9911796707
TMI Blog2013 (1) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case were factory stuffed in container No. BAXU-2587707 under examination and supervision of Central Excise Range-I, Division-I, Vapi. Based on intelligence that the goods under export were inferior in quality and the values were highly inflated to get undue DEPB benefit, the container was detained and the goods were examined in the presence of the CHA and the authorised representative of the exporter, Shri Pawan Kumar Sharma of M/s. Shubham Impex. The packages were found in intact condition. On examination, it was found that contents of 11 packages with the numbers 6, 27, 34, 42, 55, 68, 73, 79, 89, 91 and 100 consisted of ladies night dresses of slightly better quality and were made of uniform/single fabric. All the remaining goods in 99 packages appear to have been made of old and used clothes which were found to be unwearable and unworthy for exports and in some clothes the stitching was also unfinished. 2.1 Statements of Shri Pawan Kumar Sharma, authorized representative of M/s. Shubham Impex, was recorded under Section 108 of the Customs Act, 1962 on 27-8-2003 wherein he admitted that he was working for Shri Anil Arya on a monthly wage of ₹ 3,180/- and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Naik as against the declared PMV of ₹ 84,34,800. The goods were seized under the provisions of Customs Act, 1962. On the basis of National Import Data Bank, the value was taken at ₹ 21/- per kg. in respect of 29,700 pieces and the value was determined at ₹ 77,752/-. The market value of the remaining 3,300 pieces was ascertained at ₹ 1,65,000/-. These values were accepted by Shri Rakesh Naik and Shri Anil Arya. The total value of the goods under export was determined at ₹ 2,42,742/-. The goods were provisionally released on payment of bond for the full value of the goods and a cash security of ₹ 9 lakhs. 2.3 Statements of Shri R.A. Zaidi, Inspector of Central Excise, Range-I, Vapi was recorded under Section 108 of the Customs Act. He confirmed that the examination of the goods had been done by him before stuffing into the container and he had selected 11 cartons on random basis. He had seen the input invoices for the fabrics showing the value at ₹ 55/- per metre and the stitching bills were produced before him and after discussing the matter with the Superintendent, the declared value appeared to be correct. Accordingly, they had forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Rakesh Naik, thereby abetting in the preparation and attempt of smuggling of the impugned goods for exports. R.A. Zaidi, Inspector of Central Excise, did not exercise due diligence in performing his duties in inspection, selection of cartons for examination of the goods and valuation thereof. From the evidence it appeared that the Inspector did not choose the cartons on his own but examined the cartons already kept aside specially for examination. Shri M.S. Jeph, Superintendent also did not exercise supervision effectively and did not issue proper guidance to the Inspector in the selection process for the examination. 2.6 Based on the above, a show cause notice dated 23-2-2004 was issued proposing to determine the present market value of goods at ₹ 2,42,742/-; to confiscate the impugned goods under Section 113(d) and 113(i) of the Customs Act; to deny DEPB credit claim of ₹ 14,57,004/- and to impose penalties under Section 114 on Shri Anil Arya, Shri Rakesh Naik, M/s. Shubham Impex, Shri P.K. Sharma, Shri Sanjay Agarwal, Shri R.A. Zaidi and Shri M.S. Jeph. The notice was adjudicated and vide the impugned order the goods were confiscated under Section 125 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents in respect of the goods produced by the exporter. Thus, though he might have been negligent in accepting the declarations without verification, he cannot be alleged to have acted in connivance with the exporter. At best his action can be considered only as dereliction of duty and for dereliction of duty no penalty is imposable, as has been held by this Tribunal in the case of Commissioner of Customs v. M. Naushad reported in [2007 (210) E.L.T. 464 (Tri.-Bang.)]; Brajesh Y. Tiwari v. Commissioner of Customs (Import), Mumbai [2012 (283) E.L.T. 295]. He also relied on the decision of the Tribunal in the case of Commissioner of Customs, New Delhi v. M.I. Khan - 2000 (120) E.L.T. 542 (Tribunal) wherein dropping of penalty proceedings under the Customs Act against officers in performance of the duties have been upheld. 3.3 The counsel appearing for R.A. Zaidi submits that the Inspector has carried out the duties as per the examination norms prescribed by the Customs. As far as the value is concerned, the responsibility was that of the Superintendent. Therefore, he cannot be held responsible for declaration of wrong value. As per the norms prescribed, he has selected 10% of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedure was not followed. Secondly, the export is under claim for DEPB. In respect of export under DEPB scheme, the entitlement of credit is capped by the present market value of goods and the DEPB credit entitlement shall not exceed 50% of the present market value of the goods as per Circular No. 37/99-Cus., dated 24-6-1999 issued by the Department of Revenue, Ministry of Finance, Delhi. Thus, PMV is a relevant factor and needs to be determined in respect of exports under DEPB scheme. Therefore, the contention of the appellant that the valuation was not proper and was based only on market survey is without any merit and is dismissed accordingly. The reliance placed in this regard on the various case laws by the appellants is of no avail as the value has been agreed to and accepted by the appellants. 5.3 Coming to the next issue with respect to imposition of huge amounts of penalty under Section 114, there is merit in this argument. In the case of a proprietary firm it is an accepted position that both the firm and the proprietor need not be penalized and penalizing any one of them would be sufficient. Therefore, imposing penalty both on M/s. Shubham Impex and Shri Rakesh Naik, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be excessive for the reason that in respect of ready-made garments, the trade margin are very high and sometimes exceeds the cost of manufacture of goods. Accordingly, we uphold the imposition of redemption fine. 5.4 As regards Shri P.K. Sharma the authorised signatory of the firm, he has signed all the export documents and he was also aware of the fraudulent nature of the transactions. Thus, he has abetted in the committing of the offence. However, since he did not stand to gain personally from the transactions, penalty of ₹ 5 lakhs imposed on him is very much on the higher side and the same is reduced to ₹ 50,000/-. 5.5 Coming to the role of Shri R.A. Zaidi, Inspector and Shri M.S. Jeph, Superintendent, the examination of the goods had been done by them and they supervised the factory stuffing. Though they claim that the cartons examined by them were found to contain good quality goods, this examination conducted by them is not as per the proper procedure. The total number of packages were 110 and as per the procedure, they were required to examine 10% of the packages and accordingly they examined 11 packages. It is also a fact on record that only 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the fact that the value of the goods under export is only ₹ 2,42,742/-, we reduce the penalty on the Superintendent from ₹ 50,000/- to ₹ 10,000/-. 5.6 The next issue for consideration is penalty imposed on the CHA. From the statements recorded from the CHA and the documents available on record, the CHA was never present at the time of examination. The examination was done at the factory by the Central Excise officers and the containers were sealed. The samples drawn were sent to the CHA for handing over to the Customs. The export documents were also filed by the CHA on the basis of documents given to him by the exporter. Therefore, there is no involvement of the CHA in the fraudulent claim of DEPB credit by the exporter either by way of any action or omission on his part. Neither the Customs Act nor the CHALR envisages that the CHA should verify the antecedence of the exporter. So long as the identity of the exporter is established based on the IEC code and export documents are prepared on the basis of documents given by the exporter, his action cannot be faulted. If there is any wrong declaration of the value of exports, the responsibility for the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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