2024 (7) TMI 1366 - AT - Customs

CESTAT upholds confiscation and penalties for export overvaluation by 2.8 times to claim undue benefits

M/s. Patharrow Marketing Versus Commissioner of Customs, New Delhi

CESTAT New Delhi dismissed an appeal challenging rejection of declared F.O.B. value and penalties under Sections 114(iii) and 114AA of Customs Act, 1962. ... Rejection of the declared F.O.B. value along with imposition of penalty under Section 114(iii) and 114AA of the Customs Act, 1962 - manner of conducting the market enquiry on the basis of the wholesale market of Delhi, whereas gooda are purchased from the impugned goods from Ludhiana - HELD THAT:- From the records of the case, it is apparent that the market enquiry was conducted in the presence of the Shri Sunil Bhandari, the Authorised Representative of the appellant company alongwith three independent sellers. The re-calculated F.O.B. value was duly explained to Shri Sunil Bhandari and he, categorically accepted the same. Moreover, as pointed out by the learned Authorised Representative for the respondent, the Authorised Representative of the appellant company in his statement recorded statement under Section 108 of the Act admitted and agreed to the value arrived at during the market enquiry. Thus, when the exporter himself has participated in the market enquiry, along with independent sellers and has agreed to the value arrived in his presence, nothing survives to challenge further. The reliance placed by the learned Authorised Representative on the decision of the Tribunal in CC (IMPORT) , ICD, TKD, NEW DELHI VERSUS M/S SODAGAR KNITWEAR [2018 (5) TMI 686 - CESTAT NEW DELHI] on the principle that the admitted facts need not be proved, rejected the challenge to the calculation of the assessable value as the Manager of the appellant admitted in his statement that he agreed with the manner of calculating the assessable value. Since there was misdeclaration as to the quantity and the value of the goods, the goods were rightly held to be liable for confiscation under sub-sections (i),(ia) and (ja) of Section 113 of the Act. Consequently, the imposition of penalty under Section 114 of the Act is upheld as there was overvaluation of goods of around 2.8 times - the exporter has intentionally mis-declared the value and quantity of the goods to be exported and for that they submitted false documents or information so as to avail undue export benefits, i.e. Drawback and ROSCTIL on the goods. Therefore, the imposition of penalty under Section 114AA of the Act is justified and is affirmed. There are no reason to interfere with the impugned order and hence the same is affirmed - appeal dismissed. Issues:Challenge to Order-in-Appeal confirming rejection of declared F.O.B. value and penalty imposition under Customs Act, 1962.Detailed Analysis:1. Challenge to Declared F.O.B. Value and Penalty Imposition:- The appellant challenged the Order-in-Appeal confirming the rejection of the declared F.O.B. value and imposition of penalties under Sections 114(iii) and 114AA of the Customs Act, 1962.- Intelligence received led to the examination of four shipping bills, revealing mis-declaration in terms of quantity and value of goods.- The value of goods was determined under Customs Valuation Rules, 2007 through a market enquiry in the presence of the appellant's representative and independent sellers.- The market enquiry revealed a lower F.O.B. value, which the appellant's representative accepted during the investigation.- The Adjudicating Authority rejected the declared F.O.B. value, re-determined the value, and imposed penalties, which were upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.2. Contentions and Findings:- The appellant argued that the market enquiry conducted in Delhi did not consider the higher quality goods available in Ludhiana, where the goods were purchased.- The appellant claimed the market enquiry was flawed and arbitrary as it relied on verbal information from three independent sellers.- The revenue's representative relied on the appellant's representative's acceptance of the market enquiry results, stating that challenging the outcome after admission is not permissible.3. Legal Precedents and Decision:- The Tribunal cited legal precedents emphasizing that admitted facts need not be proved, supporting the acceptance of the market enquiry results by the appellant's representative.- The Tribunal rejected the challenge to the valuation calculation based on the appellant's admission during the investigation.- Referring to previous judgments, the Tribunal upheld the re-determination of value when the importer had voluntarily accepted the valuation method during the investigation.- The Tribunal distinguished a case where a flawed market survey was conducted without the exporter's involvement, unlike the present case where the appellant's representative participated in the market enquiry.4. Conclusion:- The Tribunal affirmed the decision of the Authorities below, upholding the confiscation of goods and imposition of penalties due to intentional mis-declaration of quantity and value for availing undue export benefits.- The Tribunal dismissed the appeal, affirming the imposition of penalties under Sections 114 and 114AA of the Customs Act, 1962.- The judgment was pronounced on 26th July, 2024, with no interference in the impugned order.This detailed analysis outlines the issues, contentions, legal precedents, and the Tribunal's decision regarding the challenge to the declared F.O.B. value and penalty imposition under the Customs Act, 1962.