2024 (5) TMI 283 - AT - Customs

Valuation - Export of Carpets and threading bars - Mis-declaration of description and value - Overvaluation - Confiscation of carpets - reduction of FOB value - shortage of quantity of carpets - difference in weight of threading bars - value for synthetic carpets is much lesser than that of woolen carpet - show cause notice not served upon the respondent based on his own request to waive off the issuance of show cause notice and of any opportunity of personal hearing - HELD THAT - Apparently, the respondent, the proprietor thereof namely Shri Ankit Sehgal while being examined on 30.05.2019 had mentioned him to be the trader who purchase the goods/carpets to export the same. However, he admitted that the description of carpet in the impugned shipping bills was mis-declared. The shortage of quantity of carpets in terms of area was clearly admitted in his subsequent statement dated 10.06.2019. With respect to the difference in weight of threading bars proposed to be exported in the impugned consignment, the said proprietor mentioned that the threading bars were to be exported based on per piece criteria. Hence any difference in weight of the consignment for threading bars is irrelevant for the alleged misdeclaration and undervaluation. In the light of this kind of statement of respondent himself, we proceed to examine the findings goods wise i.e. for carpets and threading bars separately as follows Carpets - We observe that commissioner (Appeals) has held that the misdeclaration of description of carpets stands established, hence, the said export goods merit confiscation u/s 113 (one of Act). Accordingly, the confiscation of carpets is upheld. Once based upon the said two reports, the description of carpets is held to be wrong even by Commissioner (Appeals) and the respondent herein have not challenged that part of the impugned order. The findings that the carpets which were to be exported by the appellant were mis-declared as far as their quality and quantity is concerned are hereby upheld. There is no denial rather it can also be judicially noticed that carpets made out of wool have more value than the carpets made out of synthetic polyester. Once the carpets are proved to not to be purely of wool, the value declared for the carpets wrongly declaring those as woolen carpets cannot be denied to be the overvalue of the consignment of the carpets. The rejection of re-determined value of the carpets is therefore held to be contradictory finding by Commissioner (Appeals). The value has been rejected also on the ground that the market enquiry cannot be considered in the case of export of goods. Respondent has also relied upon Section 18 of Foreign Exchange Regulation Act but we observe from the record that the market enquiry was conducted in presence of the respondent with his own consent. The said consent has never ever been withdrawn. Secondly, the value arrived in the market survey is in corroboration to the value given by the government testing labs CRCL. Hence the entire case law as has been relied upon by the Commissioner (Appeals) for rejecting the value of market enquiry is held not applicable to the given set of facts and circumstances of the present case. We hold that the case law has wrongly been quoted while rejecting the re-determined value with respect to carpets. The modification in the Order-in-Original to that effect is therefore ordered to be set aside. Threading bars - The consignment of threading bars was detained based upon the difference in weight of the containers as was observed at the time of vehement than the one declared in the shipping bills. We observe that the sole contention of respondent is that they have never tried to export threading bars on weight basis. They were exporting the threading bars on piece basis and length basis as is also apparent from the copies of shipping bills placed on record, the threading bars both of M-8/M-10 quality have been valued unit wise. There is no mention of weight of the threading bars in the shipping bills. Thus, findings with respect to no misdeclaration nor any undervaluation with respect to threading bars has rightly been arrived at by Commissioner (Appeals). The re-determined value for threading bars has rightly been set aside. The confiscation thereof has rightly been set aside. We uphold the impugned order to the said extent. Thus, the order under challenge is partly set aside i.e. with respect to the reduction of amount of redemption fine and the penalty with respect to carpets. However, the findings with respect to threading bars are confirmed. The appeal is accordingly partly allowed.

Summary

Issues Involved:
1. Redetermination of value of goods.
2. Confiscation of goods.
3. Reduction of Redemption Fine and Penalty.

Summary of Judgment:

1. Redetermination of Value:
The department challenged the Order-in-Appeal which set aside the redetermination of value and accepted the declared value. The original adjudicating authority had re-determined the value of goods under Rule 8 of Customs Valuation (Determination of value of Export Goods) Rules, 2007, rejecting the total declared FOB value of Rs.11,75,95,061/- and re-determined it at Rs.1,21,58,910/-. The Commissioner (Appeals) accepted the declared value, citing a lack of evidence to counter the respondent's documents related to procurement of export goods, such as e-way bills, GST Returns, invoices, and bank statements.

2. Confiscation of Goods:
The Commissioner (Appeals) upheld the confiscation of polyester carpets u/s 113 of the Customs Act, 1962, but set aside the confiscation of threading bars. The carpets were found to be misdeclared as woolen but were actually made of synthetic polyester, thus justifying their confiscation. The threading bars were correctly declared in terms of quality and number of pieces, and the misdeclaration based on weight was deemed irrelevant. The Tribunal upheld the findings that the carpets were misdeclared and overvalued, while the threading bars were correctly declared.

3. Reduction of Redemption Fine and Penalty:
The Commissioner (Appeals) reduced the Redemption Fine u/s 125 of the Customs Act, 1962, from Rs. 30 lakhs to Rs. 1 lakh and the penalty u/s 114(iii) from Rs. 7 lakhs to Rs. 1 lakh. The department argued that this reduction was unjustified and without cogent reasons. The Tribunal found the reduction in fines and penalties for carpets to be unjustified and ordered the modification in the Order-in-Original to be set aside. However, the reduction in fines and penalties for threading bars was upheld.

Conclusion:
The Tribunal partly set aside the order under challenge with respect to the reduction of redemption fine and penalty for carpets but confirmed the findings for threading bars. The appeal was thus partly allowed.