2015 (5) TMI 94 - AT - Customs

DEPB Benefit - Overvaluation of goods - appellant have overvalued the export consignments to reduce their profit margin - Held that - Though the Commissioner by invoking section 9D(1) (a) read with Section 9D(2) of Central Excise Act, 1944 has relied upon the statements of the suppliers which did not turn up for cross examination, he while doing so, has not followed the directions of Hon'ble Delhi High Court on this issue in para 28 to 32 its judgement in the case of J & K Cigarettes vs. Commissioner of Customs, Delhi reported in 2009 (8) TMI 64 - DELHI HIGH COURT and has not given a finding that on the point as to whether the two witnesses, who did not turn up for cross examination are dead or cannot be found or are incapable of giving evidence or are being kept out of the way by the appellant or their presence cannot be obtained without an amount of delay or expense , which is unreasonable. Just because the witnesses did not appear for cross examination, their statements cannot be used against the appellant by invoking section 9D(2) read with section 9D(1) (a). For invoking these provisions, a finding by the adjudicating authority after hearing affected party that the circumstances enumerated in clause (a) of section 9D(1) exist, has to be given, while this has not been done in this case. - impugned order is set aside and the matter is remanded back to the Commissioner for de novo adjudication - Decided in favour of assessee.

Summary

Issues:
1. Mis-declaration of FOB value in export consignments.
2. Imposition of penalties under Customs Act, 1962.
3. Cross examination of suppliers and principles of natural justice.
4. Compliance with Tribunal's judgment in a related case.
5. Application of mind and consideration of submissions in de novo adjudication.

Analysis:

Issue 1: Mis-declaration of FOB value
The case involved a partnership firm engaged in exporting hand tools under DEPB claim, where the customs department alleged overvaluation of export consignments to reduce profit margin. The investigation revealed suppliers inflating prices, leading to inflated FOB values. The Commissioner held mis-declaration, imposing penalties on the firm and partners under Customs Act, 1962.

Issue 2: Imposition of penalties
The Commissioner imposed significant penalties on the appellants based on the mis-declaration of FOB values, citing Customs Act provisions. The Tribunal remanded the matter for de novo adjudication, emphasizing the need for cross examination of suppliers and ensuring principles of natural justice.

Issue 3: Cross examination and natural justice
The Tribunal allowed cross examination of suppliers to address the mis-declaration allegations. However, not all suppliers appeared, leading to incomplete evidence. The failure to consider written submissions and lack of compliance with natural justice principles resulted in the Tribunal setting aside the initial order for de novo adjudication.

Issue 4: Compliance with Tribunal's judgment
The appellants argued that their case aligned with a prior Tribunal judgment, which the impugned order did not adequately address. The Tribunal highlighted the need to examine the applicability of previous judgments to the current case for a fair adjudication process.

Issue 5: Application of mind and submissions consideration
Both parties presented their arguments regarding the correctness of the impugned order. The Tribunal found deficiencies in the Commissioner's order, specifically in failing to consider detailed submissions and not following established legal principles. As a result, the matter was remanded for fresh adjudication within a specified timeframe.

In conclusion, the judgment addressed issues of mis-declaration, penalties under the Customs Act, cross examination, compliance with legal precedents, and proper consideration of submissions. The Tribunal emphasized the importance of upholding natural justice principles and ensuring a thorough and fair adjudication process in matters of customs violations.