2018 (2) TMI 1426 - AT - Customs

Scope of SCN - it is alleged that there is no whisper in the SCN either for invoking Section 14 of the Customs Act, 1962 or the Customs Valuation Rules, 2007. There was no proposal for rejection of the value declared - Held that - It is correct that the SCN does not propose for redetermination of the value of the goods or reject the value declared by the exporter/appellant. So also there is no proposal for invoking section 14 of Customs Act or the Valuation Rules, 2007 - there is no proposal for invoking the provisions for redetermination of value or proposing rejection of the value declared by the appellant. The Commissioner has applied Section 14 and the Valuation rules to redetermine the value of goods. The contentions of the department that there is sufficient ground for confiscation under section 113(h)(ii) of the Customs Act, is not tenable as the alleged mis-declaration is not conclusively established. The Commissioner has traveled beyond the scope of SCN - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged mis-declaration of goods and value in shipping bill for export of silk carpets.
2. Confiscation of goods under section 113(h)(ii) of the Customs Act, 1962.
3. Imposition of penalty under Section 114 of the Customs Act, 1962.

Analysis:

Issue 1: Alleged mis-declaration of goods and value
The appellants filed a shipping bill for export of silk carpets but upon examination, it was found that the consignment contained durry made out of old and used silk/cotton/viscose saree rags of cheap quality. The officers suspected ineligible drawback claim. The Valuation Committee fixed the value of each silk carpet at a lower price than declared, leading to a discrepancy in total cargo value and drawback claimed. The original authority redetermined the value and imposed penalties. The appellant argued that there was no mis-declaration as the goods predominantly contained silk. The Tribunal found the show cause notice defective as it lacked grounds for redetermination of value or invoking specific provisions, leading to the set aside of the impugned order.

Issue 2: Confiscation of goods
The show cause notice proposed confiscation of silk carpets based on alleged mis-declaration. However, the Commissioner's redetermination of value and application of Section 14 and Valuation Rules were deemed beyond the scope of the notice. The Tribunal concluded that the mis-declaration was not conclusively established, as the goods predominantly contained silk. Therefore, the grounds for confiscation under section 113(h)(ii) were not tenable, resulting in setting aside the impugned order.

Issue 3: Imposition of penalty
The Commissioner's actions in redetermining value and imposing penalties were found to exceed the scope of the defective show cause notice. The Tribunal held that without conclusive evidence of mis-declaration and considering the predominant silk content, the confiscation, redemption fine, and penalty could not be sustained. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment highlights the importance of a valid show cause notice, conclusive evidence of mis-declaration, and adherence to statutory provisions in customs valuation and confiscation proceedings.