1999 (3) TMI 102 - CGOVT - Customs

Summary

Issues Involved:
1. Determination of the correct export value for the purpose of Duty Drawback.
2. Validity of the market enquiry conducted by the Assistant Commissioner.
3. Applicability of judgments from higher courts and their binding nature.
4. Compliance with Section 14(1) and Section 76 of the Customs Act, 1962.
5. Acceptance of declared export value versus market value.

Issue-wise Detailed Analysis:

1. Determination of the correct export value for the purpose of Duty Drawback:
The applicants exported readymade garments and claimed Duty Drawback under entry No. 2707(a) of the Drawback Schedule. The original authority found the declared value of Rs. 1,388/- to 1,424/- per set to be very high and fixed the value at Rs. 218/- per set after a market enquiry. On appeal, the appellate Commissioner upheld this value. The Government, in its Order-in-Revision, remanded the case for fresh enquiries, but the original authority reaffirmed the value at Rs. 210/- per set. The appellate authority rejected the subsequent appeal, leading to the current Revision Application.

2. Validity of the market enquiry conducted by the Assistant Commissioner:
The applicants argued that the market enquiries conducted by the Assistant Commissioner were contrary to norms of equity and principles of natural justice. They claimed their representative was neither technical nor commercial and was taken by surprise without being informed of the purpose. The Government observed that the Assistant Commissioner, as a quasi-judicial authority, conducted the enquiries properly. The applicants' representative, who was their chief executive during the relevant period, was deemed appropriate for association with the market enquiry. Thus, this plea was rejected.

3. Applicability of judgments from higher courts and their binding nature:
The applicants cited various judgments to support their case, including those from the Tribunal and the Supreme Court. However, the Government noted that the Calcutta High Court's judgment in Pankaj V. Sheth was binding, as the earlier judgment in Lexus Exports Pvt. Ltd. was set aside by the Supreme Court. Consequently, the relied-upon orders of the Tribunal and views from the Tariff Conference were superseded by the binding nature of the Pankaj V. Sheth judgment.

4. Compliance with Section 14(1) and Section 76 of the Customs Act, 1962:
The Calcutta High Court in Pankaj V. Sheth held that Section 14(1) of the Customs Act could be utilized to determine the correct value of goods, and the Department need not necessarily accept the declared value. The applicants' plea on the applicability of the Supreme Court's judgment in Dimple Overseas Ltd. was found irrelevant as it pertained to a different context. The Government also noted that Section 76 allows for ascertaining the market price to determine eligibility for drawback, and the reference is to "Drawback due" and not "drawback claimed."

5. Acceptance of declared export value versus market value:
The applicants argued that the declared export value should be accepted as the full foreign exchange was received, and there was no charge of mis-declaration or over-invoicing. However, the Government found no evidence supporting the claim that the goods were manufactured and sold at the declared prices by independent manufacturers. The Government also noted that the Department had accepted similar values in another case due to procedural defaults, not because the values were verified as correct. Ultimately, the Government fixed the FOB value at Rs. 242/- per set, considering the market price and additional costs, and ordered the amount of drawback to be settled accordingly.

Conclusion:
The Government upheld the market value determined by the Department and rejected the applicants' arguments for accepting the declared export value. The FOB value was fixed at Rs. 242/- per set, and the drawback amount was to be settled as per law.