2020 (5) TMI 10 - AT - Customs

Export of Carpets - generation of wrong documents, due to defects in software - mis-description of value as well as quantity of goods - confiscation - redemption fine - Levy of Penalty on CHA u/s 114 (iii) of the Customs Act, 1962 - HELD THAT - The appellant on being pointed out by the CHA immediately placed the correct document before Customs Authority on the same very date. In such set of circumstances, no mala fide can be attributed to the assessee so as to confiscate the export consignment or to impose penalty upon them - also, the second set filed by the appellants correctly covered all the aspects of the export consignment including the quantity, quality description and value etc. - confiscation set aside. Valuation of goods - HELD THAT - The Commissioner has gone by the market inquiries which fact by itself cannot be held to be sufficient to reject the value of the exported goods. It is worth noticing that the appellant has placed on record BRC s indicating and evidencing the total realization of the exported goods. The said fact has not been disputed by the Adjudicating Authority. In this scenario, the value of the goods cannot be doubted and the declared value has to be accepted. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of exported carpets with redemption fine and penalties imposed.
2. Reduction of drawback claim by the Commissioner.
3. Discrepancies in export documents leading to confiscation and penalties.
4. Challenge of the Adjudicating Authority's order before the Tribunal.
5. Allegations of misdeclaration and software malfunction.
6. Market inquiries affecting the value of exported goods.
7. Decision to set aside the impugned order and allow the appeals.

Analysis:
1. The appeals arose from an order confiscating exported carpets with an option for release on payment of redemption fine and imposition of penalties. The Commissioner reduced the drawback claim and imposed penalties on the appellants. The Tribunal noted the common impugned order and proceeded to address the issues raised by the parties.

2. M/s Kaka Carpets, a partnership firm, engaged in carpet manufacturing and export, faced discrepancies in export documents due to a software malfunction. Corrective measures were taken promptly, but the Customs Authority initially rejected the revised documents. Subsequently, after 100% examination, the goods were found to be in order. The Commissioner alleged misdeclaration and contravention of the law, leading to the confiscation and penalties.

3. During adjudication, the appellants argued that they rectified the mistake by submitting correct documents promptly. They contended that the revised documents aligned with the actual export values, as evidenced by bank release certificates. The Adjudicating Authority, however, upheld the impugned orders, prompting the appeal before the Tribunal.

4. The Tribunal analyzed the Commissioner's findings, noting that the software malfunction caused the initial discrepancies in the documents. The appellants acted promptly to rectify the errors, and the revised documents accurately reflected the export consignment details. The Tribunal concluded that no malafide intent was present, making confiscation and penalties unwarranted.

5. Regarding the value of the goods, the Commissioner relied on market inquiries to challenge the declared value. However, the appellants provided Bank Release Certificates supporting the actual realization of the exported goods, which went undisputed. The Tribunal held that the declared value should be accepted, entitling the appellants to the drawback claim based on the declared value.

6. Ultimately, the Tribunal set aside the impugned order, allowing all three appeals and granting consequential relief to the appellants. The decision highlighted the lack of malafide intent, the accuracy of the revised documents, and the validity of the declared value supported by bank records. The Tribunal's decision favored the appellants, overturning the confiscation and penalties imposed by the Commissioner.