1993 (10) TMI 157 - AT - Customs

Summary

Issues Involved:
1. Confiscation of sandalwood pieces.
2. Misdeclaration of the value of goods.
3. Compliance with export license requirements.
4. Permissibility of exporting sandalwood flakes.
5. Revenue implications and duty considerations.
6. Adjudication and penalty reduction.

Issue-Wise Detailed Analysis:

1. Confiscation of Sandalwood Pieces:
The appeal challenges the order of the Collector of Customs and Central Excise, Visakhapatnam, dated 2-4-1993, which absolutely confiscated sandalwood pieces weighing 19.696 MT under Section 113(d) & (e) of the Customs Act, 1962, read with Section 11(2)(u) of the said Act, Section 11(1) of the Foreign Trade (Development & Regulation) Act, 1992, and Section 18(l)(a) and Section 67 of the Foreign Exchange Regulation Act, 1973. The Department seized the goods on 16-3-1993, alleging non-conformance to statutory requirements and misdeclaration of value.

2. Misdeclaration of the Value of Goods:
The Department alleged that the value of the goods was misdeclared, initially valuing them at 8500 US $ per MT, later reduced to 7500 US $ per MT. The appellant argued that the value was declared as per the buyer's contract and accepted by the licensing authorities. The Tribunal noted that no market enquiry was conducted by the Department regarding the value of similar goods, and past instances showed similar goods exported at comparable values.

3. Compliance with Export License Requirements:
The appellant contended that the exported goods, described as sandalwood flakes, were fully covered by the export license. The Department, however, found discrepancies, noting that only 20 bags were permissible for export, while the remaining 380 bags did not conform to the license specifications. The Tribunal observed that there was no clear definition of "sandalwood flakes" and that the Department should have sought expert opinion or conducted market enquiries.

4. Permissibility of Exporting Sandalwood Flakes:
The appellant's contract with the buyer specified the export of sandalwood flakes and sawdust, without particular emphasis on the shape, size, or weight. The Supreme Court, in its order dated 27-8-1993, permitted the export of 100 bags containing sandalwood flakes of less than 50 gms, indicating that the Department had no objection to such exports. The Tribunal held that the appellant should be allowed to export the goods after reducing the size to 50 gms or less.

5. Revenue Implications and Duty Considerations:
The Tribunal noted that the goods in question were not dutiable and did not have any revenue implications for the Department. The appellant argued that there was no duty involved and no revenue loss to the government, emphasizing the potential to earn valuable foreign exchange through the export.

6. Adjudication and Penalty Reduction:
The Tribunal modified the order of absolute confiscation, allowing the appellant to redeem the goods for export after reducing the size to 50 gms or less, bearing the cost of this process. The Tribunal upheld the confiscability of the goods due to technical non-compliance but reduced the penalty from Rs. 3,00,000/- to Rs. 25,000/-, considering similar past cases where lower fines were imposed.

The appeal was disposed of with the Tribunal permitting the appellant to export the goods after necessary modifications, thus balancing the enforcement of regulations with practical considerations for the exporter.