2008 (6) TMI 454 - AT - Customs

Summary

Issues:
1. Valuation of exported goods and misdeclaration of value.
2. Confiscation of goods and imposition of penalties on exporter and Customs House Agents (CHA).
3. Role and responsibility of exporter, importers, and CHA in the case of misdeclaration of value.
4. Adjudication process and penalties imposed on the parties involved.

Analysis:

Issue 1: Valuation of exported goods and misdeclaration of value
The case involved the export of Polypropylene by an exporter based in Hong Kong to importers in India. The investigation revealed a discrepancy in the declared value of the goods. The exporter had initially invoiced the goods at 630 US$ per MT, but the correct price was found to be 721 US$ per MT. The Commissioner confiscated the goods and imposed fines and penalties on the exporter and other parties involved.

Issue 2: Confiscation of goods and imposition of penalties
Following the investigation and adjudication process, the Commissioner confiscated the 1504 MTs of Polypropylene. The exporter was allowed to redeem the goods on payment of a fine of Rs. 30 lakhs. Additionally, penalties of Rs. 30 lakhs were imposed on the exporter and Rs. 1.5 lakhs on the CHA, along with a penalty of Rs. 1 lakh on the partner of the CHA. The parties appealed against these orders.

Issue 3: Role and responsibility of exporter, importers, and CHA
The exporter argued that they should not be held responsible for misdeclaration as the local importers failed to clear the goods and make payments. The Department was unable to produce original contracts or invoices, which the exporter had voluntarily submitted. The exporter cited legal precedents to support their contentions on valuation and reliance on documents. On the other hand, the Department contended that the exporter was not an innocent party and had engaged in similar activities previously.

Issue 4: Adjudication process and penalties imposed
The Tribunal considered submissions from both sides and noted that the misdeclaration of value was established by the difference between the declared value in the bills of entry and the value in the bank-attested invoices. The Tribunal upheld the penalties imposed on the exporter but reduced the penalty amount. Regarding the CHA and partner, it was observed that there was no evidence to prove their knowledge or involvement in the fraud, leading to the setting aside of the penalties imposed on them.

In conclusion, the judgment highlighted the importance of accurate valuation in international trade transactions and the responsibilities of exporters, importers, and Customs House Agents in ensuring compliance with customs regulations.