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2009 (8) TMI 885 - AT - CustomsClaim of ineligible duty drawback - present market value of the goods which has been purchased by the appellant from the local market - over-invoicing of the value - violation of misdeclaration of the export consignment in order to avail ineligible of drawback - appellants herein contested show cause notice on the ground that there is no misdeclaration of the value and also submitted that the exported consignments were received by the overseas party and the foreign exchange is realized - Difference of opinion. Whether the order passed by the Commissioner is liable to be set aside as proposed by Member (Judicial) or the order is required to be upheld and appeal dismissed as held by Member (Technical)? HELD THAT - It was held by learned Member (Technical) that The purpose of drawback is to refund the duty suffered on the material used in the export product and in respect of all industry rate the quantum of duty is arrived at on the basis of average market value prevailing in the market for those goods and that is why these restrictions under Sec. 76 has been put. In view of this I uphold the finding that there was a misdeclaration of the present market value of goods which has been admitted by one and all and accordingly the drawback has been correctly denied. For same reasons I uphold the penalties imposed and confiscation of goods. It was also held by learned Member (Technical) that Receipt of remittance supported by bank realization certificate is of no consequence as firstly what is mainly been disputed in the present case is not the FOB value but procurement price of bicycle parts (domestic market value) and secondly receipt of remittance supported by bank realization certificate is not a sure indication of declared export price being correct. The learned Member (Technical) of the regular Bench has arrived at an acceptable conclusion on the basis of the available materials - there are no proof of duress coercion or threat was produced by Shri Mukhia. Moreover the retraction made through reply to show-cause notice after more than two years from the date of confessional statement is not a valid retraction. It is also pertinent to note that Shri Vinod K. Agarwal managing director of M/s. Ad-Manum Finance Ltd. and partner of M/s. Agarwal Overseas Corporation did not come forward to support the claim of Shri Mukhia that the latter s statements had been recorded under duress coercion or threat. The statements of other witnesses are also against these appellants to varying extents and none of them was sought to be cross-examined by any of the appellants. In any case there is nothing in these statements to support the appellants. Thus the learned Member (Technical) is agreed upon in his assessment of the evidence collected by the Revenue under Section 108 of the Customs Act. As per Section 76(1)(b) of the Customs Act no drawback shall be allowed in respect of any goods the market price of which is less than the amount of drawback due thereon. This provision makes it imperative for any drawback claimant to show that the amount of drawback claimed by him is less than the market price (PMV) of the export goods. In other words he is bound to disclose the PMV of the goods. Where he fails to do so the department would proceed to determine the PMV of the goods through market enquiry. This is precisely what happened in the present case. In the present case admittedly M/s. Agarwal Overseas Corporation and M/s. Ad-Manum Finance Ltd. had not even made an attempt to show that the PMV of the export goods was higher than the amount of drawback claimed by them. They did not even disclose the specifications of the bicycle parts procured by them from M/s. Puneel Traders and M/s. Craftmen and exported under claim of drawback. Such specifications of the goods if declared by the exporters would have enabled the department to conduct a more effective market enquiry for the PMV of the goods. In view of the above conduct of the appellants I hold that the present challenge against the results of the market enquiry conducted by the department is devoid of bona fides or merit. In other words the PMV of the goods ascertained by the department is unassailable in the circumstances of this case. In the present case the PMV determined by the department on the basis of documentary evidence gathered from other exporters in respect of contemporaneous exports of similar goods is much lower than the amount of drawback claimed. As already noted the appellants have not succeeded in showing that this PMV was determined arbitrarily. On the other hand the oral evidence gathered by the department under Section 108 of the Customs Act corroborates the basis of determination of PMV by the department. The Commissioner s order is sustainable in law as held by the learned Member (Technical) - Registry is directed to place the records before the regular Bench on 13-8-2009 for formulation and pronouncement of the majority decision. The impugned order is sustained and the appeals are dismissed.
Issues Involved:
1. Alleged over-invoicing of export consignments. 2. Determination of Present Market Value (PMV) and its comparison with the claimed duty drawback. 3. Admissibility and impact of statements recorded under Section 108 of the Customs Act. 4. Applicability of Section 76 of the Customs Act. 5. Validity of retraction of statements. 6. Relevance of realization of export proceeds as evidenced by Bank Realization Certificates (BRCs). Issue-wise Analysis: 1. Alleged Over-Invoicing of Export Consignments: The appellant-firm exported bicycle parts under duty drawback claims. The lower authorities suspected over-invoicing to claim ineligible excess drawback and conducted an investigation. Statements from various individuals, including the appellant's partner, were recorded, leading to the conclusion of over-invoicing. The adjudicating authority found that the prevailing market value (PMV) of the items was significantly lower than the declared FOB value, resulting in a rejection of the drawback claims and the imposition of penalties. 2. Determination of Present Market Value (PMV) and its Comparison with the Claimed Duty Drawback: The adjudicating authority determined the PMV based on evidence collected during the investigation, including market values of similar goods exported by other firms. The PMV of the goods was found to be Rs. 7,18,578/-, while the claimed drawback was Rs. 12,63,428/-. The authority concluded that the goods were over-invoiced, rendering the appellants ineligible for any drawback as per Section 76 of the Customs Act. 3. Admissibility and Impact of Statements Recorded Under Section 108 of the Customs Act: The statements recorded under Section 108 were pivotal in establishing the over-invoicing. The adjudicating authority relied on these statements, which were not retracted until the reply to the show-cause notice. The statements indicated that the goods were over-invoiced, and the PMV was lower than the declared value. The Tribunal held that these statements were admissible and binding, as they were not recorded under duress or coercion. 4. Applicability of Section 76 of the Customs Act: Section 76 prohibits the allowance of drawback if the market price of the goods is less than the amount of drawback due. The adjudicating authority applied this provision, finding that the claimed drawback exceeded the PMV, thus denying the drawback claims. The Tribunal upheld this application, emphasizing that the appellants failed to prove that the PMV was higher than the claimed drawback. 5. Validity of Retraction of Statements: The retraction of statements by the appellants was deemed invalid due to the lack of evidence of duress or coercion. The retraction occurred significantly later, weakening its credibility. The Tribunal relied on the original statements, corroborated by other evidence, to support the findings of over-invoicing. 6. Relevance of Realization of Export Proceeds as Evidenced by Bank Realization Certificates (BRCs): The appellants argued that the realization of export proceeds, evidenced by BRCs, should validate the declared FOB value. However, the Tribunal held that realization of proceeds alone does not negate the findings of over-invoicing and the determined PMV. The Supreme Court's judgment in Vishal Exports Overseas Ltd. was distinguished, as it did not involve the specific considerations of Section 76 of the Customs Act. Separate Judgments: The Tribunal was divided, with Member (Judicial) proposing to set aside the order, while Member (Technical) upheld it. The third Member (Judicial) agreed with Member (Technical), leading to a majority decision to sustain the impugned order and dismiss the appeals. Conclusion: The Tribunal upheld the adjudicating authority's decision, finding that the appellants over-invoiced the export consignments to claim ineligible duty drawback. The PMV determined by the department was accepted, and the retraction of statements was invalidated. The realization of export proceeds did not affect the findings of over-invoicing. The appeals were dismissed, affirming the penalties and denial of drawback claims.
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