2015 (4) TMI 770 - AT - Customs

Duty drawback claim - Misdeclaration of quantity and value of goods - Held that - There was violation of provision of section 113(i) and 113(ii) of Customs Act, 1962 since there was a misdeclaration of the quantity and value of the goods with material departure to the particulars relating to quantity and value of the goods being attempted to be exported under drawback claim not corresponding in material particular with the information furnished in the export documents. Revenue s contention that appellant acted deliberately cannot be ruled out for the reason that an exporter who has not remitted higher amount of foreign exchange to this country does not expect higher quantity of goods with higher value. Accordingly, confiscation of the goods was justified. Since the goods were under drawback claim, imposition of redemption fine is also warranted under law. - Commissioner did not record his finding on redemption fine - Therefore it is desirable to work out the same in the interest of justice. He has not recorded what was the difference in value between original shipping bill and revised shipping bill. Therefore, to determine appropriate quantum of redemption fine and penalty imposable, matter is remanded to him. - Decided partly in favour of assessee.

Summary

Issues: Misdeclaration of quantity and value in export documents leading to duty drawback claim, imposition of penalty and redemption fine.

Analysis:
1. The case involves exporters who attempted to export silk carpets by declaring incorrect quantities and values in the shipping bills, resulting in a higher claim for duty drawback. Upon detection by customs, the exporters filed revised shipping bills declaring lower quantities, admitting to the misdeclaration. The customs authorities found discrepancies in the quantity and value of goods declared for export, leading to a higher claim for duty drawback.

2. The exporters argued that the misdeclaration was not deliberate and that they rectified the mistake as soon as it was noticed. They contended that since the duty drawback was claimed based on the shipping bills' values, they should not be liable for redemption fine or penalty. However, the Revenue contended that the misdeclaration was intentional, as revealed by the discrepancies in the invoice and packing list details, which led to a violation of the Customs Act, 1962.

3. The Tribunal found that the exporters had indeed misdeclared the quantity of goods meant for export, leading to a misdeclaration of the export value. While export itself is not liable to duty, misdeclaring a higher value to claim a higher duty drawback is considered a breach of law. The Tribunal referenced a Supreme Court judgment highlighting that over-invoicing in exports can lead to illegal money transactions, such as money laundering.

4. The Revenue's argument that there was a violation of Customs Act sections 113(i) and 113(ii) due to the misdeclaration of quantity and value was upheld by the Tribunal. It was noted that the misdeclaration significantly deviated from the actual exportable quantity and value, justifying confiscation of the goods and imposition of a redemption fine. The Tribunal remanded the matter back to the Commissioner to determine the appropriate redemption fine and penalty due to the lack of specific findings on these aspects.

5. Ultimately, the Tribunal ruled in favor of the Revenue's appeal, subject to the redetermination of the penalty and the determination of the redemption fine in a readjudication process. Both the appeal of the assessee and the Revenue were disposed of accordingly, based on the findings and observations made in the judgment.