2023 (6) TMI 550 - AT - Customs

Tribunal Adjusts Penalties and Fines, Orders Redetermination in Customs Valuation Dispute for Mis-declared Export Goods.

M/s. Kalima Exim Versus The Commissioner of Customs, Tuticorin

The Tribunal partially allowed the appeals filed by the appellant against the orders of the Commissioner of Customs & Central Excise (Appeals), ... Valuation of export goods - overvaluation - rejection and redetermination of value - restriction of duty drawback to such re-determined value - Confiscation - imposition of redemption fine and penalty - HELD THAT:- The appellant was allowed to re-export the goods after re-determining the value on the basis of cost construction statement submitted which was duly certified by the Chartered Accountant - there is no dispute as to the basis for fixation by the Valuation Committee has not been communicated to the appellant and the appellant was not accorded any opportunity to rebut the same, thus, violating the principles of natural justice. The revised values are fixed in terms of Rule 6 of Customs Valuation (Determination of Value of Export Goods) Rules, restricting the drawback amount to such re-determined value. In terms of the Valuation Rules, the adjudicating authority should sequentially go through Rule 4 and Rule 5 before fixing the value under Rule 6 ibid. Circular No. 07/2003-Cus., dated 05.02.2003 – F. No. 605/147/2002-DBK was issued on the subject of admissibility of drawback and market verification for ascertaining the present market value of export goods under Drawback. This Circular gives the methodology to be adopted in cases of over-valuation of goods for export and there is no mention of constitution of any Valuation Committee. The Tribunal in the case of M/S. WOODERN STYLE PLUS EXPORTS VERSUS COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, TIRUCHIRAPALLI [2018 (7) TMI 709 - CESTAT CHENNAI] wherein an identical goods of over valuation of export goods based on the price fixed by the Valuation Committee was involved has held Apart from the report of the Valuation Committee, there is no other evidence to show over-valuation of the cargo. Even the status of the Valuation Committee does not stand disclosed i.e., as to who were the members of the said Committee, how they arrived at the value?; what was the basis of the findings? and what was the technical and expert qualification of the said members? - impugned orders are not sustainable. The above decision has been followed by this Tribunal in the case of M/S. ABHISHEK EXPORTS INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE, TUTICORIN [2018 (9) TMI 1673 - CESTAT CHENNAI] while deciding an identical issue of over valuation on the basis of the prices fixed by the Valuation Committee. As such adopting the values as fixed by the Valuation Committee without revealing the methodology and basis adopted for such values is not correct and is not in accordance with the Valuation Rules. The drawback as applicable is payable on the re-determined value of Rs.8,24,245/- in respect of Exports effected under Shipping Bills Nos. 7758554 and 7758286 dated 27.02.2012 and on re-determined value of Rs.22,23,609/- in respect of Exports effected under Shipping Bills Nos. 8654826, 8654845, 8654852 and 8654864 dated 26.04.2012 - a careful reading of the orders of the lower adjudicating authorities indicate that there is mis-declaration of the value of the export goods thereby contravening the provisions of the Customs Act and Rules made thereunder. So, no fault found with the orders of the original adjudicating authority in holding the goods liable for confiscation under Section 113(h), (i) and (ia) of the Customs Act, 1962 or for imposition of penalty under Section 114 (iii) of the Act ibid. in both these appeals. Appeal allowed in part. Issues Involved:1. Overvaluation of Export Goods2. Confiscation of Goods and Imposition of PenaltiesSummary:Issue 1: Overvaluation of Export GoodsThe appellant, M/s. Kalima Exim, filed two appeals against the rejection of their appeals by the Commissioner of Customs & Central Excise (Appeals), Tiruchirapalli. The first appeal involved the export of 'Ready Made Gents Shirts' and 'Kids Pant Shirt Set' with initially declared values that were later revised. The goods were detained on suspicion of overvaluation, and samples were tested. The Valuation Committee determined a lower value than declared, leading to the rejection of the declared value and re-determination under Rule 6 of the Valuation Rules, 2007, restricting the drawback benefits accordingly. In the second appeal, a similar process occurred with different export goods, leading to a re-determined lower value and restricted drawback claim.The appellant argued that the adjudicating authority should have used Rule 5, based on the cost construction statement certified by a Chartered Accountant, rather than Rule 6. They also contended that the Valuation Committee's basis for fixing prices was not disclosed, violating principles of natural justice. The Tribunal found that the Valuation Committee's methodology was not communicated, and the adjudicating authority should have sequentially applied Rules 4 and 5 before Rule 6.Issue 2: Confiscation of Goods and Imposition of PenaltiesThe adjudicating authority confiscated the goods and imposed fines and penalties based on the Valuation Committee's prices. The Tribunal noted that the appellant was not given an opportunity to rebut the Valuation Committee's findings. The Tribunal referenced previous decisions where similar issues were resolved in favor of the appellant, setting aside the orders based on the Valuation Committee's undisclosed methodology.The Tribunal held that the drawback is payable on the re-determined values but acknowledged the mis-declaration of value, justifying the confiscation and penalties. However, the fines and penalties were significantly reduced. The Tribunal ordered to set aside the impugned Order-in-Appeal Nos. 15 & 16/2013 with consequential relief and partially allowed the appeals.Revised Penalties and Fines: OIO No. & Dt. OIA No. & Dt. Redemption Fine Imposed Earlier (in Rs.) Revised Redemption Fine (in Rs.) Penalty Imposed Earlier (in Rs.) Revised Penalty (in Rs.) 39/2012 dt 13.09.2012 15 &16/2013 dt. 21.02.2013 1,50,000/- 50,000/- 1,50,000/- 50,000/- 43/2012 dt 04.10.2012 1,00,000/- 50,000/- 2,00,000/- 50,000/- (Order pronounced in the open court on 12.06.2023)