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2023 (1) TMI 112 - AT - CustomsValuation of export goods for drawback purpose - rejection of declared value - FOB and duty drawback was re-determined on the basis of lower mean value obtained from the market enquiry - levy of penalty u/s 114 of the Customs Act - HELD THAT - It cannot be doubted that under rule 12 of the 2007 Valuation Rules, the adjudicating authority has to first give cogent reasons to reject the declared value and thereafter re-determine it - In the instant case, the adjudicating authority noted only two questions to be answered, namely, re-determination of value of the export goods for drawback purpose and whether the exporter was liable to penalty under section 114 of the Customs Act. The adjudicating authority, after observing that the export goods were over-valued by the exporter with an intent to avail higher drawback, observed that the declared value of the goods attempted to be exported should, therefore, should be rejected under rule 8 of the 2007 Valuation Rules. The adjudicating authority had to first examine the correctness of the declared value of the export goods and after recording a finding that they were not correctly valued re-determine the value, but this was not done. This mistake has been noticed by the Commissioner (Appeals) in the impugned order. There is, therefore, no infirmity in the impugned order which may call for any interference in this appeal - appeal dismissed.
Issues Involved:
1. Re-determination of the Free on Board (FOB) value of the export goods for drawback purposes. 2. Imposition of penalty under section 114 of the Customs Act, 1962. Issue-wise Detailed Analysis: 1. Re-determination of the Free on Board (FOB) value of the export goods for drawback purposes: The respondent filed four shipping bills for the export of Polyester fancy long scarves with Embroidery work, claiming a drawback under the 1995 Drawback Rules. Upon examination, it was observed that the goods were overvalued, leading to their seizure under section 110 of the Customs Act. The declared FOB value was Rs. 1,87,14,328/- with a claimed drawback of Rs. 18,34,004/-. The Department conducted a market enquiry under rule 6 of the 2007 Valuation Rules, resulting in a re-determined FOB value of Rs. 1,47,84,000/- and a drawback of Rs. 14,48,832/-. The adjudicating authority re-assessed the declared FOB to Rs. 1,47,84,000/- under rule 6 of the 2007 Valuation Rules read with section 14 of the Customs Act, rejecting the declared value under rule 8 and restricting the drawback benefit to Rs. 14,48,832/-. The Commissioner (Appeals) set aside this order, emphasizing the need for cogent reasons to reject the declared value and the requirement for a two-step process as per Rule 8 of the 2007 Valuation Rules, similar to Rule 12 of the Customs Valuation Rules for imported goods. The Commissioner (Appeals) noted that no contemporaneous exports were cited, and the difference in declared and market value was not significant enough to reject the declared value. Additionally, there was no evidence of misdeclaration or any financial dealings affecting the transaction value. 2. Imposition of penalty under section 114 of the Customs Act, 1962: The adjudicating authority imposed a penalty of Rs. 6,00,000/- under section 114(iii) of the Customs Act, as the goods were liable to confiscation under section 113(i) but were not available for confiscation. The Commissioner (Appeals) found that the rejection of the declared value and the subsequent re-determination based solely on market enquiry without proper justification was legally untenable. The Commissioner (Appeals) highlighted that the appellant had realized the entire sale proceeds, and there was no evidence of hawala transactions or money laundering to challenge the declared value. Conclusion: The appellate tribunal upheld the order of the Commissioner (Appeals), stating that the adjudicating authority failed to provide cogent reasons for rejecting the declared value before re-determining it. The tribunal emphasized that the adjudicating authority should have first examined the correctness of the declared value and then re-determined it if necessary. The appeal by the Department was dismissed, affirming that there was no infirmity in the impugned order. (Order Pronounced in Open Court on 16.12.2022)
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