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TMI Blog2010 (6) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... of materials to M/s. S.F. Overseas, the Falta unit and Appeal No. 206 of 2006 and appeal No. 217 of 2006 are by Sri N. Mitra Mustafi and Shri S.K. Sachadeva, Partners of M/s. Devi Chemicals industry, DTA supplier of materials to M/s. S.F. Overseas. Appeal No. 216 of 2006 is by Shri Uttam Kr. Surana who has acted as intermediary between the DTA suppliers viz. S.S. Enterprises and Devi Chemicals and M/s. S.F. Overseas, the Falta unit. All these appeals arise out of common order in original No. Kol/Cust/Airport/Admn./29/2005 dated 27-12-2005. In all appeals other than that of S.F. Overseas Pvt. Ltd. the challenge is only against the penalties imposed on the appellants. 2. Heard extensively both sides. 3. The relevant facts, in brief, are that M/s. S.F. Overseas, a unit in Falta Zone filed seven shipping bills all dated 21-2-03 for exporting one lakh pcs. of 100% natural cotton made men-teashirts declaring export price of Rs. 250/- per piece thus a total price of Rs. 2.5 crores. Shipping bills were assessed by the officers of Customs at Falta zone and bottle seals were put on the containers and "let export" order was given on 25-2-2003. The export consignments moved fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the replies and the submissions at the time of personal hearing, Commissioner passed the impugned order. He held that the drawback claims on the export goods were liable to be rejected. Commissioner ordered confiscation, under Section 113(d) and 113(i) of the Customs Act, of the goods with declared value of 2.5 crores and ascertained value of Rs. 28.00 Lakhs and allowed the same to be redeemed on the payment of Rs. 25.00 Lakhs. He also imposed penalties under Section 114 of the Customs Act on various persons as follows :- (i) M/s. S.F. Overseas Pvt. Ltd. - Rs. 15,00,000/- (Rupees Fifteen Lakhs only) (ii) Sri Falguni Mukherjee - Rs. 20,00,000/- (Rupees Twenty Lakhs only) (iii) Sri Debangshu Mukherjee - Rs. 10,00,000/- (Rupees Ten Lakhs only) (iv) Sri Shyamal Ghosh - Rs. 10,00,000/- (Rupees Ten Lakhs only) (v) Sri S.K. Sachadeva - Rs. 5,00,000/- (Rupees Five Lakhs only) vi) Sri Saurav Sardar, proprietor of S.S. Enterprises - Rs. 1,00,000 (Rupees One lakh only) (vii) Sri N. Mitra Mustafi, proprietor of Devi Chemical - Rs. 1,00,000/- (Rupees One Lakh only) (viii) Sri Uttam Surana - Rs. 1,00,000/- (Rupees One Lakh only) (ix) M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corresponds to their purchase price of Rs. 245/- per piece from the domestic suppliers. (vi) As against the evidence produced by them, the Department has not conducted any market enquiry. They merely obtained some opinion from NTC and NIFT and came to the conclusion that PMV was Rs. 28/- per pc. He submits that it is common knowledge that the value of any garment depends upon the fabrics, chemicals, the nature of colouring material used etc. (vii) The fact that domestic suppliers supplied on credit basis to M/s. S.F. Overseas Pvt. Ltd. cannot be the basis for doubting the genuineness of the transaction as whether the transaction is on cash or credit basis should not make a difference. (viii) The bills for stitching were issued in the name of B.K. Sinha as many of the persons in the stitching business were not in the habit of not issuing any bills. (ix) He draws our attention to the Section 51 of the Customs Act and submits that the formalities for export of the goods involved "order permitting clearance" and order for "loading of the goods". In the present case though the goods have been cleared from the Falta one after let export order was given, the goods were not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by some other party. The supply have been made on credit basis and no evidence of payment by M/s. S.F. Overseas to the said suppliers have been relied upon. Further, the overseas investigation clearly revealed that the buyer was not found in the given address in Russia and that they were not registered as an importer with the Russian authorities. The LC was clearly fabricated one and not issued by the bank. He submits that but for the timely intervention by the officers of DRI, the export would have been completed and the deemed exporters who have got the drawback and the Falta unit would have received the benefits as per Exim policy. He submits that all the appellants have acted in collusion and declared inflated value of deemed export to S.F. Overseas and inflated value of export by S.F. Overseas to Russian buyer and, therefore, the over valued goods are liable for confiscation under 113(d) and 113(i). They are also liable for penalties. He relies on the decision of the Hon'ble Supreme Court in the case of OM Prakash Bhatia (supra). 7.1.We have carefully considered the submissions from both sides and perused the records. 7.2 At the outset we find that the two domestic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xporters would have got the deemed drawback and the S.F. Overseas would have got whatever export benefits available to them under the law. 7.5 Claim of M/s. S.F. Overseas that they sought permission of the Development Commissioner to cancel the shipping bills on 28-2-2003 looks strange. It is apparently consequent to the commencement of the investigation by the officers of DRI. When the goods have already moved from Falta zone on 25-2-2003, how cancellation could be granted by the Development Commissioenr is not known. As the let export order was given and the goods have moved and reached Haldia Port, the question of Development Commissioner intervening and recalling the consignments does not arise. 7.6 We have not been shown that M/s. S.F. Overseas, who claimed that the buyer in Russia has given a false letter of credit, has taken any legal action against the said buyer. After all, the buyer's action, as claimed by M/s. S.F. Overseas, has resulted in the cancellation of the export with adverse consequences to M/s. S.F. Overseas. 7.7 The submissions of the appellants that if the Department feels that any statement is partly correct and partly incorrect, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning true sale consideration of the goods, would amount to violation of the conditions for import/export of the goods and result in illegal/irregular transactions in foreign currency and also the issue whether exporter has to give the value of the goods as provided under Section 14 of the Customs Act or the value of the goods which he expects to receive on the sale of goods in the overseas market. After raising the above issues, the Hon'ble Supreme Court has clearly held that overvalued export goods are to be treated as prohibited goods and that they are liable for confiscation under Section 113(d) of the Customs Act. It has also been held that Section 14 of the Customs Act would apply to export goods as well. As this judgement is directly on the issue, the same requires to be followed in the present case. In the case of Commr. of Customs v. Prayag Exporters Pvt. Ltd., Hon'ble Supreme Court did not interfere with the decision of the Tribunal in view of the facts of the said case. 11. From the above, it is clear that supply on deemed export basis to M/s. S.F. Overseas Pvt. Ltd. and attempted export by M/s. S.F. Overseas Pvt. Ltd. are on inflated value and all the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X
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