2018 (10) TMI 568 - AT - Customs

Misdeclaration of export goods - export of man-made fabrics under rebate/DEPB scheme - Confiscation - rejection of declared value - penalty u/s 114 of CA, 1962 - Held that - For entertaining mis-declaration of value, rejection of the declared value deducible from various circumstantial evidence, is making one pillar - A single pillar is unable to support a superstructure much beyond the top of its surface area; the stability of a structure is possible only with the support of additional pillars. In all matters pertaining to valuation, it is, therefore, required that rejection of declared value should necessarily be followed by determination of an assessable value that has the approval of rules framed for the purpose. Neither does the show cause notice propose nor does the impugned order consummate the valuation exercise. In the absence of re-determination of value, goods cannot be said to have been mis-declared warranting imposition of penalties under section 114 on various individuals, whatever their linkage with the goods may be. Impugned order do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Penalties imposed under Customs Act, 1962 for mis-declaration of value in export of man-made fabrics under rebate/DEPB scheme; Confiscation of goods and imposition of fines; Role of various individuals in mis-declaration and export of goods; Validity of statements recorded during investigation as evidence; Rejection of declared value and imposition of penalties under section 114 of Customs Act, 1962.

Analysis:

1. The appeals were filed against penalties imposed on various entities involved in the export of man-made fabrics under rebate/DEPB scheme. The goods were held liable for confiscation under section 113(1) of the Customs Act, 1962, for mis-declaration of value, and individuals were penalized under section 114 of the Act. The primary contention of the appellants was that they were not involved in the exports and relied on previous tribunal and court decisions to argue against the confiscation and penalties.

2. The appellants argued that the confiscation of goods without their availability lacks legal authority. They cited previous tribunal and court decisions to support their claim that redemption fine cannot be imposed when goods are not available. They contended that statements recorded during the investigation were invalid due to restrictions and insufficient evidence to establish their involvement in mis-declaration.

3. The Authorized Representative argued that the statements were sufficient evidence of the appellants' role in the export. They referenced various court decisions to support the reliance on statements as evidence. The lack of availability of goods was not considered a barrier to imposing fines, as per the decision of the Hon'ble High Court of Madras in a relevant case.

4. The Tribunal noted that the show cause notice lacked allegations of mis-declaration regarding the export goods' quality and value. The rejection of declared value without proper assessment and determination of assessable value was deemed insufficient to impose penalties under section 114 of the Customs Act, 1962. The absence of a valuation exercise rendered the imposition of penalties unwarranted.

5. Due to the lack of a finding on assessable value and the consequent inability to invoke section 114 of the Customs Act, 1962, the impugned order was set aside. The Tribunal concluded that without proper valuation determination, the imposition of penalties on various individuals for mis-declaration could not be sustained, leading to the allowance of the appeals.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal precedents cited, and the Tribunal's decision regarding the imposition of penalties for mis-declaration of value in the export of man-made fabrics.