TMI Blog2000 (10) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... pervision of the Jurisdiction Excise Authorities. These shipping bills were examined by the Customs Authorities and allowed to be exported. A let export order was passed on each shipping bill. The exports were made to meet the export obligations cast on the exporter under value Advance Licence No. 329/5071.101/20/1, dated 16-5-1995 for the FOB value of Rs. 13,15,10,757/- (US $ 10,07,699.30). The SSIB of Custom House, Bombay stopped the shipment and examined the goods under 3 mahazars and they came to the conclusion that the value declared was high and the description of the material given in the shipping bills M.S. Section was not correct. Hence, they detained the goods. The seized goods were got examined by experts viz. (1) Metallurgical expert of Customs, (2) Mr. Saboo of SAIL, (3) Shri M.P. Dixit of IIT and they gave opinions which led to the belief that the description of the goods and declarations made on the Customs Export documents did not tally. The Commissioner of Customs, Mumbai allowed provisional release of the goods and all the goods covered by 10 shipping bills have been allowed to be exported. Thereafter, a show cause notice dated 30-4-1997 was issued mainly statin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on merits. The parties were thereafter heard on merits and after considering the submissions and material on record we find - (a) The exports were being made in compliance to the value based Advance Licence No. 3291507, dated 16-5-1995 which had been issued to the appellants after due verification of the declared values, costs, sales agreements, etc., by the DGFT authorities on an application filed by the appellant company. The value addition norms as worked out vide the formula prescribed in relevant page 7.24 of the EXIM Policy was not found fault by the DGFT authorities. This policy in Chapter VII covers the Policy as Duty Exemption Scheme para prescribes that the licence shall be issued as per the policy and we do not find any reason to find that the Customs authorities can impinge on the authority and jurisdiction of the DGFT authorities and sit on a judgment over the licence issued by the competent authority, by relying on Bombay Chemicals Ltd. - 1982 (10) E.L.T. 171 (Bom.) read with para 8g; C.L. Jain Woollen Mills Ltd. as reported in 1995 (79) E.L.T. 197 (Del.) as this question has been left open by the Hon ble Supreme Court by dismissing the SLP filed by Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand bag may sell for $ 120 in Italy and $ 240 in United States. Why? Gucci has to add the cost of transportation tariffs importer margin, wholesaler margin to its factory price. Depending on these added costs as well as the currency fluctuation risk, the product might have to sell for two to five times as much in another country to make the same profit. The very same Marketing Guru in Chapter Selecting a Pricing Method prescribes Mark up Pricing as a most elementary method for fixing prices of the goods to be sold and lays down at page 503 of the 9th Edition of his treatise- Mark ups very considerably among different goods. Mark ups are generally higher on seasonal items (to cover the risk of not selling), speciality items, shower moving items, items with high storage and handling costs and demand in elastic items (Emphasis supplied) In the present case the goods are admittedly not conventional goods or M.S. Sections but Heavy specially made to order goods and will not have any market and buyers other than the present buyer for his specific end-use, who has sent the drawings. Therefore, the excessive mark up would be normal elementary marketing strategy and nothing m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order viz. Foreign Trade (Exemption Application of Rules and Certificate) Order, 1993 was made. This order dated 31-12-1993 does not have paras analogues to para 3(3) of the Export (Control) Order, 1988. Therefore, we cannot find reason to uphold the confiscation as ordered by the Commissioner under Sections 113(d) and 113(l) read with para 3(3) of the Export (Control) Order, 1988 which stands repealed and superseded. (e) We have considered the provisions of Sections 18 and 67 of the Foreign Exchange Regulation Act and also whether the goods would become prohibited goods under the provisions of that Act read with the Customs Act for the so-called overvaluation of the Export goods. We find that this matter is now well-settled by the decision of the Larger Bench of the Tribunal in the case of M/s. J.G. Exports Others v. CCE, New Delhi Final Order Nos. 777 to 780/2000 [2000 (121) E.L.T. 754 (Tri. - LB)] wherein it has been held as follows :- 26. Even if it be assumed that the exporters misdeclared the PMV at a high value or over-invoiced the export goods, would it make them liable for penal action under the Customs Act? On this question, conflicting decisions were cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the PMV of the goods by having recourse to the provisions of Section 14 of the Customs Act, which were not applicable to cases like this one as rightly held in Shilpi Exports (supra). Ld. Commissioner s reliance on the Calcutta High Court s decision in Pankaj V. Sheth (supra) with reference to the provisions of Section 14 of the Customs Act is totally inapposite to the facts of the case. 28. It was also argued by Counsel that, even if over-invoicing and incorrect description of the goods in question could be found in the instant case, the same did not amount to violation of Section 18(1)(a) of the FERA, 1973 and, for that matter, any violation of Section 11 of the Customs Act, 1962. Reliance was placed on the Calcutta High Court s decision in the case of Lexus Exports (supra). That was a case involving export of steel rods by the writ-petitioner under two contracts with a US-based company. Stainless steel rods had to be exported under one of these contracts and non-stainless steel rods under the other contract. The exporters, by an inadvertent mistake, mentioned the goods under the second contract as stainless steel rods in the export documents filed with the Customs authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rohibited and the goods were not dutiable. The facts of the instant case are also similar. It has not been shown to us that Quartz analog watch fitted with gold straps/bracelets was in the negative list of export items. The adjudicating authority has not recorded any finding to the effect that the said goods were prohibited for export or that the goods were dutiable. Therefore, the goods were not liable to confiscation under Section 113(d) of the Customs Act and, in the result, there was no question of imposition of penalty on the exporters under Section 114 of the Act. Moreover, neither in the show cause notice nor in the order of the adjudicating authority is there any material to show that the partners of the exporting firm were personally liable for any penal action under Section 114 of the Act. Being bound by this order of the Larger Bench and respectively following the same, we cannot uphold the findings of liability for confiscation under Sections 113(d) and 113(l) for the purposes of valuation and for the purposes of reading with Sections 18 and 67 of FERA as is being read by the learned Commissioner. (f) Now, we consider whether the liability of confiscation unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lows : 18. Export Obligation means the obligation to export the products covered by the licence or permission in terms of quantity value or both as may be prescribed or specified by the licencing or competent authority. Therefore, one has to look at what was required to be exported. Looking at the photocopy of the application for the said licence, it is seen that the goods to be exported can be either or all of - Non-Alloy Steel, Bars Rods (including Rounds; Flats; Hexagons, Octogens, Wire Rods, cold twisted Bars, Techno Machinery treated Re-inforced bars, angles, Shapes Sections (including beams, joints, channels, special profiles, etc. (Emphasis supplied). which is also as per the Import-Export norms. The licence issued stipulates that the firm shall export 1000 MT of Non-alloy steel shapes and sections and special profiles, etc. There is no finding by the Commissioner how the goods under export are not conforming to these goods stipulated in the application and or the licence. The goods which can be exported or intended to be exported are varied and have been called as M.S. Section . That in itself will not lead one to conclude that export description of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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