2007 (4) TMI 466 - AT - Customs

Confiscation, fine and penalty - Export - misdeclaration of value - Revenue s contention is that since the declared FOB value was found to be twice as much as domestic price, clearly there was mis-declaration of value with intention to gain undue DEPB benefit - Held that - there is no evidence to support a finding that there was mis-declaration of export value. The unreliability of the finding regarding market value is brought out by the very fact that enquiry showed that similar goods were being sold in the price range of ₹ 50/- to ₹ 70/-. The variation is nothing abnormal - It is also not correct to judge a consignment s price by an average price. The full payment for the consignment by the buyer also confirms that the transaction is genuine. In these facts and circumstances, the action taken by the Custom authorities cannot be sustained. Appeal allowed - appellant shall be entitled for DEPB benefit based on the declared report price - decided in favor of appellant.

Issues:
1. Mis-declaration of value in export consignment.
2. Confiscation of goods and imposition of fine and penalty.
3. Reliability of price verification and quantity check.
4. Legality of adopting an average value for valuation.
5. Applicability of DEPB benefit based on declared FOB value.

Analysis:
1. The appellant exported man-made fabric claiming DEPB benefit but faced scrutiny due to a quantity difference of 3000 meters in a consignment of 50,000 meters. The authorities adopted an average value of Rs. 66 per meter, leading to confiscation of goods for alleged mis-declaration of value. The appellant contested this, asserting the declared FOB value was correct, supported by full payment from the buyer. The appellant argued against the average value method and highlighted the Supreme Court's stance on large price variations not necessarily indicating mis-declaration.

2. The authorities imposed a fine and penalty on the appellant for the alleged mis-declaration of value, justifying their actions based on the significant difference between the declared FOB value and the domestic price. The appellant challenged this, emphasizing the lack of evidence supporting mis-declaration and questioning the reliability of the price verification process. The appellant's reliance on the Supreme Court's decision in a similar case further strengthened their argument against the confiscation and penalties imposed.

3. The reliability of the price verification and quantity check conducted by the customs authorities came into question during the proceedings. The appellant argued that the negligible quantity difference could be attributed to measurement errors rather than intentional mis-declaration. The discrepancy in the market prices of similar goods highlighted the normal variation in prices and undermined the authorities' reliance on an average price for valuation purposes.

4. The legality of adopting an average value for determining the reasonable value of the exported goods was a key point of contention. The appellant argued that market transactions occur at varying prices, and imposing an average price on a specific transaction was unjustified. The appellant's position was supported by the lack of evidence indicating mis-declaration and the genuine nature of the transaction, as evidenced by the full payment received.

5. Ultimately, the Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal. The appellant was deemed entitled to the DEPB benefit based on the declared FOB value, emphasizing the lack of evidence supporting the alleged mis-declaration of value. The decision highlighted the importance of substantiated findings and proper valuation methods in customs proceedings to prevent unjust confiscation and penalties.

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