2004 (6) TMI 232 - AT - Customs

DEPB - Confiscation - Penalty and fine - Over invoicing of cycle tyre exports to claim excessive duty entitlement under the Duty Entitlement Pass Book Scheme (DEPB) - HELD THAT - There is no justification to interfere with the findings on misdeclaration of value by the Commissioner. The gravity of the offence and considerable financial fraud are also evident. Shri B.N. Kejriwal Director of the firm has admitted to his personal responsibility and motive for carrying out the misdeclaration. In these circumstances penalties and fine in respect of the consignment covered by Shipping Bill No. 1207422 dated 16-4-2002 are fully justified. Penalties in regard to the previous eight exports were also fully justified. The amounts are also not high when compared to the gravity of the offence and the amount of D.E.P.B. benefit sought to be falsely obtained. Therefore the redemption fine and penalties imposed under the order are confirmed. However we find merit in the appellants submission relating to demand for differential amount after adjusting Rs. 7, 19, 660/- from Rs. 45, 41, 898/-. If the appellants had only made claim and had not received the D.E.P.B. claim there will be no occasion to ask them to refund the amount. It is also the appellants uncontested contention that whatever D.E.P.B. they had received (Rs. 12, 80, 000/-) had already been returned. Thus modification of the order in relation to D.E.P.B. benefit is called for. It is therefore ordered that the appellants shall be entitled for D.E.P.B. benefit worked out as 20% of the market value/purchase price of the cycle tyres exported and the same shall be paid to it after adjusting the penalties imposed under the impugned order and D.E.P.B. benefit if any already paid. The appeals are disposed off in the above terms.

Summary

Issues involved:
The case involves over invoicing of cycle tyre exports to claim excessive duty entitlement under the Duty Entitlement Pass Book Scheme (DEPB).

Details of the Judgment:

Issue 1: Allegations of overvaluation and misdeclaration
The case involved the appellant declaring inflated values for cycle tyre exports to claim excessive DEPB benefits. Investigations revealed discrepancies between declared values and actual market values, leading to charges of overvaluation and misdeclaration. The Commissioner upheld the charges and ordered confiscation of goods, imposition of fines, and penalties on the appellant and its director under relevant sections of the Customs Act, 1962.

Issue 2: Contention regarding declaration of values
The appellant contended that the declared values were not misdeclarations, as the declared price was the sale price. They argued that Customs authorities had verified and allowed previous exports, questioning the basis for the current allegations. The appellant also challenged the calculation of DEPB benefits and penalties imposed by the Commissioner.

Issue 3: Observations and decision
After considering submissions from both sides, the Tribunal found the revenue's case well-established. The Tribunal noted intentional overstatement of Present Market Values (PMV) to claim excessive DEPB benefits. Citing a Supreme Court judgment, the Tribunal affirmed that correct export values must be declared, emphasizing the seriousness of over-invoicing and its implications for foreign currency transactions. The Tribunal upheld penalties and fines imposed by the Commissioner, acknowledging the gravity of the offense and financial fraud involved.

Issue 4: Modification of the order
While confirming penalties and fines, the Tribunal found merit in the appellant's argument regarding the demand for a differential amount. Considering that the appellant had already returned received DEPB benefits, the Tribunal modified the order to entitle the appellant to DEPB benefits based on market value/purchase price, after adjusting penalties and any previously received benefits.

In conclusion, the Tribunal disposed of the appeals, upholding penalties and fines but modifying the order regarding DEPB benefits to align with the appellant's contentions and the circumstances of the case.