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2004 (9) TMI 240 - AT - CustomsValuation (Customs) of Export Goods - Transaction value - Evidence of Local Market Value - Jurisdiction of Customs Authorities in Determining DEPB - Misdeclaration and Confiscation of Goods - Penalty - HELD THAT - The DGFT grants the DEPB rates, as claimed, on the export goods, which had been verified by the Customs Department. The credit given in the Passbook can be utilized for payment of duty on the imported goods. At the time of payment of duty on the imported goods debit the Passbook, the Customs once again verify the DEPB Licence. The Central Board of Excise and Customs vide Circular dated 17-4-97 has described the procedure to be followed under DEPB Scheme. In its circular dated 3-6-1997. In this view of the policy, procedure instructions and the law, in the matter of DEPB, we cannot uphold the decision arrived at by the Commissioner to have impugned the exports and come to a finding that the exports made in this case were not entitled to DEPB under Serial No. 86 of the Product Code 83 of the DEPB Schedule. Since all that was required, in the case was for the Commissioner to have reported the matter to the DGFT authorities and not sit in judgments over the grant and or determine entitlement of DEPB which were not within the jurisdiction of the Customs to do so. The order of determination of the eligibility or otherwise of DEPB as made in this case cannot be upheld. The declaration in the Shipping Bills need not always be in technical details explaining the functions. It is not brought out in the order that the packing list was suppressed or kept away from the Customs Officers. In fact the declaration made on the Shipping Bill, as seen from Para 1 of the impugned order was 'Printed Circuit Board Double Sided (AGP Card TNT2/M84)'; which would indicate that the 'Card nature' with technical specification was indeed declared. The charge of misdeclaration therefore cannot be upheld. The finding of the Commissioner that Rule 14 of the Foreign Trade (Regulation) Rules, 1993 especially sub-rule (2) thereof read with Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 the goods should be deemed to render the export goods, prohibited goods and therefore liable for confiscation u/s 113(d) and 113(i) of the Customs Act, 1962 on consideration is found to be not correct interpretation of law. Even if the alleged misdeclaration finding is to be upheld. It is found that Foreign Trade (Regulation) Rules, 1993 issued vide Ministry of Commerce Notification No. GBR 791(E), dated 30-12-1993 have been issued under the powers confirmed by Section 19 of the Foreign Trade (Development and Regulation) Act, 1992 by the Central Government and not under the powers which would be exercised by the Central Govt. to issue an order u/s 3(2) of the Foreign Trade (Development and Regulation) Act, 1992, which would vide sub-section (3), would then deem then to be a prohibition u/s 11 of the Customs Act, 1962. Besides of Rule 14(1) and 14(2) of Foreign Trade (Regulation) Rules, 1993 on a plain reading, would cover declaration for obtaining a licence and import any goods and DEPBs would not be covered by the word 'Licence' as defined in the Foreign Trade (Development and Regulation) Act, 1992. A claim for DEPB export would not be a declaration for import. In this view of the matter, the liability for confiscation of the goods, being prohibited goods, u/s 113(d) and/or 113(i), as brought out by the Commissioner cannot be upheld. Confiscation arrived at u/s 113(d) or/and 113(i) cannot be upheld. Conclusion The order is set aside, and the appeals are allowed. The Commissioner's orders on DEPB eligibility, penalty, and redemption fine are not upheld.
Issues Involved:
1. Timeliness of the Show Cause Notice. 2. Valuation of Export Goods. 3. Evidence of Local Market Value. 4. Jurisdiction of Customs Authorities in Determining DEPB. 5. Misdeclaration and Confiscation of Goods. 6. Imposition of Penalty and Redemption Fine. Summary: 1. Timeliness of the Show Cause Notice: The shipping bill was filed on 3rd November 1998, while the Show Cause Notice was issued on 22nd November 1999, beyond the 90-day period stipulated by Circular No. 69/97-Customs and Circular No. 79/98-Customs. The Commissioner's reliance on Circular No. 23/99-Customs, which allows for an extension of the 90-day period, was invalid as it came into force after the prescribed period had expired. No written order for extending the period was passed, nor was any notice issued to the appellants proposing such an extension. 2. Valuation of Export Goods: The value of export goods for the purposes of the Customs Act, 1962, must be determined u/s 14(1). The department failed to produce evidence to impugn the export price of goods, which were fully realized in foreign exchange. The Supreme Court upheld that export value cannot be upset by local market value evidence. The appellants provided evidence of full realization of the declared export value, demonstrating it as the true sale consideration. 3. Evidence of Local Market Value: The department did not satisfactorily establish that the local market value was less than declared. The examining officer's report, which indicated higher prices, was withheld, showing departmental bias. The Commissioner relied on a quotation and a cash memo without verifying if the goods were of the same quality as the export consignment. The confessional statement of the appellant was retracted, and earlier statements were exculpatory, leading to the conclusion that the local market values alleged by the adjudicator cannot be accepted. 4. Jurisdiction of Customs Authorities in Determining DEPB: The Customs Department's role is limited to verifying the correctness of the exporter's declaration regarding description, quantity, and FOB value. The determination of DEPB eligibility is within the jurisdiction of the DGFT, not the Customs. The Commissioner's decision to impugn the exports and determine DEPB eligibility was beyond his jurisdiction and cannot be upheld. 5. Misdeclaration and Confiscation of Goods: The Commissioner's finding that the goods were misdeclared and thus liable for confiscation u/s 113(d) and 113(i) was incorrect. The Foreign Trade (Regulation) Rules, 1993, do not cover DEPB claims as declarations for import. Therefore, the goods cannot be deemed prohibited, and their confiscation cannot be upheld. 6. Imposition of Penalty and Redemption Fine: Since the goods were not liable for confiscation, the penalty u/s 114(i) of the Customs Act, 1962, cannot be sustained. Consequently, the penalty and redemption fine imposed are set aside. Conclusion: The order is set aside, and the appeals are allowed. The Commissioner's orders on DEPB eligibility, penalty, and redemption fine are not upheld.
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