2024 (12) TMI 1206 - AT - Customs

Classification of goods under DEPB Scheme - Hand Tools Digging Spade With Handle to be classified under CTH No. 82011000 or as Pick Mattock falling under CTH No. 82013000? - mismatch between the quantity declared and the quantity good - Valuation of goods. Classification of goods under DEPB Scheme - Hand Tools Digging Spade With Handle to be classified under CTH No. 82011000 or as Pick Mattock falling under CTH No. 82013000? - HELD THAT - The goods are described as consisting of two parts, one metal part and one wooden handle. The appellants have submitted a certificate of Chartered Engineer Shri O.S.Nagar describing it as digging spade. The notice alleges that as per examination report the goods are found to be Pick Mattock. The notice does not define what a Pick Mattock is and how the revenue comes to a conclusion that it is a Pick Mattock - it is seen that both the Chartered Engineers have opined that the tool is used for digging. CRCL Kandla, in its opinion has not given any name to product. The word Pick Mattock has not been defined anywhere in the proceedings. Shri Nagar, Chartered Engineer in reply to questionnaire had described that the words Digging Spade and Pick Mattock are used interchangeably - The Google defines a spade as a tool that you use for digging . Since, both the Chartered Engineers have stated that the item is used for digging it can be called a Spade . There are no evidence is produced by revenue to establish that the goods are not Spade falling under Sr. No. 196 of DEPB schedule. Mismatch between the quantity declared and the quantity good - HELD THAT - The declaration made in the documents was based on the order placed by the exporter. Physical counting of 21000 pieces would require opening of all packages. Moreover, it is stated that there was a delay in carting of second truck in the part by two days which necessitated the carting of cargo from the warehouse to open. The pictures of the cargo available in the file show that the goods were loosely packed in bags. In these circumstances the exporter cannot be blamed for some mismatch in quantity. As it is the benefit depends on value of foreign currency earned and not on the number of places exported. Valuation of goods - HELD THAT - There is no evidence that the market price indicated by dealers is of identical goods as nothing except approximate weight of metal part is mentioned. There is no reference to the composition. Moreover, it is not necessary to export the goods has to be done at the domestic market price. The exporter can get a better price due to his marketing skills as well - It is apparent that the only administrative restriction is that the DEPB claimed should not exceed 50% of the market value. Thus, the CBEC also recognizes that FOB value can be much higher than market value. In these circumstances we do not find any merit in this objection as well. The Impugned ordered is set aside - the appeal is allowed.

Summary

Issues:
Classification of goods under DEPB scheme, Allegations of mis-declaration, Quantity discrepancy, Valuation of goods

Classification of Goods under DEPB Scheme:
The appellant, a steel company, filed a shipping bill for export claiming DEPB Scheme benefits for "Hand Tools Digging Spade With Handle" under CTH No. 82011000. Revenue alleged mis-declaration, stating the goods were "Pick Mattock" under CTH No. 82013000. The DEPB Schedule listed both items, with different DEPB rates. The appellant argued the goods were correctly classified, supported by a Chartered Engineer's certificate. The Tribunal noted discrepancies in quantity and valuation but found no evidence to support the revenue's classification.

Allegations of Mis-Declaration:
The revenue alleged mis-declaration to claim higher DEPB benefits. Discrepancies were found in the declared versus actual quantities of metal parts and wooden handles. The appellant provided invoices and statements to support the declared quantities. The Tribunal considered the physical counting challenges and concluded that the mismatch in quantity did not affect the benefit based on foreign currency earned.

Quantity Discrepancy:
The dispute included discrepancies in the declared and actual quantities of metal parts and wooden handles. The appellant argued that the goods received matched the order placed, supported by statements from relevant parties. The Tribunal acknowledged the challenges in physically counting each piece and accepted the explanation provided by the appellant.

Valuation of Goods:
The revenue estimated the market value based on dealer opinions, but the appellant provided invoices for purchases. The Tribunal noted that market prices did not consider the metal composition and recognized the exporter's ability to fetch better prices. Referring to circulars, the Tribunal highlighted that DEPB benefits should not exceed 50% of the market value. The Tribunal found no merit in the revenue's valuation objection and set aside the impugned order, allowing the appeal.