2009 (4) TMI 99 - HC - Customs

DEPB Credit Export of Inferior quality of fabrics Adjudicating authority held that there was a wilful attempt to export inferior quality fabrics in the guise of 100% polyester dyed fabrics by misdeclaring the value of goods and therefore the goods were ordered to be confiscated with the option to redeem the goods on payment of fine and penalty of a sum of Rs.10, 00, 000/- also imposed Tribunal has set aside the order of confiscation and penalty on the ground that section 113 is a penal provision which pertains to export under claim of duty draw back but this case is not of duty drawback HC accepted the contention of the respondent (export) on the grounds of maintainability and dismissed the appeal. HC further held that the department however is at liberty to move the Supreme court if it is so advised.

Summary

Issues:
1. Misdeclaration of goods under the DEPB Scheme leading to confiscation and penalty.
2. Interpretation of Section 113 of the Customs Act, 1962 regarding confiscation of goods.
3. Consideration of overvalued goods as "prohibited goods" for confiscation.
4. Maintainability of the appeal before the High Court.

Issue 1: Misdeclaration of goods under the DEPB Scheme leading to confiscation and penalty:
The respondent had filed shipping Bills under the DEPB Scheme for export of goods declared as 100% polyester dyeing fabric. However, upon examination, it was discovered that the goods were of inferior quality. A show cause notice was issued, and the respondent admitted to misdeclaration. The High Court held that there was a deliberate attempt to export inferior quality fabrics by misdeclaring the value, leading to confiscation of the goods with an option to redeem on payment of a fine and penalty.

Issue 2: Interpretation of Section 113 of the Customs Act, 1962 regarding confiscation of goods:
The Customs, Excise and Service Tax Appellate Tribunal set aside the order of confiscation and penalty, stating that since the goods were not of the category for higher drawback under Section 75 of the Customs Act, confiscation was not warranted. The High Court analyzed the penal provisions of Section 113, emphasizing the omission of "dutiable or prohibited goods" and the significance of misdeclaration in relation to confiscation under the Customs Act.

Issue 3: Consideration of overvalued goods as "prohibited goods" for confiscation:
The High Court considered whether overvalued goods could be treated as "prohibited goods" under the Customs Act, making them liable for confiscation. The Senior Central Government Standing Counsel argued that misdeclaration and overvaluation rendered the goods as prohibited, justifying confiscation. References to relevant case laws highlighted the importance of valuation issues in determining duty assessment and the jurisdiction for appeals.

Issue 4: Maintainability of the appeal before the High Court:
The High Court addressed the maintainability of the appeal, citing precedents where valuation issues were crucial for assessment and appeal to the Supreme Court. The Court accepted the objection on maintainability raised by the respondent's counsel and dismissed the appeal, granting the department the option to approach the Supreme Court if desired.

In conclusion, the judgment delves into the misdeclaration of goods, the interpretation of relevant sections of the Customs Act, the consideration of overvalued goods as prohibited, and the maintainability of the appeal before the High Court, providing a comprehensive analysis of each issue involved in the case.