Declared FOB value controls drawback and confiscation where comparable export prices support the declaration and foreign documents are unproven.

Declared FOB value for exported garments could not be rejected where comparable export prices for similar goods supported the declared value and the foreign customs documents relied on were not conclusive proof of misdeclaration. On that basis, drawback refixation and recovery could not be sustained. With no valid basis to displace the FOB declaration, confiscation of the exported goods also failed because the predicate for invoking the Customs Act provision was absent. Penalty on the exporter likewise fell away, as it rested on the same unproved allegation of undervaluation and confiscability. The Commissioner's order was therefore set aside and consequential relief granted.

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Issues: (i) Whether the declared FOB value of the exported goods could be rejected and drawback re-fixed and recovered under the drawback rules. (ii) Whether the exported goods were liable to confiscation under the Customs Act. (iii) Whether penalty could be sustained on the exporter.

Issue (i): Whether the declared FOB value of the exported goods could be rejected and drawback re-fixed and recovered under the drawback rules.

Analysis: The exported consignments were of the same kind of garments, and the declared export prices were shown to be comparable with exports made to other foreign buyers during the same period. The alleged lower values reflected in copies of documents produced before Dubai Customs were not treated as conclusive evidence of incorrect FOB declaration in India. The valuation had to be judged on the basis of the customs law applicable at the point of export, and the comparable export prices were not shown to be unreliable. On that basis, the declared FOB value could not be discarded, and the proposed refixation and recovery of drawback under the drawback rules could not stand.

Conclusion: The rejection of FOB value and recovery of drawback were not justified and were set aside in favour of the assessee.

Issue (ii): Whether the exported goods were liable to confiscation under the Customs Act.

Analysis: Once the declared FOB value was not found to be incorrect, the basis for treating the exported goods as liable to confiscation disappeared. The material relied on by the Department did not establish a sustainable case for confiscation of goods already exported, and the condition for invoking the relevant confiscation provision was not made out.

Conclusion: The confiscation ordered in respect of the exported goods was not sustainable and was set aside in favour of the assessee.

Issue (iii): Whether penalty could be sustained on the exporter.

Analysis: The penalty was founded on the same premise as the alleged misdeclaration of FOB value and the supposed liability to confiscation. Since those foundational findings were not sustained, no independent basis remained for imposing penalty on the exporter.

Conclusion: The penalty was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The order of the Commissioner was not sustained, and the appeal was allowed with all consequential reliefs flowing from the setting aside of drawback recovery, confiscation, and penalty.

Ratio Decidendi: Declared export value cannot be rejected, and drawback, confiscation, or penalty cannot be sustained, merely on the basis of unproved foreign customs documents when comparable export prices for similar goods support the declared FOB value.

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