2003 (9) TMI 124 - AT - Customs

Summary

Issues Involved:
1. Misdeclaration of the description of watches.
2. Misdeclaration of the gold content in the straps/chains.
3. Reassessment of the value of the exported goods.
4. Liability for confiscation under Sections 113(d) and 113(I) of the Customs Act.
5. Imposition of penalties under Sections 114(I) and 117 of the Customs Act.

Detailed Analysis:

1. Misdeclaration of the Description of Watches:
The primary dispute was whether 1956 out of 1957 exported watches were pocket watches with gold chains or wrist watches with gold chains/straps. The Commissioner concluded that the allegation of misdeclaration was not established by the Revenue. The Revenue contended that the Commissioner erred in his conclusion, arguing that sufficient material, including statements from involved persons and departmental officers, supported the claim that 1956 watches were pocket watches. However, the Commissioner relied on documentary evidence over oral statements, noting that the documents seized showed procurement of wrist watches, not pocket watches. The Tribunal upheld the Commissioner's finding, stating that the Revenue failed to prove that the respondent acquired large quantities of pocket watches.

2. Misdeclaration of the Gold Content in the Straps/Chains:
The show cause notice alleged that the respondents did not receive gold from the sources they claimed. The Commissioner found that the allegation was not established, relying on documents showing gold purchases from Corporation Bank and evidence of gold being transported to Bombay. The Tribunal agreed with the Commissioner, stating that the statutory records kept by the respondents under the Central Excise Act and Rules were authentic and not discredited by the Revenue. The Tribunal upheld the finding that the allegation of misdeclaration regarding the gold content was not proven.

3. Reassessment of the Value of the Exported Goods:
The show cause notice proposed reassessing the value of the goods, assuming that each pocket watch's chain weighed 15 grams. The respondents argued that this valuation was incorrect, citing evidence that the chain of a pocket watch weighed 79.350 grams and that the valuation did not consider the actual weight and manufacturing costs. The Commissioner observed that there was no allegation that the Present Market Value (PMV) declared by the exporter was more than 150% of the AR 4 price. The Tribunal noted that the Revenue failed to establish that the one pocket watch examined by SIIB, with a chain weighing 79.350 grams, was an exception. The Tribunal upheld the Commissioner's view that the Revenue did not prove the allegation of over-valuation.

4. Liability for Confiscation under Sections 113(d) and 113(I) of the Customs Act:
The show cause notice alleged that the exported watches were liable for confiscation under Sections 113(d) and 113(I) due to misdeclaration. Since the Tribunal upheld the Commissioner's findings that the allegations of misdeclaration were not established, the charge of confiscation did not survive.

5. Imposition of Penalties under Sections 114(I) and 117 of the Customs Act:
The show cause notice also proposed penalties under Sections 114(I) and 117. The Tribunal, agreeing with the Commissioner, found that since the charges of misdeclaration were not sustainable, the penalties could not be imposed on the respondents.

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue, upholding the Commissioner's order that the allegations of misdeclaration and over-valuation were not proven. Consequently, the charges of confiscation and penalties did not hold.