TMI Blog2017 (5) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court is of the view that in the absence of sufficient proof being led, Revenue's doubt about the FOB value of the goods cannot be sustained. It has not substantiated its contention that the exported goods were overpriced. Furthermore, there was nothing on record to conclude that there were business interests between Padmini and its importers in Singapore, United States and USA so as to doubt that the transactions between them were not in the normal course of trade or that it was not a transaction at arms’ length. Hence, the declared FOB would have to be accepted. Since Revenue has not led any evidence to indicate either a 'Hawala' transaction or a back flow of money to Padmini through illegal means regarding the value of the exported goods, the export transaction cannot be viewed with suspicion. There is no reason to interfere with the impugned order of the Settlement Commission - petition dismissed - decided against petitioner-Revenue. - W.P.(C) 412/2006 & 413/2006 - - - Dated:- 15-5-2017 - MR. S. RAVINDRA BHAT MR. NAJMI WAZIRI JJ. Petitioner Through: Mr. Satish Aggarwala, Adv. Respondents Through: Mr. Mr. V. Lakshmikumaran with Mr. S. Vasudevan and Mr. Ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was entitled to duty free imports through the aforesaid licences under the schemes provided in Foreign Trade policy such as DEPB, EPCG and DEEC. These licences were freely transferrable and were sold in the open market by Padmini to third party importers to utilise them. Against seven of the advance licences, no imports were made. Against licence No. 83515, a duty benefit of ₹ 9,06,300/- was obtained without fulfilment of the corresponding export obligation. Against another licence bearing No. 82338, the export obligation was unfulfilled to the extent of ₹ 13,76,973/-. Regarding the remaining 16 advance licences, Padmini had claimed fulfilment of the export obligations. 3. The petitioner Directorate of Revenue Intelligence had issued two Show Cause Notice (SCN) on 20.04.2001 and 11.02.2001 respectively alleging that Padmini had claimed fraudulent fulfilment of the export obligation. Accordingly, it demanded jointly and severally an amount of ₹ 20,84,75,559/- (Rs. 19,44,83,561/- in respect of 33 DEPB licences and ₹ 1,39,91,998/- in respect of EPCG licence) vide Show Cause Notice dated 20.4.2001 and customs duty of ₹ 7,81,73,260/- in respect of 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as arms length trade under Section 14 of the Customs Act. Meanwhile, the DGFT during the pendency of the SCN cancelled the 25 advance licences granted to Padmini as void ab initio. 5. During the proceedings before it, the Settlement Commission had directed the Commissioner (Investigations) to furnish certain specific information apropos the amount for which 25 licences had been issued; the export obligations fulfilled/purported to be fulfilled along with the evidence, as may be; import value against each of them; admitted duty liability vis-a-vis the actual duty liability apropos the revenue and the duty liability according to the Commissioner (Investigations); the evidence on record in each instance was to be indicated. The latter s report admitted to a mistake in the computation of duty from ₹ 7,81,73,260/- to 7,76,68,432/-. 6. Padmini had argued that the cost of their CD ROMs was inclusive of the development costs of their own software and costs of purchase of the titles, as well as, marketing, advertising and replication cost; that software has short business cycles with corresponding profit cycles. Hence, there is a contemporaneous higher pricing only in the early ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It relied upon the order of the Special Director made on 30.03.2005, which noted that the remittance certificate issued by the banks indicating inter alia the invoice particular to Padmini related to the remittances received by it. The Settlement Commission observed that the Revenue had succeeded in indicating the possibility of a case of over-valuation in view of the prevalent contemporaneous lower prices and the fact that a substantial quantity of the exported goods were lying unsold in the USA without any indication as to whether the same were specifically sold at the time of remittances received from them. Hence, they would create a doubt about the bona fide of the declared FOB value. Referring to Section 14 of the Act it held: 10.1 The Customs Valuation Rules, 1988 framed under Section 156 of the Customs Act, deals with value of imported goods. As a matter of fact, even the provisions of Section 14 of the Act, refer only to goods on which duty is chargeable on ad valorem basis, though the said Section covers the goods under export also. However, during the hearing both the applicant and the Revenue had admitted that the provisions contained in the said Section 14 can ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y them, allegation of over-invoicing does not appear to be convincing. The Bench also takes note in this context that even the AO dt. 5.8.2002 of this Bench has observed that in view of this, we do not find any substance in the objection of the Revenue. We are however, satisfied that the disclosure made by the applicant of his duty liability and the manner in which he has arrived at it is reasonable. Particularly, since, it is not in dispute that remittances of fully declared export values have been received through the Banking channels and there is no allegation of any Hawala payment or any evidence that the proceeds received are in respect of anything other than the export goods, in question.(Emphasis supplied) It is also observed from a copy of the letter F.No.T-4/6-D/2001 (DEZ) 135 dt. 2.3.2005 of Dy. Director/Directorate of Enforcement, filed by the applicant, that the Enforcement Directorate has specifically observed In connection with the above, this is to inform that M/s. Padmini Polymers, New Delhi and its Directors have not been issued with any SCN for over-invoicing as there was no evidence to that effect. 10.5 Accordingly, the situation appears to be one of all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the latter s ab initio cancellation subsequent to imports would not have any impact on the said import . During the arguments, the counsel for Padmini had submitted that the cancellation of proceedings ab initio by the DGFT had been set aside in the appeal proceedings and this petition is not maintainable since the order of the Settlement Commission has been passed after scrutiny of evidence on record and taking into consideration the due submissions of the parties. 12. The counsel for Padmini also argued that the petitioner Directorate of Revenue Intelligence has no locus standi to file the writ petition under Article(s) 226/227 of the Constitution of India. If the Custom department was at all aggrieved by the impugned order, then the appropriate authority could have filed the writ petition. The petitioner being merely an investigating authority cannot contest the adjudication by the Settlement Commission. It was argued that only the officer of Customs who had been assigned to function either by the Central Board of Excise and Customs or by the jurisdictional Commissioner of Customs would be the proper officer for the purposes of assessment or reassessment. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the proper officer for the purposes of Section 17, i.e., assessment of the bills of entry can be considered as the proper officer for the purposes of Section 28(11) of the Act. As further explained in Shri Ishar Alloys Steels Ltd. v. Jayaswals Neco Ltd. (supra), the article the always denotes a particular thing or person. 69. The Court also finds merit in the contention that if jurisdiction is exercised by one officer of the Customs or of the DRI or DGCEI, it should impliedly oust the jurisdiction of other officers over the same subject matter. The doctrine of comity of jurisdiction requires that for the proper administration of justice there should not be an overlapping of the exercise of powers and functions. The decision of the Punjab and Haryana High Court in Kenapo Textiles Pvt. Ltd. v. State of Haryana (supra) and the decision of the Supreme Court in India Household and Healthcare Ltd. v. LG Household and Healthcare Ltd. (supra) are relevant in this context. Conclusion on the effect and validity of Section 28 (11) 70.1 The net result of the above discussion is that the Department cannot seek to rely upon Section 28(11) of the Act as authorising the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have preferred this writ petition against the order of the Settlement Commission, the writ petition would not be maintainable. This Court in its judgment dated 16.10.2015 in W.P.(C) 9783/2015 held that: It is well settled that the proceedings before the Settlement Commission are not adjudicatory but are by way of settlement. This Court does not sit in appeal over the settlement orders passed by the Settlement Commission. It is, therefore, not open to a party to make a grievance with regard to an adjudicatory process when the same is foreign to the proceedings before the Settlement Commission. We do not agree with the learned counsel for the petitioner that any interference with the impugned order is called for. 15. However, having considered the contentions of the learned counsel for the parties, the Court is of the view that in the absence of sufficient proof being led, Revenue's doubt about the FOB value of the goods cannot be sustained. It has not substantiated its contention that the exported goods were overpriced. Furthermore, there was nothing on record to conclude that there were business interests between Padmini and its importers in Singapore, United St ..... X X X X Extracts X X X X X X X X Extracts X X X X
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