2007 (5) TMI 59 - AT - Customs

Valuation(Custom) Two cases alleged regarding overvaluation in respect of (i) PVC sports shoes (ii) automobile in order to avail undue benefit of DEPB Held (i) confiscation , redemption fine and penalties upheld (ii) overvaluation in respect to automobile set aside

Issues Involved:
1. Overvaluation of PVC sports shoes.
2. Overvaluation of automobile parts.
3. Non-imposition of penalties on individuals.

Detailed Analysis:

1. Overvaluation of PVC Sports Shoes:
The officers of Central Excise, Indore, examined three sealed containers at the Inland Container Depot, Malanpur, which were supposed to contain 16,000 pairs of shoes. The shipping bills under the DEPB Scheme indicated certain FOB values. Upon suspicion of overvaluation to avail undue DEPB benefits, the officers detained and seized the containers. Samples were taken and sent for market value assessment, revealing overvaluation. Further investigations showed that the exporters were fictitious and had no involvement in manufacturing or exporting shoes.

The adjudicating authority concluded that the charges of overvaluation were correct, leading to confiscation of the goods and limiting DEPB benefits to the current market value. Penalties were imposed on the firms but not on the proprietors/partners. The appellants contested the confiscation, penalty imposition, and reduction in DEPB benefits, arguing that the market value was incorrectly assessed as wholesale prices and that the declared value was accurate. The Revenue argued that the suppliers were fake and the declared value was inflated to gain ineligible DEPB benefits.

Upon review, the Tribunal found that the appellants provided fictitious addresses and suppliers denied supplying the shoes. The adjudicating authority's findings on the present market value and the conclusion of overvaluation were upheld. The confiscation, penalties, and reduction in DEPB benefits were deemed correct and required no interference.

2. Overvaluation of Automobile Parts:
The adjudicating authority dropped the charges of overvaluation of automobile parts, citing a lack of nexus between the procured parts and those exported. The Revenue argued that the procurement of parts was from non-existent parties and that the firms were floated by a single individual to defraud the government.

The Tribunal found that the firms involved in overvaluing PVC sports shoes were likely to have overvalued automobile parts as well. The adjudicating authority's decision to drop the charges was incorrect. The Tribunal referenced a similar case, Annapurna Yarn Fabrics v. Commissioner of Customs (Port) Kolkata, where fraudulent export activities under a government scheme were not tolerated. The Tribunal set aside the adjudicating authority's order and remitted the matter back for reassessment of overvaluation and imposition of penalties.

3. Non-Imposition of Penalties on Individuals:
The Revenue appealed against the non-imposition of penalties on the individuals (proprietors/partners). The Tribunal held that it is settled law that a firm and its proprietor/partner are not distinct entities. Therefore, once a penalty is imposed on the firm, it need not be imposed separately on the proprietor/partner. The appeals by the Revenue on this issue were dismissed.

Conclusion:
The appeals by the appellants regarding the overvaluation of PVC sports shoes were dismissed. The appeals by the Revenue concerning the overvaluation of automobile parts were allowed, with the matter remitted back for reassessment. The appeals by the Revenue on non-imposition of penalties on individuals were dismissed. All appeals were disposed of accordingly.

← Previous Next →