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of <h1>Tribunal refers case on mis-declaration penalties under Customs Act to larger Bench for clarity</h1> <h3>RAINBOW SILKS Versus COMMR. OF CUS. (EXPORTS), ACC, MUMBAI</h3> The Tribunal referred a case involving mis-declaration leading to confiscation and penalties under Sections 113(d) and 114 of the Customs Act, 1962 in ... Confiscation and penalty – Misdeclaration – Overvaluation to claim higher DEPB rates – In the case of Mercantile India (2007 -TMI - 1619 - CESTAT,CHENNAI), it was found that the quantity and value of export goods were misdeclared with intent to avail DEPB credit and accordingly confiscation was upheld - appellant's case is worse inasmuch as they consistently confessed to having overvalued the goods for claiming undue DEPB benefit and even produced documentary evidence of Present Market Value - Tribunal taken the contrary view to the applicability of Sections 113(d) and 114 of the Customs Act, 1962 in the case of export under DEPB scheme by the exporter - matter referred to the larger Bench to decide the issue 'whether the provisions of Sections 113(d) and 114 of the Customs Act, 1962 are invocable in the case of export under DEPB schemes or not?' Issues:Mis-declaration leading to confiscation and penalties under Sections 113(d) and 114 of the Customs Act, 1962 in the case of export under DEPB scheme.Detailed Analysis:1. Mis-declaration and Confiscation:The case involved mis-declaration of goods by an exporter under the DEPB scheme, where embroidered sarees were declared as fabric to claim a higher DEPB rate. The Customs authorities alleged mis-classification, leading to confiscation under Section 113(d) of the Customs Act, 1962. A redemption fine of Rs. 75,000 was imposed on the exporter for redemption of the goods. The exporter argued that the Customs authority lacked jurisdiction to order confiscation and penalties in DEPB export cases, citing precedents like Kanhaiya Exports (P) Ltd. v. Commissioner of Customs (Port), Kolkata. The Tribunal's decision was referred to a larger Bench to determine the applicability of Sections 113(d) and 114 in DEPB export cases.2. Penalties Imposition:The Customs authority imposed penalties on both the exporter and the Customs House Agent (CHA) under Section 114 of the Customs Act, 1962. The exporter contended that mis-declaration for higher DEPB benefits did not warrant penalties, relying on cases like Texport India v. Commissioner of Customs, Mumbai. However, the Department argued that mis-declaration of goods to obtain higher DEPB benefits constituted an offense under Section 50 of the Customs Act, justifying penalties. Precedents like Ramesh Jain v. Commissioner of Customs (G), Mumbai were cited to support the imposition of penalties in cases of overvaluation for DEPB claims.3. Contrasting Views:The Tribunal noted conflicting views on the applicability of Sections 113(d) and 114 in DEPB export cases. While the exporter's counsel cited cases supporting the non-applicability of these sections, the Department relied on precedents upholding penalties for mis-declaration related to DEPB benefits. The Tribunal decided to refer the matter to a larger Bench to resolve the issue regarding the invocation of Sections 113(d) and 114 in DEPB export cases, highlighting the need for clarity and consistency in such matters.4. Decision and Referral to Larger Bench:After considering the arguments and precedents presented by both sides, the Tribunal found a divergence in views on the application of Sections 113(d) and 114 in DEPB export cases. Consequently, the matter was referred to a larger Bench for a definitive decision on whether these provisions are applicable in cases of export under the DEPB scheme. The Registry was directed to place the issue before the Hon'ble President to constitute a larger Bench for resolving the legal uncertainty surrounding the applicability of Sections 113(d) and 114 in DEPB export cases.This detailed analysis encapsulates the legal nuances and arguments presented in the judgment, highlighting the key issues of mis-declaration, confiscation, penalties, conflicting views, and the decision to refer the matter to a larger Bench for clarification.
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