2014 (5) TMI 1010 - AT - Customs

Confiscation of goods - Redemption fine - mis-declaration of Present Market Value (PMV) and FOB value - claim of abnormally high DEPB credit - Right to get goods released on redemption fine payment - Held that - appellant, as a matter of right, cannot claim release of the goods on payment of redemption fine and duty. Even though gold as such is not a prohibited item and can be imported, such import is subject to lot of restrictions including the necessity to declare the goods on arrival at the Customs Station and make payment of duty at the rate prescribed. There is no need for us in this case to consider the conditions on which import is permissible and whether the conditions are satisfied because the appellant attempted to smuggle out the goods by concealing the same in emergency light, mixie, grinder and car horns etc. and hence the goods so brought is prohibitory goods as there is clear violation of the statutory provisions for the normal import of gold. Further, as per the statement given by the appellant under Section 108 of the Act, he is only a carrier i.e. professional smuggler smuggling goods on behalf of others for consideration. Since the exporter realized the value declared as FOB value it has to be taken as correct This circular is silent on the manner in which PMV is to be considered for the purpose of allowing credit . Since the circular is a continuation of earlier circular it is reasonable to conclude that the consideration is to ensure that credit given does not exceed 50% of PMV as ascertained. At any rate this change is after the export of goods on 17-08-2000 and cannot be made applicable to this this case - In the process of re-determining the eligible DEPB credit the appellant seems to have suffered beyond what was prescribed under law - in the matter of issue of SCN, the procedure prescribed vide circular 79/98-Cus dated 22-10-98 as amended by Circular dated23/99-Cus dated 11-05-99 was not followed - confiscation of goods and redemption fine and penalty imposed is set aside - Decided partly in Favour of assessee.

Summary

Issues Involved:
1. Application for raising additional ground.
2. Mis-declaration of Present Market Value (PMV) and FOB value.
3. Confiscation of goods under section 113 (d) & (l) of the Customs Act, 1962.
4. Calculation of DEPB credit.
5. Imposition of penalty under section 114 of the Customs Act, 1962.

Detailed Analysis:

1. Application for Raising Additional Ground:
The appellant filed an application to introduce Circular No. 69/97-Cus. dated 08.12.97, issued by the Department of Revenue, as relevant evidence. The tribunal found the circular pertinent to the case and allowed the application, thus admitting the circular into the record.

2. Mis-declaration of Present Market Value (PMV) and FOB Value:
The appellant filed three shipping bills for exporting ballpoint pens, declaring a total value of Rs. 88,05,626/- and claiming DEPB benefits. During the investigation, the proprietor admitted to purchasing the pens at lower prices than declared and requested provisional assessment. The investigation revealed discrepancies between the declared and actual values, leading to a show cause notice for reassessment and proposed penalties.

3. Confiscation of Goods Under Section 113 (d) & (l) of the Customs Act, 1962:
The Revenue proposed confiscation of the goods under section 113 (d) & (l) of the Customs Act, 1962, due to mis-declaration of PMV and FOB values. The adjudicating authority confirmed the liability for confiscation and imposed a fine of Rs. 2 lakhs in lieu of confiscation, along with a penalty of Rs. 1 lakh under section 114 of the Customs Act, 1962.

4. Calculation of DEPB Credit:
The appellant argued that the DEPB credit should be calculated at 50% of the PMV based on the MRP, as per Circular No. 69/97-Cus. The adjudicating authority, however, calculated the DEPB credit based on 15% of the assessed PMV, which the appellant contended was erroneous. The tribunal noted that the correct calculation method was not followed, leading to an incorrect determination of DEPB benefits.

5. Imposition of Penalty Under Section 114 of the Customs Act, 1962:
The appellant contested the imposition of penalties, arguing that there was no provision under the Customs Act for confiscating goods for mis-declaration of PMV and that the goods were not prohibited. The appellant relied on Circular No. 79/98-Cus. and subsequent amendments, which prescribed procedures for determining PMV and issuing show cause notices.

Tribunal's Findings:
- The tribunal acknowledged the appellant's realization of the declared FOB value, thus accepting it as correct.
- The formula for determining DEPB benefits in the adjudication order was found to be prima facie wrong. The tribunal clarified that DEPB credit should be restricted to 50% of the PMV if it exceeds the prescribed rate.
- The tribunal noted procedural lapses in issuing the show cause notice, as per Circular No. 79/98-Cus. and its amendments.
- Considering the overall facts and procedural lapses, the tribunal set aside the confiscation of goods, redemption fine, and penalty imposed on the appellant.

Conclusion:
The tribunal allowed the appellant's application for raising additional grounds, acknowledged procedural errors in the adjudication process, and ultimately set aside the confiscation, redemption fine, and penalty, providing relief to the appellant.