2017 (6) TMI 259 - AT - Customs

Valuation - export goods - manmade fibres polyster knitted gents t-shirts and 65% cotton 35% polyster boys shirts - market enquiries were conducted from two manufacturer exporters who opined that the export goods were overvalued to the extent of about 35%. The Department also obtained the opinion of the Chartered Engineer Shri R.K. Agarwal who suggested that the goods were overvalued to the extent of about 45% - Held that - it is seen that neither of these facts have been cited in the adjudication proceedings against the appellant. The value of the export goods have been re-determined essentially on the basis of the revised cost sheet which the appellants were not contesting the reduction in value - we find no reason to interfere either with the reduction in the declared value or in the restriction imposed on the drawback. In the present case there are no valid reasons for rejection of the transaction value. There is no justification for confiscation of the export goods as also imposition of penalties u/s 114 and Section 114 (AA). Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
- Allegation of overvaluation of export goods
- Re-determination of value and restriction of drawback
- Confiscation of export goods and imposition of penalties
- Challenge against the impugned order

Analysis:
The case involved appeals against an order dated 21.02.2013 regarding the export of manmade fibers, polyester, knitted gents t-shirts, and cotton-polyester boys shirts under duty drawback claim. The Customs suspected overvaluation of goods, leading to market inquiries and the opinion of a Chartered Engineer indicating overvaluation up to 45%. The appellants contested the re-determination of the export goods' value, reduction in drawback, confiscation of goods, and penalties imposed. The impugned order re-determined the value at ?1,50,87,600, restricted drawback to ?15,58,148, and imposed penalties along with confiscation of goods for redemption with a fine of ?40 lakhs.

The appellants argued against the reduction in value and drawback, contending that the charge of overvaluation was baseless since the foreign buyer had paid the declared amount. They cited case laws to support their stance. The Revenue justified the impugned order under the Customs Valuation Rules, as the appellants admitted overvaluation. The Tribunal noted discrepancies in the evidence presented during adjudication, with the value being primarily re-determined based on a revised cost sheet submitted by the appellant's Director, who accepted the reduced value.

Regarding the confiscation and penalties, the Tribunal analyzed the transaction value accepted by the foreign customer, emphasizing the need for valid reasons to reject such value under the Customs Valuation Rules. Citing a Supreme Court judgment, the Tribunal highlighted the requirement to prove over-invoicing, which was not established in this case. Consequently, the Tribunal found no justification for confiscation and penalties, modifying the impugned order to set aside the penalties and confiscation of goods.

In conclusion, the Tribunal disposed of the appeal by setting aside the penalties and confiscation of goods, based on the lack of evidence supporting overvaluation and the acceptance of declared value by the foreign customer. The judgment was pronounced on 16.05.2017 by the Tribunal members, Dr. Satish Chandra and Mr. V. Padmanabhan.