2013 (8) TMI 544 - AT - Customs

Quantum of fine and penalty whether the amount of fine and penalty could be reduced - Held that - Court did not order any reduction in fine as a result of which fine of Rs. 2 lakhs is confirmed - So far as penalty is concerned the value of goods reduced by six times of the declared value and the reduction was nearly Rs. 29 lakhs Making overall assessment of facts and circumstances depicted above, penalty is reduced to Rs. 4 lakhs - Penalty was imposed u/s 114(iii) - this section prescribes penalty not to exceed the value of goods as declared by the exporter or the value as determined under Customs Act, 1962, whichever is greater Appeal allowed partly.

Issues:
1. Dispute over the nature of goods in shipping bill affecting DEPB benefit entitlement.
2. Alleged mis-declaration of goods leading to reduction in DEPB claim.
3. Appellant's plea of no mis-declaration and full realization of export value.
4. Disagreement on DEPB claim rate between the parties.
5. Confirmation of goods being cotton fabric, not man-made fabric, based on CRCL report.
6. Assessment of fine and penalty amounts imposed.

Analysis:

1. The primary issue in this case revolves around a dispute concerning the nature of the goods listed in the shipping bill, specifically at serial No. 3, dated 27.9.2005, impacting the entitlement to Duty Entitlement Passbook (DEPB) benefit. The appellant claimed the goods were man-made fabric eligible for a DEPB benefit rate of 7.8 percent, while the Revenue contended that the goods were actually cotton fabric, as confirmed by testing from CRCL, resulting in a reduction of the DEPB claim to 2.8 percent. This discrepancy led to the imposition of a fine and penalty on the appellant.

2. The appellant argued that there was no mis-declaration on their part, emphasizing that the full value of the export had been realized, and thus, no adverse inference should be drawn against them. However, the Revenue maintained that not only was there mis-declaration in the value of the exported goods, but also an undue claim of fiscal incentives due to the higher DEPB rate of 7.8 percent instead of the correct rate of 2.8 percent.

3. After considering the arguments from both sides and examining the records, the Adjudicating Authority's findings, particularly in paragraph 14 of the order, were reviewed. The CRCL report conclusively established that the goods were made of cotton, not man-made fabric, justifying the valuation adjustments made by the Authority. The declared value per meter was reduced from Rs. 128 to Rs. 22.50, confirming the mis-declaration and the correct DEPB rate of 2.8 percent.

4. Regarding the quantum of the fine and penalty, the Tribunal upheld the fine of Rs. 2 lakhs but reduced the penalty amount. The penalty was initially imposed under Section 114(iii), which limits the penalty to not exceed the declared value of goods or the value determined under the Customs Act, 1962, whichever is greater. Considering the significant reduction in the value of goods and the circumstances of the case, the penalty was reduced to Rs. 4 lakhs, allowing the appeal partially on this specific issue.

5. In conclusion, the judgment confirmed the findings regarding the nature of the goods, the mis-declaration, and the appropriate DEPB rate, while adjusting the penalty amount based on the assessed value reduction. The decision provides clarity on the dispute and resolves the issues raised by the parties involved in the case.

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