TaxTMI 
TaxTMI 
2009 (8) TMI 885
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....back claim. The said goods were cleared for "Let Export" and the goods were allowed to be exported. On an intelligence, the lower authorities, suspecting over-invoicing was resorted, to claim ineligible excess draw back, took up the matter for investigation. Statements of various persons for recorded and statement of Vinod Agarwal partner of M/s. Agarwal Overseas Corporation was also recorded and the lower authorities came to the conclusion that there was a over-invoicing of the value and hence the appellants were charged with the violation of misdeclaration of the export consignment in order to avail ineligible of drawback. Show cause notice was issued to the appellant i.e., M/s. Agarwal Overseas Corporation, M/s. AdManum Finance Ltd. and Shri M. Mukhia. The appellants herein contested show cause notice on the ground that there is no misdeclaration of the value and also submitted that the exported consignments were received by the overseas party and the foreign exchange is realized. They also contested the show cause notice on the ground that the purchase price is not disputed by the authorities. The adjudicating authority did not accept contentions raised, by the appellants herei....
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.... 3. The ld. Counsel appearing on behalf of the appellant submits that the entire order of the lower authority has considered the issue in a narrow perspective. It is his submission that the export took place in January/February, 1997 and the show cause notice was issued on 31-5-1999. He submits that the statement of Shri Vinod Agarwal was recorded wherein Shri Agarwal has clearly indicated that they were guided by Shri M. Mukhia and they believed in the presentation made by Shri M. Mukhia and entered into an agreement for exporting of bicycle parts. It is his submission that there is no other evidence except the statement, which were recorded by the authorities. It is his submission that the proceeds of the goods which were exported has been realized and there is no doubt about the genuinenity of the bank realization certificate. It is his submission that the authorities have adopted PMV which is erroneous in which that the consignments which were exported by some other exporter of like goods in March, 1997 was considered to peg the purchase value of the appellants goods. It is his submission that such present market value is incorrect as they have brought on record that the good....
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....cases are appellants had exported bicycle parts purchasing them from local market. It is also not disputed that the FOB value which has been declared by the appellants in the export invoice, shipping bills etc., has been realized and bank realization certificates are true and correct. It is also undisputed that the appellants had for the first time exported the bicycle spare parts. The main dispute is regarding the present market value of the goods, which has been purchased by the appellant from the local market. The adjudicating authority while coming to the conclusion that there was an overvaluation (as reproduced in paragraph 2 hereinabove.) has considered that the exports of the similar goods as done by one M/s. Metro Exports Ltd. and that the purchase invoice of such M/s. Metro Exports Ltd. indicate the lower purchase value and FOB value was also lower. The adjudicating authority has also relied upon the sales invoice of M/s. Swikar Steel Products, M/s. Thapar Industries, and M/s. Mongomery Saddle Works, who had sold like or similar goods to Metro Exporters Ltd. for exports. It is also seen that the adjudicating authority has relied upon the standard export quotation for bicyc....
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....Sahakari Bank, Khar, Mumbai". (Emphasis Supplied) From the above reproduced portion of the statement of Shri Praful Mehta (as is reproduced in order-in-original), it can be noticed that the appellant's claim that they have purchased the said consignment from M/s. Puneel Traders is true and correct. It is also seen that Shri Praful Mehta and M/s. Puneel Traders had clearly indicated they both made sizeable profits. The fact that M/s. Puneel Traders were made the payments, as indicated in the invoice of Shri Puneel Traders is not in dispute. The Revenue has not brought on record that there was a flow back of any amount from M/s. Puneel Traders to the current appellants in any way. Further it is noticed from the records, that the Revenue has not recorded any statement or made any inquiry with M/s. Craftmen whose invoices were produced by the appellants to the authorities. In the absence of any such enquiry at the end of M/s. Craftmen, it has to be held that the invoices and the consideration paid by the appellants to the said M/s. Craftmen, has been admitted and accepted by the department. It is surprising to note that that the Revenue has sought to keep mum on the informa....
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....rders of the first and the appellate authorities nothing can be found to hold that the FOB price was excessive or not genuine. The Tribunal has also given a finding that the Adjudicating Authority has arbitrarily computed the FOB value and have fixed the credit on that basis. We accept findings of the Tribunal in the absence of any concrete evidence having been put to support the contention of the ld. Counsel that the FOB price is inflated. In this behalf we cannot ignore the documents supplied by the assessee before the Revenue which we have already mentioned earlier. It is not a case of the Revenue that the assessee has not received the FOB price at all. That is clear from the BRCs. Therefore, the FOB price is supported amply by the BRCs with which no fault is found. Once that is clear, there will be no question to hold that the FOB is inflated". 11. It is also seen that the Tribunal in the case of Frost International Ltd. (supra) in an identical situation held as under:- "Valuation (Customs) - FOB value - Overvaluation - Misdeclaration of FOB price - FOB price declared as Rs. 338.25 per T-shirt - Revenue failed to show that in the course of international trade, such ....
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....reto. In the case of cosmetic the value addition between the manufacturing costs to the brand name price some time over 400%. If one is to go by the cost of material and cost of manufacture plus a "reasonable margin of profit" then the value if every commodity would be much lower than the actual value in the market. In the case of readymade garments the profit margins are tremendous and the margin would depend upon many causes including on the skill of the seller and the gullibility of the buyer. What is the effect of the over-valuation? The Government on one hand many have to give a higher quantum of drawback but at the same time the country is getting a significant amount of foreign exchange. Where the exports are suggestive of being intended for the purpose of Hawala transaction, where the goods are not physically present or in cases where the sales proceeds are not realized penal action on the exporter would be justifiable. But merely by turning a blind eye on the capacity of the exporters in generating high profits on exports, it is the Government which is ultimately going to lose".              &emsp....
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....ket value of the goods which have been purchased by the appellant from local market. The facts of the case clearly bring about that since bicycle parts were fetching a high rate of drawback (22%), a proposal was mooted by one Shri Shah M. Mukhia who was supposed to be consultant in export matters to undertake export of bicycle parts wherein Shri Shah M. Mukhia was required to make arrangement for local purchase of bicycle parts as well as for overseas buyers. This proposal was agreed to and accordingly Shri Shah M. Mukhia arranged local purchases from one M/s. Puneel Traders and M/s. Craftmen and he also procured an order form a foreign buyer. All export documents, including invoices, packing list, shipping bills were either prepared by Shri Shah M. Mukhia or were prepared under his instructions and he alone was solely responsible for local purchase and export of bicycle parts and all the concerned persons have accepted over-invoicing of purchase price. The statements of the main person i.e. Shri Shah M. Mukhia were recorded on 19-3-97 and 20-3-97, wherein he inter alia stated that he was in export business as well as in export brokering. He started working as broker in textile and....
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....Overseas Corporation and M/s. Admanum Finance Ltd. which include invoices, packing list, declaration were provided by Shri Shah M. Mukhia and the respective shipping bills were prepared on the basis of this information. He was aware of over-invoicing in the export of bicycle parts by the two exporters and due to his caution, the extent of over-invoicing was reduced in the fourth consignment. 19. Statement of Shri Praful Mehta holding power of attorney of M/s. Puneel Traders, who was one of the local suppliers of bicycle parts was recorded on 4-9-97. In this statement he has stated that he is a sales manager with M/s. Puneel Traders and that Shri Shah M. Mukhia is known to him and he approached him with a proposal to supply bicycle parts with pre-determined rates @ saddle Rs .85/pcs, handle lever Rs. 35/pcs and break buttons and checknuts at Rs. 35/doz; that the supply was required urgently in the month of March, 1997, but the payment was to be made after three months. The deal required huge amount and he did not have the capacity, so he carried out the deal through M/s. Puneel Traders. 20. It may be stated that all above persons have clearly admitted over-invoicing of the goo....
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....ers are not police officers. Reliance is also placed on the decision of the Madras High Court in the case of Assistant Collector of Customs v. Govindasamy Ragupathy - 1998 (98) E.L.T. 50 wherein it has been held that confessional statements made under Section 108 of Customs Act, 1962 before the customs officers regarded as voluntary and not to be viewed with suspicion. Retraction of such confessional statements not effects its evidentiary value and when confession is retracted the burden is on the accused to prove that confession was made under threat and only if accused is able to prove that it was not voluntary then onus shifts to prove that it was made voluntarily. The Madras High Court has relied upon the decisions of the Supreme Court - 1997 (89) E.L.T. 646 and 1997 (90) E.L.T. 241. In the present case, no evidence whatsoever has been brought by Shri Shah M. Mukhia that the statements were not voluntary and he has just written one line in his reply to the show cause notice which was submitted more than two years after the date of recording statements that the statements were recorded under duress and coercion without bringing out what was nature or extent of threat etc. It is ....
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....M/s. Puneel Traders and M/s. Craftmen who have never dealt in the bicycle parts. Invoices submitted show that M/s. Puneel Traders is a stockists and suppliers of M.S. Alloy steel, ball-bearings, hardware and M/s. Craftmen is a general merchant and commission agent having no dealings in bicycle parts. It is almost impossible to believe, that the two exporting firms and Shri Shah M. Mukhia wanted to deal in bicycle parts but could not make enquiries as to who are the manufacturers of bicycle parts and who are the dealers in bicycle parts, which even a layman can do. When persons like M/s. Puneel Traders and M/s. Craftmen can procure bicycle parts and make huge profits, why the two exporting firms or Shri Shah M. Mukhia could not approach the dealers who deal in bicycle parts. Where was the need of giving a pre-determined price to M/s. Puneel Traders. This was done solely so as to ensure that the declared FOB value and the declared PMV are not hit by Sec. 76 which denies drawback in case where the amount of drawback exceeds the market value. It may also be pertinent to mention that Sec. 76 denies draw back in respect of any goods, the market price of which is less than the amount of d....
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....olving the following difference of opinion. Sd/- (K.K. Agarwal) Member (T) Difference of Opinion Whether the order passed by the Commissioner is liable to be set aside as proposed by Member (Judicial) or the order is required to be upheld and appeal dismissed as held by Member (Technical). Sd/- (M.V. Ravindran) Member (J) Sd/- (K.K. Agarwal) Member (T) 23. [Order per : P.G. Chacko, Member (J), as third Member]. -  The essential facts of the case have already been stated in the order recorded by learned Member (Judicial). The question before me is whether, on these facts coupled with the available evidence, the order passed by the Commissioner is liable to be set aside as proposed by learned Member (Judicial) or to be upheld as held by learned Member (Technical). 24. Heard both sides. The submissions of the learned counsel for the appellants can be summarized as follows:- (a) The export consignments were allowed to be exported, by the proper officers of customs. There was no dispute as to valuation of the goods at the time of the exports. The department carried out verifications with the appellants' bankers and it was....
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....s manifest that the bicycle components were differently priced on the basis of size, specification and material composition. The department did not draw samples of the export consignments in question to ascertain the size, specification or material composition of the goods for the purpose of comparison with identical or similar goods covered by contemporaneous exports. In the circumstances, it has to be held that the PMV and export price determined by the department are arbitrary and unrealistic and the same have to be discarded. In this connection, reliance is placed on the Tribunal's decision in the case of CC, Mumbai v. Unimac (I) Ltd. - 2006 (204) E.L.T. 95 (Tri.-Mumbai). It has also been submitted that this decision of the Tribunal was upheld by the apex court in Commissione v. Unimac (I) Ltd. - 2008 (226) E.L.T. A33 (S.C.). (d) The profit margin in this case was approximately 52.7% to 61% over the purchase price. In the absence of evidence to the contra, FOB value of the export goods being in the range 52.7% to 61% more than the purchase price seems to be within reasonable limit. The finding of overvaluation of the export goods on the basis of the statements of Shri ....
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....k. This market enquiry was conducted in this case and accordingly, PMV of Rs. 7,18,578/- was determined for the export goods in question. As the drawback claimed in this case (Rs. 12,63,428/-) at the rate of 22% of FOB value was higher than this PMV of the goods, the claim was rightly rejected by the Commissioner. In this connection, JCDR referred to the Board's circular No. 7/2003-Cus., dated 5-2-2003, wherein it was clarified thus:- "In cases of specific information that the FOB value declared is inflated or there is prima facie evidence to suggest such overvaluation, the field formations should resort to market verification to ascertain the correct market price of the goods" and "In those cases where it is conclusively proved through verification that the FOB value had been artificially inflated/manipulated by the exporter to avail of unintended higher drawback benefits, the cases shall be investigated and decided on merits in terms of Sections 14 and 113 read with Sections 76(l)(b) and 114 of the Customs Act, 1962". Upon market enquiry, it was found that bicycle components of similar description had been procured from the domestic market by other exporters at lower prices and e....
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....sed purchase orders from the domestic market for M/s. Agarwal Overseas Corporation and M/s. Ad-Manum Finance Ltd. and also canvassed orders from abroad for purchase of the export goods. In one of his statements, Shri Mukhia stated that M/s. Craftmen was a relative of one of the overseas buyers and that the overseas buyer visited India and collected remittances representing flowback of part of the value of the export goods. It was only in his reply to the show-cause notice that Shri Mukhia complained for the first time that his earlier statements had been recorded under duress, threat etc. He stated that his earlier statements were not voluntary. I find that no proof of duress, coercion or threat was produced by Shri Mukhia. Moreover, the retraction made through reply to show-cause notice after more than two years from the date of confessional statement is not a valid retraction. It is also pertinent to note that Shri Vinod K. Agarwal, managing director of M/s. Ad-Manum Finance Ltd. and partner of M/s. Agarwal Overseas Corporation, did not come forward to support the claim of Shri Mukhia that the latter's statements had been recorded under duress, coercion or threat. The statements ....
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.... merit in this plea either. On a perusal of the records, I find that the export invoices of M/s. Agarwal Overseas Corporation and M/s. Ad-Manum Finance Ltd. described the bicycle parts in non-specific terms. For instance, one of the invoices described the goods thus: "bicycle spare parts assorted/handle lever, brake buttons, check nuts, saddles". The shipping bills also described the goods in the same manner. These export documents did not provide the specifications of the goods, such as size, nature of material used for manufacture, year of manufacture, brand name and the like. The appellants might say that they were unable to provide the specifications of the export goods because the purchase invoices issued by the domestic suppliers, viz. M/s. Puneel Traders and M/s. Craftmen had not provided such specifications. The answer to this would be: "purchaser beware". At the time of procuring the bicycle parts, the appellants were aware of the purpose for which the goods were being purchased, which was exportation under claim of drawback of duty. It was, therefore, open to them to collect the suppliers' invoices complete in all particulars including specifications of the goods. In the ....