TMI Blog2009 (8) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... rrived at on the basis of average market value prevailing in the market for those goods and that is why these restrictions under Sec. 76 has been put. In view of this I uphold the finding that there was a misdeclaration of the present market value of goods which has been admitted by one and all and accordingly the drawback has been correctly denied. For same reasons I uphold the penalties imposed and confiscation of goods. It was also held by learned Member (Technical) that Receipt of remittance supported by bank realization certificate is of no consequence as firstly what is mainly been disputed in the present case is not the FOB value, but procurement price of bicycle parts (domestic market value) and secondly receipt of remittance supported by bank realization certificate is not a sure indication of declared export price being correct. The learned Member (Technical) of the regular Bench has arrived at an acceptable conclusion on the basis of the available materials - there are no proof of duress, coercion or threat was produced by Shri Mukhia. Moreover, the retraction made through reply to show-cause notice after more than two years from the date of confessional statement is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot succeeded in showing that this PMV was determined arbitrarily. On the other hand, the oral evidence gathered by the department under Section 108 of the Customs Act corroborates the basis of determination of PMV by the department. The Commissioner s order is sustainable in law as held by the learned Member (Technical) - Registry is directed to place the records before the regular Bench on 13-8-2009 for formulation and pronouncement of the majority decision. The impugned order is sustained and the appeals are dismissed. - Shri M.V. Ravindran, K.K. Agarwal, P.G. Chacko, and A.K. Srivastava, JJ. Shri Ramesh Nair with Mayur Shroff, Advocates, for the Appellant. Dr. Y.D. Banga, SDR and Shri S. Meena, JCDR for the Respondent. ORDER All these three appeals are directed against Order-in-Original No. 1246/2000/CAC/CC/SPS dated 23-10-2000. Since all these three appeals are arising out of a common order-in-original, they are being disposed off by a common order. 2. The relevant facts that arise for consideration are the appellant-firm (Agarwal Overseas Corporation) exported in January and February, 1997 bicycle parts such as Handle levers, Saddles, Break buttons, Checknuts etc. in two con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence that has come on record during investigation and having regard to what has been admitted by all concerned persons during investigation as also in the replies to the show cause notice and during the course of personal hearing, the fact that PMV of the goods is only approx. Rs. 7 lakhs as against the total amount of drawback of approx. Rs. 12.63/- lakhs, which was claimed in respect of 4S/Bills was much less and that being so, I hold that in respect of 4S/Bills they are not entitled to any drawback in view of the provisions of Sec. 76 of the Customs Act, 1962. The claims for drawback in respect of 4S/Bills are therefore rejected. For mis-declaring the value of the goods as also the PMV in respect of S/Bill Nos. 804109 dated 15-1-97, 810609 dated 3-2-97 and 820290 dated 5-3-97, M/s. Agarwal Overseas Corporation and in respect of S/Bill No. 8137832 dated 23-2-97, M/s. Admanum Finance Ltd., have rendered the goods exported liable to confiscation under Sec. 111(i) of the Customs Act, 1962. I hold that the goods are liable to confiscation under this section. These are however not available for confiscation now since these were exported . Coming to such above conclusion, the adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 131 (Tri. - Kolkata)] (vii) Mitexco v. Commissioner of Customs (E.P.), Mumbai [2003 (155) E.L.T. 69 (Tri.-Mumbai)] 4. The ld. SDR on the other hand would submit that the present market value as has been arrived by the adjudicating authority has been not challenged by the appellants. It is his submission that there was an overvaluation of the consignment in order to avail ineligible duty drawback. He submits that the findings of the adjudicating authority at pages 41 and 42 are very important and they would indicate that the adjudicating authority has gone into the details very correctly and the penalties imposed on the appellants is correct. It is his submission that the partner of the firm as well as the consultant, who directed the appellants to do the activity of overvaluation, have clearly admitted in their statement that there was overvaluation. If there is an admission by the partner and their consultant, than the further evidence is not required. 5. The ld. Counsel in rejoinder submitted statement showing the particular of purchase price of the bicycle part and the FOB value. He submits that the FOB price is just, as it is only 52% to 61% more than the purchase price. 6. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the current appellant in favour of M/s. Puneel Traders and M/s. Craftmen were credited to the parties accounts. It is also seen from the records that the authorities had recorded the statement of Shri Praful Mehta who was holding Power of Attorney for M/s. Puneel Traders. In the said statement the said Shri Praful Mehta had indicated as under:- Wherein he inter alia stated that he is sales manager with M/s. Puneel Traders, working on salary plus commission and he is also having his own firm M/s. Bhavin Exports which was engaged in local sales/trading and supply for export. Shri Shah M. Mukhia is known to him and approached with a proposal to supply bicycle parts with predetermined rates at saddle Rs. 85/pcs., handle lever Rs. 35/pcs and break buttons and checknuts at Rs. 35/doz, that the supply was required urgently in the month of March 1997 but the payment was to be made after 3 months. The deal required huge amount and he did not have the capacity so he carried out the deal through M/s. Puneel Traders. He himself and M/s. Puneel Traders made sizeable profits and all the payments were made by M/s. Agarwal Overseas Corporation, which amounts to Rs. 11,87,625/- through four cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Traders, for flow back of the amount. It is undisputed that the appellants had paid for the purchase price as per the invoices raised by M/s. Puneel Traders and M/s. Craftmen. In the absence of any contrary evidence, the purchase value in the hands of the appellant remains un-challenged and the FOB value declared by the appellant being in the range of 52.71% to 61% more than the purchase value, seems to be within the reasonable limit. The reliance placed by revenue to reject the FOB value is in-correct, as the FOB value in all the exports in question in this case has been realized and there is no investigation at the end of purchasers of these exported goods. 10. The Hon ble Supreme Court in the case of Vishal Exports Overseas Ltd. (supra) had held as under :- The first contention of the appellant herein to the effect FOB value being 450% more than the purchase value is unreasonable and cannot be accepted for the simple reason that there is no evidence on record to support such a contention. The Tribunal has also specifically held so and returned a final finding of fact that the FOB price was correctly shown by the assessee. Learned Counsel for the appellant could not show us anyt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) E.L.T. 11 (S.C.). Purchase price of original equipment manufacturer also does not reflect the prices at which the merchant exporters procured the bicycle parts. There is also no evidence regarding price of gaskets in the Madras documents. The goods were purchased/procured at prices nearest to the FOB value and evidence of the purchase price was placed on record by the respondents . In the case of Mitexco, (supra) the Tribunal held as under:- The judgment of the Larger Bench of the Tribunal reported in the case of Om Prakash Bhatia reported in 2001 (127) E.L.T. 81 upheld the powers of Customs to challenge of valuation of export goods. In that judgment the referral Order has been cited where the Appellant had claimed that the manner in which the valuation of exports were done was wrong (para 4). In a number of cases this plea is raised and the Tribunal on examination of facts has granted relief Brooks International [2002 (141) E.L.T. 547 (T)], Reco Industries [2001 (131) E.L.T. 694 (T)]. Fashion garments do not subject themselves to normal rules of valuation. A shirt stiched from the same material would cost anywhere from Rs. 500/- to Rs. 1800/- depending upon the brand name attach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Act, 1962. 76. Prohibition and regulation of drawback in certain cases. - (1) Notwithstanding anything hereinbefore contained, no drawback shall be allowed - (a) Omitted (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) . 16. It is the case of the department that since the amount of drawback claimed is Rs. 12,63,428/- based on the declared FOB value (Rs. 57,74,107/-), the same was more than the ascertained market value (Rs. 7,18,578/-) of imported goods and therefore the claim was not admissible in terms of Sec. 76 of the Customs Act and since the present market value (PMV) was misdeclared, the goods were liable to confiscation and penalties were accordingly required to be imposed. 17. As rightly pointed out by my ld. Brother Member (J), the main dispute is regarding the present market value of the goods which have been purchased by the appellant from local market. The facts of the case clearly bring about that since bicycle parts were fetching a high rate of drawback (22%), a proposal was mooted by one Shri Shah M. Mukhia who was supposed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deira General Trading, Dubai. It was settled that after receipt of the remittance, he will pay it to M/s. Craftmen who in turn will pass on to foreign buyer as and when he visits India. In his statement recorded on 20-3-97, Shri Shah M. Mukhia admitted that drawback claim of Rs. 12,63,428.40 was not admissible as over-invoicing in varying degrees was done. He voluntarily deposited Rs. 2.5 lakhs in lieu of possible fine and penalty and promised to pay the amount that would exceed Rs. 2.5 lakhs in case excess penalty was levied on him. 18. Statement of Shri Kishan Unde an employee of M/s. Komal Cargo Services who handled the shipping documents of the said two firms was recorded on 1-4-97. He inter alia stated that the business of M/s. Agarwal Overseas Corporation and M/s. Admanum Finance Ltd. was brought to his agency by Shri Shah M. Mukhia and all documents pertaining to four consignments of exports of M/s. Agarwal Overseas Corporation and M/s. Admanum Finance Ltd. which include invoices, packing list, declaration were provided by Shri Shah M. Mukhia and the respective shipping bills were prepared on the basis of this information. He was aware of over-invoicing in the export of bic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mukhia, Shri Kishan Unde and Shri Ashok Kumar Mukherjee have clearly admitted of indulging in over-invoicing of goods and getting purchase invoices made at a price slightly lower than the FOB value without any retraction during the entire investigation proceedings, there was no need of making any further inquiry from M/s. Craftmen and M/s. Puneel Traders as what is admitted is not required to be proved. In this regard, I place my reliance on the decision of the Hon ble Supreme Court in the case of CCE v. Systems Components - 2004 (165) E.L.T. 136 (S.C.) wherein it has been clearly laid down that what is admitted need not be proved. I also place my reliance on the decision of the Supreme Court in the case of Surjeet Singh Chhabra - 1997 (89) E.L.T. 646 (S.C.) wherein it has been held that confessional statements recorded before Customs officer, though retracted, is an admission and binding since Customs officers are not police officers. Reliance is also placed on the decision of the Madras High Court in the case of Assistant Collector of Customs v. Govindasamy Ragupathy - 1998 (98) E.L.T. 50 wherein it has been held that confessional statements made under Section 108 of Customs Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter two years from the date of statement and that also came in reply to show cause notice. On the other hand there is sufficient evidence in the form of statements of Shri Kishan Unde and documentary evidence in the form of purchase/sale invoices of M/s. Metro Exporters Ltd., M/s. Swikar Steel Products, M/s. Thapar Industries and M/s. Mongomery Saddle Works who has sold like or similar products to M/s. Metro Exporters Ltd. for exports and the standard export quotation for bicycle spare parts issued by M/s. Metro Exporters Ltd. which shows that the procurement price was heavily over-invoiced. 21. It is to be noted that if the two exporting firms wanted to export bicycle parts, why should they engage a consultant like Shri Shah M. Mukhia who according to his own statement has never dealt with bicycle parts. Then, when it comes to the procurement of the bicycle parts, why should Shri Shah M. Mukhia approach M/s. Puneel Traders and M/s. Craftmen who have never dealt in the bicycle parts. Invoices submitted show that M/s. Puneel Traders is a stockists and suppliers of M.S. Alloy steel, ball-bearings, hardware and M/s. Craftmen is a general merchant and commission agent having no dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mukherjee and Shri Kishan Unde who have not been sought for cross-examination and a very belated and very general retraction by Shri Shah M. Mukhia. 22. Receipt of remittance supported by bank realization certificate is of no consequence as firstly what is mainly been disputed in the present case is not the FOB value, but procurement price of bicycle parts (domestic market value) and secondly receipt of remittance supported by bank realization certificate is not a sure indication of declared export price being correct as has been held by the Calcutta High Court in the case of Collector of Customs v. Pankaj V. Seth - 1997 (90) E.L.T. 31. In view of this I hold that the order passed by the Commissioner does not require any interference and the appeals are liable to be dismissed. Since there is a difference of opinion, the matter may be put up to the Hon ble President for nominating a third Member for resolving the following difference of opinion. Sd/- (K.K. Agarwal) Member (T) Difference of Opinion Whether the order passed by the Commissioner is liable to be set aside as proposed by Member (Judicial) or the order is required to be upheld and appeal dismissed as held by Member (Techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal statement to the effect that, after receipt of remittances from abroad, he would pay it to M/s. Craftmen who, in turn, would pass it on to the related foreign buyer as and when the latter visited India, is also uncorroborated and contrary to the evidence on record. It is particularly so in the absence of allegation, in the show-cause notice, of flowback of any remittance of the foreign buyer. For all these reasons, the inculpatory statements of Shri Mukhia are not to be relied upon. (c) The domestic market value and export price of the subject goods were ascertained by the department only on the basis of purchase invoices and shipping bills of M/s. Metro Cycles and M/s. Metro Exporters Ltd. The comparison of such shipping bills would show wide difference in prices of the same bicycle components, from which it is manifest that the bicycle components were differently priced on the basis of size, specification and material composition. The department did not draw samples of the export consignments in question to ascertain the size, specification or material composition of the goods for the purpose of comparison with identical or similar goods covered by contemporaneous exports. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of confessional statements, which came through replies to the show-cause notice after more than two years from the date of recording of the said statements, is liable to be rejected. Consequently, the confessional statements in this case are reliable. Admitted facts need not be corroborated or proved as held by the Tribunal in Commissioner v. Gopal Textile Mills Pvt. Ltd. - 2007 (215) E.L.T. 558 (Tri.-Ahd.). JCDR also relied on Jasjeet Singh Marwaha v. UOI - 2009 (239) E.L.T. 407 (Del.), wherein it was held by the High Court that a retracted statement could be relied upon if, on examination of evidence, it was found that the statement was true and voluntary. (b) Section 76 of the Customs Act required ascertainment of PMV of the goods presented for export under claim of drawback. This market enquiry was conducted in this case and accordingly, PMV of Rs. 7,18,578/- was determined for the export goods in question. As the drawback claimed in this case (Rs. 12,63,428/-) at the rate of 22% of FOB value was higher than this PMV of the goods, the claim was rightly rejected by the Commissioner. In this connection, JCDR referred to the Board s circular No. 7/2003-Cus., dated 5-2-2003, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich may be imposed on us under the Customs Act, for which we have already deposited Rs. 7.5 lakhs in the name of the company and 2.5 lakhs in the name of Shri Mukhia . Shri Mukhia also confessed to overvaluation of the goods for obtaining higher drawback. He confessed to having masterminded the overinvoicing of the export goods by Shri Vinod K. Agarwal, who was the managing director of M/s. Ad-Manum Finance Ltd. and partner of M/s. Agarwal Overseas Corporation. He admitted that M/s. Agarwal Overseas Corporation and M/s. Ad-Manum Finance Ltd. were not entitled to the duty drawback claimed by them. He also deposited Rs. 7.5 lakhs. The statements of Shri Mukhia clearly revealed the role played by him as a consultant for the exporters. It was he who canvassed purchase orders from the domestic market for M/s. Agarwal Overseas Corporation and M/s. Ad-Manum Finance Ltd. and also canvassed orders from abroad for purchase of the export goods. In one of his statements, Shri Mukhia stated that M/s. Craftmen was a relative of one of the overseas buyers and that the overseas buyer visited India and collected remittances representing flowback of part of the value of the export goods. It was only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey did not even disclose the specifications of the bicycle parts procured by them from M/s. Puneel Traders and M/s. Craftmen and exported under claim of drawback. Such specifications of the goods, if declared by the exporters, would have enabled the department to conduct a more effective market enquiry for the PMV of the goods. In view of the above conduct of the appellants, I hold that the present challenge against the results of the market enquiry conducted by the department is devoid of bona fides or merit. In other words, the PMV of the goods ascertained by the department is unassailable in the circumstances of this case. 28. It was pointed out that no samples were drawn from the export consignments for the purpose of market enquiry. I see no merit in this plea either. On a perusal of the records, I find that the export invoices of M/s. Agarwal Overseas Corporation and M/s. Ad-Manum Finance Ltd. described the bicycle parts in non-specific terms. For instance, one of the invoices described the goods thus: bicycle spare parts assorted/handle lever, brake buttons, check nuts, saddles . The shipping bills also described the goods in the same manner. These export documents did not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The issue in the instant case is whether undue drawback was claimed by the exporters and this issue has got to be examined in the light of the provisions of Section 76 of the Customs Act. Considerations relevant to this provision of law did not arise in the case of Vishal Export Overseas (supra). Moreover, in that case, PMV was determined by the department in a different manner than in the instant case. As I have already noted, in the instant case, PMV was determined by the department on the basis of documentary evidence gathered from contemporaneous exporters of similar goods. Such determination cannot be discarded in the manner proposed by the appellants. In any case, it is not correct to say that the apex court s judgment in Vishal Exports Overseas (supra) is squarely applicable to the facts of the present case. 30. As held by this Tribunal in the case of Olympia Overseas (supra), a case of overvaluation of export goods based on market enquiry cannot be dislodged only on the basis of the plea that the declared FOB value has been recovered from the foreign buyers as evidenced by BRCs. Evidence of receipt of foreign remittance in the form of BRC may help an exporter successfully ..... X X X X Extracts X X X X X X X X Extracts X X X X
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