2016 (9) TMI 1387 - AT - Customs

Penalty u/s 114(i) and 114(iii) of the CA - denial on DEPB Benefit - inflated FOB value - rejection of declared value - Held that - the Revenue is willing to accept a FOB price up to 50% higher than the AR-4 price without market enquiry. In case of declared FOB value being more 150% it mandates a market enquiry - In the instant case no market enquiry has been conducted. In the absence of any market enquiry the declared FOB value cannot be rejected - Revenue has also not produced any evidence of contemporary exports while the appellants have produced the bank realization certificate for the entire declared FOB - penalties set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of goods exported under DEPB scheme
2. Denial of DEPB benefit and imposition of penalty
3. Admission of over-valuation in shipping bill
4. Lack of market enquiry and evidence of contemporary exports
5. Appeal against the order of original adjudicating authority

Confiscation of goods exported under DEPB scheme:
The appellant, M/s. Nangalia Impex, filed a shipping bill for export under the DEPB scheme. Revenue recorded a statement where it was admitted that the value in the shipping bill was significantly higher than the value declared in the AR-4. A show cause notice was issued seeking to confiscate the goods exported provisionally under the Customs Act, 1962. The original adjudicating authority ordered confiscation of the goods provisionally cleared and imposed a fine for redemption.

Denial of DEPB benefit and imposition of penalty:
The appellant faced denial of the entire DEPB benefit and a penalty under the Customs Act. The Commissioner (Appeals) upheld the original order. The appellant challenged this before the Tribunal.

Admission of over-valuation in shipping bill:
The appellant argued that the partner had only accepted the DEPB credit at 150% of the AR-4 value as permitted by a Circular. It was contended that the goods were released provisionally without a bond, questioning the validity of confiscation. The appellant presented evidence of full foreign exchange receipt, while the department failed to provide evidence of contemporary exports at different prices.

Lack of market enquiry and evidence of contemporary exports:
The Tribunal noted that the Revenue accepted a FOB price up to 50% higher than the AR-4 price without a market enquiry. In this case, where the declared FOB value exceeded 150%, no market enquiry was conducted. The Revenue also did not produce evidence of contemporary exports, whereas the appellants provided a bank realization certificate for the declared FOB value. Due to the absence of a market enquiry and lack of evidence, the Revenue failed to establish the case, leading to the appeal of M/s. Nangalia Impex being allowed.

Appeal against the order of original adjudicating authority:
The Tribunal allowed the appeal of M/s. Nangalia Impex, thereby negating the imposition of any penalty on its partner. The appeals were disposed of accordingly, with the decision announced in court.