2017 (2) TMI 188 - AT - Customs

Valuation - Rejection of declared/export value - rejection placing reliance on the market enquiry. Held that - market enquiry has been done without any involvement of the exporter or CHA. The description taken for exploring the price of the goods is also without any specifics. The difference in value is not so significant. The value of garments depends on the kind of fabric, the nature/ count/ denierage of yarn, the print/colour and size etc. Any comparison without all these factors is not a fair comparison - the said market enquiry cannot be given any credence. These market enquiry reports cannot be relied to discard the export value - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegations of overvaluation and misdeclaration in export consignment.
2. Confiscation of live consignment, redemption fine, and recovery of drawback.
3. Imposition of penalties under the Customs Act.
4. Challenge to the method of obtaining market value of goods.
5. Admissibility of statements made by the appellants.

Issue 1: Allegations of overvaluation and misdeclaration:
The case involved Shriji Trading Company exporting readymade garments at declared prices, which were later found to be inflated. Statements from individuals involved revealed admission of overvaluation to obtain export incentives. Market surveys and dealer opinions were conducted to determine the correct wholesale market price of the goods. The Commissioner ordered confiscation of the live consignment, recovery of drawback, and imposed penalties under the Customs Act.

Issue 2: Confiscation, redemption fine, and drawback recovery:
The Commissioner's order included confiscation of the live consignment with an option for redemption on payment of a fine. Additionally, the recovery of drawback under Customs and Central Excise Duty Drawback Rules was ordered, along with revised values for shipping bills under the DEPB scheme. Penalties were imposed on individuals involved, and past consignments were deemed liable to confiscation under the Customs Act.

Issue 3: Imposition of penalties under the Customs Act:
Penalties of ?3 lakhs each were imposed on Shri Jayesh Bhavsar and Shri Gopal Krishnan Iyer under Section 114(iii) of the Customs Act. The penalties were linked to the overvaluation and misdeclaration of export consignments, as admitted by the individuals involved.

Issue 4: Challenge to the method of obtaining market value:
The appellant challenged the method used to determine the market value of the goods, arguing that the market survey was conducted without their presence or that of their representatives. The argument emphasized the lack of specific product descriptions in the reports relied upon by the DRI. The Tribunal found that the market survey lacked crucial details necessary for a fair comparison and could not be relied upon to discard the declared export values.

Issue 5: Admissibility of statements made by the appellants:
The admissibility of statements made by Shri Jayesh Bhavsar and Shri Gopal Krishnan Iyer was contested, with the appellant claiming that the statements were not voluntary. The Tribunal noted discrepancies in the statements and the timing of any retractions, emphasizing the lack of concrete evidence to support the revenue's allegations based on the statements.

In conclusion, the Tribunal allowed the appeal, highlighting the inadequacies in the market survey and the lack of substantial evidence to support the allegations of overvaluation and misdeclaration. The decision underscored the importance of detailed product descriptions and specific factors influencing garment values in determining accurate export prices.