2009 (4) TMI 101 - AT - Customs

Claim of DEPB Credit by over-valuation of export goods burden of proof is on the department No LC was opened and the remittance was received through telegraphic transfer. o dispute about the receipt of full remittance from their Dubai buyers. The fact of non-opening of LC by itself will not lead to any inevitable conclusion that the goods were over-valued. The mode of receiving the remittance by the appellant is a legal mode and merely because they have chosen to adopt the same instead of through a Letter of Credit cannot reflect upon their mala fide. The Revenue s entire case is based on the invoices submitted by the importer at Dubai to the Customs authorities. Department failed to prove the overvaluation of export goods to claim Higher DEPB appeals of the appellants allowed with consequential relief.

Issues Involved:
1. Overvaluation of exported goods.
2. Examination and verification by Customs and Central Excise officers.
3. Receipt of full remittance and its implications.
4. Validity of second set of invoices presented at Dubai.
5. Relationship between exporter and importer affecting valuation.
6. Penalties and fines imposed on appellants.

Issue-wise Detailed Analysis:

1. Overvaluation of Exported Goods:
The primary issue was whether the goods exported by the appellant were overvalued to claim higher DEPB benefits. The Revenue alleged that the exports were grossly overvalued based on a second set of invoices presented at Dubai, which showed significantly lower values. The appellants argued that the goods were legitimately valued and exported, and the second set of invoices was not genuine.

2. Examination and Verification by Customs and Central Excise Officers:
The appellants contended that the goods were examined and verified by Customs and Central Excise officers, who found the values and descriptions to be correct. However, statements from the officers under Section 108 of the Customs Act revealed that they did not properly examine the goods and merely tallied the documents. The Tribunal noted that these officers were not made noticees, and their statements were not reliable, as they might have been influenced by vigilance inquiries.

3. Receipt of Full Remittance and Its Implications:
The appellants received full remittance for the exported goods, as evidenced by Bank Realization Certificates (BRCs). The Revenue argued that the receipt of remittance through telegraphic transfer, rather than a Letter of Credit (LC), suggested possible overvaluation. The Tribunal held that the receipt of full remittance, without evidence of Hawala transactions, supported the appellants' case. The Tribunal emphasized that the burden of proof for overvaluation lay with the Revenue, which failed to provide conclusive evidence.

4. Validity of Second Set of Invoices Presented at Dubai:
The second set of invoices presented at Dubai Customs showed lower values for the exported goods. The appellants argued that these invoices were fabricated by the buyer in Dubai to evade customs duties. The Tribunal noted that the signatures on the second set of invoices did not match those of Sanjay Agarwal, the authorized signatory of the appellant. The Tribunal concluded that the second set of invoices could not be accepted as conclusive proof of overvaluation.

5. Relationship Between Exporter and Importer Affecting Valuation:
The familial relationship between the proprietors of the exporting firm and the importing firm was highlighted. The Tribunal held that the relationship alone could not influence the valuation of the goods without material evidence. The Tribunal relied on the judgment in Commissioner of Customs, Mumbai v. Clariant (India) Ltd., which established that familial relationships do not affect valuation in the absence of evidence.

6. Penalties and Fines Imposed on Appellants:
The Commissioner imposed penalties and fines on the appellants under various sections of the Customs Act. The Tribunal, in its majority order, set aside the penalties and fines, holding that the Revenue failed to prove the allegations of overvaluation and misdeclaration. The Tribunal emphasized that the evidence provided by the Revenue was insufficient to discharge the initial onus of proof.

Separate Judgments:
The Tribunal delivered separate judgments due to differing opinions between the members. The majority order, delivered by Members Ashok Jindal and A.K. Srivastava, allowed the appeals and set aside the penalties and fines. Member K.K. Agarwal dissented, upholding the findings of overvaluation and suggesting modifications in the penalties and fines. The third member, Archana Wadhwa, agreed with the majority, leading to the final majority order in favor of the appellants.

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