2007 (8) TMI 64 - AT - Customs

Export goods value upheld, burden of proof on Revenue not met. Appeals allowed, penalties overturned.

The majority decision concurred that the declared value of export goods could not be rejected without evidence of lower prices, and the burden of proving ... EXIM - Department contended that appellant had made overvaluation of goods (CD Roms) for the purpose of claiming higher DEPB benefit - Matter allowed with consequential relief in the absence of any evidence which support the contention of department Issues Involved:1. Valuation of export goods.2. Over-valuation allegations.3. DEPB credit entitlement.4. Imposition of penalties.5. Jurisdiction of Customs authorities.Detailed Analysis:1. Valuation of Export Goods:The primary dispute revolved around the valuation of 60,000 CD ROMs exported by M/s. Advance Exports to M/s. Wajilam Export (Singapore Pvt. Ltd., Singapore). The declared value was US $18 per CD ROM, supported by invoices from the Indian manufacturer, M/s. Padmini Polymers Pvt. Ltd., at Rs. 750 per piece. The goods were cleared for export under Section 51 of the Customs Act.2. Over-Valuation Allegations:Subsequent investigations by the Revenue suggested over-valuation. It was found that part of the export realization was received from M/s. G.A. International, Dubai, managed by Shri Rajesh Adani, a partner of M/s. Advance Exports. Payments made by M/s. Advance Exports to M/s. Padmini Polymers were deposited into the bank account of M/s. Adani Exports Ltd., a sister company. The Revenue argued that this indicated over-valuation and manipulation of export value.3. DEPB Credit Entitlement:The Commissioner's order reduced the FOB value of the exported CD ROMs, resulting in a reduction of DEPB credit. The appellants contended that the declared value was within 150% of the market price, as per Board Circular No. 69/97-Cus. The Tribunal in similar cases had accepted the purchase price from M/s. Padmini Polymers, and the appellants argued that the entire realization of the export value was received, albeit from different sources.4. Imposition of Penalties:Penalties were imposed on M/s. Advance Exports, Shri Rajesh Adani, M/s. G.A. International, and Shri Vinod Shah. The appellants argued that the transactions were legitimate and that penalties were unjustified. The Tribunal found no evidentiary value in the Revenue's claim that the deposit of money in the bank account of M/s. Adani Exports indicated over-valuation.5. Jurisdiction of Customs Authorities:The Tribunal noted that M/s. G.A. International, being a company operating from Dubai, was beyond the jurisdiction of the Customs Act. Therefore, the imposition of penalties on M/s. G.A. International and its partners was not in accordance with the law.Majority Decision:The majority decision, concurred by the Vice-President, found that:- The supplier's price of Rs. 642 to Rs. 730 per piece was not disputed.- As per CBEC Circular No. 69/97-Cus., the FOB value within 150% of the manufacturer's price cannot be rejected.- The declared value could not be rejected under Section 14 of the Customs Act without evidence of contemporary exports at a lower price.- The foreign exchange realization was as per bank certificates, and the remittance from M/s. G.A. International was on behalf of M/s. Wajilam Exports.- The burden of proving over-valuation lay with the Revenue, which had not been discharged.Final Order:The impugned order was set aside, all appeals were allowed, and consequential relief was granted. The penalties imposed were also set aside, upholding the appellants' contentions and recognizing the legitimacy of the transactions and valuations declared.