, entitled to drawback as claimed. To sum up, we hold that the FOB value and the Present Market Value of the goods in question have been correctly declared by the exporter, drawback is admissible to them, and that goods are not liable to confiscation and the exporter and others are not liable to penalty. In the result, Appeals filed by the exporter s company and its officers and the shipping agencies and partners thereof are allowed. Appeal filed by the revenue is dismissed.

Issues Involved:
(A) Whether the FOB value of US $ 7.5 = to Rs. 338/- per piece of Cotton T-Shirts/Knitted T-Shirts as declared is correct?
(B) Whether the determination of the Present Market Value (PMV) of Rs. 35/- per piece by the Commissioner is correct, as against the PMV of Rs. 120/- declared by the exporters and consequently, whether the exporters are entitled for drawback as claimed by them?
(C) Whether the inter-parties decision in an earlier case between the company and the Department, decided by this Tribunal, against which the appeal has been dismissed by the Hon'ble Supreme Court, is conclusive and binding in the present case?
(D) Whether the Commissioner is correct in imposing fine and penalty?

Issue-wise Detailed Analysis:

Issue (A): Correctness of the Declared FOB Value
The Commissioner accepted the declared FOB value of Rs. 338/- per piece, while the Revenue contended it should be Rs. 35/- or Rs. 42/- per piece based on the cost of procurement and additional expenses. The Tribunal found that the Revenue failed to provide evidence of contemporaneous exports at the proposed value of Rs. 35/- or Rs. 42/-. The Tribunal noted that the value declared before Dubai Customs was irrelevant and that the remittance in foreign currency did not detract from the correctness of the declared FOB value. The Tribunal upheld the declared FOB value, rejecting the Revenue's appeal.

Issue (B): Determination of Present Market Value (PMV) and Entitlement to Drawback
The Commissioner determined the market price as Rs. 27/- or Rs. 28/- based on the manufacturer's selling price to the trader, which the Tribunal found incorrect as it did not reflect the wholesale market price in India. The Tribunal held that no market enquiry was conducted to disprove the declared PMV of Rs. 120/-. The Tribunal concluded that even if the market price was Rs. 42/- per piece, it was above the amount of drawback claimed, thus not attracting the bar under Section 76 (1)(a) of the Customs Act. The Tribunal found no evidence of artificial inflation or manipulation of the FOB value and held that the exporters were entitled to the claimed drawback.

Issue (C): Binding Nature of the Earlier Tribunal Decision
The Tribunal noted that in an identical case involving the same exporters, the declared PMV and FOB value were accepted, and the appeal against the Tribunal's order was dismissed by the Supreme Court. The Tribunal held that the doctrine of merger applied, making the earlier order binding in the present case. Consequently, the Tribunal set aside the Commissioner's order on the determination of market price and denial of drawback.

Issue (D): Imposition of Fine and Penalty
Given the Tribunal's findings that the goods were not liable to confiscation and the exporters were entitled to drawback, the Tribunal held that the imposition of redemption fine and penalty was unsustainable and set them aside.

Conclusion
The Tribunal concluded that the FOB value and Present Market Value of the goods were correctly declared by the exporter, and they were entitled to the claimed drawback. The goods were not liable to confiscation, and the exporter and others were not liable to penalties. Therefore, the appeals filed by the exporter's company, its officers, and the shipping agencies were allowed, while the Revenue's appeal was dismissed.

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