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TMI Blog2008 (9) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the appellants M/s Jupiter Exports have filed four shipping bills for export of steel balls of size 1/8" arid 1/4" and declared the FOB value of the exports as well as the present market value (PMV). In pursuance of an intelligence, the consignment was detained by the officers of D for the purpose of checking the declared market value, which as per the intelligence was mis-declared on a very high side with intent to claim higher benefits of the DEPB scheme. It may be mentioned that under DEPB scheme, products attracting credit @ 15% or more was subject to the condition that the amount of credit shall not exceed 50% of the PMV of the export product and therefore, PMV has a bearing on the quantum of credit admissible under DEPB scheme. The PMV was therefore required to be declared in the shipping bills. The goods involved in the present consignment were declared as steel balls which were eligible for DEPB @ 22% and therefore, declaration of the PMV was essential. 3. Investigations revealed that one Shri Ramkishore Agarwal, Proprietor of M/s. Jupiter Exports has sent the above four consignments along with shipping documents to the CHA, Shri Milind C. Kadam and thereafter in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rijesh Kumar Maheshwari, Shri Milind G. Kadam and one Shri Ramesh Jain as to why penalty should not be imposed on them under Section 114(1) of the Customs Act, 1962. 5. The Advocate for the appellant M/s Jupiter Exports, Shri Ramkishore Agarwal and Shri Brijesh Kumar Maheshwari did not seriously disputed the PMV determined by the department on the basis of inquiries but his main argument was that in the case of misdeclaration of PMV, all that the department should have done was to restrict the DEPB in terms of the PMV determined by it but it cannot confiscate the goods as the provisions of Sec.113 (d) and (i) are not applicable in the present case. He referred to the various circulars issued by the CBEC in respect of the DEPB scheme wherein directions were issued that the consignments should not be held up for verification of PMV and that wherever PMV is found to be incorrect, a show cause notice should be issued within thirty days from the date of export failing which the declared PMV was required to be accepted. Later on further directions were issued that in case where fraud, collusion, suppression of facts is suspected, the inquiry period can be extended by the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is enough evidence to show that the PMV has been misdeclared. Since the PMV has been misdeclared, the goods became prohibited goods as the incorrect declaration of the value is violation of Rule 11 of Foreign Trade Regulations Rules, 1993 and of Sec.11 of the Foreign Trade Development and Regulations Act, 1992, which prohibits the export or import of goods in violation of the rules. This, in turn, would attract the provisions of Sections 11 and 113 of the Customs Act, 1962 as the goods imported or exported contrary to law and give the Customs authorities the power to investigate the correct value of the goods and for that purpose utilize the method prescribed under Section 14(1). The Foreign Exchange (Regulation) Act, 1973 also provide in Sec.18(1), that no goods can be exported unless the exporter furnishes to the prescribed authority a declaration in the prescribed form of inter alia the full export value of the goods supported by evidence. The prescribed authority under Sec. 18(1) is the Customs authorities. Under Sec. 67 of the 1973 Act, the restriction imposed by inter alia Sec.18 shall be determined to have been imposed under Sec.11 of the Customs Act and all the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have not been dealt with in the cases cited by the ld. Advocate for the appellants and therefore those case laws are not relevant, especially when circular No. 56/2002 makes it clear that show cause notice can be issued within five years as per the provisions of the Customs Act, 1962 in cases of fraud/collusion etc. 8. As regards confiscation of the goods, the main plea of the appellants is that the goods cannot be considered as prohibited goods as they have not been prohibited under any Act. For this purpose it would be useful to reproduce the definition of prohibited goods under the Customs Act, 1962. Prohibited goods have been defined under Sec. 2(33) of the Customs Act as under:- "...Prohibited goods means any goods the importer or the exporter of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with". This definition makes it very clear that prohibition is riot confined to Customs Act, 1962 but may be prescribed in any other law for the time being in force. The Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n those documents are in accordance with the terms of the export contract entered into with the buyer or consignee in pursuance of which the goods are being exported and shall subscribe a declaration of the truth of such statement at the foot of such Bill of Entry or Shipping Bill or any other documents." Therefore, this regulation also required that the importer has to declare the correct value and the description of the goods and in case he does not do so, it will result in contravention of Rule 11 and goods will be liable to confiscation besides penal action. The term value also include the present market value as is evident from Para 7.36 of Handbook of Procedures for the period 1997-2002. Para 7.36 of Handbook of Procedures reads as under:- "7.36 A Credit under DEPB and Present Market Value. - In respect of products where the rate of credit entitlement under DEPE Scheme comes to 15% or more the amount of credit against each such export product shall not exceed 50% of the Present Market Value (PMV) of the export product. At the time of export, the exporter shall declare on the shipping bill that the benefit under DEPB Scheme against the export product would not exceed 50% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obian ECS India Pvt. Ltd. (supra) and others are therefore not relevant as they were given prior to the Supreme Court decision in the case of Suresh Jhunjhunwala and have not discussed the DEPB circulars of 2001 and 2002 A similar view has also been taken by the Tribunal m the case of Olympia Overseas - 2008 (223) E.L.T. 114 (Tri.-Bang.). The decision in Olympia Overseas (supra) refers to other similar decisions of the Tribunal in the case of Sidhachalam Exports Pvt. Ltd. - 2007 (210) E.L.T. 539 (Tribunal), Deep International - 2003 (159) E.L.T. 608 (Tribunal) Dimension Overseas Pvt Ltd. - 2005 (181) E.L.T. 237 (Tribunal), Rioben International - 2006 (198) E.L.T. 55 (Tribunal), Ramesh Hegde - 2005 (179) E.L.T. 230 (Tribunal) etc. Thus, we hold that in case the FOB/PMV values are misdeclared the goods become prohibited goods and can be confiscated. 10. As regards the present case, the misdeclaration of PMV has not been disputed by the appellants and even otherwise there is ample evidence available to that effect in the form of statement of the CHA, who has stated that PMV was changed as per direction of Shri Ramkishore Agarwal, the statement of the suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities to determine the eligibility of the exports to DEPB if these goods are exported after release. Thus, the Commissioner cannot be said to have exercised function belonging to DGFT as has been made out by the ld. Advocate for the appellants. 11. As regards the penalty imposed on Shri Ramkishore Agarwal, Proprietor of M/s. Jupiter Exports, we find that he was himself involved in the over-valuation of export goods with a view to get higher DEPB and therefore, penalty is imposable on him and penalty of Rs. Seven Lakhs is considered to be adequate. Similarly, Shri Brijesh Kumar Maheshwari, partner of Ludha Udyog has aided and abetted M/s. Jupiter Exports in the over-valuation of the goods by issuing invoices for inflated value as per the directions of Shri Ramkishore Agarwal and therefore, we hold the imposition of penalty amounting to Rs. One lakh is quite adequate. Since Shri Ramesh Jam has admitted that he knew about the over-invoicing of the exports and has assisted in its export, we uphold the imposition of penalty of Rs. Fifty Thousand on him as well. All the four appeals are consequently dismissed. (Pronounced and dictated in Court on 17-9-2008) - - TaxTMI - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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