2009 (4) TMI 707 - AT - Customs

Appeal to Appellate Tribunal - Limitation - Condonation of delay - Stay/Dispensation of pre-deposit - Demand & Penalty

Issues Involved:

1. Overvaluation of exported goods for availing higher DEPB credit.
2. Jurisdiction of Customs authorities in altering DEPB credit.
3. Procedural lapses in investigations.
4. Legality of penalties imposed on appellants.
5. Validity of evidence obtained from foreign sources.

Issue-wise Detailed Analysis:

1. Overvaluation of Exported Goods for Availing Higher DEPB Credit:

The main charge against the appellants, including M/s. Goyal Impex & Industries Ltd. (GIIL), M/s. Goyal Exports (GE), and M/s. Diamond Mink Blankets (DMB), was the overvaluation of exported goods to claim undue DEPB credits. The show cause notices alleged that the appellants declared higher values for goods exported to Dubai and CIS countries to avail more DEPB credit. The investigation revealed that the value declared at the port of import was significantly lower than the value declared in India. The Commissioner concluded that the appellants over-invoiced the goods based on fictitious invoices and conspired with overseas buyers to defraud the government.

2. Jurisdiction of Customs Authorities in Altering DEPB Credit:

The appellants argued that the Customs authorities do not have the jurisdiction to alter DEPB credits, which is the prerogative of the JDGFT under the Foreign Trade (Development & Regulation Act), 1992. They cited several case laws, including Pradeep Polyfils Pvt. Ltd. v. UOI and Avon Appliances v. CC, Mumbai II, to support their contention. The Tribunal acknowledged that DEPB credit cannot be altered by Customs authorities but noted that this does not preclude the imposition of penalties for overvaluation.

3. Procedural Lapses in Investigations:

The appellants highlighted several procedural lapses, including the failure to follow the procedure prescribed in CBEC Circular No. 23/99-Cus. They argued that the declared value was accepted after examination by Customs officers, and any grievance should have been addressed through an appeal under Section 128/129A/129D of the Customs Act, 1962. They also pointed out that the documents obtained from Dubai were not attested as required by the Evidence Act, making them unreliable.

4. Legality of Penalties Imposed on Appellants:

The appellants contended that penalties under Section 114 of the Customs Act, 1962, cannot be imposed as the goods were not "Prohibited Goods" or "Dutiable Goods," and no drawback was claimed. They relied on case laws such as Rammapati Exports v. CC (Port) Kolkata and Vijeta International v. CC, Mumbai. The Tribunal found that prima facie, there was evidence of overvaluation, justifying the imposition of penalties on GIIL, DMB, Hiralal Goyal, and Gagan Goyal, while S. Chandrasekaran and Goyal Exports Ltd. were not liable for penalties.

5. Validity of Evidence Obtained from Foreign Sources:

The appellants challenged the validity of evidence obtained from Dubai, arguing that it was not duly attested and thus inadmissible. They cited the decision of the Apex Court in CC, Bombay v. East Punjab Traders. The Tribunal noted that the investigations conducted at Dubai indicated undervaluation of goods exported, but acknowledged the appellants' legal contentions and reliance on case laws.

Conclusion:

The Tribunal ordered the appellants to pre-deposit specified amounts towards penalties within three months, failing which the appeals would be dismissed. The stay applications and applications for condonation of delay were disposed of accordingly. The Tribunal emphasized that the DEPB credit cannot be altered by Customs authorities but upheld the penalties based on prima facie evidence of overvaluation.

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