2022 (7) TMI 1521 - AT - Customs

Overvaluation of the export consignments to Bangladesh - availing higher benefit of DEPB scheme - rejection of declared value u/r 8 of Customs Valuation (Determination of value of export goods) Rules, 2007 - confiscation of the export consignments u/s 113(d) (i) of the Customs Act 1962 and imposition of penalty u/s 114 114AA of the said Act - HELD THAT - It is not even the case of revenue that these enquiries were conducted fraudulently. During the adjudicating proceedings commissioner has duly ordered for such market verification on the basis of the same sample that were drawn from the export consignment at the time of seizure. On the examination of the same samples and verification undertaken Commissioner has re-determined the market value of the export consignments and concluded that the value as declared by the exporters was genuine. Revenue in their appeal have sought to place reliance on the market enquiries that were conducted by the DRI without associating the exporter with the same. It is basic law of evidence that every evidence that is to be adduced in a proceedings against the person should be tested for it veracity and authenticity by the person adjudging the issue. In this case Commissioner has got the market verification done and have rejected the market enquiries undertaken by the DRI. In our view the approach of the Commissioner cannot be faulted. Admittedly the market enquiries conducted by the DRI during the course of investigation were conducted without participation of the exporter or his authorized representative. The enquiries so done behind the back of the exporter cannot be solely relied for determining the market value of export goods. Once Commissioner has concluded that the value as declared by the respondent to the Custom Authorities in India is genuine, other charges made against the exporter do not survive. Even if there are certain irregularities found in the export vis a vis the legal requirements in the destination country, (Bangladesh), the same could not be made a ground for proving the misdeclaration of value. For the irregularities committed vis a vis the legal requirements in Bangladesh, it is for the Bangladesh Authorities to proceed against the importer/ exporter of the goods. Neither show cause notice nor the appeal conclusively makes an assertion to that effect. The appeal filed by the revenue is dismissed.

Summary

Issues Involved:
1. Overvaluation of export goods.
2. Mode of payment for exports to Bangladesh.
3. Fraudulent acts to facilitate importers in Bangladesh to evade customs duty.

Issue-wise Detailed Analysis:

1. Overvaluation of Export Goods:

The primary allegation was that the exporter overvalued synthetic fabrics to avail undue benefits under the DEPB scheme. The declared FOB value was Rs. 3,22,80,954/- while the DRI determined it should be Rs. 1,11,51,198.85 based on market verification. The market verification conducted by DRI was disputed by the exporter, who requested a fresh verification in their presence. The Commissioner ordered a new market verification, which revealed that the declared FOB value was only marginally higher than the market value. The Commissioner rejected the DRI's market verification report, concluding that the fresh market verification indicated no significant overvaluation. The Commissioner also noted that the undervaluation declared in Bangladesh was to evade customs duty there, not overvaluation by the Indian exporter.

2. Mode of Payment:

The SCN alleged that the mode of payment for exports to Bangladesh should be through a Letter of Credit (L/C) as per Bangladesh's import policy, whereas the exporter used D.A. basis for three out of four bills of export. The exporter argued that D.A. is an accepted mode of payment in India, and they cannot be held liable for the foreign buyer's actions. The Commissioner agreed, stating that Indian laws, including RBI guidelines, do not mandate L/C for exports to Bangladesh. Hence, the allegation regarding the mode of payment was dismissed.

3. Fraudulent Acts:

The SCN alleged that the exporter, CHA, and their employees conspired to fabricate duplicate sets of documents to evade customs duty in Bangladesh. The Commissioner noted that the forged documents were not presented to Indian Customs but were meant for Bangladesh Customs. The Commissioner concluded that while these acts showed the intent to indulge in illegal activities, they were not punishable under the Indian Customs Act as they did not involve documents presented to Indian Customs.

Conclusion:

The Commissioner determined that the value of the export consignments was genuine based on the fresh market verification. The allegations of overvaluation, improper mode of payment, and fraudulent acts to evade customs duty in Bangladesh were dismissed. The appeal filed by the revenue was dismissed, and the charges against the exporter were dropped. The judgment emphasized the importance of conducting market verifications in the presence of the concerned parties and adhering to principles of natural justice.