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TMI Blog2019 (2) TMI 1506X X X X Extracts X X X X X X X X Extracts X X X X ..... f Customs (Appeals), Mumbai-II, JNCH Nhava Sheva. 2. In the first Appeal i.e. of M/s. Rani Sati Exports. Two Bills were filed by the Appellant on 31.12.2009 for export of fabric, made out of Spun yarn from MM Fibre & MM Filament yarm W/W embroidery W/W metalized yarn w 112 cm. to Dubai (UAE) under EPCG & DEPB Schemes. The value of consignment declared as ₹ 58,71,275.90(FOB) and ₹ 54,43,779.50(FOB) respectively @ 1.48 USD per yard (C& F). Net wt. of the consignments are 7275 kgs. and 6750 kgs and the DEPB benefit is ₹ 4,81,444.6/- and 4,46,389/- respectively. In the 2nd Appeal i.e. of P.D. Impex, also two bills were filed by the Appellant for export of fabric, made out of Spun yard and the export was at COTE D'IVOIRE under EPCG & DEBP Schemes. The value of the consignment was declared as ₹ 32,54,697.50(FOB) and ₹ 90,82,189.50 (FOB) respectively @ 1.05 EURO per yard (C&F). Net Wt. of the consignments were 3697.50 kgs. & 10222.50 kgs. respectively. The Appellants in both the Appeals have produced their respective Sales Contract signed by both the parties for these Shipping bills and submitted that the FOB value was declared as per the sales contract betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort goods, only due to the reason that those case laws pertain to the period prior to the enactment of Customs Valuation (Determination of Value of Export Goods) Rules, 2007. 4. According to ld. counsel for the Appellants, the value of the goods under export should have been determined as per the provisions of Customs Valuation Rules, 2007 sequentially and not on the basis of local market survey and, therefore, procedure adopted for determination of export value of the goods is incorrect and this determination of value has to be held as unsustainable in law. He contended that the similar goods were earlier exported by the Appellants at prices comparable with prices declared in the impugned shipping bills, but the same was not relied upon by the authorities since according to them in absence of availability of any authentic samples of the goods exported earlier or any other evidence which could establish their comparability with the impugned goods, their export values cannot be a basis for valuation of the impugned exports. According to ld. counsel the value of the Appellants goods was not comparable with the goods exported by M/s. Provogue India Ltd. And M/s. Sadguru International ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) difference in composition, quality and design between the goods to be assessed and the goods with which they are being compared, (iv) difference in domestic freight and insurance charges depending on the place of exportation. 5. Computed value method. - If the value cannot be determined under rule 4, it shall be based on a computed value, which shall include the following:- (a) cost of production , manufacture or processing of export goods; (b) charges, if any, for the design or brand; (c) an amount towards profit. 6. Residual method. - (1) Subject to the provisions of rule 3, where the value of the export goods cannot be determined under the provisions of rules 4 and 5, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules provided that local market price of the export goods may not be the only basis for determining the value of export goods. 7. Declaration by the exporter.- The exporter shall furnish a declaration relating to the value of export goods in the manner specified in this behalf. 8. Rejection of declared value.- (1) When the proper officer has reason to doubt the truth or accuracy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value shall be determined by proceeding sequentially through Rules 4 to 6. Rule 4 deals with 'transaction value of goods of like kind and quality exported at or about the same time to other buyers in the same destination country of importation' and Rule 5 deals with 'computed value method' which shall include cost of production, manufacture or processing of export goods; charges, if any, for the design or brand and an amount towards profit. Rule 6 makes it clear that 'if the value of exported goods cannot be determined under the provisions of Rules 4 and 5, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules provided that local market price of the export goods may not be the only basis for determining the value of export goods. Explanation (1)(i) to Rule 8 ibid also makes it clear that where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 6. 6. In the instant matter, since the declared value appeared to the department to be on higher side, therefore market enquiry was conducted by Revenue which puts price of similar fabrics at about 0.45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provogue India Ltd and M/s. Sadguru International were not identical as the goods exported by the Appellants. This aspect was clearly demonstrated by the respective RICT codes which determine the description of the goods. In two cases of comparison the RICT code pertains to different chapter of the tariff for the goods. The goods of the Appellants figure in the input output norms at Sr. Nos J-37 while that of the compared value of M/s Provogue India Ltd figure at Sr no. J315(ii). The ld. Commissioner failed to consider these vital aspects, when he rejected the impugned transaction value based on the valuation produced by the department relating to the export made by M/s Provogue India Ltd. We are not able to understand when the department can compare the goods of the Appellant with the goods exported by M/s. Provogue India Ltd. or M/s. Satguru International merely on the basis of their export document, then they could not have rejected the value of the similar goods exported earlier by the Appellant to the same company, which was accepted by the department at that time of export. The said export document produced by the Appellant was rejected by department because of absence of ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not exceed 50% of the PMV of the goods. 10. In another similar matter titled as Commr. of Customs, Mumbai vs. Vishal Exports Overseas Ltd.; 2007(209) ELT 331 (SC) the Hon'ble Supreme Court has laid down as under:- "9. The first contention of the appellant herein to the effect that the FOB value being 450% more than the purchase value is unreasonable and cannot be accepted for the simple reason that there is no evidence on record to support such a contention. The Tribunal has also specifically held so and returned a final finding of fact that the FOB price was correctly shown by the assessee. Learned counsel for the appellant could not show us anything concrete in support of his contention. From the orders of the first and the appellate authorities nothing can be found to hold that the FOB price was excessive or not genuine. The Tribunal has also given a finding that the Adjudicating Authority has arbitrarily computed the FOB value and have fixed the credit on that basis. We accept findings of the Tribunal in the absence of any concrete evidence having been put to support the contention of the learned counsel that the FOB price is inflated. In this behalf we cannot ignore the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st or relation between the Appellants and their importers in Dubai or COTE D'IVOIRE in order to doubt that the transactions between them were not in the normal course of trade or that it was not a transaction at arms' length. It is also not the case of the Revenue that it is either a Hawala transaction or a back flow of money to the Appellants through illegal means. The value declared by the Appellant was to be remitted through the banking channel. Unless it is established that the goods of market or goods of export, value of which department sought to apply, are absolutely identical to the goods of the Appellants, the value declared by the Appellants cannot be disputed. Therefore, the FOB declared by the Appellants deserves to be accepted. 13. These appeals are thus allowed with consequential relief, if any. (Dictated Pronounced in Court) (Sanjiv Srivastava) Member (Technical) (Ajay Sharma) Member (Judicial) I have gone through the order prepared by Learned Member (Judicial). Even after lot of persuasion I am not in position to agree with the same. The issue under consideration is in respect of valuation of goods presented for export under claim of benefit under DEPB Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i 30.00 27.00 2 Nil 21.01.2010 Ronak Textiles Hindmata Mumbai 32.00 28.80 3 1307 21.01.2010 Sandeep Textiles Dadar (E) Mumbai 35.00 31.50 1.7 Thus the average price of the fabric comes to ₹ 29/- (Rupees Twenty Nine only) or 0.45 EURO per yard approximately. The fabrics purchased from the market along with bills are put up in the file. 1.8 Further, a data of the export price for similar export of 4 shipments by 2 exporters exported from DRT CFS were taken which is as follows: S No S/B No & Date Exporter Name Price Per Yard Inv No & Date US $ Rs 1 8024378/ 06.01.2010 Provogue (India) Ltd Mumbai 53 0.350 16.10 435/09-10 05.01.10 2 8027019/ 07.01.2010 Provogue (India) Ltd Mumbai 53 0.330 15.20 440/09-10 07.01.10 3 8031897/ 08.01.2010 Satguru International Mumbai 2 0.430 19.80 SGI/120 06.01.10 4 8093132/ 20.01.2010 Provogue (India) Ltd Mumbai 53 0.355 16.35 484/09-10 27.01.10 1.9 This analysis gives the value of the cloth at near about 0.40 $ per yard or 0.30 EURO per yard. 1.10 In light of above, it becomes clear that the value declared by the exporter is above normal export price of the simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantially lower than the value originally declared by the exporter i.e. 1.05 EURO pr yards." 2.4 From the findings as recorded by the adjudicating authority it is quite evident that he has considered the value of contemporaneous exports for determination of value of export goods as mandated under Rule 4 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. He could have adopted the said value and determined the value of goods in present case at 0.30 EURO per yard. However since he himself found that the value as determined in terms of market survey/ enquiry was around 0.45 EURO he determined the value accordingly. 2.5 The procedure for rejection of declared value as prescribed under Rule 8 has also been followed and from the facts as recorded above it is quite evident that proper query memo was also issued. Appellant was also asked to submit the costing sheets etc for determination of value under Rule 5. However the method under Rule 5 was not adopted. The reasons as recorded in order in appeal for not adopting the same are as follows: "The appellant has also argued that the value was required to be determined on the basis of the costing of export pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97, while re-examining the matter, it was decided that the role of the Customs authorities should be confined to verification of the correctness of the exporter's declaration regarding description, quantify and f.o.b. value of the export product and that it would be for the Licensing authorities, granting credit, to ensure that credit was permitted by them at the correct rate as notified by the DGFT. Circular No. 15/97 further provides that the declared PMV may also be verified, by the proper officers of Customs, at the time of examination of goods as was done in the case of drawback shipping bills, that, upon examination of the goods, where the Examining Officer finds that, in view of the quality or conditions of the goods, prima facie, the PMV declared, or the f.o.b. price, was unduly high, the matter may be referred to the Assistant Commissioner (Export) along with a sample of the goods wherever possible and, in such cases, the PMV may be verified/determined through market enquiries or by such process as the Assistant Commissioner (Customs) may direct. Circular No. 15/97, dated 3-6-1997 recognises the similarity between DEPB and a duty drawback scheme when it provides that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys is that any goods which are imported or attempted to be imported contrary to "any prohibition imposed by any law for the time being in force in this country" is liable to be confiscated. "Any prohibition" referred to in that section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition" in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions "prohibiting", "restricting" or "otherwise controlling", we cannot cut down the amplitude of the word "any prohibition" in Section 111(d) of the Act. "Any prohibition" means every prohibition. In other words all types of prohibitions. Restrictions is one type of prohibition. From item (I) of Schedule I, Part IV to Import Control Order, 1955, it is clear that import of living animals of all sorts is prohibited. But certain exceptions are provided for. But nonetheless the prohibition continues." 10.The next question is - Is there any prohibition imposed under other law which is for the time being in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or in the alternative the value of the goods which he expects to receive on their sale in overseas market. Hence, importance is given to the value of goods which exporter is to receive. It also provides that the exporter shall affirm in the declaration that full export value of the goods has been or will within prescribed period be paid in the prescribed manner. Further, the learned Additional Solicitor General referred to the notification issued under the said Section, relevant part of which reads thus :- "GSR. 78 - In exercise of the powers conferred by sub-section (1) of Section 18 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Economic Affairs) No. GSR 2641, dated the 14th November, 1969, the Central Government hereby prohibits the export otherwise than by post, of all goods, either directly or indirectly, to any place outside India. Other than Nepal and Bhutan, unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. (3) …." 14.The aforesaid Section would be applicable for determining the value of goods for the purposes of assessment of tariff under the Act or any other law for the time being in force where under a duty of customs is chargeable on any goods by reference to their value. In the present case, on export of goods in question, no duty was payable under the Act. It was, therefore, contended that there is no scope of application of Section 14 for determining the value of goods by applying the criteria laid down in the said Section. In our view, this submission cannot be accepted. For determining the export value of the goods, we have to refer to the meaning of the word 'value' given in Section 2(41) of the Act, which specifically provides that value in relation to any goods means the value thereof determined in accordance with the provisions of subsection (1) of Section 14. Therefore, if the export value of the goods is to be determined, then even if no duty is leviable, the method (mode) for determining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14 of the Act is the price at which such or other goods are ordinarily sold or offered for sale in the course of international trade where the seller and buyer have no interest in the business of each other and the price is the sole consideration for sale or offer for sale. 17.To the same effect Rule 11 of the Foreign Trade (Development and Regulation) Rules, 1993 provides. This Rule is to be read along with Section 11(1) of the Foreign Trade (Development and Regulation) Act, 1992, which inter alia provides that no export or import shall be made by any person except in accordance with the provisions of this Act, the rules and the orders made thereunder and the export and import policy for the time being in force. Rule 11 reads thus :- "11. Declaration as to value and quality of imported goods. - On the importation into, or exportation out of, any customs ports of any goods, whether liable to duty or not, the owner of such goods shall in the bill of entry or the shipping bill or any other documents prescribed under the Customs Act, 1962 (52 of 1962), state the value, quality and description of such goods to the best of his knowledge and belief and in case of exportation of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities that there was violation of Section 12(1) of the Foreign Exchange Regulation Act, 1947. 21.In the present case, as found by the authorities, 28,000 pieces of ladies skirts at the rate of $10.25 per piece, export value of which was mentioned as ₹ 1,21,54,447/-, were sought to be exported. The market price of such skirts was ascertained to be ₹ 45/- per piece and on that basis total value of the goods came to be ₹ 9,53,280/-. The exporter claimed a drawback of ₹ 21,87,800/- on the consignment on the basis that value of each skirt was ₹ 78/- per piece. No doubt, during the enquiry exporter admitted that the market price of ₹ 45/- per piece was acceptable to him and the claim for drawback was withdrawn. Thereafter, the exporter has not led any evidence that export value mentioned in the shipping bill was the true sale consideration for the goods sought to be exported. 4.0 In view of discussions as above I do not find any merits in the appeals filed by the appellants and dismiss the same. (Sanjiv Srivastava) Member (Technical) POINTS OF DIFFERENCE In view of the orders as above, matter is referred to Hon'ble President, to refer t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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