TMI Blog2015 (1) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... watch components received low weightage by test results of the Government recognized laboratory. Contention of Revenue as to mis-declaration of FOB was established when the appellant M/s. Roche Watches changed its stand on cost of manufacture of watches filing three cost statement on three different dates, i.e., on 31-8-2004, 10-9-2004 and 24-9-2004. Repeated revision of such statements gives rise to the inference that the records of the appellants were not reliable and certificate issued by the Chartered Accountant was false. Misdeclaration of the value of export to Indian Customs was patent from remittance of lower consideration in respect of the goods exported by the appellant M/s. Roche Watches to Dubai and such goods exported therefrom to Hong Kong which remained unrebutted leading cogent evidence to the contrary by appellant. Therefore, even such factor contributes to the inference that higher export value came to India while the past export goods did not command such higher value corroborated by appellant’s own conduct of declaration of lower value upon detection by Hong Kong Customs. Extended period of limitation - A case of overvaluation should not be sanctioned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1023676 all dated 10-1-2005 filed in ICD, Jaipur 2004-05 2,35,21,894 44,75,000 MERCHANT EXPORTER APPELLANTS Exporters Period of Export FOB declared FOB determined M/s. Rochi Ram Sons 1-1-2000 to 5-8-2004 15,55,48,124 4,11,95,555 M/s. Jaipur Time Industries 1-1-2000 to 5-8-2004 9,87,62,865 2,51,03,300 M/s. Rajasthan Watch Manufacturers 1-1-2000 to 5-8-2004 10,52,01,906 2,74,85,687 M/s. India Watch Parts Manufacturers 1-1-2000 to 5-8-2004 8,20,71,770 1,91,49,228 M/s. HMD Exim Pvt. Ltd. 1-1-2000 to 5-8-2004 5,76,25,800 1,59,00,000 M/s. Prakash Sales Agency 1-1-2000 to 5-8-2004 65,56,456/- 19,04,000/- 1.2 In the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 90632816 25790711 64842105 Rochi Ram Sons 155548124 41195555 114352569 24998537 6546823 18451714 Jaipur Time Industries 98762865 25103300 73659565 16906181 4205863 12700318 Rajasthan Watch Mfrs. 105201906 27485687 77716219 17767458 4646289 13121169 India Watch Pvt. Mfr. 82071770 19149228 62922542 14963063 3566987 11396076 HMD Exim Pvt. Ltd. 57625800 15900000 41725800 9876180 2684960 7191220 Prakash Sales Agency 6456456 1904000 4552456 1008000 304640 703360 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and not available for confiscation. Redemption Fine of ₹ 9,48,000/- (Rupees nine lakhs forty eight thousand only) was imposed on M/s. Rochees Watches Private Limited, Jaipur, in lieu of confiscation in terms of the Bond executed by the exporter, under Section 125 of the Act. (5) Quartz analog wristwatches of which PMV determined as ₹ 44,75,000/- (Declared FOB value of ₹ 2,35,21,894/-) exported from ICD, RAJSICO Jaipur vide Shipping Bills Nos. 1023671 to 1023676 all dated 10-1-2005 were confiscated under Section 113(d) (i) of the Customs Act, 1962 and such goods having been exported and not available for confiscation. Redemption fine of ₹ 24,76,000/- (Rupees twenty four lakhs seventy six thousand only) was imposed on M/s. Rochees Watches Private Limited, Jaipur, in lieu of confiscation in terms of the Bond executed by the exporter, under Section 125 of the Act. (6) Penalty of ₹ 15,00,00,000/- (Rupees fifteen crores) was imposed on M/s. Rochees Watches Private Limited, Jaipur under Section 114(i) (iii) of the Customs Act, 1962. Appeal No. C/545/2011 Shri Ishwar Das Moolrajani Penalty of ₹ 10,00,00,000/- (Rupees ten cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of ₹ 9,87,62,865/-) were confiscated under Section 113(d) (i) of the Customs Act, 1962 and such goods having been exported and not available for confiscation, Redemption fine of ₹ 1,27,00,000/- (Rupees one crore twenty seven lakhs only) was imposed on M/s. Jaipur Time Industries, Jaipur in lieu of confiscation under Section 125 of the Act. (3) Penalty of ₹ 2,52,00,000/- (Rupees two crores fifty two lakhs only) was imposed on M/s. Jaipur Time Industries, Jaipur under Section 114(i) and (iii) of the Customs Act, 1962. Appeal No. C/557/2011 M/s. Rajasthan Watch Manufacturers (1) Declared FOB value ₹ 10,52,01,906/- in respect of Quartz analog wrist watches exported from Air Cargo Complex/ICDs, Jaipur during 1-1-2000 to 5-8-2004 by M/s. Rajasthan Watch Manufacturers, Jaipur was rejected at PMV was determined as ₹ 2,74,85,687/- under Section 14(1) of the Customs Act, 1962 for the purpose of determination of DEPB benefit of the competent authority. (2) Quartz analog wristwatches of which PMV determined as - ₹ 2,74,85,687/- (Declared FOB value of ₹ 10,52,01,906/-) under Section 113(d) (i) of the Customs Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upees seventy one lakhs ninety one thousand only) was imposed on M/s. HMD Exim Pvt. Ltd., Jaipur in lieu of confiscation under Section 125 of the Act. (3) Penalty of ₹ 1,60,00,000/- (Rupees one crore sixty lakhs only) on M/s. HMI) was imposed on Exim Pvt. Ltd., Jaipur under Section 114(1) (iii) of the Customs Act, 1962. Appeal No. C/556/2011 M/s. Prakash Sales Agency, Jaipur (1) Declared FOB value ₹ 64,56,456/- in respect of Quartz analog wristwatches exported from Air Cargo Complex, Jaipur during 1-1-2000 to 5-8-2004 by M/s. Prakash Sales Agency, Jaipur was rejected and PMV was determined as ₹ 19,04,000/- under Section 14(1) of the Customs Act, 1962 for the purpose of determination of DEPB benefit by the competent authority. (2) Quartz analog wristwatches of which PMV determined as ₹ 19,04,000/- (Declared - FOB value of ₹ 64,56,456/-) under Section 113(d) (i) of the Customs Act, 1962 were confiscated and such goods having been exported and not available for confiscation, redemption fine of ₹ 7,03,000/- (Rupees seven lakhs three thousands only) was imposed on M/s. Prakash Sales Agency, Jaipur in lieu of confiscat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore. Shri Anand further explained that there were 321 consignments exported during that period. Such export consisted 8 (eight) live consignments and 313 past consignments. All these consignments were suspiciously investigated. 29 past export consignments were subject to provisional assessment and such assessments were also finalized subsequently. But Revenue has denied the DEPB benefit on baseless allegation of over-valuation of exports and some of the importers were related parties to the exporter appellants. DEPB claim has been restricted to the figure adjudicated. 2.3 According to the appellants, the consequence of the allegation is mainly four fold. First one is denial of amount of DEPB claimed, the second one is confiscation of live as well as past consignments, the third consequence is rejection of the FOB value declared by appellant exporters and fourthly imposition of penalty and confiscation which is unwarranted. 2.4 Appellants submitted that market enquiry was made by Revenue to ascertain PMV of the aforesaid exports while exporting, all the shipping bills were accompanied by the cost statements. But Revenue adopted cost construction method to reduce the FOB decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot contain the model number and description of the watch meant for reporting. Further, when cross-examination of H.C. Brothers as well as the officer who were incharge of testing, was asked by the appellant, that was denied. That concern having no experience of dealing with watch, report of that concern is unreliable and unusable in adjudication. 2.8 Placing reliance on page 11 of volume 2 of paper book, ld. Counsel further submitted that the testing done by the concern mentioned therein also suffered from deficiency. When such concern as well as officers were required to be cross-examined, that was not allowed. 2.9 Placing reliance on pages 12 and 13 of the Volume 2 of paper book, similar objection was raised by ld. Counsel on the ground that both pages were identically typed and prices were written by parties in hand as required by customs officers. Cross-examination of the persons who examined the goods and the officers who were involved in the process were not allowed. That violated the principles of natural justice. It was further submitted by appellant that Thakur Das Khatri and Sons whose name appeared on pages 11 and 13 of the above paper book, filed affidavit averr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t corroborate with the samples taken at the time of seizure. 2.12 Revenue represented by Shri Amresh Jain, preliminary submitted that all the export consignments were covered by DEPB claim. When cost construction of goods exported was worked out, that revealed over-valuation thereof was proved. Cost of manufacture shown by appellant was very high and false. Appellants claimed exports of gold plated component watches falsely overvaluing FOB thereof in order to make undue claim of DEPB. This fact was corroborated from overseas enquiries and it was established that revenue was defrauded. Objecting to such averment Revenue, ld. Counsel for the exporter appellants submitted that there existed a gold register maintained by appellant which proved the usage of gold in making watch components. That gold register was seized by Revenue and given back later to the appellants. Such evidence deserves consideration by Tribunal. 3. Shri Amresh Jain, ld. Departmental Representative submitted that following material facts contributed to the demand :- (i) M/s. Rochees Watches Pvt. Ltd. in Appeal No. C/544/2011 was manufacturer appellant and the appellants Shri Ishwar Das Moolrajani in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time. (ix) It was convenient for the exporter manufacturer M/s. Rochees Watches Pvt. Ltd. to make a mis-declaration because the importers in Dubai, London and Hong Kong were related persons of Shri Ishwar Das Moolrajani and Shri Nanak Das Moolrajani, who were the Directors of the appellant-company as above. (x) Some of the goods, which were sent to Spain, established that very low value was coming from Spain to Dubai, as declared to Dubai customs, whereas, higher value was declared to Indian customs and such value was remitted from Dubai. Investigation precisely found out that the value declared to Dubai customs was 1/10 of the value declared to Indian customs. There was over-valuation of the goods compared to quality of the goods exported and the market value thereof was found to be very low. (xi) Merchant-exporters who appeared in Sl. Nos. 51 to 56 of cause list in Appeal Nos. C/556/2011 to C/561/2011 were the name-lenders to M/s. Rochees Watches Pvt. Ltd. They formed part of group of the manufacture exporter appellants. They were all operating from the campus of M/s. Rochees Watches Pvt. Ltd. having no place of business of their own. Those six merchant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Exports v. CC (Kol.) - 2006 (203) E.L.T. 107 (Tri.-Kol.), to submit that DGFT is the only authority to grant export incentive. Inviting attention to page 910 of the volume 4 of the paper book exhibiting, para 55.5 of show cause notice, it was that in absence of provision in Customs law, the Customs Authority has even no power to reduce the DEPB claim and direct recovery thereof from the appellants. It was further submitted that in the case of Hindustan Liver v. C.C. Customs (EP), Mumbai - 2012 (281) E.L.T. 241 (Tri.-Mum.), it has been held that Customs authority has no jurisdiction on DEPB issues which is the domain of DGFT. Also relied on the decision in the case of Pradip Polyfils Pvt. Ltd. v. UOI - 2004 (173) E.L.T. 3 (Bom.) for such proposition. 5.1 On the point of cost of production, it was submitted by the appellants that FOB declared to customs in respect of 8 (eight) live consignments finds place at page 923 of vol. 4 of paper book (page 5 of the show cause notice). Examining the elements constituting the FOB value declared a cost sheet was filed on 31-8-2004 (Ref : Para 5 of SCN). Reference may be made to page 850 of vol. 4 of the paper book (page 11 of SCN). Thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellants that Customs has no power to determine cost of manufacture to arrive at the FOB. This was held in C.C., Kandla v. Crown International - 2006 (203) E.L.T. 120 (Tri.-Mum.). Similarly the cost of manufacture has no relevance for the purpose of Section 14 of Customs Act, 1962. The only fact necessary is to examine whether transaction value was rightly declared. Selling price of manufactured goods is irrelevant to determine the FOB. PMV and FOB are different concepts altogether and FOB and PMV should not be confused because both are different as has been held by Tribunal in the case of PEE AAR Exim v. C.C., Amritsar - 2012-TIOL-1960-CESTAT-DEL serving different purposes in the trade. To further submit that FOB and PMV are different and PMV does not determine FOB value of export, reliance was placed on decision of Kanak Metal Industries v. C.C., Jodhpur - 2012 (275) E.L.T. 115 (Tri-Del). That decision was maintained by Apex Court in the case reported in 2013 (293) E.L.T. A25 (S.C.). In this case also meaning of PMV and FOB was explained. FOB is considered for grant of DEPB. Whereas PMV is the value which is the sale price of the goods in the domestic market. The FOB may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of provisional assessment. Page 64 of volume-III establishes full proof case of verification of PMV to finalize provisional assessment. Appellants reiterated that FOB and PMV are not one and the same relying on (para Nos. 6, 7, 9 and 16) of the decision of Tribunal in the case of Frost International Ltd. v. CC (Exports) - 2006 (206) E.L.T. 451 (Tri.-Mum.) in this regard. Decision in Frost International Ltd. was maintained by the Supreme Court as reported 2007 (215) E.L.T. A103 (S.C.). 8.3 Appellants further relied on the decision of Tribunal in the case of CC (Exports), Mumbai v. Unimac (India) Ltd. - 2006 (204) E.L.T. 95 (Tri.-Mum.) to support that FOB value of export price cannot be determined with reference to market price in India. It was submitted that the moment the FOB is questioned by the Customs Authorities, burden of proof lies on them to prove that there was mis-declaration. For this proposition, he relied on the decision in the case of Advance Export v. CC, Kandla - 2007 (218) E.L.T. 39 (Tri.-Ahmd.). 8.4 It was submitted by appellants that when the entire FOB value was realised and foreign remittances came to India, the FOB values appearing in shipping bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Union of India - 1978 (2) E.L.T. (J 172) (S.C.). Further, reliance was placed on the decision in the case of State of Kerala v. C - 1966 62 ITR 236 (paras 10 11) of volume-II of paper book page nos. 370-373 to support the contention that there cannot be presumption when all facts and circumstances of each case are different. Presumption of existence of similar factual situation and circumstances causes prejudice to the interest of justice. Therefore, without cogent evidence brought by the Customs authorities to prove that past consignments were mis-declared, there is no scope to deal such consignments in par with live consignments. 10.1 Appellants further submitted that while making watches the appellant had used gold in some of the components used therein. Gold purchase were recorded in gold register called salt register by the appellant. (Ref : to Volume No. 10 of the paper book). Statements were recorded about the use of gold and such use is verifiable from the salt register. Maintenance of salt register is verifiable from the para 11 of the show cause notice at page 848 of the volume IV of the paper book. That register was examined by the customs authorities and conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be challenged by another authority under different statute. When books of accounts were audited by chartered accountant and report thereon submitted, figures were conclusive. That cannot be challenged by the Customs authorities without finding any discrepancy or material irregularity in the figures. Appellants relied on the decision in the case of ITC Ltd. v. CCE - 2004 (171) E.L.T. 433 (S.C.) (para 48) to make such proposition. 13.1 On the issue of oversea enquiry, it was reiterated by the appellant that the officer who conducted enquiry abroad was adjudicating authority. But Revenue objected to such stand on the ground that this issue was not before the authorities below. Appellant did not press such plea further. However, appellant pleaded that market enquiry report relied by that officer is contrary to law since no one could be judged of his own cause. 13.2 Placing reliance on pages 504-506 of volume-II of the paper book, it was submitted by appellants that unsigned and unauthenticated documents were appearing therein. Such documents are not evidence and cannot be used against the appellants. These were not annexed to letter dated 19-6-2008 of the Counsel General of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aja Impex Pvt. Ltd. - 2008 (229) E.L.T. 185 (P H) in this regard. Ld. Counsel further submitted that ratio of these decisions was that when goods were not cleared against bond and bank guarantee and such goods not available for confiscation shall not be confiscated. 16. So far as imposition of penalty under Section 113(d) of Customs Act, 1962 is concerned, it was submitted that such provision shall not apply since the goods exported were not prohibited goods. Similarly so far as penalty under Section 113(i) of Customs Act, 1962 is concerned, that shall be applicable to the case of the appellant only in the case of live consignments and not to past consignments and that too from the date when amendment to the law came into force. 17.1 On the question whether importers of Dubai were related persons of exporters, it was submitted on behalf of the appellants that valuation questioned in para 46 of page 42 of show cause notice (page 880 of Volume-IV of paper book) has no basis without disclosing manner in which parties were related in SCN itself. In order to make allegation of related persons, it is essential for Revenue to show that there was mutual interest. Revenue was required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cannot be discarded. Since the value received from domestic sale remained unquestioned. That was also well explained in the statements recorded in clause 108 of Customs Act, 1962. Such value was reliable to be adopted as a FOB value. 17.5 Appellants also urged that Revenue s allegation that there was no domestic sale without any transport evidence is baseless. Revenue ignored the fact that watches were not bulky goods and can be transported without vehicles. Burden of proof to show that the goods were not capable of being transported without carrier was not discharged by Revenue. The allegation therefore, fails in view of the principles laid down in the following judgments :- (i) Mirah Exports Pvt. Ltd. v. Collector of Customs [1998 (98) E.L.T. 3 (S.C.)] (supra). (ii) CC, Calcutta v. South Indian Television Pvt. Ltd. [2007 (214) E.L.T. 3 (S.C.)]. (iii) Sounds N. Images v. Collector of Customs [2000 (117) E.L.T. 538 (S.C.)]. 18. It was further submitted by the ld. counsel for appellants that they had not acted mala fide and whether their intention was mala fide or not, guidelines given by the Hon ble Supreme Court in paras 24 and 26 in the case of Uniworth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r import by Customs Authority. Overvaluation of export is made for the purpose of money-laundering and such transaction are illegal under law. Modality of valuation of goods is stated in the judgment in para 3 at page 2 and following the law laid down in the case of Om Prakash Bhatia judgment (supra). Adjudicating authority has therefore, rightly determined FOB which is basis for grant of DEPB. He further submitted that principle laid down in the Om Prakash Bhatia judgment was reiterated in the case of CCE C, AP v. Suresh Jhunjhunwala [2006 (203) E.L.T. 353 (S.C.)] (para 20). 22. Learned DR explained that appellants were given 10 opportunities to explain their case even before issuance of Show Cause Notice (SCN). That is stated in different paragraphs thereof. But they failed to defend. Para 2 of SCN at page 84 of volume-IV of paper book shows that the exports (both past and live) made by appellants were overvalued to make undue claim of DEPB. The watches exported were Geneva , Yasoda Rivera and Star brands. Statements were recorded from different persons in the course of investigation. Sri Ishwar Das in his statement recorded on 31-8-2004 as extracted in para 4 at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded were incriminating in nature; (3) cost of manufacture was very low without use of gold; and (4) contradictory statements were given by the parties to divert attention of Investigation. All such factors contribute to the questionable modus operandi of appellants. 25.1 Placing reliance on cost sheet dated 31-8-2004, ld. DR further submitted that when department noticed that the said statement was fabricated and unreliable, appellant came on 10-9-2004 to submit another cost sheet showing lower cost of components. That was also false which was established from the statement recorded. The item covered by that cost sheet as appearing in cost sheet dated 31-8-2004 at page 5 of show cause notice was ₹ 195/-. But that was reduced to ₹ 45/- in the cost sheet of 10-9-20014 as per para 14 of SCN at page 11 thereof (ref. page 854 of volume-V of paper book). Para 14(1) shows that cost sheet dated 10-9-2004 was fabricated. Even though there was reduction in the cost, as appearing at page 11 of SCN, the cost of watches of each type was shown to be abnormally high. 25.2 When investigation found that there were contradictory statements and false cost sheets were filed, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant was arbitrary and without evidence. This is established from para 28 of SCN of volume-4. When investigation proceeded to analyze cost of components used in the watches as is exhibited by pages 872-880 of the paper book No. 4 and detailed analysis was done in para 45 of Order-in-Original, it revealed that all the cost sheets were engineered against Revenue. 26.3 Revenue analysed the cost of goods exported during the years 1999-2000 to 2000-2005 exhibited in Annexure C to SCN at pages 892 to 895 volume-4 of paper book. Cost of manufacture appearing in the said Annexure C when analyzed in detail with profit margin at pages 937 to 945 of volume-4 of paper book, that enabled investigation to determine PMV which demonstrated false FOB reflected in Shipping Bills. 27.1 Placing reliance on para 29 of SCN appearing at page 862 of volume-IV of paper book, ld. DR stated that cost sheet presented on 23-1-2003 was proved to be false. Chartered Accountant of the appellant issued false certificate. Falsification of documents was made by exporter-appellant. Such falsification was again confirmed by version of exporter-appellant in para 22 volume VII of paper book. Brand name was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation with Dubai Customs. That authority by letter dated 19-9-2005 informed DRI that the value declared to Dubai Customs was 10 times lower than the value declared to Indian Customs. All such facts appear in para 50.2 of SCN. Inviting attention to para 50.3, ld. DR submitted that by letter dated 20-7-2005, the Consulate General of India in Hong Kong reported that very high value was declared to Hong Kong Customs. But on detection by Customs, that was lowered by the importer revising the value stated in the Bill of Entry thereat. Such lowering was done to get rid of mis-declaration. Hong Kong Customs informed that the information revealed by letter dated 20-10-2005 was neither disclosable to third party nor usable in any proceedings. Inviting attention to para 50.4 of SCN, learned DR submitted that overvaluation was established fact. But investigation was handicapped due to embargo of UK law. 28.3 Revenue also relied on the decision of the Tribunal in the case of Mahalaxmi International Exports v. CC, Jaipur [2004 (169) E.L.T. 68 (Tri.-Del.)] to submit that the report of the foreign authority is reliable and Apex Court in the case of Manohar Rajaram Chhabria and Orson Electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ratio laid down by the Hon ble Apex Court in the case of Collector of Central Excise, Calcutta v. Pradyumna Steel Ltd. [1996 (82) E.L.T. 441 (S.C.)]. Revenue further relied on the decision of Hon ble High Court of Andhra Pradesh in para 47 in the case of Sravani Impex P. Ltd. v. ADG, DRI, Chennai [2010 (252) E.L.T. 19 (AP)] to submit that violation of foreign exchange law is to be dealt severely. Rejoinder of appellant 32. In rejoinder, ld. advocate for appellant submitted that cost construction is no prescribed mode of valuation under law. Therefore, Revenue s attempt to value the cost of the goods exported following cost construction method is not warranted. Reliance was placed on the decision in the case of C.C., Mumbai v. Vishal Exports Overseas Ltd. [2007 (209) E.L.T. 331 (S.C.)], to submit that cost construction method is not applicable. 33. Relying on the decision of the Apex Court in the case of Om Prakash Bhatia v. CC, Delhi (supra), appellant submitted that PMV in India has no relevance to determine FOB, since FOB is export value to be declared and the value so declared is to be realised. Therefore, that cannot be challenged by Revenue under any misconstructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having been rectified, there is no basis to discard the FOB declared by appellant to Hong Kong Customs (ref : page 764 of Volume-3 of paper book). Page 768 of Volume-3 of paper book supports appellants declaration in other transactions made to Hong Kong Customs. So also, page 782 of the said paper book supports this proposition. 38. According to the appellants, when Revenue failed to discard appellants arguments on the time bar issue and three years period being time-limit to deal DEPB cases as has been held by Tribunal in the case of Colourtex v. CC, Kandla [2012 (280) E.L.T. 225 (Tri.-Ahmd.)], Revenue had no authority to adjudicate a matter which is time-barred. Similarly, when Revenue did not rebut the arguments of the appellant on confiscation issue, such confiscation became unwarranted. 39. Lastly, it was submitted that points on which a decision is made that becomes precedent and no other points. Therefore, Revenue not arguing on the issues dealt by the judgments cited by the appellants, rendered the adjudication fatal as has been held in the case of State of Orissa v. Sudhansu Sekhar Misra Others [AIR 1968 SC 647], Similarly, irrelevant decisions cited by Revenue n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prescribed form. Provided that the Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically, allow an entry to be presented in any other manner. (2) The exporter of any goods, while presenting a shipping bill or bill of export, shall make and subscribe to a declaration as to the truth of its contents. [Emphasis supplied] 42.1 Determination of value of export is mandate of Section 50 of the Act following the meaning of the term assessment defined by Section 2(2) thereof. The term value is defined by Section 2(41) of the Act to serve the purpose of Section 14 of the Act. Therefore, it is considered necessary to reproduce Sections 2(2), 2(41) and 14 of the Act as under for convenience of reading : Section 2(2) assessment includes provisional assessment, self-assessment, re-assessment and any order of assessment in which the duty assessed is nil; Section 2(41) value , in relation to any goods, means the value thereof determined in accordance with the provisions of sub-section (1) or sub-section (2) of Section 14. Section 14 Valuation of goods . - (1) For the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of this section - (a) rate of exchange means the rate of exchange - (i) determined by the Board, or (ii) ascertained in such manner as the Board may direct, for the conversion of Indian currency into foreign currency or foreign currency into Indian currency; (b) foreign currency and Indian currency have the meanings respectively assigned to them in clause (m) and clause (q) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999). [Emphasis supplied] 42.2 Examining jurisdiction of the customs authority to determine value of exports whether liable to duty or not, Hon ble Supreme Court in Om Prakash Bhatia - 2003 (155) E.L.T. 423 (S.C.) held that whether the goods are liable to duty or not those are subject to assessment by customs authority. Even though the exporter is not concerned with the Prevailing Market Value (PMV) in India of the goods sought to be exported but he is required to disclose true export value of goods which should be truthfully done under Section 14 of the Act. This is clear from the reading of paras 12, 13 and 14 of the judgment. The said paragraphs are reproduced below fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod be, paid in the prescribed manner . 13. Apart from the aforesaid provision, for finding out the true export value of the goods. Section 14 of the Act provides relevant procedure. Section 14 is to be read along with Section 2(41), which defines the word value . Section 2(41) reads as under :- S.2(41) - value , in relation to any goods, means the value thereof determined in accordance with the provisions of sub-section (1) of section 14. Thereafter, relevant part of Section 14 reads thus :- Valuation of goods for purposes of 14.assessment. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be - the price at which such or like goods are ordinarily sold, or offered for sale; for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and price is the sole consideration for the sale or offer for sale : Provided that such price shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable for determining the value of the goods for the purpose of tariff or duty of customs chargeable on the goods. In addition, by reference it is to be resorted to and applied for determining the export value of the goods as provided under sub-section (41) of Section 2. This is independent of any question of assessability of the goods sought to be exported to duty. Hence, for finding out whether the export value is truly stated in the shipping bill, even if no duty is leviable, it can be referred to for determining the true export value of the goods sought to be exported. [Emphasis supplied] 42.3 Hon ble Court in the above judgment also held that where export value is not correctly stated but there is intentional over invoicing for some other purpose that is to say not mentioning true sales consideration of the goods then it would amount to violation of the conditions of export. The purpose may be money laundering or some other purpose, but it would certainly amount to illegal/unauthorized money transaction. In any case, over invoicing of the export goods would result in illegal or irregular transaction in foreign currency. This is patently clear fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccasions. It became further clear from the significant variation in the cost elements without satisfactory explanation thereon. All such factors proved that records of M/s. Roche Watches were unreliable. 44. Further, material borne by record discarded plea of use of gold in making watch components made by M/s. Roche Watches. Appellant was unsuccessful on such plea in view of very minor quantity of use of gold found in the samples drawn on 14-9-2004 sent to Department of Metallurgical, Malvia Institute, Jaipur for testing. This has established that the claim of the appellant that major quantity of gold used in making watch components was false. The brand of watches which were subject matter of test by the Department of Metallurgical, Malvia Institute, Jaipur containing minor amount of gold, can only be said to have contained minor quantity of gold used in the watch components manufactured by the manufacturer appellant. 45. Misdeclaration of the value of export to Indian Customs was patent from remittance of lower consideration in respect of the goods exported by the appellant M/s. Roche Watches to Dubai and such goods exported therefrom to Hong Kong which remained unrebutted l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequentially proceeding through Rules 5 to 8 of the 1988 Rules. (See : Commissioner of Customs (Gen), Mumbai v. Abdulla Koyloth - JT 2010 (12) SC 267 = 2010 (259) E.L.T. 481 (S.C.).). [Emphasis supplied] 47. No doubt, the initial burden to establish that the value mentioned by exporter in the shipping bill is incorrect lies on the Revenue. Revenue has discharged its burden in the manner indicated in the preceding paragraphs. Therefore, once transaction value under Rule 4 is rejected, the value must be determined by the sequential proceeding through Rules 5 to 8 of the 1988 Valuation Rules. In this regard reference may be made to Commissioner of Customs (General) v. Abdullah Koyletth - 2010 (259) E.L.T. 481 (S.C.). Following the ratio laid down in Abdullah Koyletth s case, the principle of law has been stated in para 16 of the judgment in Siddachalam Exports, Apex Court (supra). While explaining the law relating to valuation, the Apex Court in the case of Commissioner of Customs v. Abdullah Koyleth in para 15 of the judgment explained the modality of valuation as under : 15. Both Sections 14(1) of the Act (as it existed at the relevant time) and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market enquiry could be conducted only as a last resort. This is patent from para 19 of the judgment in Siddachalam Exports Pvt. Ltd. (supra). The said para is reproduced for convenience of reading and appreciation of the law relating to valuation of export during the material period : 19. In the present case, as stated above, neither the adjudicating authority, i.e., the Commissioner of Central Excise nor the CESTAT has dealt with the matter as per the procedure prescribed under the Act. At the threshold, instead of first determining the value of the goods on the basis of contemporaneous exports of identical goods, the Revenue erroneously resorted to a market enquiry. If for any reason, data of contemporaneous exports of identical goods was not available, the procedure laid down in Rules 5 to 8 of the 1988 Rules was required to be followed and market enquiry could be conducted only as a last resort. It is evident that no such exercise was undertaken by the Commissioner and interestingly he, acting as an appellate authority, proceeded to test the evidentiary value of the report submitted by M/s. Skipper International and rejected it on the ground that it does not depict if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customs authority is required to determine the proper value of export to carry out the object of the provisions of Customs Act, 1962. At the cost of repetition, it may be reiterated, that determination of the value of export being essence of the law for the reason that overvaluation may be for money laundering or some other purpose amounting to illegal/unauthorized money transaction, such an object of law cannot be given go by. The value of export determined by Customs whether adoptable by DGFT to entertain DEPB is left to the entire exclusive jurisdiction of that authority. Therefore, the appellant fails in its contention that determination of FOB is of no significance in law in view of exercise of jurisdiction over DEPB by DGFT. 52. The appellant manufacturer contended that every Shipping Bill of the past exports having been accompanied by cost statement to show cost of manufacture of watches shipped by such bill to satisfy the Customs authority that FOB was truthfully declared. That cannot be doubted. It was also contended that gold components being used in the watches exported; those were costly warranting declaration of higher FOB. But such contentions failed to be meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by learned adjudicating authority. 55. There is no difference to the proposition that onus of proof of mis-declaration of the FOB lies on Revenue. But Revenue has discharged its burden bringing out the material fact that there was declaration of very low value of import before Dubai Customs and Hong Kong Customs which were nearly one-tenth of the value declared to Indian Customs remaining unrebutted by the manufacturer exporter. Although the documents accompanying the overseas enquiry report were not visible to the authentic, the materials on record proving declaration of low import value to Dubai and Hong Kong Customs when failed to be ruled out, did not rule out questionable modus operandi of all the exporter appellants. 56. There was allegation of relation of importers with the directors of manufacturer exporter. No doubt manner of relationship was not brought out in the SCN. But their modus operandi proved accommodation by one party to the other to make declaration of low value of imports to Dubai and Hong Kong Customs. However the allegation of interconnected undertaking does not subsist in absence of such clear allegation in SCN. 57. The merchant exporters w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e carried out. 60. In view of the discussions made above on the principal issues, it is considered that dealing with various ancillary issues would be only academic exercise. 61. Since this order has proposed remand of the matter for revaluation of the exports, for the reasons stated aforesaid, it would be premature to decide on the penalty aspects. In the course of readjudication, if learned adjudicating authority finds that any of the persons or concerns is liable to penalty, he may pass appropriate order granting fair opportunity of hearing on such aspect also. 62. So far as confiscation aspect is concerned, law is well settled that when the goods exported were not covered by bond or guarantee and have left India, such goods are not confiscable. But goods available for export are confiscable if any of the elements of Section 113 of the Act are present. The goods in the present appeals are subject to the provisions of Section 18 of the Foreign Exchange Regulation Act, 1973 as well as Export (Control) Act, 1947 and law relating to export. Therefore, applicability of Section 113 is to be carefully examined by the learned adjudicating authority. However the decision relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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