2008 (9) TMI 327 - AT - Customs

Tribunal Upholds Confiscation & Penalties for Misdeclaration of PMV under Customs Act

The tribunal upheld the confiscation of goods and penalties imposed on involved parties in the case involving misdeclaration of Present Market Value (PMV) ... Overvaluation – claim of higher DEPB – confiscation of export goods - there is ample evidence available to that effect in the form of statement of the CHA, who has stated that PMV was changed - invoices of identical goods sold by Ludha Udyog to other customers and similar goods sold by others duly supported by test reports - no correspondence was produced between importer and exporter leading to the export in support of their declared invoice value – overvaluation upheld – confiscation of goods upheld – personal penalties imposed justifiable. Issues Involved:1. Misdeclaration of Present Market Value (PMV) for DEPB benefits.2. Legality of confiscation of goods under Sections 113(d) and 113(i) of the Customs Act, 1962.3. Applicability of CBEC circulars in cases of misdeclaration.4. Definition and treatment of 'prohibited goods' under the Customs Act.5. Imposition of penalties on involved parties.Detailed Analysis:1. Misdeclaration of Present Market Value (PMV) for DEPB benefits:The appellants, M/s Jupiter Exports, filed shipping bills declaring the FOB value and PMV of steel balls. Investigations revealed that the PMV was misdeclared significantly higher to claim higher DEPB benefits. The PMV declared was Rs. 77.58 per gross for 1/8' size and Rs. 581.85 per gross for 1/4' size, while the actual market values were much lower. The appellants did not dispute the PMV determined by the department.2. Legality of confiscation of goods under Sections 113(d) and 113(i) of the Customs Act, 1962:The appellants argued that the goods should not have been confiscated for misdeclaration of PMV and that DEPB benefits should have been restricted based on the PMV determined. They cited CBEC circulars stating that consignments should not be detained for PMV verification and should be allowed provisional clearance. However, the tribunal held that these circulars do not prohibit investigations by agencies like DRI in cases of fraud or misdeclaration. The tribunal upheld the confiscation of goods, stating that misdeclaration of PMV renders the goods 'prohibited' under Section 2(33) of the Customs Act, as it violates Rule 11 of the Foreign Trade Regulations Rules, 1993, and Section 11 of the Foreign Trade Development and Regulations Act, 1992.3. Applicability of CBEC circulars in cases of misdeclaration:The appellants cited various CBEC circulars to argue against the seizure of goods. However, the tribunal clarified that these circulars are meant for assessing authorities to ensure that exports are not held up on suspicion of PMV. In cases of fraud or misdeclaration, the Commissioner can extend the inquiry period, and the circulars do not restrict the DRI from investigating and seizing goods.4. Definition and treatment of 'prohibited goods' under the Customs Act:The tribunal referred to the definition of 'prohibited goods' under Section 2(33) of the Customs Act and the Supreme Court's decision in Om Prakash Bhatia. It held that goods become prohibited if the conditions for export, such as correct declaration of value, are not met. The tribunal emphasized that non-compliance with the conditions prescribed under various laws, including the Foreign Trade Regulations, renders the goods prohibited and liable for confiscation.5. Imposition of penalties on involved parties:The tribunal upheld the penalties imposed on the involved parties:- Shri Ramkishore Agarwal, Proprietor of M/s Jupiter Exports, was directly involved in over-valuation and was penalized Rs. Seven Lakhs.- Shri Brijesh Kumar Maheshwari, partner of Ludha Udyog, aided in over-valuation by issuing inflated invoices and was penalized Rs. One Lakh.- Shri Ramesh Jain, who assisted in the export process knowing about the over-invoicing, was penalized Rs. Fifty Thousand.Conclusion:The tribunal dismissed all four appeals, upholding the confiscation of goods and the penalties imposed. The judgment emphasized the importance of correct declaration of value in export documentation and the applicability of various legal provisions and circulars in cases of misdeclaration and fraud.