TaxTMI 
TaxTMI 
2025 (8) TMI 17
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....laim excess benefits of drawback, Refund Of State Levies (ROSL), Merchandise Exports from India Scheme (MEIS) & IGST refund, the Special Intelligence and Investigation Branch of the Commissionerate (SIIB) examined the goods under a panchnama. A major quantity of the goods was as declared. However, it felt that the value was highly inflated in order avail ineligible export benefits. The goods were however allowed to be exported after obtaining a bond and bank guarantee and they were accordingly exported. The officers conducted a market enquiry to determine the market price of the export goods and came to the conclusion that the market value of the export goods was between Rs. 45/- to Rs. 65/-. A show cause notice dated 14.11.2019 was issued to the appellant proposing to reject the FOB value declared by the appellant in the two shipping bills under Rule 8 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 [Valuation Rules] and re-determine it at Rs. 45,00,000/- (in respect of shipping bill No. 7293844 dated 31.08.2018) and Rs. 29,88,000/- (in respect of shipping bill No. 7273960 dated 31.08.2018) re-determine under Rule 6 of the Valuation Rules. It was also....
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....ovides for rejection of the declared value and accordingly it was rejected and re-determined under Rule 6 of the Valuation Rules. He also submitted that the appellant did not cooperate with the investigation. He never provided a valid cost list or any supporting documents to substantiate the inflated price despite being offered multiple opportunities. He also did not participate in the market enquiry. During adjudicating, the appellant's counsel sought gross-examination of the witnesses of market enquiry. However, when summoned, they did not appear before the adjudicating authority and, hence, no cross-examination could be held. In the light of the above, the impugned order is correct and proper and calls for no interference and the appeal may be dismissed. 8. We have considered the submissions on both sides and perused the records. 9. Before going into the details of this case what needs to be examined is the scope of "value" under section 14 of the Customs Act and the Valuation Rules and of the FOB value. Section 14 of the Customs Act is meant for the purpose of Customs Tariff Act or any other law for the time being in force. It shall be the transaction value of such goods,....
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....rseas buyer if the proper officer determines the assessable value as US $ 20,000. Similarly, the overseas importer cannot fulfil his obligation by paying only US $ 5,000 even if the proper officer determines the value as US $ 5,000. Thus, while the transaction value (FOB value) will continue to be US $ 10,000 as agreed to between the buyer and the seller, the assessable value will change if the proper officer re-determines it. 13. Undisputedly, in this case, there is no export duty on the goods which have been exported. Unlike the customs duty which is to be determined on the assessable value, export benefits under drawback and MEIS are given as a percentage of the FOB value and not a percentage of the assessable value. Therefore, it is inconsequential whether the assessable value is re-determined by the proper officer or not when no export duty is to be paid. The export benefits will continue to be available as a percentage of the FOB value which is the transaction value. 14. The proposal in the show cause notice in this case was to reject the FOB value under Rule 8 of the Valuation Rules and re-determine it under Rule 6 of the Valuation Rules. The Joint Commissioner, ....
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....on value which is the assessable value under Section 14, the proper officer has right to reject the transaction value and re-determine it following some other method. The exporter has no right to reject his own transaction value or to re-determine the value following some other method. The exporter also has no obligation to anticipate if the proper officer would reject the transaction value and if so what value he will re-determine. Therefore, the only value which an exporter can reasonably be expected to declare in his shipping bill is his transaction value. Section 113 (i) would apply insofar as it pertains to the value of the goods only if the value declared in the shipping bill is different from the transaction value which is not the case here. It is impossible for the exporter to predict what value the proper officer would fix under the Valuation Rules and, accordingly, file the shipping bill. In this case, the goods were not liable for confiscation under Section 113 (i) because there is no assertion in the show cause notice or finding in the order-in-original or in the impugned order that the value declared in the shipping bill was not the transaction value. Consequently, the....
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....by or under this Act or any other law for the time being in force." 7. The aforesaid Section empowers the authority to confiscate any goods attempted to be exported contrary to any 'prohibition' imposed by or under the Act or any other law for the time being in force. Hence, for application of the said provision, it is required to be established that attempt to export the goods was contrary to any prohibition imposed under any law for the time being in force. 8. Further, Section 2(33) of the Act defines "prohibited goods" as under:- "prohibited goods" means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with." 9. From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions,....
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....The next question is - Is there any prohibition imposed under other law which is for the time being in force? For this purpose, reliance is placed upon Section 18 of the Foreign Exchange Regulation Act, 1973 relevant part of which reads thus :- 18. Payment for exported goods. - (1)(a) The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereafter in this section referred to as export) of all goods or of any goods or class or goods specified in the notification form India directly or indirectly to any place so specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars which, among others, shall include the amount representing :- (i) the full export value of the goods; or (ii) If the full export value of the goods is not ascertainable at the time of export the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, and affirms in the said declara....
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....nishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars which, among others, shall include the amount representing :- (i) the full export value of the goods, or (ii) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions express to receive on the sale of the goods in the overseas market, and affirms in the said declaration that the full export value of the goods (whether ascertainable at the time of export or not) has been, or will within the prescribed period be, paid in the prescribed manner". 13. Apart from the aforesaid provision, for finding out the true export value of the goods, Section 14 of the Act provides relevant procedure. Section 14 is to be read along with Section 2(41), which defines the word 'value'. Section 2 (41) reads as under :- 'S.2(41) - "value", in relation to any goods, means the value thereof determined in accordance with the provisions of sub-section (1) of section 14." Thereafter, ....
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....r liable to duty or not, the owner of such goods shall in the bill of entry or the shipping bill or any other documents prescribed under the Customs Act, 1962 (52 of 1962), state the value, quality and description of such goods to the best of his knowledge and belief and in case of exportation of goods, certify that the quality and specification of the goods as stated in those documents are in accordance with the terms of the export contract entered into with the buyer or consignee in pursuance of which the goods are being exported and shall subscribe to a declaration of the truth of such statement at the foot of such bill of entry or shipping bill or any other documents." 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 goods, then it would amount to violation of the conditions for import/export of the goods. 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/ irregular transacti....
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....pect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case; (iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section: Provided also 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 of export, as the case may be, is presented under section 50. (2) Notwithstanding anything contained in sub-section (1), if the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. Explanation.-For the purposes of this section- (a) "rate of exchange" means the rate of exchan....
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....e allowed (a) omitted by Act 11 of 1983, Section 53 (w.e.f. 13-5-1983).] (b) in respect of any goods the market-price of which is less than the amount of drawback due thereon; (c) where the drawback due in respect of any goods is less than fifty rupees (2) Without prejudice to the provisions of sub-section (1), if the Central Government is of opinion that goods of any specified description in respect of which drawback may be claimed under this Chapter are likely to be smuggled back into India, it may, by notification in the Official Gazette, direct that drawback shall not be allowed in respect of such goods or may be allowed subject to such restrictions and conditions as may be specified in the notification. 24. Needless to say that drawback is usually a percentage of the transaction value (FOB value) depending on the type of goods. Let's take it as say, 15%, for example. If the market price of the goods is say Rs. 100/- and the FOB value (transaction value) is Rs. 200/-, drawback will be available @ 15% of Rs. 200/- (the FOB value) or Rs. 30/- and not 15% of Rs. 100/- (the market value) or Rs. 15/-. 25. However, if the transaction value (F....