TaxTMI 
TaxTMI 
2020 (11) TMI 546
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....at Delhi by judgment and order dated October 15, 2020 of the Supreme Court. The operative portion of the judgment of the Supreme Court is reproduced below : "The appeal which has been filed by the Chief Commissioner Customs [Appeal Diary No 70226/2020] is pending before the CESTAT, Prayagraj. Mr N Venkataraman, learned Additional Solicitor General appearing with Ms Nisha Bagchi, learned counsel on behalf of the respondents apprised the Court of the fact that presently the Bench of the Tribunal at Prayagraj is not functional due to the existence of vacancies. 2. There is a need for an early resolution of the appeal or, in any event, the application for stay that has been filed by the Customs Department. Hence, the ends of justice would be served if the appeal is transferred to the Principal Bench of the Tribunal at New Delhi so that the appeal or, as the case may be, the application for stay can be taken up expeditiously. Mr Vishwajit singh, learned counsel appearing on behalf of the petitioner has no objection to this course of action to facilitate an early resolution of the dispute. 3. We accordingly transfer Appeal Diary No 70226/2020 from the CESTAT, P....
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....hnama gives details of the two shipping bills. It mentions the product description, the number of pieces, the prevailing market value and the drawback percentage. The panchnama also mentions that the two shipping bills had been filed claiming the benefit of drawback (DBK), Rebate of State Levies (RoSL) and Merchandise Exports from India Scheme (MEIS). The DBK and RoSL involved in the two shipping bills has been stated to be as follows : Sl. No. SB No. & Date Inv. No. and date DBK Involved ROSL Involved 01 --- 1286368 1946030 02 --- 1671268 2161187 6. The panchnama records that there is a short quantity of 1872 pieces in the cargo covered by one shipping bill. It also records that the export cargo was grossly over-valued 8 to 9 times for claiming undue export benefits and excess duty drawback, otherwise not admissible. This statement was based on a local market enquiry from traders/dealers of such type of garments. 7. The panchnama further mentions that the officers formed a reasonable belief that the goods were liable to confiscation under section 113(i) of the Customs Act since the export consignment was deficient in quantity and grossly o....
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....hus, the impugned goods remained in the Customs warehouse in the intervening period and there is no affirmation in the Panchnama that proper arrangements were made to prevent unauthorized access to the said goods. In these circumstances the alleged shortage of 1872 pcs itself is questionable. However, even if the said shortage is accepted, the quantum of shortage is so meagre (1.33%) that it would be ridiculous to believe that the same was intentionally done by the appellant. In such situations, the CBEC's Customs Manual, vide Para 25 of Chapter 3, provides for amendment of Shipping Bill. The Assistant/Deputy Commissioner of the ICD was competent to permit such amendment. 6. (i) Regarding allegation of overvaluation, it is found that the declared FOB price was straightaway compared with the local trade opinion which is grossly illegal. As per section 14 of the said Act, the value of the export goods shall be the transaction value of such goods i.e. the price actually paid or payable for the goods when sold for export from India for delivery at the time and place of exportation. Thus, the export price is negotiated/ determined in the course of international trade a....
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....avention of sections 50(2), 75 and rule 3 of Customs, and Central Excise Drawback Rules, 2017 and section 14 of the Customs Act; (iv) When any goods are seized under section 110(1) of the Customs Act, proceedings can be initiated by issuance of a show cause notice under section 124 of the Customs Act before the goods are confiscated. In the instant case, before such an exercise could be undertaken, the Respondent filed an Appeal before the Commissioner (Appeals) on June 08, 2020, which Appeal was allowed on June 10, 2020, without even giving any opportunity to the Department; (v) The goods became prohibited goods as a wrong declaration was made by the Respondent. In support of this contention, reliance has been placed upon the decision of the Supreme Court in Om Prakash Bhatia vs Commissioner of Customs, Delhi 2003 (155) ELT 423 (SC); and (vi) The Commissioner (Appeals) completely misdirected himself in examining, at the stage of seizure, whether the value of the export goods would be the transaction value and whether the provisions of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 the Export Valuation Rules were required to be....
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.... even assuming without admitting that there was a minor shortage of 1.6%, the exporter could have amended the shipping bills and the remaining items could have been cleared. 12. The submissions advanced by the learned Authorized Representative of the Department and the learned Counsel appearing for the Respondent have been considered. 13. The seizure memo dated June 03, 2020 mentions that in respect of one consignment the goods are deficient by 1872 pieces and that both the consignments appear to be grossly overvalued. The two shipping bills had been filed claiming the benefit of drawback, RoSL and MEIS, which are entirely dependent on the market price of the goods. It is for this reason that the seizure mentions that the goods have been seized under section 110(1) of the Customs Act as they were liable to confiscation under section 113(i) of the Customs Act for contravention of sections 50(2) and 75 of the Customs Act read with rule 3 of the Customs and Central Excise Duties Drawback Rules, 2017 Drawback Rules and section 14 of the Customs Act. 14. Section 110 of the Customs Act deals with seizure of goods, documents and things. Sub-sections (1) and (2) of section 110,....
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....cally on the customs automated system to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in such form and manner as may be prescribed: PROVIDED that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically on the customs automated system, allow an entry to be presented in any other manner. (2) The exporter of any goods, while presenting a shipping bill or bill of export, shall make and subscribe to a declaration as to the truth of its contents. (3) The exporter who presents a shipping bill or bill of export under this section shall ensure the following, namely:- (a) the accuracy and completeness of the information given therein; (b) the authenticity and validity of any document supporting it; and (c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force. 51. Clearance of goods for exportation- (1) Where the proper officer....
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....awback involved in the two shipping bills, as is clear from the panchnama dated June 3, 2016, is Rs. 29,57,636/- while ROSL involved in the two shipping bills is to the extent of Rs. 41,07,217/-. Further, according to the Department, the goods were deficient in quantity by 1872 pieces and both the consignments appeared to have been grossly overvalued because the value declared by the appellant was in the range of Rs. 749 to Rs. 1123 per piece, while the average price arrived at on the basis of opinion of the local dealers ranged from Rs. 32 to Rs. 87 per piece. 20. The Commissioner (Appeals) has set aside the seizure memo dated June 3, 2020 for the following reasons: i. The alleged shortage of 1872 pieces is questionable and even if the said shortage is accepted, "the quantum of shortage is so meagre' (1.33%) that it would be ridiculous to believe that the same was intentionally done by the Appellant"; ii. As regards the allegation of overvaluation, the declared price was straightway compared with the local trade opinion, which is contrary to the provisions of section 14(1) of the Customs Act and rule 3(1) of the Export Valuation Rules; iii. The transa....
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.... that of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income Tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The Court can always examine this aspect though the declaration of sufficiency of the reasons for the belief cannot be investigated by the Court." (emphasis supplied) 24. In Tata Chemicals Ltd. v/s Commissioner of Customs (Preventive), Jamnagar (2015) 11 SCC 628, the Supreme Court observed as follows:- "15. Statutes often use expressions such as "deems it necessary", reason to believe", etc. Suffice it to say that these expressions have been held not to mean the subjective satisfaction of the officer concerned. Such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with the restraints imposed by law. " 25. In Worldline Tradex Pvt. Ltd v/s The Commissioner of Customs (Imports) & others (2016) 340 ELT 174 (D....
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....nal mandate, no authority can plead unlimited power of non clearance for its own incompetence as a justification beyond reasonable period. Learned counsel for the respondents submitted that the petitioners could get the goods released on furnishing requisite bond under Section 110A of the Act. This contention is misconceived as Section 110A applies only when seizure is effected under Section 110. 11. We are of the view that while officers of Custom Department may have justification to verify whether goods were prohibited or were otherwise liable to confiscation or to assess and recover duty, they are not immune from accountability against abuse of power by detaining goods for indefinite period on the ground that they were in the process of checking the value or nature of goods. They are under legal obligation to do so promptly and if by reason of their incompetence they are unable to do so, detention of goods beyond reasonable time cannot be allowed." (emphasis supplied) 27. None of these decisions, which have been relied upon by the learned counsel for the Respondent, advance the case of the Respondent. 28. The power of seizure, as was held in Tata....
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....e goods were grossly overvalued, it cannot be said that the proper officer did not have 'reason to believe' that the goods were liable to confiscation under the provisions of section 113(i) of the Customs Act. Whether they are actually confiscated or not is a matter that can be determined only in accordance with the procedure prescribed under section 124 of the Customs Act by issuing a show cause notice to the exporter and also giving him a reasonable opportunity of making a representation in writing. All that was required to be considered for exercising power under section 110 (1) of the Customs Act was whether there was a reason to believe that the goods are liable to confiscation. 31. Learned counsel for the Respondent submitted that the allegation in the seizure memo about overvaluation of the goods in the shipping bills is not correct. In this connection learned counsel referred to the provisions of section 14 of the Customs Act as also the Export Valuation Rules. According to the learned counsel, the value of the exports goods should have been treated as the transaction value since the export price is negotiated /determined in the course of international trade and the same....