2005 (7) TMI 434 - AT - Customs

Summary

Issues: Mis-declaration of exported goods under DEPB Scheme, applicability of DEPB benefit, imposition of penalty under Customs Act.

Mis-declaration of Exported Goods under DEPB Scheme:
The case involved the export of 100% cotton handloom pot holders and oven mitts under the DEPB Scheme, with a declared FOB value of Rs. 26,75,741. However, upon examination, it was found that the goods were quilted made-ups containing 100% polyester fiber, which did not align with the description required for DEPB benefit under Serial No. 72 of the DEPB schedule. The Commissioner contended that the goods were mis-declared to avail DEPB benefits, leading to the imposition of a penalty under Section 114 of the Customs Act, 1962. The Tribunal observed that the export product indeed contained polyester fiber, rendering it ineligible for DEPB benefits under the specified serial number.

Applicability of DEPB Benefit:
The Tribunal analyzed the provisions of Serial No. 72 of the DEPB schedule, which specifically required the products to be cotton made-ups. Since the exported goods contained polyester fiber, they did not fall within the scope of the mentioned serial number, justifying the denial of DEPB benefit at the rate of 12% claimed on the FOB value. The appellant's argument that similar consignments had been allowed earlier did not hold ground, as discrepancies were found between the description in the shipping bills and the actual content of the goods, leading to the conclusion that the goods were mis-declared for unwarranted DEPB benefits.

Imposition of Penalty under Customs Act:
Regarding the imposition of a penalty under Section 114 of the Customs Act, the Tribunal upheld the penalty but reduced it from Rs. 1,25,000 to Rs. 25,000 considering the circumstances of the case. The penalty was justified based on the mis-declaration of goods for claiming undue DEPB benefits, leading to the goods being rightfully held liable for confiscation under Section 113(i) of the Customs Act. The Tribunal's decision to partially allow the appeal was based on the acknowledgment that the DEPB benefit was rightly denied due to the mis-declaration of goods, emphasizing the importance of accurate declaration in export transactions to avoid penalties and confiscation.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Mumbai highlighted the consequences of mis-declaration in export transactions, the ineligibility for benefits due to non-compliance with specified requirements, and the imposition of penalties under the Customs Act for such violations.