2007 (4) TMI 86 - AT - Customs

Benefit of DEPB can t be denied merely on the ground that the supplier of the good non-existed and untraceable. When goods were exported after due to verification by customs authorities, foreign exchange received, DEPB shall be allowed

Summary

Issues Involved:
1. Confiscation of goods under 14 shipping bills.
2. Imposition of penalties under Section 114 of the Customs Act, 1944.
3. Denial of DEPB benefits.

Issue-wise Detailed Analysis:

1. Confiscation of Goods:
M/s. Al Hadi Impex filed 14 shipping bills for exporting 53,60,000 ball pens with a declared FOB value of Rs. 3.69 crores to Dubai. The Customs Department later doubted the correctness of the declaration, especially the weight of the ball pens, leading to an investigation. The declared weight was 1.6 gm per pen, which was significantly lower than the average weight of 4-5 gm per pen. The investigation revealed non-existence of various suppliers and suspicious financial transactions. Despite these findings, the Customs officers confirmed during cross-examination that the goods were examined and found to be ball pens, and the declared value was verified and accepted after discussion with senior officers. The Tribunal concluded that since the goods were exported after full examination by Customs officials, there was no justification for holding the goods liable to confiscation.

2. Imposition of Penalties:
The Commissioner imposed penalties of Rs. 15 lakhs on M/s. Al Hadi Impex and Shri Sadiq Hussein Yusuf Ali Pattawalla, and Rs. 1 lakh on Shri Divyesh Gandhi under Section 114 of the Customs Act, 1944. The appellants contended that the export was genuine, all shipping bills were duly processed, and the entire remittance was received. The Tribunal found that the penalties were not justified as the goods were exported after due verification by Customs officers, and there was no evidence of mis-declaration. Consequently, the penalties on M/s. Al Hadi Impex, Shri Sadiq Hussein Yusuf Ali Pattawalla, and Shri Divyesh Gandhi were set aside.

3. Denial of DEPB Benefits:
The Commissioner denied DEPB benefits to M/s. Al Hadi Impex, doubting the authenticity of the export. However, the Tribunal noted that the DEPB benefits were granted after due verification by Customs and DGFT authorities. The appellants argued that the DEPB benefits are based on the value of goods exported, not their weight, and the remittance was fully received. The Tribunal referred to Circular Nos. 15/97 and 69/97, which mandate verification of declared value at the time of examination and acceptance if no show cause notice is issued within 30 days. The Tribunal, agreeing with the Member (Judicial), held that the DEPB benefits could not be denied as the export was verified and accepted by the Customs authorities, and the appellants had received the entire remittance.

Separate Judgments:
- Member (Judicial): Concluded that there was no justification for holding the goods liable to confiscation or imposing penalties, and DEPB benefits should not be denied. All appeals were allowed.
- Member (Technical): Agreed on the non-imposition of penalties but held that DEPB benefits should be denied due to the appellants' failure to convincingly prove the exports.
- Third Member (Judicial): Agreed with the Member (Judicial) that DEPB benefits should not be denied, resulting in the majority decision to allow all appeals with consequential relief.

Final Order:
In view of the majority decision, all appeals were allowed with consequential relief to the appellants.