TaxTMI 
TaxTMI 
2020 (11) TMI 546
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....15, 2020 of the Supreme Court. The operative portion of the judgment of the Supreme Court is reproduced below : "The appeal which has been filed by the Chief Commissioner Customs [Appeal Diary No 70226/2020] is pending before the CESTAT, Prayagraj. Mr N Venkataraman, learned Additional Solicitor General appearing with Ms Nisha Bagchi, learned counsel on behalf of the respondents apprised the Court of the fact that presently the Bench of the Tribunal at Prayagraj is not functional due to the existence of vacancies. 2. There is a need for an early resolution of the appeal or, in any event, the application for stay that has been filed by the Customs Department. Hence, the ends of justice would be served if the appeal is transferred to the Principal Bench of the Tribunal at New Delhi so that the appeal or, as the case may be, the application for stay can be taken up expeditiously. Mr Vishwajit singh, learned counsel appearing on behalf of the petitioner has no objection to this course of action to facilitate an early resolution of the dispute. 3. We accordingly transfer Appeal Diary No 70226/2020 from the CESTAT, Prayagraj to the Principal Bench at New Delhi. We request the Chair....
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....number of pieces, the prevailing market value and the drawback percentage. The panchnama also mentions that the two shipping bills had been filed claiming the benefit of drawback (DBK), Rebate of State Levies (RoSL) and Merchandise Exports from India Scheme (MEIS). The DBK and RoSL involved in the two shipping bills has been stated to be as follows : Sl. No. SB No. & Date Inv. No. and date DBK Involved ROSL Involved 01 --- 1286368 1946030 02 --- 1671268 2161187 6. The panchnama records that there is a short quantity of 1872 pieces in the cargo covered by one shipping bill. It also records that the export cargo was grossly over-valued 8 to 9 times for claiming undue export benefits and excess duty drawback, otherwise not admissible. This statement was based on a local market enquiry from traders/dealers of such type of garments. 7. The panchnama further mentions that the officers formed a reasonable belief that the goods were liable to confiscation under section 113(i) of the Customs Act since the export consignment was deficient in quantity and grossly overvalued. Accordingly, the Officers seized the impugned goods under section 110(1) of the Customs Act and placed th....
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....the said goods. In these circumstances the alleged shortage of 1872 pcs itself is questionable. However, even if the said shortage is accepted, the quantum of shortage is so meagre (1.33%) that it would be ridiculous to believe that the same was intentionally done by the appellant. In such situations, the CBEC's Customs Manual, vide Para 25 of Chapter 3, provides for amendment of Shipping Bill. The Assistant/Deputy Commissioner of the ICD was competent to permit such amendment. 6. (i) Regarding allegation of overvaluation, it is found that the declared FOB price was straightaway compared with the local trade opinion which is grossly illegal. As per section 14 of the said Act, the value of the export goods shall be the transaction value of such goods i.e. the price actually paid or payable for the goods when sold for export from India for delivery at the time and place of exportation. Thus, the export price is negotiated/ determined in the course of international trade and the same cannot be directly compared with local trade opinion of Kanpur. Rule 3(1) of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 also provides that the value of export goods sha....
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....er section 124 of the Customs Act before the goods are confiscated. In the instant case, before such an exercise could be undertaken, the Respondent filed an Appeal before the Commissioner (Appeals) on June 08, 2020, which Appeal was allowed on June 10, 2020, without even giving any opportunity to the Department; (v) The goods became prohibited goods as a wrong declaration was made by the Respondent. In support of this contention, reliance has been placed upon the decision of the Supreme Court in Om Prakash Bhatia vs Commissioner of Customs, Delhi 2003 (155) ELT 423 (SC); and (vi) The Commissioner (Appeals) completely misdirected himself in examining, at the stage of seizure, whether the value of the export goods would be the transaction value and whether the provisions of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 the Export Valuation Rules were required to be followed. 11. Shri Vishwajit Singh, learned Counsel appearing for the Respondent supported the order passed by the Commissioner (Appeals) and made the following submissions : (i) The exercise of power under section 110(1) of the Customs Act was not justified in the present case as the C....
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....d. 13. The seizure memo dated June 03, 2020 mentions that in respect of one consignment the goods are deficient by 1872 pieces and that both the consignments appear to be grossly overvalued. The two shipping bills had been filed claiming the benefit of drawback, RoSL and MEIS, which are entirely dependent on the market price of the goods. It is for this reason that the seizure mentions that the goods have been seized under section 110(1) of the Customs Act as they were liable to confiscation under section 113(i) of the Customs Act for contravention of sections 50(2) and 75 of the Customs Act read with rule 3 of the Customs and Central Excise Duties Drawback Rules, 2017 Drawback Rules and section 14 of the Customs Act. 14. Section 110 of the Customs Act deals with seizure of goods, documents and things. Sub-sections (1) and (2) of section 110, which are relevant for the purposes of this appeal, are reproduced below : "110. Seizure of goods, documents and things - (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods : PROVIDED that where it is not practicable to seize any such goods, the proper offi....
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....llow 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. (3) The exporter who presents a shipping bill or bill of export under this section shall ensure the following, namely:- (a) the accuracy and completeness of the information given therein; (b) the authenticity and validity of any document supporting it; and (c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force. 51. Clearance of goods for exportation- (1) Where the proper officer is satisfied that any goods goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation:" Provided xxx xxxx xxx Provided further xxxx xxx (2) xxx xxxx xxx " 18. It would, therefore, be seen from the aforesaid provisions of the Customs Act that the exporter of any goods shall make e....
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....nged from Rs. 32 to Rs. 87 per piece. 20. The Commissioner (Appeals) has set aside the seizure memo dated June 3, 2020 for the following reasons: i. The alleged shortage of 1872 pieces is questionable and even if the said shortage is accepted, "the quantum of shortage is so meagre' (1.33%) that it would be ridiculous to believe that the same was intentionally done by the Appellant"; ii. As regards the allegation of overvaluation, the declared price was straightway compared with the local trade opinion, which is contrary to the provisions of section 14(1) of the Customs Act and rule 3(1) of the Export Valuation Rules; iii. The transaction value can only be challenged in terms of the Export Valuation Rules. The Department has disregarded the price of the goods purchased under proper GST invoice; and iv. The facts and circumstances of the case indicate that 'reasonable belief is not formable'. 21. The contention of learned Authorized Representative of the Department appearing for the appellant is that the facts and circumstances of the case clearly demonstrate that the proper officer had reason to believe that the goods were liable to confiscation and, therefore, the goods w....
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....24. In Tata Chemicals Ltd. v/s Commissioner of Customs (Preventive), Jamnagar (2015) 11 SCC 628, the Supreme Court observed as follows:- "15. Statutes often use expressions such as "deems it necessary", reason to believe", etc. Suffice it to say that these expressions have been held not to mean the subjective satisfaction of the officer concerned. Such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with the restraints imposed by law. " 25. In Worldline Tradex Pvt. Ltd v/s The Commissioner of Customs (Imports) & others (2016) 340 ELT 174 (Delhi High Court), the Delhi High Court observed as follows:- "23. The power of seizure under Section 110 of the Act has to obviously be exercised for valid reasons. The proper officer has to record his reasons to believe that the goods that he proposes to seize are liable to confiscation. The said reasons for exercise of the power have to be recorded prior to the seizure. In the present case, as already noticed, apart from the panchnama, there is no separate order passed under Section 110(1) of the Act by the proper officer recording the reasons to believe that the goods are liable for con....
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....accountability against abuse of power by detaining goods for indefinite period on the ground that they were in the process of checking the value or nature of goods. They are under legal obligation to do so promptly and if by reason of their incompetence they are unable to do so, detention of goods beyond reasonable time cannot be allowed." (emphasis supplied) 27. None of these decisions, which have been relied upon by the learned counsel for the Respondent, advance the case of the Respondent. 28. The power of seizure, as was held in Tata Chemicals, has to be exercised in accordance with the restraints imposed by the law and as held in Sheo Nath Singh, it can be exercised on the basis of direct or circumstantial evidence and not on mere suspicion. In Worldline Trade, the Delhi High Court found that apart from the panchnama there was no separate order passed under section 110(1) of the Customs Act by the proper officer recording a reason that the goods were liable to confiscation. The contention of the Department that mere 'detention' of goods should be treated as the seizure in terms of 110(1) of the Customs Act was not accepted by the High Court. In Om Udyog, the Punjab and Har....
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....e goods are liable to confiscation. 31. Learned counsel for the Respondent submitted that the allegation in the seizure memo about overvaluation of the goods in the shipping bills is not correct. In this connection learned counsel referred to the provisions of section 14 of the Customs Act as also the Export Valuation Rules. According to the learned counsel, the value of the exports goods should have been treated as the transaction value since the export price is negotiated /determined in the course of international trade and the same cannot be compared with the local trade opinion of the market. Learned Counsel pointed out that the seizure memo records that the consignment appeared to be grossly overvalued but this is merely on the basis of the market value of the goods in the local market. This inference is not correct, more particularly when the goods were purchased by the exporter under proper GST invoice. In this connection, the provisions of rule 3(1) of the Export Valuation Rules have also been referred to. 32. The Commissioner (Appeals) had also concluded that the proper officer straightway compared the declared price with the local trade opinion, which was illegal. The C....