2002 (2) TMI 211 - AT - Customs

Summary

Issues involved:
1. Valuation of stainless steel balls for export.
2. Imposition of penalty under Section 114 of the Customs Act.

Issue 1: Valuation of stainless steel balls for export

The appeal questioned the overvaluation of stainless balls exported by M/s. Peerless Consultancy Services Pvt. Ltd. and the possibility of imposing a penalty under Section 114 of the Customs Act. The appellant's representative argued that the goods exported were of high quality, met AISI specifications, and were valued as per the Circular No. 69/97 guidelines for the DEPB scheme. They emphasized that no show-cause notice challenging the declared value was issued within the prescribed 30-day period, rendering the valuation deemed accepted. Additionally, they disputed the FOB value based on local market prices, asserting that the transaction value should be accepted unless falling under exceptions in Section 14 of the Customs Act. The appellant also refuted the challenge to the PMV based on a quotation from another company, highlighting discrepancies in the quality and timing of the quotation.

Issue 2: Imposition of penalty under Section 114 of the Customs Act

The Departmental Representative contended that the Circular No. 69/97-Cus. did not mandate acceptance of the declared PMV and that the D.R.I. had the authority to conduct inquiries regardless of Customs House clearance. They referenced a High Court order directing assessment in accordance with the law, disputing the appellant's claim of PMV acceptance. The Departmental Representative argued that market inquiries supported the high PMV, citing the lack of evidence for similar goods sold at the declared price and the initiation of remittances post D.R.I. inquiry. They maintained that the PMV could be challenged based on market inquiry results, which were conducted thoroughly in this case.

The Tribunal analyzed the submissions and evidence from both sides. While the Revenue found the PMV to be high based on a quotation, the Tribunal noted the lack of verification regarding whether the quoted prices matched the exported steel balls' variety. They highlighted that the exported steel balls conformed to AISI specifications, emphasizing the absence of contrary reports for the quoted company's goods. The Tribunal rejected the Revenue's cost-based challenge to the PMV, stressing the need for market inquiry into prices of steel balls of the specified grade. They placed the burden of proving inflated PMV on the Department, which was not met. Referring to Circular No. 69/97 guidelines, the Tribunal concluded that the PMV declared was within acceptable limits and set aside the impugned order, allowing all the appeals.