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TMI Blog2019 (10) TMI 1336X X X X Extracts X X X X X X X X Extracts X X X X ..... lty not sustainable. Appeal allowed - decided in favor of appellant. - C/77625-77626/2018 - Final Order Nos. 76416-76417/KOL/2019 - Dated:- 23-10-2019 - Shri P.K. Choudhary, Member (J) and Bijay Kumar, Member (T) Shri Abhishek Jaju, Advocate, for the Appellant. Shri A.K. Singh, AR, for the Respondent. ORDER [Order per : Bijay Kumar, Member (T)]. - The appeal is directed against Order-in-Original dated 28-3-2018 passed by the Commissioner of Customs by which the following order has been passed :- (a) I order to confiscate goods attempted to be exported under the cover of 8 (eight) Shipping Bills Nos. 1678919, 1678990, 1678991, 1678998, 1678993, 1679035, 1679036 and 1679037 all dated 17-10-2016 under Section 113(i) and 113(ia) of the Customs Act, 1962 read with the provisions of Section 124 of the Customs Act, 1962. The goods are however allowed to be exported under without any Drawback benefit subject to payment of penalties as ordered (b) I reject the value of the goods in terms of Rule 8 of Export Valuation Rules, 2007 read with Section 17(4) of the Customs Act, 1962 and re-determine the value at the rate of ₹ 1,000/- (Rupees O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Evaluation Report 1. Determination of quality of the material used in Method : Visual Inspection Leather waist coat made of Suede bits 2. Constitution of the product Mat made of suede leather bits, screen printed and fabricated as waist coat. Lining Material Polyester, Fur: Synthetic (artificial) 3. Manufacturing Cost and procedure for determination Manufacturing Cost : ₹ 833/- (based on Largest size) Basis of Determination : Leather = ₹ 450/-; Lining Material = ₹ 25/-; Button ₹ 8/-; Synthetic Fur = ₹ 50/-; Stitching = ₹ 150/-; Overheads = ₹ 150/- Based on the test report the export consignment was confiscated on the ground that the consignment was attempted to be exported to avail the higher amount of drawback. The adjudicating authority, however, allowed the export to be effective without any drawback benefit subject to the payment of penalty as has been ordered. 4. Being aggrieved by the impugned order the appellants have filed the present appeals. 5. Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document in respect of export consignment and therefore, they are not liable for penalty under Section 114AA of the Customs Act, 1962. 9. Similarly, it is the submission of the Learned Advocate that the appellant has not violated any of the provisions of the Foreign Trade (Development and Regulation) Act, 1992 and thus no penalty is imposable under the FT (DR) Act as well. 10. Learned Advocate further submitted that in the impugned order the adjudicating authority has not followed the Export Valuation Rules which mandated for sequential application of the Rules and directly travelled to Rule 6, ignoring the provisions of Rules 4 and 5. The Rules 4 to 8 of the Customs Valuation Rules require market inquiry to be conducted as a last resort. Reliance was placed on the decision of M/s. Siddachalam Export Private Limited v. Commissioner of Central Excise, Delhi-III; [2011 (267) E.L.T. 3 (S.C.)]. Further, Learned Advocate also relied upon the decision of the Hon ble High Court in the case of Commissioner of Customs, New Delhi v. Vishal Exports Overseas Limited, [2007 (209) E.L.T. 331 (S.C.)] regarding acceptance of FOB value, which was supported by the Bank Realisation Certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared by the exporter. We also find that the Learned Additional Commissioner DRI has communicated with the Director of CSIR-CLRI, vide letter dated 6-1-2017. The relevant portion of the letter is reproduced as under : This refers to Directorate of Revenue Intelligence (DRI) letters dated 3-11-2016 and 6-12-2016 (copies enclosed). And your [letters/reports] 15-11-2016 and 14-12-2016 (copies enclosed). DRI had forwarded sealed samples of leather garments to CSIR for testing and report. DRI in its letter dated 6-12-2016 had requested for a detailed report on the following points: 1. Opening the seal of the sample, 2. Determination of the quality of the material used in the sample (declared as Leather Waist Coat with Artificial fur), 3. The constitution of the product i.e. grade of leather and type/nature of leather used, 4. The procedure for determining manufacturing cost to be indicated approximately. The second DRI letter dated 6-12-2016 was sent requesting for retesting with another set of sealed sample forwarded because the CSIR-CLRI report dated 15-11-2016 of the designated authority for the first sample tested appeared suspicious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared by exporter indicated in US dollar that has been converted into Indian rupees and two lines towards the cost breakup. Not only that the letter also suggested the cost of the export consignment to be extended to ₹ 500/- to ₹ 600/-. It is only after the receipt of this letter, which clearly indicates that DRI has influenced CLRI to give favourable report after changing the two initial reports as per their wish. Accordingly, we find that the report of CLRI is completely influenced by the price suggested by the DRI and the same cannot be taken as independent and fair evaluation of price of the export consignment. In any case, we also find that the CLRI is not an authorized agency to determine the prices of the export consignment, which can only be arrived in terms of Export Valuation Rule. The Learned Adjudicating Authority has not followed the Export Valuation Rule while rejecting the transaction value by adopting sequential application of Rules 4 to 6 of the Valuation Rules. Learned Adjudicating Authority in the impugned order has however held that in case the export consignment cannot be compared with any other export or identical or similar goods. It is also he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family. Explanation I. - The term person also includes legal persons. Explanation II. - Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other shall be deemed to be related for the purpose of these rules, if they fall within the criteria of this sub-rule. 3. Determination of the method of valuation. - (1) Subject to Rule 8, the value of export goods shall be the transaction value. (2) The transaction value shall be accepted even where the buyer and seller are related, provided that the relationship has not influenced the price. (3) If the value cannot be determined under the provisions of sub-rule (1) and sub-rule (2), the value shall be determined by proceeding sequentially through Rules 4 to 6. 4. Determination of export value by comparison. - (1) The value of the export goods shall be based on the transaction value of goods of like kind and quality exported at or about the same time to other buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exporter and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1). Explanation. - For the removal of doubts, it is hereby declared that - (i) This rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 6. (ii) The declared value shall be accepted where the proper officer is satisfied about the truth or accuracy of the declared value after the said enquiry in consultation with the exporter. (iii) The proper officer shall have the powers to raise doubts on the declared value based on certain reasons which may include - (a) the significant variation in value at which goods of like kind and quality exported at or about the same time in comparable quantities in a comparable commercial transaction were assessed. (b) the significantly higher value compared to the market value of goods of like kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inflated. 10. As per the policy also the credit has to be linked with the FOB price. Again we cannot ignore the fact that the PMV is also correctly fixed and is within the permissible limits i.e. 150% of AR4 value. The market value is fixed at ₹ 52.50. That has also been found to be in order by the Tribunal. Therefore, we accept the finding of the Tribunal in this behalf and reject the contention of the Learned Counsel for the Revenue . We have already held that the report of CSRI-CLRI is not the fair price of the goods as CLRI is not competent agency to decide present market value of export consignment. In holding so we place reliance on the decision of Hon ble Supreme Court in case of Commissioner of Customs, New Customs House, Mumbai v. Vishal Exports Overseas Ltd., [2007 (209) E.L.T. 331 (S.C.)], the paragraphs 9, 10 and 11 of which are relevant is as follows : 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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