1998 (11) TMI 671 - AT - Customs

Summary

Issues Involved:

1. Validity of the licence for importing Acrylic Scrap Material.
2. Whether the exported goods used Acrylic Material.
3. Correct availing of the benefit of Notification No. 203/92.
4. Overvaluation of the exported goods.
5. Undervaluation of the imported goods.

Issue-wise Detailed Analysis:

1. Validity of the Licence for Importing Acrylic Scrap Material:

The appellants held a licence allowing the import of "Relevant Plastic Scrap Materials" for the manufacture of garbage plastic bags. The Tribunal observed that the term "Plastics" included acrylic material, thus validating the licence for importing acrylic scrap material. The flexibility clause in the Import & Export Policy allowed the import of any plastic scrap not listed as a sensitive item, which included acrylic scrap.

2. Whether the Exported Goods Used Acrylic Material:

The appellants claimed that the garbage bags exported contained acrylic strips. The Tribunal examined various statements and test reports. The Chemical Examiner's reports indicated the presence of acrylic material in the exported bags. Despite some discrepancies in weight and material composition, the Tribunal found no substantial evidence to discard the Chemical Examiner's findings. The statements of the workers and the Power-of-Attorney holder did not conclusively prove the non-use of acrylic material. Therefore, the Tribunal accepted that acrylic material was used in the exported goods.

3. Correct Availing of the Benefit of Notification No. 203/92:

Notification No. 203/92 required that imported materials should not be disposed of before fulfilling the export obligation and realizing the export proceeds. The Tribunal noted that the appellants had sold the imported materials before the full realization of export proceeds, violating condition (vi) of the notification. The Tribunal emphasized that the condition should be interpreted strictly, and the benefit of the notification could not be availed if the export proceeds were not fully realized before the sale of imported materials.

4. Overvaluation of the Exported Goods:

The Tribunal found that the lower authority had rightly suspected the overvaluation of the exported goods based on the cost of production and the declared export value. The appellants' declared value was significantly higher than the cost of production. The Tribunal directed the lower authority to re-examine the value of the exported goods in terms of Section 14 of the Customs Act, considering the parameters of international trade.

5. Undervaluation of the Imported Goods:

The Tribunal upheld the lower authority's finding that the imported acrylic scrap was undervalued. The appellants accepted the revision of the value from US $150 to US $240 per MT for the scrap. The Tribunal also upheld the enhancement of the value for off cuts and photoframes from US $240 to US $450 per MT based on contemporaneous imports. The imported goods were rightly confiscated under Section 111(m) of the Customs Act for misdeclaration of value.

Final Determination:

The Tribunal remanded the matter for re-determination of the value of the exported goods and the quantum of goods that could be imported duty-free. The final determination of the redemption fine and penalty would depend on the extent of overvaluation of the exported goods. The Tribunal also directed that penalty could be levied either on the partnership firm or the partners, but not both. The duty demand of Rs. 72,47,895/- was confirmed, and the appeals were disposed of accordingly.