2004 (3) TMI 266 - AT - Customs

Confiscation and penalty - Misdeclaration - DEPB credit on pre-export basis - EXIM - Violation and mischief of Rules 11 and 14 of the Foreign Exchange (Regulations) Act, 1993 - HELD THAT - The claim under DEPB and the rate is to be determined by DGFT, and not by Customs was the view held by this Bench in Kobian ECS India Pvt. Ltd. 2003 (9) TMI 378 - CESTAT, MUMBAI . Following the above case and decision of the Bombay High Court in the case of M/s. Pradip Polyfils Pvt. Ltd. v. Union of India Others 2004 (1) TMI 93 - BOMBAY HIGH COURT , and Boards instructions, it is to be held that Customs authorities should only examine the Export Goods and leave the eligibility to DEPB to DGFT authorities and that goods under DEPB Export cannot be held to be liable to confiscation u/s 113 of the Customs Act and or penalty u/s 114 of the Customs Act, 1962 for DEPB eligibility claim, or otherwise. In view of the findings, this appeal is to be allowed after setting aside the order.

Summary

Issues involved: Alleged contravention of Section 11 of the Foreign Trade (Development and Regulations) Act, 1992 read with Rule 11 of the Foreign Trade (Regulations) Rules, 1993, leading to confiscation under Section 113(d) of the Customs Act, 1962 and penalty under Section 114(i) of the Customs Act, 1962.

Summary:
The Appellate Tribunal CESTAT, Mumbai heard an appeal from exporters regarding a consignment of ladies skirts. The Central Intelligence Unit of Custom House, Mumbai conducted enquiries and issued a Show Cause Notice alleging discrepancies in the declared Present Market Value (PMV) and DEPB credit entitlement. The appellants contested the Notice on various grounds, including lack of intelligence, improper valuation methods, and baseless allegations. The Tribunal considered the submissions and found that the adjudicator's reliance on market prices without allowing cross-examination was flawed. Additionally, it was noted that the determination of DEPB eligibility falls under the jurisdiction of the Directorate General of Foreign Trade (DGFT), not Customs authorities. The Tribunal cited previous decisions and instructions to support the view that Customs should only verify export goods, leaving DEPB eligibility to the DGFT. Consequently, the appeal was allowed, and the previous order was set aside.

This judgment highlights the importance of proper valuation procedures, adherence to jurisdictional boundaries, and the need for fair and transparent decision-making in matters of export regulations and entitlements.