TaxTMI 
TaxTMI 
2026 (8) TMI 1405
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....eclared in the shipping bills, resulting in inflation of the FOB value and consequential availment of excess DEPB benefits. The lower authority, after rejecting the declared value and redetermining the same, ordered confiscation of the goods under Section 113(h) and (i) of the Customs Act, 1962, demanded the differential duty with interest under Section 28AB and imposed penalties under Section 114A. The appeals filed before the Commissioner (Appeals) were dismissed. Hence, the present appeals. 3. The Ld. Advocate Ms. Nivedita Mehta appeared for the appellants and Ld. Authorized Representative Smt. Anandalakshmi Ganeshram, appeared for the respondent. Submissions made by the Appellant 3.1 Ms. Nivedita Mehta the Ld. Counsel for the appellants submitted as follows: A. Background of the dispute The Appellants are engaged in the manufacture and export of viscose yarn and cotton blends, predominantly through Tuticorin Port. The exports were made on CIF basis, and the FOB value for DEPB purposes was arrived at by deducting the freight and insurance components from the CIF value. The Department alleges that the Appellants ought also to have deducted the Currency ....
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....nnai)]. In the present case, although the Customs authorities had requested the Joint Director of Foreign Trade, Coimbatore, to examine and reduce the DEPB credit to the extent allegedly in excess, no proceedings were initiated by the licensing authority. The decision in Swati Industries (supra), therefore, squarely applies. D. CAF and BAF are not part of the freight declared in the CIF value The Appellants submit that BAF represents compensation recovered by shipping lines towards unexpected increases in fuel-related costs, while CAF represents compensation towards fluctuations in foreign exchange rates. These charges may arise subsequently and are separately recovered by the shipping lines or freight forwarders. Since the CIF value declared to the foreign buyer did not include such subsequent charges, there was no question of deducting CAF or BAF from the CIF value for determining the FOB value. The Department has also not established that these charges formed part of the freight component included in the CIF value declared in the shipping bills. E. No undervaluation or inflation of FOB value The allegation of inflation of the FOB value is with....
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....ndalakshmi Ganeshram, Ld. Authorized Representative, submitted on behalf of the Revenue that: A. BAF and CAF form part of freight Bunker fuel is the fuel used aboard ships and that bunkering charges ordinarily form a substantial component of freight charged by shipping lines/freight forwarders. Whether recovered before sailing or subsequently as compensation, such charges called (BAF) remain part of the freight and cannot be treated as contingent or unrelated charges. Similarly, the CAF, being compensation for fluctuations in foreign exchange rates, is also attributable to freight and forms part of the freight value. Accordingly, BAF and CAF were required to be deducted, along with insurance, from the CIF/ CF value for determining the FOB value of the exported goods for DEPB purposes. B. Suppression of actual freight It was further submitted that an employee of the Appellant admitted that the Customs authorities were not informed of the actual freight subsequently paid to the shipping lines. Hence, the Appellant was aware that the freight declared in the shipping bills was only an approximate amount and, nevertheless, deducted it instead of the a....
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....y merit in the impugned order confirming the recovery of duty on the allegations of overvaluation. The case of the Revenue as we have extracted supra, in a nutshell, is that the importer/appellant had obtained DEPB scripts of a higher value than what it was entitled to. To arrive at this allegation, the Department has alleged that the CAF and BAF are required to be deducted from CIF, admittedly, which was not done by the Appellant. 6. The recovery of the above has been made by the Revenue under Section 28 of the Customs Act. On this aspect, we find that in the following orders, the Benches have held that the recovery of an alleged over valuation of DEPP is not permissible under Section 28 Supra: - 1.TTK Prestige Ltd. vs Commissioner of Customs, Bangalore 2005(188) E.L.T. 385(Tri.-Bang.) "7....Another important point is that the Customs authorities do not have any jurisdiction to reduce the excess credit taken. The DGFT authorities have the proper jurisdiction. Until and unless the DGFT takes action we cannot even hold that the credit taken is irregular. In view of these facts, we cannot hold that there is short levy of Customs duty in respect of the goods....