TaxTMI 
TaxTMI 
2015 (1) TMI 1253
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....e by that exporter and merchant exporters related to the Directors of M/s. Rochees Watches Pvt. Ltd. It was noticed that FOB of all such exports were over-valued by the exporters calling for determination thereof as follows : Export made by Manufacturer Exporter M/s. Rochee Watches Pvt. Ltd. Past/Live Consignment details Period FOB declared FOB determined Past Exports 1-1-2000 to 5-8-2004 51,21,17,945 14,17,10,591 Live consignments covered by Shipping Bill Nos. 1002 & 1003 both dated 21-8-2004 filed in Air Cargo, Jaipur 21-8-2004 87,95,880 15,00,000 Live consignments covered by Shipping Bills Nos. 1023671 to 1023676 all dated 10-1-2005 filed in ICD, Jaipur 2004-05 2,35,21,894 44,75,000 MERCHANT EXPORTER APPELLANTS Exporters Period of Export FOB declared FOB determined M/s. Rochi Ram & Sons 1-1-2000 to 5-8-2004 15,55,48,124 4,11,95,555 M/s. Jaipur Time Industries 1-1-2000 to 5-8-2004 9,87,62,865 2,51,03,300 M/s. Rajasthan Watch Manufacturers 1-1-2000 to 5-8-2004 10,52,01,906 2,74,85,687 M/s. India Watch Parts Manufacturers 1-1-2000 to 5-8-2004 8,20,71,770 1,91,49,228 M/s. HMD Exim Pvt. Ltd. 1-1-2000 to 5-8-2004 5,76,25,800 1,59,00,000 M/s. ....
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....176152235 47746273 128405962 1.4 Market enquiry conducted by STF in India and overseas revealed that there was misdeclaration of value of exports made by the exporter appellants to defraud exchequer making undue claim of DEPB. Learned adjudicating authority upon hearing the exporter and examining evidence before him passed Order of adjudication dated 30-9-2009 with the following consequences : Appeal No. C/544/2011 M/s. Rochees Watches Private Limited (1) Declared FOB value Rs. 51,21,17,945/- in respect of 'Quartz analog wristwatches' exported from Air Cargo Complex, ICD (Rajsico) & ICD (Concor), Jaipur during 1-1-2000 to 5-8-2004 by M/s. Rochees Watches Private Limited, Jaipur was rejected and PMV was determined as Rs. 14,17,10,591/- under Section 14(1) of the Customs Act, 1962 for allowing DEPB benefit by the competent authority. (2) Declared FOB value Rs. 3,23,17,774/- in respect of 75000 pieces of 'Quartz analog wristwatches' exported vide Shipping Bills Nos. 1002 and 1003 both dated 21-8-2004 from Air Cargo Complex, Jaipur and Shipping Bills Nos. 1023671 to 1023676 all dated 10-1-2005 from ICD (Rajsico), Jaipur by M/....
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....d, M/s. Rochi Ram & Sons, M/s. Jaipur Time Industries, M/s. Rajasthan Watch Manufacturers, M/s. India Watch Parts Manufacturers, Jaipur under Section 114(i) & (iii) of Customs Act, 1962. Appeal No. C/546/2011 Shri Nanak Das Moolrajani Penalty of Rs. 5,00,00,000/- (Rupees five crores only) was imposed on Shri Nanak Das Moolrajani, Director/Partner on Shri Nanak Das Moolrajani, Director/Partner of M/s. Rochees Watches Pvt. Ltd., M/s. Rochi Ram & Sons, M/s. Jaipur Time Industries, M/s. Rajasthan Watch Manufacturers, M/s. India Watch Parts Manufacturers, Jaipur under Section 114(i) & (iii) of Customs Act, 1962. Appeal No. C/561/2011 M/s. Rochi Ram & Sons, Jaipur (1) Declared FOB value Rs. 15,55,48,124/- in respect of 'Quartz analogue wristwatches' exported from Air Cargo Complex and ICD, Jaipur during 1-1-2000 to 5-8-2004 by M/s. Rochi Ram & Sons, Jaipur was rejected and PMV as Rs. 4,11,95,555/- was determined under Section 14(1) of the Customs Act, 1962 for the purpose of determination of DEPB benefit by the competent authority. (2) 'Quartz analog wristwatches' of which PMV determined as Rs. 4,11,95,555/- (Declared FOB value of Rs....
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....nd are not available for confiscation. Redemption fine of Rs. 1,31,21,000 (Rupees one crore thirty one lakhs twenty one thousand only)/-, was imposed on M/s. Rajasthan Watch Manufacturers, Jaipur in lieu of confiscation under Section 125 of the Act. (3) Penalty of Rs. 2,75,00,000/- (Rupees two crores seventy five lakhs only) was imposed on M/s. Rajasthan Watch Manufacturers, Jaipur under Section 114(i) & (iii) of the Customs Act, 1962. Appeal No. C/559/2011 M/s. India Watch Parts Manufacturers (1) Declared FOB value Rs. 8,20,71,770/- in respect of 'Quartz analog wristwatches' exported from Air Cargo Complex/ICDs, Jaipur during 1-1-2000 to 5-8-2004 by M/s. India Watch Parts Manufacturers, Jaipur was rejected and PMV was determined as Rs. 1,91,49,228/- under Section 14(1) of the Customs Act, 1962 for the purpose of determination of DEPB benefit by the competent authority. (2) 'Quartz analog wristwatches' of which PMV determined as Rs. 1,91,49,228/- (Declared FOB value of Rs. 8,20,71,770/-) under Section 113(d) &, (i) of the Customs Act, 1962 were confiscated and such goods having been exported and not avai....
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....cy, Jaipur in lieu of confiscation under Section 125 of the Act. (3) Penalty of Rs. 20,00,000/- (Rupees twenty lakhs only) was imposed on M/s. Prakash Sales Agency, Jaipur under Section 114(i) 86 of the Customs Act, 1962. Appeal No. C/547/2011 Shri Hargun Das Nebhnani (1) Penalty of Rs. 50,00,000/- (Rupees fifty lakhs only) was imposed on Shri Hargun Das Nebhnani, Director/Partner of M/s. HMD Exim Pvt. Ltd., and M/s. Prakash Sales Agency, Jaipur under Section 114(i) & (iii) of the Customs Act, 1962. In addition to the aforesaid consequences, the Bonds & Bank guarantees executed by the appellants for release of unutilized DEPB scrips was directed to be enforced by the competent authority after confirmation of recovery of excess availed DEPB credit. Submissions of Appellants 2.1 This batch of appeals when earlier listed along with other batch of appeals in S. No. 14 to 69 of the cause list, came up on 17-7-2014, Shri L.P. Asthana, ld. Advocate appearing in respect of importer appellants in Appeal Nos. C/201-240/2011 (at Sl. Nos. 14 to 53) of the said cause list submitted that such appeals question Jurisdiction of DRI which ....
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....nue adopted cost construction method to reduce the FOB declared and DEPB claimed is reduced arbitrary, determining low cost of manufacture. Such approach has been followed against live as well as past consignments. 2.5 Panchnamas were drawn by investigating team only in respect of one live consignment while no such panchnama drawn in respect of seven other live consignments. Samples drawn also varied with the inventories recorded in the panchnama. So also the samples were sent openly without being sent in sealed cover. Revenue objected to such plea. But ld. counsel for the appellants replied that the Miscellaneous Applications have been filed in the cases of M/s. Rochees Watches Pvt. Ltd. as Application No. C/MISC/55810/2014, M/s. Prakash Sales Agency as Application No. C/MISC/55840/2014, M/s. Rajasthan Watch Manufacturers as Application No. C/MISC/55811/2014, M/s. Jaipur Time Industries as Application No. C/MISC/55812/2014, M/s. India Watch Parts Manufacturers, as Application No. C/MISC/55813/2014 and M/s. HMD Exim Pvt. Ltd. as Application No. C/MISC/55841/2014 to bring certain additional grounds of appeal to record. 2.6 Against the query whether any Panchnama was prep....
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....appeared on pages 11 and 13 of the above paper book, filed affidavit averring that they signed the report according to the will of the officers who brought the goods for examination. Similar affidavit was also from Manohar Lal, Ratilal Lodhia of Rama Watch Industries (page 88 of paper book volume-1). Such affidavits were ignored to the detriment of justice. Accordingly, when Authors of the market report appearing at page Nos. 10, 11, 12, 13 and 88 of the above paper book were requested for cross-examination, that was not allowed. Therefore, result of market enquiry report cannot be used against the appellants being done behind their back. To support such contention, reliance was placed on the following decisions : S. No. Parties Citations 1. State of Kerela v. KT Shaduli Grocery Dealers, etc. 1977 (2) SCC 797 Para 5 2. Kisan Chand Chelaram v. CIT 1980 (Supplementary) SCC 660 Ref : para 6(7) 3. Bhushan Bhandaar 2002 (143) E.L.T. 25 (S.C.) 4. Lakhan Exports Ltd. v. CCE 2002 (143) E.L.T. 21 (S.C.) 5. CC, New Delhi v. Punjab Steel Industries 2001 (132) E.L.T. 10 (S.C.) 2.10 Relying on para 7 of the judgment in Kishan Chand Chelaram v. CIT - 1980 (Supp) SCC 660,....
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....546/2011 were directors of M/s. Rochees Watches Pvt. Ltd. (ii) Shri Hargun Das Nebhnani in Appeal No. C/547/2011 was an employee of M/s. Motilal Watch Co. at Jaipur owned by Shri Ishwar Das Moolrajani as proprietor. That concern is not in appeal. (iii) M/s. Prakash Sales Agency in Appeal No. C/556/2011, M/s. Rajasthan Watch Manufacturers in Appeal No. C/557/2011, M/s. Jaipur Time Industries in Appeal No. C/558/2011, M/s. India Watch Parts Manufacturers in Appeal No. C/559/2011, M/s. HMD Exim Private Ltd. in Appeal No. C/560/2011 and M/s. Rochi Ram & Sons in Appeal No. C/561/2011 were merchant exporters of watches manufactured by M/s. Rochees Watches Pvt. Ltd. (iv) Substantial exports were made to Dubai, London and Hong Kong. At all three places, the importers were found to be related persons of either Shri Ishwar Das Moolrajani in Appeal No. C/545/2011 or Shri Nanak Das Moolrajani in Appeal No. C/546/2011. (v) The exports were overvalued to make undue claim of DEPB and such overvalued goods were found to be established from the market enquiry made with the traders, exporters, trade associations and the leadin....
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.... Rochees Watches Pvt. Ltd. 4.1 Ld. Counsel urged that Customs Authority have no power to decide on DEPB issue since DGFT is the Authority on that subject. Market enquiry to ascertain PMV was unwarranted since value cap was prescribed in respect of the goods exports at the relevant point of time. DEPB is a fiscal incentive and that it has no character of duty. Appellants were governed partly by the Trade Policy of 1997-2002 and 2002-2007. Relying on para 7.36(i)(A) of the 1997-2002 policy, it was submitted that when rate of DEPB was 10%, claim thereof was limited to 50% of PMV. Serial No. 30 at page 68 of volume 1 of paper book covered watches exported by the appellant with a value Cap prescribed at the relevant point of time. The rate of DEBP has gone on changing as depicted in page 77 of volume 1 of the case law paper book filed in the course of hearing. Monitoring of DEPB claim was left to the jurisdiction of the DGFT. If Customs Authority were dissatisfied with the PMV declared they were at liberty to refer the case to DGFT without having any power to initiate proceeding against the exporter. Failing to do so is contravention of the provisions of the Trade Policy. Even if ....
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....e elements of the cost of manufacture, the appellant further revised cost sheet on 10-9-2004. Such chart finds place at page 850 of the volume 4 of paper book (page 18 of SCN) read with page 11 of SCN. The original cost sharing manufacture filed on 31-8-2004 (para 5 of SCN), was first revised on 10-9-2014 and was lastly revised on 24-9-2004. The last revised statement exhibited correct FOB which should not be disturbed. 5.2 Explaining cost revision, it was submitted by appellants that the reasons of revision and the manner of determination of cost of manufacture of watches was explained by the appellant in reply to show cause notice at page 586 of volume 3 of the paper book. That depicts various reason why the FOB finally declared on 24-9-2004 by appellant was considerable. Added to that, the appellant also placed page 588 of the volume 3 of the paper book to explain that the analytical report appearing in that page discloses use of gold and existence of the gold content in the components of the watches justifying the value declared finally on 24-9-2004. It was emphatically submitted that there were three types of watches exported which were :- 1. &nb....
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....the sale price of the goods in the domestic market. The FOB may certainly vary with PMV because FOB includes profit expected on exports. 7. Ld. Counsel placing page 199 to page 224 of volume 1 of paper book submitted that visit by the officials to the factory premises of the appellant on 22-9-2004 resulted with inventory of 22,024 gold plated unfinished watch cases. Such cases were found without any identification mark since those were semi-finished goods. Out of 22024 number of watch cases found, 135 samples were taken and those were packed in three different cartons containing 45 samples each. Those cartons were sealed and two samples out of the inventory made on 14-9-2004 and 22-9-2004 were sent by the investigation team for testing to Titan and Sarfa Traders, Jaipur. Test report disclosed that the cases were acid touch gold plated. The mark "TG & MG" contained in those samples. The process of sampling followed by investigation was neither proper nor the testing was done according to law. Appellant was not given samples for its future guidance. 8.1 Appellant further submitted that the FOB declared on the shipping bills were realised. Therefore, that left no doubt as ....
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.... foreign remittances came to India, the FOB values appearing in shipping bills do not call for disturbance. This also establishes that appellant followed transaction value principle for export. For such proposition, reliance was placed on the decision of Tribunal in the case of Ajay Apparels v. CC (Port), Kolkata - 2006 (204) E.L.T. 131 (Tri.-Kolkata) (paras 3.1 to 3.3 and para 4). Further reliance was placed on the decision of the Tribunal in the case of CC, Kandla v. Dimple Overseas - 2005 (190) E.L.T. 58 (Tri.-Mum.) (para 2.4) to support that declaration given to Dubai Customs shall not ipso facto become basis to disturb FOB value declared by appellants and such value realised through banking channels in India. Appellant further relied on the decision of the Tribunal in the case of Rioben International v. CC, Bangalore - 2006 (198) E.L.T. 55 (Tri.-Bang.), where the Tribunal held that any declaration by importer in the importing country does not bind on the Customs authority of exporting country. Therefore, the appellant cannot be questioned on the value declared at the importing port to cause prejudice to the appellants. 9.1 So far as past consignments are concerned, ld. C....
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....para 11 of the show cause notice at page 848 of the volume IV of the paper book. That register was examined by the customs authorities and contents thereof verified from the statement of Sri Iswar Das (paras 12 and 13 of the show cause notice). All statements recorded by customs authorities were exculpatory and cannot be used against the appellants. 10.2 Placing reliance on para 17 of show cause notice (page 13 of SC, page 892 of volume-IV of paper book), it was submitted on behalf of the appellants that consumption of gold was established from 8 live consignments since gold was found to have been used therein. Past consignments not being available with the department and no testing being done, there cannot be presumption that some of the components of the watches did not contain gold. 11.1 Explaining the cost of manufacture of watches, cost sheet was submitted on 23-1-2003 which reflected use of gold in making watch components. That was corroborated by statement recorded from different persons. Page 20 of show cause notice shows export of gold plated watches. Similarly page 22 of SCN (page 862 of volume-IV) depicts that cost sheet containing use of gold in the manufact....
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....earing therein. Such documents are not evidence and cannot be used against the appellants. These were not annexed to letter dated 19-6-2008 of the Counsel General of Dubai addressed to DG, DRI, India. That has no relevance in law not being authenticated documents and cannot be used against the appellants. Placing reliance on pages 467 to 486, it was submitted that those papers do not establish any fact in absence of authenticity. Similarly page 471 onwards being in Spanish language but not in English, those papers have no evidentiary value. Use of papers in the adjudication is detrimental to the interest of justice. Decision rendered in the case of Ajay Apparels and Dimple Impex were reiterated. Appellants further submission was that there was no adverse report other than 58 cases covered by the overseas enquiry communications which are ab initio void. 14. On the point of time bar, appellant placing reliance on Circular No. 69/97-Cus., dated 8-12-97 (para 7), Circular No. 79/98-Cus., dated 22-10-98 and Circular No. 23/99-Cus., dated 11-5-1999, submitted that C.B.E. & C. intended that 30 days period, thereafter 90 days period and thereafter reasonably extended period were pres....
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....hich parties were related in SCN itself. In order to make allegation of related persons, it is essential for Revenue to show that there was mutual interest. Revenue was required to discharge its burden of proof. But it failed to do so. When show cause notice nowhere depicts the manner of relation of parties and whether they were mutually benefited by virtue of their relation, if any. Therefore, Revenue misconceived the SCN. 17.2 None of the clauses of Valuation Rules, 1988 were invoked in the SCN nor violation of any of the valuation rules alleged. The only letter dated 19-6-2005 of Consulate appearing at page 504 of Volume-II of paper book depicts 51% shareholding by Shri Dinesh Kumar Ramchand Moolrajani and his family members without establishing that the foreign shareholders were related to Indian counterparts. That does not vitiate the valuation of goods declared by appellants. 17.3 Appellants submitted that ld. Commissioner page 153 of order-in-original (page 753 of appeal folder) alleged that the importer and exporter were interconnected undertaking under Companies Act, 1956 while no such allegation was made in show cause notice for which the adjudication travelli....
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....8. It was further submitted by the ld. counsel for appellants that they had not acted mala fide and whether their intention was mala fide or not, guidelines given by the Hon'ble Supreme Court in paras 24 and 26 in the case of Uniworth Textiles v. CCE, Raipur [2013 (288) E.L.T. 161 (S.C.)] applies. Ld. Adjudicating Authority had no regard to such principles laid down. But found fault baselessly. Similarly, when allegations were made on several grounds, failing to succeed on such grounds rendered the adjudication unsustainable following the ratio laid down in the case of State of Maharashtra v. BK Takkamose & Others [1967 (2) SCR 5383] (Ref para 14 at page 455 of case law compilation.) Also reliance was placed in Dhirajlal Giridharilal v. CIT [AIR 1955 SC 271]. 19. Against the appeal by Merchant Exporters, ld. counsel submitted that entire argument made in respect of the manufacturer exporter is adopted and when manufacturer exporter declared proper FOB, the merchant exporter shall not suffer. The merchant exporters having paid proper value towards sales consideration to the manufacturer exporter without any flow back from one to the other, their FOB remain unquestionable.....
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....aim of DEPB. The watches exported were "Geneva", "Yasoda" "Rivera" and "Star" brands. Statements were recorded from different persons in the course of investigation. Sri Ishwar Das in his statement recorded on 31-8-2004 as extracted in para 4 at page 842 of volume-IV of the paper book stated that appellant had never exported gold plated watches nor watches with gold components therein. The cost sheet filed on 31-8-2004 by manufacturer Exporter Appellant in respect of watches referred at page 844 of Volume-IV of the paper book shows overvaluation thereof manipulating cost and profit element. Gold plating, gold polishing, acid gold polishing are different processes. No gold was at all used in the acid polish activity. Neither gold nor nickel or chrome was used by exporter appellants. Statement of Shri Nanak Das categorical brought out no use of gold in the watches meant for export. His explanation dated 1-9-2004 also brought out that watches exported were overvalued. Para 7 of the SCN contains the statement of Sri Ishwar Das which is incriminating in nature. Page 328 of the Volume IV of paper book (SCN) proves how the manufacturer exporter-appellant, merchant exporter and importer at....
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....en though there was reduction in the cost, as appearing at page 11 of SCN, the cost of watches of each type was shown to be abnormally high. 25.2 When investigation found that there were contradictory statements and false cost sheets were filed, search to the premises of the manufacturer was made on 14-9-2004. Sampling of domestically sold watches was taken on 14-9-2004. Watches meant for export were lying in different (Ref. page 23 of SCN of volume-I of paper book) places. Such watches were without use of gold components. 25.3 When dubious practice of appellant was known to Revenue, appellant came out with third cost sheet on 24-9-2004 substantially reducing the cost of the watches. Appellant's plea that gold was used in making components was not substantiated by any evidence. Department again proceeded to make search on 22-9-2004 and panchnama was drawn (Ref. page 199 of volume-I of paper book). That panchnama shows that no goods were lying for export. Stock of watches meant for domestic sale was work in progress. Samples were drawn from such goods for market survey. 26.1 Relying on statements dated 5-10-2004 of Shri Nanak Das in para 3 (1) at page 26 of SCN rea....
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....s proved to be false. Chartered Accountant of the appellant issued false certificate. Falsification of documents was made by exporter-appellant. Such falsification was again confirmed by version of exporter-appellant in para 22 volume VII of paper book. Brand name was added by the exporter-appellant to the certificate issued by Chartered Accountant after issuance thereof and such certificates were severely used on different occasions by the appellant since that were undated. Para 32 of SCN shows that same certificate used on 23-1-2003 was used to cause prejudice to Revenue in respect of different consignments exported since that certificate was undated by the Chartered Accountant. 27.2 Ld. DR says that para 29 of SCN of volume-VII contained incriminating evidence which was the statement of the Chartered Accountant given against the appellant and the appellant confirmed that statement in para 30 of Show Cause Notice (ref. page 863-864 of Volume-IV of paper book) is relevant to appreciate contention of Revenue. Statement of Chartered Accountant was confronted to Shri Nanak Das who corroborated the same. The figures were adopted by the Chartered accountant without any documentar....
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....evenue also relied on the decision of the Tribunal in the case of Mahalaxmi International Exports v. CC, Jaipur [2004 (169) E.L.T. 68 (Tri.-Del.)] to submit that the report of the foreign authority is reliable and Apex Court in the case of Manohar Rajaram Chhabria and Orson Electronics v. Collector [1997 (93) E.L.T. A133 (S.C.)] approved the decision of the Tribunal holding that result of foreign enquiry cannot be faulted. Para 51 of SCN clearly brought out that the claim of use of gold in making watch was false. Such modus operandi was followed to make an artificial inflation to the FOB and dubious practice of the appellant was summarised in SCN to give right to the appellant to defend. 29.1 Page 891 of paper book of Volume-4 brought out the relation of the exporter and importer at different places in terms of page 52 of show cause notice showing that the said relation was instrumental to the overvaluation of goods exported. Relying on para 17 of the decision in the case of Olympia Overseas v. CC, Cochin [2008 (223) E.L.T. 114 (Tri.-Bang.)], Revenue submitted that when customs finds that there is collusion between the importer and exporter, mis-declaration is proved for whic....
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....pex Court in the case of Om Prakash Bhatia v. CC, Delhi (supra), appellant submitted that PMV in India has no relevance to determine FOB, since FOB is export value to be declared and the value so declared is to be realised. Therefore, that cannot be challenged by Revenue under any misconstruction that FOB and PMV are same. 34. Some models of watches like "geneva" and "star" were also cleared for home consumption during the period of export 1-1-2000 to 5-8-2004. This is verifiable from pages 620, 623, 627, 628 and 629 Volume-3 of paper book. Further, when purchase of gold was not disputed by Revenue, in absence of any enquiry made to gold sellers, no adverse inference can be drawn against appellant. Volume-10 of paper book shows proof of purchase of gold. Department does not dispute. Domestically sold goods contained gold components in watches. Therefore, there cannot be suspicion against appellant. 35. It was further submitted on behalf of appellants that circular prescribing the time period of 30 days, 90 days and reasonable period, issued by C.B.E. & C. is from time to time, is binding on Revenue authorities, relying on page 18 of the decision of Hon'ble High Court of....
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....comes precedent and no other points. Therefore, Revenue not arguing on the issues dealt by the judgments cited by the appellants, rendered the adjudication fatal as has been held in the case of State of Orissa v. Sudhansu Sekhar Misra & Others [AIR 1968 SC 647], Similarly, irrelevant decisions cited by Revenue not relating to the point argued by the appellant, do not bind the appellant following decisions of Hon'ble Apex Court in the case of CCE, Bangalore v. Srikumar Agencies [2008 (232) E.L.T. 577 (S.C.) = 2009 (13) S.T.R. 3 (S.C.)] and Ispat Industries Ltd. v. CC, Mumbai [2006 (202) E.L.T. 561 (S.C.)]. Finding and conclusion of Tribunal 40. Heard both sides and perused the records. 41.1 The principal issues involved in this batch of appeals is whether customs has jurisdiction to question FOB value declared in respect of export of past and live consignments and such declarations whether were correct or liable to be reduced by Customs. The third issue involved is whether cost construction method followed by Revenue to determine FOB value of the exports is proper or the method of valuation prescribed by Valuation Rules of 1988 as held by Apex Court in the case of Sidda....
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.... as under for convenience of reading : Section 2(2) "assessment" includes provisional assessment, self-assessment, re-assessment and any order of assessment in which the duty assessed is nil; Section 2(41) "value", in relation to any goods, means the value thereof determined in accordance with the provisions of sub-section (1) or sub-section (2) of Section 14. Section 14 Valuation of goods. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf : Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable....
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....p; [Emphasis supplied] 42.2 Examining jurisdiction of the customs authority to determine value of exports whether liable to duty or not, Hon'ble Supreme Court in Om Prakash Bhatia - 2003 (155) E.L.T. 423 (S.C.) held that whether the goods are liable to duty or not those are subject to assessment by customs authority. Even though the exporter is not concerned with the Prevailing Market Value (PMV) in India of the goods sought to be exported but he is required to disclose true export value of goods which should be truthfully done under Section 14 of the Act. This is clear from the reading of paras 12, 13 and 14 of the judgment. The said paragraphs are reproduced below for convenience of reading : "12. These two clauses of Section 18 leave no doubt that exporter is not concerned with the prevailing market price in India of the goods sought to be exported, but he is required to disclose true export value of goods. That is to say, exporter has to disclose full and true sale consideration - export value of the goods. The notification issued in exercise of the power under Section 18 also inter alia provides that Central Government prohibits the export of all goods unless....
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....s of sub-section (1) of section 14." Thereafter, relevant part of Section 14 reads thus :- Valuation of goods for purposes of "14.assessment. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be - the price at which such or like goods are ordinarily sold, or offered for sale; for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and price is the sole consideration for the sale or offer for sale : Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50; (1A) Subject to the provisions of sub-section (1) the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. ....
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....ort value is truly stated in the shipping bill, even if no duty is leviable, it can be referred to for determining the true export value of the goods sought to be exported."                         [Emphasis supplied] 42.3 Hon'ble Court in the above judgment also held that where export value is not correctly stated but there is intentional over invoicing for some other purpose that is to say not mentioning true sales consideration of the goods then it would amount to violation of the conditions of export. The purpose may be money laundering or some other purpose, but it would certainly amount to illegal/unauthorized money transaction. In any case, over invoicing of the export goods would result in illegal or irregular transaction in foreign currency. This is patently clear from para 18 of the judgment which is reproduced below for convenience of reading : "18. Hence, in cases where the export value is not correctly stated but there is international over-invoicing for some other purpose, that is to say not mentioning true sale consideration of the go....
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....records of M/s. Roche Watches were unreliable. 44. Further, material borne by record discarded plea of use of gold in making watch components made by M/s. Roche Watches. Appellant was unsuccessful on such plea in view of very minor quantity of use of gold found in the samples drawn on 14-9-2004 sent to Department of Metallurgical, Malvia Institute, Jaipur for testing. This has established that the claim of the appellant that major quantity of gold used in making watch components was false. The brand of watches which were subject matter of test by the Department of Metallurgical, Malvia Institute, Jaipur containing minor amount of gold, can only be said to have contained minor quantity of gold used in the watch components manufactured by the manufacturer appellant. 45. Misdeclaration of the value of export to Indian Customs was patent from remittance of lower consideration in respect of the goods exported by the appellant M/s. Roche Watches to Dubai and such goods exported therefrom to Hong Kong which remained unrebutted leading cogent evidence to the contrary by appellant. Therefore, even such factor contributes to the inference that higher export value came to India wh....
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....SC 267 = 2010 (259) E.L.T. 481 (S.C.).)."                         [Emphasis supplied] 47. No doubt, the initial burden to establish that the value mentioned by exporter in the shipping bill is incorrect lies on the Revenue. Revenue has discharged its burden in the manner indicated in the preceding paragraphs. Therefore, once transaction value under Rule 4 is rejected, the value must be determined by the sequential proceeding through Rules 5 to 8 of the 1988 Valuation Rules. In this regard reference may be made to Commissioner of Customs (General) v. Abdullah Koyletth - 2010 (259) E.L.T. 481 (S.C.). Following the ratio laid down in Abdullah Koyletth's case, the principle of law has been stated in para 16 of the judgment in Siddachalam Exports, Apex Court (supra). While explaining the law relating to valuation, the Apex Court in the case of Commissioner of Customs v. Abdullah Koyleth in para 15 of the judgment explained the modality of valuation as under : "15. Both Sections 14(1) of the Act (as it existed at the relevant time) and Rule 4 of the 1988 R....
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....le, the procedure laid down in Rules 5 to 8 of the 1988 Valuation Rules is required to be followed and market enquiry could be conducted only as a last resort. This is patent from para 19 of the judgment in Siddachalam Exports Pvt. Ltd. (supra). The said para is reproduced for convenience of reading and appreciation of the law relating to valuation of export during the material period : "19. In the present case, as stated above, neither the adjudicating authority, i.e., the Commissioner of Central Excise nor the CESTAT has dealt with the matter as per the procedure prescribed under the Act. At the threshold, instead of first determining the value of the goods on the basis of contemporaneous exports of identical goods, the Revenue erroneously resorted to a market enquiry. If for any reason, data of contemporaneous exports of identical goods was not available, the procedure laid down in Rules 5 to 8 of the 1988 Rules was required to be followed and market enquiry could be conducted only as a last resort. It is evident that no such exercise was undertaken by the Commissioner and interestingly he, acting as an appellate authority, proceeded to test the evidentiary value of the r....
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....t of ratio laid down in Siddachalam Exports case (supra). 51. The appellant made argument that determination of the value by the customs authority has no relevance for grant of DEPB. This does not make sense for the reason that the customs authority is required to determine the proper value of export to carry out the object of the provisions of Customs Act, 1962. At the cost of repetition, it may be reiterated, that determination of the value of export being essence of the law for the reason that overvaluation may be for money laundering or some other purpose amounting to illegal/unauthorized money transaction, such an object of law cannot be given go by. The value of export determined by Customs whether adoptable by DGFT to entertain DEPB is left to the entire exclusive jurisdiction of that authority. Therefore, the appellant fails in its contention that determination of FOB is of no significance in law in view of exercise of jurisdiction over DEPB by DGFT. 52. The appellant manufacturer contended that every Shipping Bill of the past exports having been accompanied by cost statement to show cost of manufacture of watches shipped by such bill to satisfy the Customs auth....
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....om TITAN as contended by the appellants provided unreliable basis is appreciable. Therefore, to resolve the controversy and to arrive at an appropriate value of export, the ratio laid down in Siddachalam Exports Pvt. Ltd. is necessarily to be followed by learned adjudicating authority. 55. There is no difference to the proposition that onus of proof of mis-declaration of the FOB lies on Revenue. But Revenue has discharged its burden bringing out the material fact that there was declaration of very low value of import before Dubai Customs and Hong Kong Customs which were nearly one-tenth of the value declared to Indian Customs remaining unrebutted by the manufacturer exporter. Although the documents accompanying the overseas enquiry report were not visible to the authentic, the materials on record proving declaration of low import value to Dubai and Hong Kong Customs when failed to be ruled out, did not rule out questionable modus operandi of all the exporter appellants. 56. There was allegation of relation of importers with the directors of manufacturer exporter. No doubt manner of relationship was not brought out in the SCN. But their modus operandi proved accommodatio....