2018 (4) TMI 489 - AT - Customs

Duty Drawback - Revenue conducted some market enquiry and on that basis entertained a view that the value of the exported goods were on the higher side - Held that - The onus to prove over-valuation falls upon the Revenue and is required to be discharged by production of evidence - In the absence of positive evidence, the value of export cannot be rejected on the basis of market enquiry or on the flimsy ground. The appellant having been able to sell the goods even at higher value to their foreign buyer and having realized the entire consideration for the export consignments, is entitled to the drawback, admissible to him under the law. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Valuation of exported goods for duty drawback claim
2. Discrepancies in procurement invoices
3. Show-cause notice for confiscation, penalty, and drawback restriction

Analysis:

Issue 1: Valuation of exported goods for duty drawback claim
The appellant exported readymade garments under a duty drawback claim. Revenue doubted the value of the goods and conducted market enquiries to ascertain if the consignments were overvalued. The first market survey revealed that similar goods were available but not identical, indicating variations in quality, brand, and pricing. The second survey lacked evidence of comparability between the exported goods and those available in the market. The appellant provided invoices from suppliers, but the adjudicating authority dismissed them without concrete evidence. The Tribunal emphasized that the onus to prove overvaluation lies with the Revenue and must be supported by evidence, citing a previous case. As the appellant received full payment for the exports and complied with regulations, the Tribunal concluded that the Revenue failed to establish overvaluation, allowing the appeal.

Issue 2: Discrepancies in procurement invoices
Discrepancies were found in the procurement invoices provided by the appellant's suppliers. Payments were not made to one supplier, invoice sequencing was irregular with another, and computer-generated invoices raised suspicions. These discrepancies led Revenue to suspect overvaluation of the export consignment. However, the Tribunal highlighted that doubts raised by Revenue lacked substantial evidence and dismissed the claims based on flimsy grounds, especially when suppliers admitted to supplying the goods. The Tribunal emphasized the importance of concrete evidence to challenge the value of exports and criticized Revenue's approach in dismissing invoices without sufficient proof.

Issue 3: Show-cause notice for confiscation, penalty, and drawback restriction
Following the discrepancies in invoices and doubts about overvaluation, Revenue initiated proceedings against the appellant through a show-cause notice proposing confiscation, penalty imposition, and drawback restriction based on market surveys. The Commissioner eventually ordered goods confiscation with an option for redemption and imposed penalties and drawback restrictions. However, the Tribunal found the Revenue's case solely relying on market surveys to be insufficient to prove overvaluation. As the appellant received full payment and complied with export regulations, the Tribunal set aside the impugned order, allowing the appeal and granting relief to the appellant.

In conclusion, the Tribunal's judgment emphasized the necessity of concrete evidence to establish overvaluation in export consignments, criticized Revenue's reliance on market surveys without comparability, and granted relief to the appellant due to lack of substantial proof supporting Revenue's claims.