2013 (8) TMI 654 - AT - Customs

Excess duty drawback allegation of overvaluation - claim of DEPB and Draw back - Confiscation of goods u/s 113 Redemption fine u/s 125(1) Held that - Assesse would be eligible for the duty drawback - The version of accountant as to sale of fabric to the assesse transportation to the destination of assesse and payment by account payee cheque of the sales consideration of fabric remained un-discarded. Valuation of trousers - It was not possible to doubt manufacturing of the Trouser It was stated by the said deponent that they use superior quality of raw material in manufacture of export material failed to be discredited by Revenue. Even his version that final destination of export as Dubai appearing in ARE-1 return remained in fact without being impeached by Revenue. Further the market enquiry was not done with any manufacturer of trouser, That was done with traders without demonstrating whether they have at any time dealt with the goods of the appellant and whether they had any experience as manufacturer. - Decided in favor of assesse.

Summary

Issues Involved:
1. Re-determination of export value.
2. Confiscation of goods and imposition of redemption fine.
3. Recovery of excess benefit of drawback.
4. Market enquiry and valuation of goods.
5. Statements and evidence regarding manufacturing and procurement.
6. Alleged overvaluation and mis-declaration for higher export benefits.
7. Applicability of value cap and relevance of market enquiry.

Detailed Analysis:

1. Re-determination of Export Value:
The adjudication order re-determined the export value of the goods pertaining to Shipping Bills no. 1012558, 1012559, and 1012560 from Rs. 53,80,690/- to Rs. 20,21,760/-. This revaluation was based on a market enquiry that suggested the goods were overvalued, leading to undue claims of DEPB and Drawback by the appellant.

2. Confiscation of Goods and Imposition of Redemption Fine:
The goods exported under the aforementioned shipping bills were confiscated under Section 113 of the Customs Act, 1962. Since the goods were released provisionally, a redemption fine of Rs. 5,00,000/- was imposed in lieu of confiscation under Section 125(1) of the Customs Act, 1962. Additionally, a Bank Guarantee of Rs. 1,45,286/- was appropriated after adjusting the excess benefit of Drawback and DEPB from a total Bank Guarantee of Rs. 3.88 lakhs.

3. Recovery of Excess Benefit of Drawback:
The adjudication order also mandated the recovery of an excess benefit of drawback amounting to Rs. 1,13,821.00 for Shipping Bill No. 1012558. This amount was appropriated from the Bank Guarantee provided by the appellant for provisional release.

4. Market Enquiry and Valuation of Goods:
The market enquiry conducted by the Revenue revealed that the declared value of the goods (Rs. 53,80,690/-) was significantly higher than the market value (Rs. 20,21,760/-). The enquiry involved opinions from two garment dealers in Amritsar, who provided lower valuations for the goods compared to the appellant's claims. The appellant argued that the export price was based on various trade factors, including cost of manufacture and purchase value.

5. Statements and Evidence Regarding Manufacturing and Procurement:
Statements were recorded from various individuals under Section 108 of the Customs Act, 1962. The appellant's partner confirmed the manufacturing and procurement details, supported by invoices and payment records. However, the adjudicating authority questioned the absence of records for the raw materials and the actual manufacturing process. Statements from suppliers confirmed the business relations and transactions with the appellant.

6. Alleged Overvaluation and Mis-declaration for Higher Export Benefits:
The investigation concluded that the appellant attempted to export ready-made garments by mis-declaring their export value to avail higher export benefits. This conclusion was based on the significant discrepancy between the declared value and the market value, as revealed by the market enquiry.

7. Applicability of Value Cap and Relevance of Market Enquiry:
The appellant argued that the claims for DEPB and Drawback were within the "value cap" limits specified in the relevant schedules and CBEC Circular No. 27/2000-CUS dated 05.04.2000. They contended that the present market value suggested by the Revenue should not prejudice their claims. The adjudicating authority, however, relied on Circular No. 56/2002 dated 09.02.2002, which allows for investigation in cases of fraud or suppression.

Conclusion:
The Tribunal found that the adjudicating authority did not adequately address the appellant's defense regarding the value cap and the relevance of the market enquiry. The evidence provided by the appellant, including statements and transaction records, was not sufficiently countered by the Revenue. The appeal was allowed, indicating that the appellant's claims for DEPB and Drawback were valid within the prescribed value caps, and the market enquiry conducted by the Revenue lacked sufficient basis.