2006 (7) TMI 473 - AT - Customs

Tribunal stays penalties, examines jurisdictional issue on deemed export under Foreign Trade Act

The Tribunal granted a waiver of pre-deposit amounts and stayed the recovery of penalties pending a regular hearing to further examine the jurisdictional ... Stay/Dispensation of pre-deposit - Drawback on deemed export - Penalty Issues:1. Imposition of penalties under Sections 114(i) and 114(iii) of the Customs Act, 1962.2. Claim of Drawback for Wall Coverings exported to a Special Economic Zone (SEZ).3. Reliance on declarations made to Dubai Customs for valuation.4. Jurisdictional issue regarding deemed export under the Foreign Trade (Development and Regulations) Act.5. Stay of penalties and pre-deposit pending regular hearing.Analysis:1. The appellants were penalized under Sections 114(i) and 114(iii) of the Customs Act, 1962 by the Commissioner for exporting Wall Coverings (Article of Silk) which were deemed liable for confiscation under Sections 113(d), 113(i), and 113(k) of the Act. Additionally, a penalty was imposed on the other appellant under Section 114(iii) of the Customs Act.2. The goods were supplied by the appellants to a Special Economic Zone (SEZ) as a Domestic Tariff Area (DTA) supplier. The appellants claimed Drawback under Sub-serial 62.19 of the Drawback Schedule, but the claim was not sanctioned as the claimed amount was significantly higher than the actual value of the exported goods based on Dubai Customs documents.3. The Tribunal noted that relying solely on declarations made to Dubai Customs was not sufficient to reject the Drawback claim as the valuation declared during the goods' entry into the SEZ might not necessarily be incorrect. The concept of deemed export under the Customs Act, 1962 was clarified to be under the Foreign Trade (Development and Regulations) Act, administered by the Ministry of Commerce. The issue of jurisdiction raised by the appellant regarding deemed export required further detailed examination during the regular hearing.4. Considering that jurisdiction was a fundamental issue, the Tribunal ordered a full waiver of the pre-deposit amounts and stayed the recovery of penalties pending the regular hearing to delve into the jurisdictional matter further.5. The Tribunal disposed of the applications by granting a waiver of pre-deposit amounts and staying the recovery of penalties until the regular hearing, emphasizing the need to thoroughly examine the jurisdictional issue related to deemed export under the Foreign Trade (Development and Regulations) Act.