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TMI Blog2024 (1) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... her than the transaction value has to be adopted step-by-step approach on the basis Rule 3 ibid, and after rejection of transaction value as per Rule 8 ibid. In order to establish the allegation of over-valuation of export goods, it is required to go by an evidence or fact indicating that there was a mis-declaration of value at the time of exports in the shipping bills and the value was re-determined as per the above legal provisions. It is not the case of Revenue that the FOB value of export goods declared in the shipping bills was different from the prices indicated in the invoices. The FOB value and the invoice value of the export goods are same and there is no mismatch. There is not even an iota of evidence produced, either in the form of data relating to value of exports of goods of like kind and quality from the data base maintained by the department, to establish prima facie case of over valuation to reject the transaction value. There is no discussion in the order of the original authority or in the impugned order of the Commissioner (Appeals) as to whether in valuation of export goods each of the Rules have sequentially been approached as provided therein and how they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d over-valuation and mis-declaration of export goods. It is already seen that in the earlier round of litigation, the appellants had prayed for provisional release of the export goods covered under detention by the Customs authorities, and they filed an appeal on the ground that the order of provisional release under Section 110A ibid, was too harsh on them. On perusal of the Circular No 01/2011-Customs dated 4th January 2011, it is found that the Government had intended to alleviate the difficulties faced by exporters which was arising on account of detention of export goods and consequential delays in fulfillment of export order, payment of demurrage charges by exporters to the Custodians, reducing the period of detention to the minimum, by streamlining the customs procedure of provisional release/exportation of seized goods/goods under investigation on account of mis-declaration in terms of quantity and value etc. We find that by applying the above instructions to the facts of the present case, it is clear that the export goods which were suspected of mis-declaration and where such declaration is to be confirmed and further enquiry/confirmatory test is required (as it is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 42,32,438/- and Refund of State Levies (ROSL) of Rs. 6,91,458/- being taxes/duties suffered on the export products. The goods covered by the shipping bills were duly assessed and cleared for export by Customs following the due procedure. The drawback, IGST refund and ROSL amounts as indicated above have been paid to the appellants after grant of Let Export Order and shipment of the goods for export. 2.2 Subsequent to the clearance of the goods for exports, on the basis of certain intelligence that the exporter have mis-declared the description of the goods and over valued the exports in order to avail of inadmissible higher amount of drawback, refund of IGST, ROSL, the Commissioner (General), JNCH, Nhava Sheva had directed the custodian CFS-JWR, Panvel to put on hold the goods exported by the appellants vide his letter dated 25.10.2018. However, it was reported by the Custodian that the goods have already been gated out from Container Freight Station (CFS) and were found to have been already shipped on board to Lagos by Maersk Line India Pvt. Ltd., in container No. MSKU0011063 on 30.10.2018. The shipping line was then directed by the Commissioner vide letter dated 7.11.2018, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Senior Advocate appearing for the Respondents states that in case the appeal is filed within a period of two weeks, the Respondents will not raise an objection regarding limitation. The Tribunal will take note of this stand of the Respondents. 2.6 As per the order of the Hon ble Bombay High Court, appellants had preferred an appeal before the Tribunal within two weeks time. Taking the note of Hon ble High Court s Order, the said appeal was admitted and held maintainable by the Tribunal vide its Order No. I/07/2020 dated 27.10.2020 . Subsequently, after hearing both the parties, this Tribunal had passed the Final Order No. A/85190/2021 dated 29.01.2021 in the first round of litigation. The extract of the relevant paragraphs of the above order is given below: 4.5 The goods were examined by the departmental officers and the samples drawn on 10.04.2019, as stated by the appellants in their communication dated 12.04.2019, and not disputed by the revenue. In para 2 of their letter dated 04.01.2021, revenue states as follows: 2. In this regard, it is to inform that on the basis of certain intelligence goods being exported vide 11 shipping bill No. 837103 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, it is to that this office will follow Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 which states that- The Customs Cargo Service provider shall Subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer as the case may be: Taking the note of the above submission made by the revenue before us and admitting that these goods have been detained by them, we are of the opinion that these charges should be waived and proper certificate in this regards be issued by the concerned authorities. 5.1 In view of the discussions as above, the appeal is disposed of as per our observations in para 4.11, 4.12 4.13, supra. 2.7 In pursuance to the above order of the Tribunal dated 29.01.2021, the Additional Commissioner of Customs, JNCH, Nhava Sheva being the original authority had passed an Order-in-Original No. 593/2020-21/ADC/NS- II/JNCH/CAC dated 27.02.2021, wherein the assessable value was redetermined as Rs. 2,34,42,440/- under Rule 6 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arable prices without considering these factors is not a fair comparison and not supported by law. The domestic value of goods cannot be used to redetermine the FOB value of the export goods. In support thereof they relied upon the decision of the Tribunal in the case of J.S. Designers Limited Vs. Commissioner of Customs, ICD Dadri (Noida) 2018 (364) E.L.T. 628 (Tri.-All.). 3.3. It is also reiterated by the learned Advocate that the customs authorities have been time and again made aware of the fact that the appellants have already realized the amounts indicated in the shipping bills in respect of exports from its purchasers abroad through banking channels and the consignee was awaiting for export goods. However, despite production of evidence in the form of e-BRCs for the receipt of payments in convertible foreign exchange as per the FOB value of goods indicated in the invoices and shipping bills, these goods have been detained/seized on the ground of over valuation of goods on the basis of market survey. Hence, he claimed that such an action of Customs is contrary to the law and instructions of the department and thus he stated that the impugned order is not sustainable. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation of export goods, and for determination of the fact whether it amounted to over valuation or not; and the proper determination of consequential benefits available to the exporter upon exportation of such goods; and deciding on the basis of the facts of the case, as to whether the export goods are liable for confiscation and whether the appellants are liable for imposition of penalties under the Customs Act, 1962. In this regard, we also find that the original authority, on the basis of Final Order No. A/85190/2021 dated 29.01.2021 passed by this Tribunal in an earlier appeal in the very same case, have adjudicated the case by listing out the issues for determination. The relevant paragraph of the Order-in- Original dated 27.02.2021 is extracted below for ease of reference: 25. I find that the following issues in the instant case:- i) Whether the description of goods and value thereof declared by the exporter in the S/Bill are correct or otherwise; ii) Whether the declared total FOB value of Rs. 6,40,08,137/- in respect of goods covered under 11 shipping bills are liable to rejection under Rule-8 of Customs Valuation (Determination of Value of Export Goods) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orter, the proper officer shall intimate the exporter in writing the ground for doubting the truth or accuracy of the value declared in relation to the export goods by such exporter and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1). Explanation . - (1) 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 inquiry 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rand; (c) an amount towards profit. Rule 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. Rule 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. 8.1. From the records of the case, we find that the appellants have declared the FOB value of export goods as given in their commercial invoices, which is the transaction value. Further, submitting the declaration form in terms of Rule 7 above, is primarily the responsibility of the exporter. In the present case, it is not in dispute that the values indicated in the Shipping Bills were matching the value particulars declared in the commercial invoices. Further, any exercise in re-determination of value other than the transaction value has to be adopted step- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order or contract with overseas buyer; the exporter had admitted in his written submission dated 24.02.2021 that they had received only part payment for six S/Bs so far; and the goods were mis-declared for size and composition. Thus, he concluded that no comparative exports could be relied upon for redetermining the value and hence it cannot be determined under Rule 4 and Rule 5 ibid. However, he relied upon the market survey report of the officers of CIU SIIB of Customs conducted on 17.05.2009, as it has been conducted in the presence of power of attorney holder of exporter and these were market value of the goods of like kind and quality. Further, the impugned order also reiterated the grounds relied upon by the original authority for adjudging the confirmed demands and for upholding the re- determination of export value, as the investigation officers have followed the provision of Customs Valuation (Determination of Value of Export Goods) Rules, 2007 and have proceeded sequentially and resorted to Rule 6, i.e., market survey; and as per the market survey report, which was conducted along with the representative of the exporter. Thus, the impugned order had re-determined the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68452.00 6 8397455/22.10.2018 5758022.16 INDB0000000001264222 Dated 13.07.2020 09.07.2020 79311.60 79311.60 7 8397405/22.10.2018 5771614.90 INDB0000000001263271 Dated 11.07.2020 08.07.2020 79561.50 79561.50 8 8397409/22.10.2018 5816675.70 INDB0000000000971883 Dated 05.03.2019 02.03.2019 80119.50 80119.50 9 8397442/22.10.2018 5732277.63 INDB0000000000971797 Dated 05.03.2019 02.03.2019 78957.00 78957.00 10 8397410/22.10.2018 5790169.44 INDB0000000000930657 Dated 22.01.2019 21.01.2019 79754.40 79754.40 11 8397426/22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019, were taken to the local market at Chakala street, Masjid Bundar, Mumbai on 17.05.2019. It is seen from the said market survey report, that the identical goods to that of representative samples were not found in the market and upon showing the samples, the prices indicated in three shops were noted by the Customs officers, as the market value. We further find that the wholesalers from whom the market value was taken as a basis, have stated that accurate price cannot be quoted and they refused to give any written quotation, estimates for the prices mentioned by them. Further the said wholesalers have also informed the Customs officers that the price may vary depending upon the quantity and the duration/time of ordering the goods. Though it is mentioned that the visiting cards of the wholesalers were placed in file for reference, no details to establish the credentials and that the prices quoted are in respect of goods of like kind and quality were found in the said markets survey report. The copy of the said market report, for better appreciation of the facts, is reproduced below: 8.4. In view of the above factual details on the issue of valuation of export goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se new Rules, due care has to be taken by Customs to facilitate the movement of bonafide export goods which is vital for the country's economic growth. The relevant portion of the said CBEC Circular dated 09.10.2007 is extracted below: 2. The Customs Valuation (Determination of Value of Export Goods) Rules 2007 have been framed in a format similar to the Valuation Rules for the imported goods. Conceptually also, acceptance of Transaction Value for export goods has been emphasized in the said rules, in as much as Rule 3 specifically provides for it. 3. Rule 3 of the said rules also stipulates that the Transaction Value for export goods shall be accepted even where buyer and seller are related, provided that the relationship did not influence the price of the goods. Where the relationship is found to influence the price, as determined by the proper officer on receipt of further information from the exporter, the value of the export goods shall be determined by proceeding sequentially through rules 4 to 6 of the said Valuation Rules. The persons who shall be deemed to be 'related' have been specified in Rule 2(2) of the said Valuation Rules, and this provision ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or having doubt about the truth or accuracy of the declared value. 7. While raising doubt about truth or accuracy of the declared value in terms of Rule 8, the proper officer shall issue a query memo specifying reasons for such doubt. Meanwhile, the goods will be released for export against a simple undertaking after drawl of representative sample as indicated in para 5. The decision to initiate the process of investigation into valuation aspects, if any, shall be taken at the earliest at the level of Joint/Additional Commissioner. 8. In a case where transaction value cannot be determined or the declared value is rejected under Rule 8, and export value has to be determined by comparison in terms of Rule 4, the proper officer shall take utmost care in selecting an export product for an in-depth inquiry. The proper officer will make the adjustments objectively on the basis of the relevant factors, some of which have been illustrated at sub rule (2) of Rule 4. 9. Where the value has to be determined by Computed value method under Rule 5, the proper officer shall give due consideration to the cost-certificate issued by a Cost Accountant or Chartered Accountant or Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order is not supported by any evidence or factual detail, to fasten the penal liability for such over valuation on the appellants and thus the impugned order rejecting the transaction value by confirming the re-determination of assessable value of export goods arrived at by the original authority in his order dated 27.02.2021, is contrary to the legal provisions and the manner provided under Customs Valuation (Determination of Value of Export Goods) Rules, 2007, and thus the same is not legally sustainable. 11. From the records of the case, it is seen that the various test reports given by the laboratories of Textile Committee provided the results in the form of identification of fibre blend composition (%) based on the dry mass with % addition for moisture as per IS 3416:1988 and the details of the sample, whether it is woven or knitted or non-woven . In order to illustrative the above, we have seen that in the case of S/B No. 8397436 dated 22.10.2018, the description of the one of goods as declared in the shipping bill was Boys 3 PC set ; further, on testing 3 representative samples, the test report given by Textile Committee laboratory vide No. 025306192 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming to a conclusion that such restriction of the drawback and other export benefits are in compliance with the legal provisions of the Customs Act, 1962 and the relevant rules made thereunder. Thus, we are of the considered view that conclusion arrived at in the impugned order for restricting the drawback to Rs. 5,25,786/- and other eligible refunds of IGST to Rs. 14,42,877/-, ROSL to Rs. 2,67,997/-, MEIS benefits to Rs. 4,78,995/- are not sustainable. However, having held that the overvaluation of export goods not having been established as per the legal provisions as discussed in paragraphs 8.1 to 10 above, there is no need for redetermination of eligible export benefits under various schemes except in respect of drawback, where on account of the results obtained in test reports received subsequent to the export of goods, the export goods may have to be classified under appropriate classification in the First Schedule to the Customs Tariff on the basis of such test reports given by the laboratories of Textile Committee and the corresponding Drawback Rates, if it varies, then the same have to be applied for determining the eligible amount of drawback on export of goods. Hence, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instructions issued by the Commissioner of Customs (General), JNCH was on the shipping lines and that the goods had already been made available for further examination by Customs, we do not find it necessary to examine the same here. 12.2 Though both sides have not raised the issue, as a matter of objection, that the subject case deals with the drawback, and thus whether the Tribunal has jurisdiction over it or not, we feel that for the purpose of record it is preferable to make a mention on the correct legal position on the basis of the judgement of the Hon ble Apex Court. The facts of the present case reveal that the main controversy that is required to be addressed is overvaluation and mis-declaration of export goods and consequential export benefits available to the exporter. Thus recovery of drawback, if any, as being paid in excess is only the consequence and not the issue for determination in this case. Thus by following the judgment of Hon ble Supreme Court in the case of Asean Cableship PTE Ltd. Vs. Commissioner of Customs 2022 (380) E.L.T. 4 (S.C.), we hold that the present appeals are maintainable before the Tribunal. 13. The impugned order confirming the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the market survey report, which was conducted along with the representative of the exporter, redetermining the value of goods covered under 11 S/bills to Rs. 2,34,42,440/- as against declared FOB value of Rs. 6,40,08,137/-. 16 . It is a matter of fact that it is proved beyond doubt that the overvaluation was deliberate acts on the part of the exporter which is rendered the goods liable for confiscation under Section 113(i) and 113(ia) of the Customs Act, 1962 17 . In the instant case, Shri Mohd. Sadique Muchhada, Partner and Power of Attorney holder of M/s S G International is also in-charge of the affairs of the company and solely responsible for the conduct of the company; he has used the documents which are false and incorrect with reference to the value and description, classification with malafide intention to avail and undue/excess benefits. It is evident that the omission and commission on the part of partner have contravened the provisions of Section 114AA of the Customs Act, 1962. Therefore, the original adjudicating authority is fully justified in imposing a personal penalty on the partner other than the penalty on the firm. The above extract of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All Commissioners of Customs Central Excise. All Commissioners of Customs Central Excise (Appeals). Subject : Provisional release of export - goods detained for investigation - reg. *** Sir / Madam, Attention is invited to the Board Circular No. 33/2005-Customs dated 02.08.2005 which contains the instructions regarding provisional release of goods entered for exportation and is seized on the ground of mis-declaration in terms of quantity and value. 2. Instances have come to the notice of the Board that export consignments continue to be detained and not allowed clearance on provisional basis on account of pending test reports/investigations for alleged mis-declaration in terms of quantity, value and description of the goods. In one case it was reported that the detained goods were not allowed to be exported provisionally on the ground that Board s Circular referred above provides for provisional release of only the seized goods. 3. In this regard it is observed that inordinate detention of the seized goods entered for exportation results in delays in fulfillment of export order and at times cancellation of such orders. Detention of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the test report/finalisation of enquiry and final decision in the matter. The Bond executed for provisional release shall contain a clause to this effect, (d) Export goods detained for purpose of tests etc. must be dealt with on priority and the export allowed expeditiously unless the prohibited nature of goods is confirmed. Continued detention of any export goods in excess of 3 days must be brought to the notice of the Commissioner of Customs, who will safeguard the interest of the genuine exporters as well as the revenue. 5. A suitable public notice for information of trade and standing order for guidance of staff may be issued. 6. Difficulty faced, if any, in implementation of this Circular may be immediately brought to the notice of the Board. On perusal of the above CBEC instructions, we find that the Government had intended to alleviate the difficulties faced by exporters which was arising on account of detention of export goods and consequential delays in fulfillment of export order, payment of demurrage charges by exporters to the Custodians, reducing the period of detention to the minimum, by streamlining the customs procedure of provisional release/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute that against those exports entire remittance was received by the respondents. The respondents have been claiming duty drawback and other benefits in respect of these exports which were also released to the respondents. 2. However, on the basis of the alleged intelligence received in the Bombay Zonal Unit of Directorate of Revenue Intelligence that the exporter was engaged in the fraudulent exports of low quality readymade garments from Nhava Sheva Sea Port by resorting to overvaluations in order to claim undue export benefits, investigations were carried out and on that basis, show cause notice was issued to the respondents which resulted in imposition of penalty etc. The respondents filed appeal there against before the Customs Excise Service Tax Appellate Tribunal (CESTAT). The CESTAT allowed this appeal thereby quashing the deduction and the penalties etc. [2008 (221) E.L.T. 395 (Tri. - Mumbai)]. This judgment of CESTAT is under challenge in these appeals. 3. A perusal of the judgment of the CESTAT shows that the entire material placed before it has been discussed and on that basis, a finding of fact is arrived at to the extent that the allegations of f ..... 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