2013 (8) TMI 508 - AT - Customs

DEPB - Over invoicing - Revision of PMV (Present Market Value) and FOB value Confiscation of goods u/s 113(d) Penalty u/s 114 - notice was issued u/s 124 r.w Section 113 alleging misdeclaration of material facts and value of the goods exported - Whether there had been overvaluation of the consignments of steel balls exported by the assesse during the period for the purpose of obtaining higher DEPB credit than eligible Held that - FOB values and the PMV declared by the assesse in the shipping bills under which they had undertaken the export were correct and valid in law The PMV cannot be challenged by going into the cost of manufacture - The burden to prove that PMV was inflated one was on the Department which had not been discharged - Revenue had not succeeded in making out a case against the assesse as the PMV declared was not more than 150% of AR-4 value - during the material period the Department allowed export of goods by other exporters under DEPB Scheme at much higher FOB values than what had been declared by the assesse and the details of the transactions were available with the Department for cross-checking. Additional evidence cannot be allowed to be submitted and considered at the appellate stage - the delay was almost 10 years after the issue of show-cause notice - the request of the Department was very strange and quite unconvincing Request for filing additional evidence at this stage since it appears to be only a ploy to delay the case further could not be accepted - the present market value arrived at by the assesse were within permissible limits assesse had realized the full export proceeds through proper banking channels and within the extended period granted by the Reserve Bank of India - Merely because there had been a delay in the realization of export proceeds the Department s conclusion that the entire transaction was a sham one had no basis and had to be rejected totally - DEPB credit claimed @22% of the FOB value by the assesse was rightly entitled order set aside penalty Set aside Decided in favor of assesse.

Summary

Issues Involved:
1. Overvaluation of Exported Goods
2. Applicability of Circular No. 69/97
3. Admissibility of Additional Evidence
4. Determination of Present Market Value (PMV) and Free on Board (FOB) Value
5. Legitimacy of DEPB Credit Claims
6. Imposition of Penalties

Detailed Analysis:

1. Overvaluation of Exported Goods:
The main issue was whether the appellant overvalued the 16 consignments of steel balls exported between May and August 1999 to obtain higher DEPB credit. The Commissioner concluded that the FOB value declared was highly inflated to avail greater DEPB credit. The Commissioner based this conclusion on several grounds, including the lack of technical specifications in the documents, the irregularity of the parties involved in dealing with steel balls, and discrepancies in payment and procurement practices.

2. Applicability of Circular No. 69/97:
The Supreme Court noted that the applicability of Circular No. 69/97 would depend on the factual scenario of each case. The Tribunal was remanded to re-evaluate the case, considering the detailed aspects of the Commissioner's conclusions and the arguments presented by both parties.

3. Admissibility of Additional Evidence:
The Department requested to submit additional evidence, citing an overseas inquiry report that contradicted the appellant's claims. However, the Tribunal rejected this request due to the significant delay (almost ten years) and the failure to present this evidence at earlier stages, including before the Supreme Court.

4. Determination of Present Market Value (PMV) and Free on Board (FOB) Value:
The Tribunal found that the appellant had provided substantial documentary evidence supporting the declared PMV and FOB values. The evidence included procurement documents, payment details, and comparisons with other exporters' transactions. The Department's reliance on cost-of-manufacture data from M/s. Kwality Balls Company was deemed irrelevant as it pertained to a different grade of steel balls (AISI 304 vs. AISI 316). The Tribunal concluded that the PMV and FOB values declared by the appellant were within permissible limits and based on valid market conditions.

5. Legitimacy of DEPB Credit Claims:
The Tribunal determined that the appellant was entitled to the DEPB credit claimed at 22% of the FOB value. The declared values were corroborated by documentary evidence, and the appellant had realized the full export proceeds through proper banking channels within the extended period granted by the Reserve Bank of India.

6. Imposition of Penalties:
Given that the Tribunal set aside the Commissioner's order, the penalties imposed on the appellant and other individuals were also set aside. The Tribunal found no basis for the Department's conclusion that the transactions were sham.

Conclusion:
The Tribunal allowed the appeal filed by the appellant, M/s. Peerless Consultancy Services Private Limited, with consequential reliefs. The penalties imposed on the other appellants were also set aside. The appeals were disposed of in the above terms.