2009 (6) TMI 548 - AT - Customs

DFIA Scheme- Benefits under DFIA Scheme claimed. Duty drawback also involved. Mis-declaration accepted as correctness of test reports not contested. Enormous evidence relied upon by adjudication authority to hold that inputs sought to be imported under DFIA for goods exported could not have been utilized. Appellant arrested and under judicial custody for more than 10 months. Amount of Rs. 1.35 crore lying with department for two years having impact on appellant s mental and financial status. Goods sought to be exported confiscated and with department. Confiscation of goods and cash upheld and goods allowed to be redeemed on payment of redemption fine. Penalty reduces. Penalty on proprietor set aside.

Issues Involved:
1. Misdeclaration of goods.
2. Overvaluation of goods.
3. Confiscation of goods and penalties.
4. Violation of principles of natural justice.
5. Legality of advance remittance confiscation.
6. Leniency in fines and penalties.

Issue-wise Detailed Analysis:

1. Misdeclaration of Goods:
The appellant company filed 18 shipping bills declaring the export goods as "Natural Silk Mixed Sarees" under the DFIA Scheme and 5 shipping bills declaring "Readymade Garments 100% Cotton Men's Shirts" under the Drawback Scheme. Investigations revealed that the actual goods were "Readymade Garments made of cotton, polyester, nylon & viscose fabrics and their blends" and "100% polyester saree," leading to a conclusion of misdeclaration.

2. Overvaluation of Goods:
The lower authorities found that the declared FOB value of Rs. 3,63,06,494/- for "Natural Silk Mixed Sarees" was overvalued, and the actual FOB value for the goods was determined to be Rs. 28,29,390/-. Similarly, the declared FOB value of Rs. 29,48,517/- for "Readymade Garments" was re-determined at Rs. 18,76,800/-.

3. Confiscation of Goods and Penalties:
The Adjudicating Authority ordered the confiscation of the goods under Sections 113(h) and 113(i) of the Customs Act, 1962, but allowed redemption on payment of fines. The total amount of Rs. 1,35,00,964/- received into the appellant's bank accounts was also confiscated under Section 121 of the Customs Act, 1962, with an option to redeem on payment of a fine. Penalties were imposed on the appellant firm and individuals involved.

4. Violation of Principles of Natural Justice:
The appellant argued that the Commissioner violated principles of natural justice by not providing documents in Kannada and not giving a final opportunity for a hearing. The Tribunal found that the appellant had accepted the misdeclaration and overvaluation, and the test reports confirmed the discrepancies.

5. Legality of Advance Remittance Confiscation:
The appellant contended that the advance remittance of Rs. 1,35,00,964/- from foreign buyers could not be considered as sale proceeds of smuggled goods since the goods were seized and not exported. The Tribunal upheld the confiscation of the amount under Section 121 of the Customs Act, 1962.

6. Leniency in Fines and Penalties:
The Tribunal acknowledged the appellant's prolonged judicial custody and the financial and mental stress suffered. Consequently, the fines and penalties were reduced. The redemption fine for the goods under the DFIA scheme was reduced to Rs. 3,00,000/-, and for the goods under the Drawback scheme to Rs. 2,00,000/-. The penalty on the appellant firm was reduced to Rs. 5,00,000/-, and the penalty on Shri Subhash Mulgund Kuberappa was set aside. The penalty on Shri Baloo Panchariya/Balaji was upheld but reduced to Rs. 5,00,000/-.

Conclusion:
The Tribunal upheld the violations of the Foreign Trade Policy and Customs Act but modified the fines and penalties considering the appellant's circumstances. The appeals were disposed of accordingly.

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