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TMI Blog2020 (11) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... tting clearance and loading of the goods for exportation. In the present case, the proper officer seized the goods as he had reason to believe that the goods were liable to confiscation under the provisions of the Customs Act for the reason that the goods entered for exportation did not correspond with what was mentioned in the shipping bills. These facts have been stated in the seizure memo dated June 3, 2020. In the instant case, the shipping bills are dated May 23, 2020. The panchnama recovery memo dated June 3, 2020 refers to the earlier panchnama proceedings June 1, 2020, wherein a shortage of 1872 pieces was detected and samples of the export product were also taken for conducting a market enquiry and obtaining opinion of traders/ dealers of such type of garments. There is no illegality in conducting a local market survey to gather the valuation of the goods for the purpose of exercising power under section 110(1) of the Customs Act. The panchnama proceedings dated June 3, 2020 record that there was a shortage of 1872 pieces and the export goods were also grossly overvalued. The value declared and the average price arrived at on the basis of the opinion of the three dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Customs Act and it is neither possible nor permissible at the stage of seizure to determine this issue. Appeal allowed - decided in favor of appellant. - Customs Appeal No. 70210 of 2020 - 51626/2020 - Dated:- 10-11-2020 - Hon ble Mr. Justice Dilip Gupta, President And Hon ble Mr. C.L. Mahar, Member (Technical) For the Appellant : Shri Vishwajit Singh, Advocate For the Respondent : Shri Sunil Kumar, Authorised Representative ORDER JUSTICE DILIP GUPTA : This Appeal has been filed by the Commissioner of Customs (Preventive), Lucknow the Appellant , to assail the order dated June 10, 2020 that was passed by the Commissioner (Appeals), Customs, GST Central Excise, Lucknow the Commissioner (Appeals) . The said order of the Commissioner (Appeals) sets aside the order dated June 03, 2020 passed by the Superintendent, Customs, ICD, Panki, Kanpur the Superintendent , seizing the goods under section 110(1) of the Customs Act, 1962 the Customs Act . 2. The Appeal was filed before a Bench of the Appellate Tribunal at Allahabad on June 22, 2020. It has been transferred to the Principal Bench of the Tribunal at Delhi by judgment and order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shipping bills bearing numbers 2807972 and 2808169 dated May 23, 2020 were examined by the Officers of Customs at Kanpur on June 1, 2020 and on examination of the goods, it was noticed that there was a mis-match in the quantity declared in the invoice and the quantity actually found in the shipping bill bearing no. 2808169. Samples were also drawn for a market opinion regarding the value of the export goods and a panchnama was prepared on June 01, 2020. 5. On record is also a panchnama recovery memo dated June 03, 2020. It states that the panchas were called on June 03, 2020 at Indian Container Depot (ICD), Panki, Kanpur, to witness further proceedings required to be undertaken under the provisions of the Customs Act pursuant to the panchnama proceedings dated June 01, 2020. Shri Jai Prakash Yadav, H Card Holder, was present as an authorised representative of the Appellant in the proceedings connected with the shipping bills. Thereafter, the panchas along with the Officers of the Customs and Shri Jai Prakash Yadav reached the Customs Bonded Warehouse, where the cargo covered by the two shipping bills was kept. The panchnama gives details of the two shipping bills. It mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 138336 115868802/- The goods mentioned at serial no.1 2 of above table have been recovered during panchnama proceedings dated 03/06/2020 are deficient in quantity by 1872 pieces in respect of export invoice number BEH/06/2020 and both the consignments appears to be grossly overvalued rendering the goods liable for confiscation under Section 113(i) of Customs Act, 1962 for contravention of Sec.50(2), Sec.75 read with Rule 3 of Customs, Central Excise Drawback Rules, 2017 and Sec.14 of Customs Act, 1962 are seized under Sec.110 of the Customs Act, 1962. (emphasis supplied) 9. It is against this aforesaid seizure memo dated June 03, 2020 issued by the Superintendent of Customs that the Respondent-M/s Bushrah Export House, Lucknow, filed an appeal before the Commissioner (Appeals) on June 08, 2020 and made a request that the Appeal should be decided on merits without personal hearing. The Commissioner (Appeals), by order dated June 10, 2020, set aside the seizure memo and allowed the Appeal. The relevant portion of the order passed by the Commissioner (Appeals) is reproduced below : 5 . I have gone through the case record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso been disregarded without any reason. (iii) Hence, in presence of unchallenged transaction value and unchallenged GST paid purchase invoice value, rushing to the town for the so called local market opinion is arbitrary and unreasonable. 7. Hon ble CESTAT in the case of KANAK METAL INDUSTRIES, reported at 2012 (275) ELT 115 (Tri.-Del) has clearly held that the exporter is not bound to fix FOB value at present market value. This view has been confirmed by Hon ble Supreme Court, reported at 2013 (293) ELT A25 (SC). 8. Section 110 of the said Act, requires reasonable belief of confiscability, for seizure of any consignment. From the facts and circumstances of the case, the reasonable belief is not formable. Therefore, the impugned order of seizure is not legally sustainable and the same is set aside. The appeal is allowed. (emphasis supplied) 10. Shri Sunil Kumar, learned Authorized Representative of the Department, made the following submissions to assail the order passed by the Commissioner (Appeals) :- (i) The Commissioner (Appeals) committed an illegality in setting aside the seizure memo dated June 03, 2020; (ii) The proper officer had reason to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stage; (ii) The allegation that the consignment appeared to be grossly over-valued, rendering the goods liable to confiscation is not correct. The Respondent had purchased the goods through proper GST invoice, where the declared price of the goods is between ₹ 620/- to ₹ 950/- and the declared price in the shipping bill is between ₹ 700/- to ₹ 1150/-. It cannot, therefore, be said that the consignment was grossly over-valued. The Customs officers have not challenged the transaction value of the goods nor made any effort to verify the GST invoices; (iii) The Customs Officers should have accepted the value of the export goods as the transaction value of such goods, as is contemplated under section 14(1) of the Customs Act and the value declared by the Respondent could not have been rejected, except in accordance with the procedure prescribed under section 14 of the Customs Act and the Export Valuation Rules; (iv) In any view of the matter, the determination of the transaction value through a local market survey could have been adopted only as a last resort when the value of the export goods could not be determined under rules 4 and 5 of the Export V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, the goods shall be returned to the person from whose possession they were seized: PROVIDED that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform the person from whom such goods were seized before the expiry of the period so specified: PROVIDED FURTHER that where any order for provisional release of the seized goods has been passed under section 110A, the specified period of six months shall not apply. 15. A perusal of sub-section (1) of section 110 of the Customs Act reveals that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. 16. Section 113 of the Customs Act deals with confiscation of goods attempted to be improperly exported. Section 113(i), which is relevant, is reproduced below : 113. Confiscation of goods attempted to be improperly exported, etc: The following export goods shall be liable to confiscation: (a) to (h) xxxx xxxx xxxx (i) any goods entered for exportation which do not correspond in respect of value or in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter has also to ensure about the authenticity and validity of any document supporting it and compliance with the restriction or prohibition, if any, relating to the goods under the Customs Act or under any other law for the time being in force. It is only where the proper officer is satisfied that the goods entered for export are not prohibited goods and the exporter has paid duty, that the proper officer may make an order permitting clearance and loading of the goods for exportation. Section 110(1) of the Customs Act provides that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. It is section 113 of the Customs Act that deals with confiscation of goods attempted to be improperly exported. Amongst others, it provides that any goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under the Customs Act, shall be liable to confiscation. 19. In the present case, the proper officer seized the goods as he had reason to believe that the goods were liable to confiscation under the provisions of the Customs Act for the reason tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that confiscation would definitely result under section 113(i) of the Customs Act for that would be determined only when proceedings are initiated under section 124 of the Customs Act after issuance of a show cause notice and a proper opportunity is given to the exporter of making a representation in writing and of being heard in the matter, but the Commissioner (Appeals) completely misunderstood the provisions of section 110(1) of the Customs Act and proceeded to examine the seizure as if it was an order of confiscation under section 113(i) of the Customs Act. 22. Learned Counsel appearing for the respondent, however, submitted that the Department has not shown that a prima facie case existed for exercise of powers under section 110(1) of the Customs Act. The phrase reason to believe means that even though formation of opinion may be subjective, but it must be based on materials on record and it cannot be arbitrary, capricious or whimsical. Learned Counsel also submitted that the Supreme Court has time and again explained the meaning of the phrase reason to believe . 23. In Sheo Nath Singh v/s CIT (1972) 3 SCC 234 , the Supreme Court observed that the belief must be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any event should be treated as a seizure in terms of Section 110(1) of the Act. (emphasis supplied) 26. The Delhi High Court, in the above mentioned decision, referred to the decision of the Punjab and Haryana High Court rendered in M/s Om Udyog v/s Union of India and Others 2010 (254) ELT 547 (Punjab and Haryana High Court) . The Punjab and Haryana High Court observed as follows:- 10. We called upon learned counsel for the respondents to show the provision of law under which the goods were detained. It is not the case of the respondents in the reply or otherwise that power of seizure had been invoked as formation of satisfaction under Section 110 of the Act, which is condition precedent for exercise of such power, has not been shown. As held in Mapsa Tapes, exercise of power of seizure requires recording of reasons before exercise of such power. Only question is whether detention could be justified pending clearance under Chapter VII of the Act. Section 47 of the Act provides for clearance of goods on payment of duty, unless goods are prohibited goods. It is not the case of the respondents that goods are prohibited goods . It is also not their case that du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while the officers of the Customs Department may be justified in verifying whether goods were prohibited or not or were otherwise liable to confiscation, but they are not immune from accountability against abuse of powers by detaining the goods for an indefinite period on the ground that they were in the process of checking the value or nature of the goods. 29. In the instant case, as noted above, the shipping bills are dated May 23, 2020. The panchnama recovery memo dated June 3, 2020 refers to the earlier panchnama proceedings June 1, 2020, wherein a shortage of 1872 pieces was detected and samples of the export product were also taken for conducting a market enquiry and obtaining opinion of traders/ dealers of such type of garments. There is no illegality in conducting a local market survey to gather the valuation of the goods for the purpose of exercising power under section 110(1) of the Customs Act. The panchnama proceedings dated June 3, 2020 record that there was a shortage of 1872 pieces and the export goods were also grossly overvalued. The value declared and the average price arrived at on the basis of the opinion of the three dealers were also indicated in the panch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration is at what stage the provisions of section 14 of the Customs Act and the provisions of rule 3 of the Export Valuation Rules have to be applied. Section 110(1) of the Customs Act empowers the proper officer to seize the goods if he has reason to believe that goods are liable to confiscation. As noticed above, the goods attempted to be improperly exported are confiscated under section 113 of the Customs Act after providing an opportunity as contemplated under section 124 of the Customs Act. It is at that stage that it is determined whether the goods entered for exportation actually correspond in respect of value or in any material particular with the entry made in the shipping bill. The Commissioner (Appeals) completely failed to appreciate the provisions of section 110(1) of the Customs Act and proceeded to examine the matter as if he was examining an order of confiscation under section 113(i) of the Customs Act and not an order of seizure of goods under section 110(1) of the Customs Act, where the proper officer should only have reason to believe that the goods are liable to confiscation. 34. Thus, for both the issues relating to the valuation of the goods or short ..... X X X X Extracts X X X X X X X X Extracts X X X X
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