2008 (2) TMI 764 - AT - Customs

Confiscation and penalty - Export - Misdeclaration and undervaluation - Penalty - Export - DEPB credit

Summary

Issues:
Misdeclaration of goods, overvaluation for DEPB credit, confiscation of goods, penalty imposition, reliance on test results, misdeclaration of value, jurisdiction of determining DEPB credit, coercion in obtaining statements, reliance on market enquiry, misdeclaration of DEPB rate.

Analysis:
1. Misdeclaration of Goods:
The case involved misdeclaration of goods by M/s. Asha Enterprises in shipping bills, where goods declared as 100% polyester were found to be of inferior quality. Samples revealed discrepancies in fabric composition and weight, leading to suspicion of overvaluation for DEPB credit.

2. Overvaluation for DEPB Credit:
The Commissioner observed that the export goods were overvalued to claim higher DEPB credit, as market inquiries revealed discrepancies in declared value compared to actual market prices. The order fixed the value of export goods lower than declared, restricting DEPB credit and imposing penalties for overvaluation.

3. Confiscation of Goods and Penalty Imposition:
The Commissioner ordered the confiscation of export goods due to overvaluation and attempted illegal export, offering redemption on payment of a fine. Additionally, a penalty was imposed on M/s. Asha Enterprises for misdeclaration and overvaluation.

4. Reliance on Test Results and Market Enquiry:
The Tribunal noted discrepancies in the Commissioner's reliance on test results and market enquiry conducted without involving the exporter. Samples were not provided to the exporter, and details of the market enquiry were not shared, raising concerns about the validity of findings based on such evidence.

5. Jurisdiction of Determining DEPB Credit:
The Tribunal highlighted that the authority competent to determine admissible DEPB credit is the DGFT, not the Commissioner. The order restricting DEPB credit was deemed to be without jurisdiction, emphasizing the need for proper verification and evidence in such cases.

6. Coercion in Obtaining Statements:
The exporter claimed that confessional statements regarding goods' actual price and quality were extracted under coercion. The Tribunal emphasized the importance of ensuring statements are obtained without duress and that proper procedures are followed in investigations.

7. Misdeclaration of DEPB Rate:
Regarding the misdeclaration of DEPB rate in shipping bills, the Tribunal clarified that penalizing the exporter for declaring the rate wrongly, especially when a revised rate came into force, should be the responsibility of assessing officers and the DGFT, not the exporter.

8. Conclusion:
After a thorough review of the case, the Tribunal found the impugned order to be illegal and set it aside, allowing the appeal. The Tribunal emphasized the need for proper procedures, reliable evidence, and adherence to jurisdictional authorities in matters of valuation, DEPB credit, and penalty imposition.