2017 (1) TMI 140 - AT - Customs

Valuation - classification under code 47A and 47B - DEPB scheme - entire case was decided against the appellant only on the basis of the so called market survey conducted by the officers - natural justice - Held that - In absence of test of the market goods it cannot be said that the goods are identical consequently value declared by the appellant can not be disputed - It is very important to note that the Appellant had sought the cross examination of the officers who conducted the market survey but the adjudicating authority neither considered their request nor even explicitly denied. At this stage after almost 13 years of the case no purpose will be served even if we direct the adjudicating authority for cross examination - the department did not discharge the burden of proving the charge of overvaluation of the goods exported by the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues: Misclassification of export goods, overvaluation of goods, cross-examination of officers conducting market survey, burden of proof on department.

Misclassification of export goods:
The appellant exported fabrics under DEPB shipping bill claiming a certain value under item code 47A of EXIM Policy 2003. However, upon examination, it was found that the goods were wrongly classified under Code 47A while they should have been classified under Code 47B. This misclassification led to a show cause notice proposing confiscation of goods, penalties under the Custom Act, and rejection of DEPB claim.

Overvaluation of goods:
The market survey conducted by officers revealed that the market value of the goods was significantly lower than the declared value by the appellant. The market survey indicated a market value of &8377; 90 per meter, while the appellant declared &8377; 131 per meter, resulting in an alleged overvaluation. This overvaluation formed the basis for the imposition of penalties and rejection of the DEPB claim.

Cross-examination of officers conducting market survey:
The appellant requested cross-examination of the officers who conducted the market survey to challenge the findings. However, the adjudicating authority did not allow the cross-examination, which was a crucial aspect in determining the accuracy and reliability of the market survey. The denial of cross-examination raised concerns regarding the fairness of the proceedings.

Burden of proof on department:
The Appellate Tribunal observed that the entire case against the appellant was based on the market survey conducted by officers. The Tribunal emphasized the importance of establishing the identity of the goods in the market survey with those exported by the appellant. Without testing the market goods and proving their identity with the exported goods, the department failed to discharge the burden of proving the alleged overvaluation. The Tribunal highlighted the lack of evidence and procedural fairness in the case.

In conclusion, the Appellate Tribunal set aside the impugned order and allowed the appeal, citing the department's failure to prove the charge of overvaluation due to the absence of essential evidence and procedural shortcomings. The Tribunal emphasized the necessity of establishing the identity of goods in market surveys and ensuring procedural fairness in customs proceedings.