2020 (4) TMI 803 - AT - Customs

Confiscation - Imposition of redemption fine and penalty - claim of drawback for export of ready-made garments - Valuation of export goods - declaration of value for the purposes of exports - case of appellant is that the amount realized is the correct transaction value and that settled law holds that the market inquiry in India is not a valid substitute for a market inquiry in the country of destination - HELD THAT - Even though the factum of goods being other than declared is not in dispute nothing has been brought to evidence that this was deliberate act. It is limited to a small portion of the consignment. Also, the consequence of misdeclaration is only ₹ 1,01,000/- and the difference drawback claimed and eligible drawback is mere 2%. The confiscation of goods and imposition of penalty does not appear to be appropriate - redemption fine and penalty set aside - appeal allowed.

Summary

Issues:
- Redetermination of assessable value for export goods
- Imposition of penalty under section 114 of Customs Act, 1962
- Jurisdiction of the Tribunal in cases of sanction of drawback

Redetermination of Assessable Value:
The appeal was filed against an order-in-appeal that modified the penalty related to one out of six shipping bills filed for the export of ready-made garments to Dubai. The goods were found to be composed entirely of cotton instead of a polyester-cotton blend as declared. A market inquiry was conducted to determine prices for reassessment. The declared value of ?53,10,379 was re-determined at ?46,41,840. The redemption fine was reduced to ?6,00,000 and the penalty to ?3,00,000. The appellant contested this redetermination, claiming that export proceeds were realized as per the original declaration. The Tribunal noted that the goods were misdeclared but found no evidence of deliberate intent. The difference in drawback claimed and eligible drawback was only 2%. Consequently, the confiscation of goods and imposition of penalty were deemed inappropriate, leading to the setting aside of the redemption fine and penalty.

Imposition of Penalty:
The authorized representative argued that the issue pertained to the sanction of drawback, which was beyond the Tribunal's jurisdiction. He emphasized the misdeclaration evident in the records and cited a High Court decision affirming penalties for such activities, even if export proceeds were fully realized. However, the Tribunal considered the negligible quantity of misdeclaration and the minimal difference in drawback claimed, leading to the conclusion that the penalty imposed was too harsh. As a result, the redemption fine and penalty were set aside.

Jurisdiction of the Tribunal:
The Tribunal clarified that the issue revolved around the declaration of value for export purposes. The appellant contended that the amount realized represented the correct transaction value, citing established law that market inquiries in India could not substitute those in the destination country. The Tribunal acknowledged the misdeclaration but found no evidence of deliberate intent, especially considering the small portion of the consignment affected. Ultimately, the Tribunal concluded that the confiscation of goods and the penalty imposed were not warranted in this case, leading to the disposal of the appeal with modifications.