2016 (12) TMI 634 - AT - Customs

Duty drawback - valuation - declared value on higher side to claim higher drawback - opinion of Chartered Engineer relied upon - Held that - Admittedly the Mechanical Chartered Engineer is not an expert to value the readymade garments. The report of the Chartered Engineer is merely on the basis of eye-estimation and who had not conducted any analysis with regard to raw material used in manufacture of readymade garments and quality and quantity of readymade garments. The mechanical engineer can examine the machinery, but not the readymade garments. Therefore, the learned Commissioner (Appeals) has rightly rejected the value adopted by the Chartered Engineer. - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Valuation of export goods for duty drawback scheme.
2. Reliability of opinion of Chartered Engineer in determining the value of goods.
3. Jurisdiction of the Tribunal in cases of payment of drawback.

Analysis:

Issue 1: Valuation of export goods for duty drawback scheme
The case involved a dispute regarding the valuation of readymade garments exported under the duty drawback scheme. The Revenue alleged that the declared value of the goods was inflated to obtain a higher drawback. The Adjudicating Authority relied on the opinion of a Chartered Engineer to reduce the value of the goods, resulting in a penalty imposed on the exporter. The Commissioner (Appeals) later set aside this decision, questioning the reliability of the Chartered Engineer's opinion.

Issue 2: Reliability of opinion of Chartered Engineer
The respondent argued that the Chartered Engineer's opinion was not based on a proper analysis of factors relevant to valuing readymade garments, such as yarn composition, quality, size, and design. They contended that the Chartered Engineer's assessment was merely an eye-estimation and lacked a factual basis. On the other hand, the Revenue heavily relied on the Chartered Engineer's expertise in valuation.

Issue 3: Jurisdiction of the Tribunal in cases of payment of drawback
The respondent raised preliminary objections, including the undated review order and the lack of grounds for appeal. They also argued that the Tribunal did not have jurisdiction over cases involving payment of drawback. However, the Tribunal first addressed the merits of the case, finding that the Chartered Engineer's opinion was not reliable for valuing readymade garments. As a result, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the Revenue's appeal.

In conclusion, the Tribunal ruled in favor of the respondent, emphasizing the importance of a thorough analysis in determining the value of exported goods under the duty drawback scheme. The judgment highlighted the need for expert opinions to be based on factual evidence rather than mere estimations, especially in cases involving complex products like readymade garments.