2014 (2) TMI 881 - AT - Customs

Valuation of goods - Delay in conducting research - More than 2 years gap in conducting 2nd research - Imposition of redemption fine - Held that - After the completion of export in May 2005, Revenue conducted enquiry and as per the report dated 01.09.2005, the value declared by the appellant was more or less equivalent to the value of the goods available in the market. No reasons stands given by the Revenue as to why the said report was not accepted by them & as to why the matter was kept pending for a further period for 2 years. It is seen that even the show cause notice dated 14.12.2007 was issued in terms of the directions of the Hon ble High Court of Delhi in their order dated 29.11.2007 and the second enquiry was conducted thereafter. After the said directions of the Hon ble High Court of Delhi, the Revenue hurriedly conducted second market enquiry on 19.11.2007 and thereafter issue show cause notice on 14.12.2007. All the enquiries conducted in 2007 reflect upon the market value of the goods available in the year 2007 inasmuch as the expression used by all these persons is the present market value . Admittedly, the viscose shawls and stoles in question are fashion goods, the value of the same would be time and period related. The enquiry conducted in 2007 reflecting upon the value of the goods at that point of time cannot be held to be correct value for the same very goods in the year 2005. Further, the Revenue has not given any sound reasons for rejection of the market enquiry conducted in 2005 itself immediately after the export of the goods - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Alleged undervaluation of exported goods based on market enquiries.
2. Delay in conducting market enquiries and issuing show cause notice.
3. Adjudication on the correct value of exported goods and entitlement to DEPB credit.
4. Confiscation of goods, imposition of redemption fine, and penalty under Customs Act.

Issue 1: Alleged undervaluation of exported goods based on market enquiries:
The appellant exported viscos shawls to Dubai under the claim of DEPB. The Revenue conducted market enquiries on the consignment's value, which initially did not accept the first report's valuation. Subsequently, after a delay of over two years, a second set of market enquiries was conducted, leading to allegations of undervaluation. The appellant contested the valuation discrepancies, citing procedural lapses in the market enquiry process.

Issue 2: Delay in conducting market enquiries and issuing show cause notice:
The significant delay in initiating market enquiries and issuing the show cause notice raised procedural concerns. The appellant had to resort to correspondence and legal intervention to prompt action from the Revenue. The High Court's intervention eventually led to the issuance of the show cause notice, but discrepancies in the handling of market enquiries and timelines were evident.

Issue 3: Adjudication on the correct value of exported goods and entitlement to DEPB credit:
During adjudication, the appellant presented various arguments, including reliance on a Customs circular prescribing market enquiry procedures. The adjudicating authority determined the correct value of the exported goods, entitlement to DEPB credit, and imposed penalties and fines. The appellant challenged this decision, emphasizing procedural irregularities and contesting the valuation methodology adopted by the Revenue.

Issue 4: Confiscation of goods, imposition of redemption fine, and penalty under Customs Act:
The order under challenge involved the confiscation of exported goods, imposition of a redemption fine, and penalties under the Customs Act. The appellant contested these punitive measures, highlighting the lack of justification for rejecting the initial market enquiry report and the adverse impact of delayed assessments on the valuation of fashion goods.

In the final judgment, the Tribunal acknowledged the procedural lapses, including the delay in conducting market enquiries and the lack of justification for disregarding the initial valuation report. Emphasizing the time-sensitive nature of fashion goods, the Tribunal found discrepancies in the Revenue's actions and ruled in favor of the appellant, setting aside the impugned order and granting consequential relief.