2004 (9) TMI 266 - AT - Customs

Confiscation and penalty - Overvaluation of export goods for claiming benefits under the duty entitlement passbook (DEPB) Scheme - misdeclaration the goods - HELD THAT - In the present case before us the charge is of overvaluation of export goods for claiming higher DEPB and since in identical cases it has been held that unless the goods are dutiable or prohibited, they would not be liable for confiscation and the penalty would also not be imposable. Therefore, we hold that the export goods covered under 11 shipping bills are not liable to confiscation u/s 113(d), (h) and (i) of the Customs Act, 1962 and consequently the appellants are not liable to penalty u/s 114(i) of the said Act. We further observe that Section 113 was amended with effect from 14-5-2003 deleting the word dutiable or prohibited . Section 113(i) was amended making any goods entered for exportation which did not correspond in respect of value or any material particulars with the entry made under the exports Act liable to confiscation. Thus for the first time with effect from 14-5-03 this amendment has been made which supports our findings that prior to 14-5-2003 for overvaluation of any goods which are neither dutiable nor prohibited, provisions of Section 113 of the Customs Act, 1962 were not applicable. Regarding the seized goods on 24-2-2001 from Plot No. 18, Paigah Colony, S.P. Road, Secunderabad, they are not liable to confiscation as held by us earlier but these goods do not become even export goods as the shipping bills were yet to be filed in respect of these goods and the goods had not entered the export area. Therefore, even on this ground these goods are not export goods and are not liable to confiscation and, therefore, we set aside the order of confiscation of these goods as well consequently, no penalties are imposable on the 3 appellants. We also observe that in this case, the department has not led any evidence by way of expert opinion regarding the value of export goods or whether the goods are usable as Ladies Nightwear were or are small, uneven, unshaped and cannot be worn by any person. Appellants in their reply to show cause notice dated 6-12-2001 had specifically pointed out that there is no expert evidence and the DRI had taken representative samples at the time of making seizure Panchanama but no expert opinion regarding value or the character of goods was obtained. Further, the ld. Commissioner did not permit cross-examination of the witnesses whose statements were relied upon. Therefore, we hold that the Department has failed to conclusively prove that the export goods were overvalued in the absence of any expert opinion regarding the value of the export goods or their use. Thus, dispense with the pre-deposit and after setting aside the impugned order allow the appeals at the stay stage itself with consequential relief if any.

Summary

Issues involved:
The issues involved in this case include the imposition of penalties under Section 114(i) of the Customs Act, 1962, confiscation of goods under Section 113(d), (h), and (i), overvaluation of export goods for claiming benefits under the duty entitlement passbook (DEPB) Scheme, mis-declaration of goods in shipping bills, and compliance with Foreign Trade (Regulation) Rules, 1993.

Imposition of Penalties and Confiscation of Goods:
The Appellate Tribunal held that the value of goods was alleged to be inflated to claim benefits under the DEPB Scheme, but as the export of goods was not prohibited, Section 113 of the Customs Act, 1962 for confiscating export goods was deemed inapplicable. The Tribunal further noted that penalties were imposed under Section 114(i) of the Act, and the goods were ordered to be released on payment of redemption fine.

Mis-declaration and Overvaluation of Export Goods:
The case involved mis-declaration and overvaluation of goods for export under the DEPB Scheme. The Commissioner found that the appellants had overvalued cheap garments to claim fraudulent DEPB credit, leading to penalties and confiscation under Sections 113(d), (h), and (i) of the Customs Act, 1962.

Investigation and Seizure of Goods:
The investigation revealed that the exported Ladies Nightwear garments were small, uneven, and unshaped, unsuitable for wearing. The goods were intercepted, examined, and seized by DRI officers, leading to a show cause notice proposing confiscation and penalties based on mis-declaration and overvaluation.

Legal Arguments and Precedents:
The legal arguments revolved around whether overvaluation of goods for DEPB purposes renders them liable for confiscation. The appellant cited various judgments, including those from the Tribunal and the Supreme Court, to support the contention that overvaluation alone does not warrant confiscation unless the goods are dutiable or prohibited.

Tribunal's Decision and Analysis:
The Tribunal analyzed the Commissioner's order, finding discrepancies in applying Rule 11 of Foreign Trade (Regulation) Rules, 1993 and Section 2(33) of the Customs Act, 1962. It held that overvaluation for DEPB does not automatically lead to confiscation unless the goods are dutiable or prohibited, as per relevant legal provisions and precedents.

Conclusion and Disposition:
Considering the lack of expert evidence regarding the value and usability of the export goods, the Tribunal dispensed with the pre-deposit, set aside the impugned order, and allowed the appeals at the stay stage. It concluded that the goods were not liable for confiscation under Section 113 of the Customs Act, 1962, and no penalties were imposable on the appellants.