2017 (4) TMI 199 - AT - Customs

Valuation - it was alleged that value of goods exceeded 50% of market value - Held that - the entire case is based on the survey conducted with the help of the engineer of a textile company. The engineer has later vide his letter dated 13-9-2005 communicated that he is not a Government approved valuer and was not an authority on the subject. Since the entire basis of the case that the market value of the goods was found to be ₹ 10/- per piece, itself has been put in suspicion, the case of Revenue cannot succeed. There is no independent evidence of the market value of the goods and in absence of the same, the impugned order cannot be sustained - in absence of a regular creditable inquiry into market value of goods, the charges of overvaluation cannot be sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Valuation of exported goods for DEPB benefit.
2. Allegation of overvaluation leading to confiscation.
3. Lack of evidence regarding the supplier of goods.
4. Reliability of the survey conducted by a textile engineer.
5. Failure of the appellant to provide evidence and cross-examine witnesses.

Analysis:
1. The appellant filed shipping bills for scarf exports, declaring a value seeking DEPB benefit. The market value of the scarves was disputed, with the appellant valuing them at a higher rate than determined by an inquiry. The DEPB claim exceeded 50% of the market value, leading to allegations of overvaluation and potential confiscation.

2. Investigation revealed discrepancies regarding the supplier, M/s. Tirupati Exports, as their address was incorrect, and they denied supplying the goods. The appellant failed to provide evidence of payments to the supplier, raising suspicions about the transaction's legitimacy.

3. The reliance on a survey conducted by a textile engineer was crucial in determining the market value of the goods. However, the engineer later clarified that he was not a government-approved valuer, casting doubt on the accuracy of the valuation. The lack of independent evidence to support the market value further weakened the Revenue's case.

4. Despite suspicions surrounding the exporter's conduct and the questionable role of the supposed manufacturer, the absence of a credible inquiry into the market value of the goods undermined the charges of overvaluation. The Tribunal found the impugned order unsustainable due to the lack of concrete evidence supporting the allegations.

5. The appellant's failure to appear for the hearing, along with the engineer's refusal to participate, hindered the cross-examination process. Despite these procedural shortcomings, the Tribunal allowed the appeal, emphasizing the necessity of a thorough and credible valuation process to substantiate claims of overvaluation.