9911796707
TMI Blog2024 (1) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming total drawback for Rs. 11,71,805/-, refund of Integrated Goods and Service Tax (IGST) of Rs. 42,32,438/- and Refund of State Levies (ROSL) of Rs. 6,91,458/- being taxes/duties suffered on the export products. The goods covered by the shipping bills were duly assessed and cleared for export by Customs following the due procedure. The drawback, IGST refund and ROSL amounts as indicated above have been paid to the appellants after grant of "Let Export Order" and shipment of the goods for export. 2.2 Subsequent to the clearance of the goods for exports, on the basis of certain intelligence that the exporter have mis-declared the description of the goods and over valued the exports in order to avail of inadmissible higher amount of drawback, refund of IGST, ROSL, the Commissioner (General), JNCH, Nhava Sheva had directed the custodian CFS-JWR, Panvel to put on hold the goods exported by the appellants vide his letter dated 25.10.2018. However, it was reported by the Custodian that the goods have already been gated out from Container Freight Station (CFS) and were found to have been already shipped on board to Lagos by Maersk Line India Pvt. Ltd., in container No. MSKU0011063 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as above with liberty to the Petitioner to file an appeal. 5. At this stage, the learned Senior Advocate appearing for the Respondents states that in case the appeal is filed within a period of two weeks, the Respondents will not raise an objection regarding limitation. The Tribunal will take note of this stand of the Respondents." 2.6 As per the order of the Hon'ble Bombay High Court, appellants had preferred an appeal before the Tribunal within two weeks' time. Taking the note of Hon'ble High Court's Order, the said appeal was admitted and held maintainable by the Tribunal vide its Order No. I/07/2020 dated 27.10.2020. Subsequently, after hearing both the parties, this Tribunal had passed the Final Order No. A/85190/2021 dated 29.01.2021 in the first round of litigation. The extract of the relevant paragraphs of the above order is given below: "4.5 The goods were examined by the departmental officers and the samples drawn on 10.04.2019, as stated by the appellants in their communication dated 12.04.2019, and not disputed by the revenue. In para 2 of their letter dated 04.01.2021, revenue states as follows: "2. In this regard, it is to inform that on the basis of certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under: "3. In regards to detention waiver, it is to that this office will follow Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 which states that- The Customs Cargo Service provider shall - Subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer as the case may be:" Taking the note of the above submission made by the revenue before us and admitting that these goods have been detained by them, we are of the opinion that these charges should be waived and proper certificate in this regards be issued by the concerned authorities. 5.1 In view of the discussions as above, the appeal is disposed of as per our observations in para 4.11, 4.12 & 4.13, supra." 2.7 In pursuance to the above order of the Tribunal dated 29.01.2021, the Additional Commissioner of Customs, JNCH, Nhava Sheva being the original authority had passed an Order-in-Original No. 593/2020-21/ADC/NS- II/JNCH/CAC dated 27.02.2021, wherein the assessable value was redetermined as Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence determination of comparable prices without considering these factors is not a fair comparison and not supported by law. The domestic value of goods cannot be used to redetermine the FOB value of the export goods. In support thereof they relied upon the decision of the Tribunal in the case of J.S. Designers Limited Vs. Commissioner of Customs, ICD Dadri (Noida) 2018 (364) E.L.T. 628 (Tri.-All.). 3.3. It is also reiterated by the learned Advocate that the customs authorities have been time and again made aware of the fact that the appellants have already realized the amounts indicated in the shipping bills in respect of exports from its purchasers abroad through banking channels and the consignee was awaiting for export goods. However, despite production of evidence in the form of e-BRCs for the receipt of payments in convertible foreign exchange as per the FOB value of goods indicated in the invoices and shipping bills, these goods have been detained/seized on the ground of over valuation of goods on the basis of market survey. Hence, he claimed that such an action of Customs is contrary to the law and instructions of the department and thus he stated that the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of valuation of export goods, and for determination of the fact whether it amounted to over valuation or not; and the proper determination of consequential benefits available to the exporter upon exportation of such goods; and deciding on the basis of the facts of the case, as to whether the export goods are liable for confiscation and whether the appellants are liable for imposition of penalties under the Customs Act, 1962. In this regard, we also find that the original authority, on the basis of Final Order No. A/85190/2021 dated 29.01.2021 passed by this Tribunal in an earlier appeal in the very same case, have adjudicated the case by listing out the issues for determination. The relevant paragraph of the Order-in- Original dated 27.02.2021 is extracted below for ease of reference: "25. I find that the following issues in the instant case:- i) Whether the description of goods and value thereof declared by the exporter in the S/Bill are correct or otherwise; ii) Whether the declared total FOB value of Rs. 6,40,08,137/- in respect of goods covered under 11 shipping bills are liable to rejection under Rule-8 of Customs Valuation (Determination of Value of Export Goods) Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all intimate the exporter in writing the ground for doubting the truth or accuracy of the value declared in relation to the export goods by such exporter and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1). Explanation. - (1) For the removal of doubts, it is hereby declared that- (i) This rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 6. (ii) The declared value shall be accepted where the proper officer is satisfied about the truth or accuracy of the declared value after the said inquiry in consultation with the exporter . (iii) The proper officer shall have the powers to raise doubts on the declared value based on certain reasons which may include- (a) the significant variation in value at which goods of like kind and quality exported at or about the same time in comparable quantities in a comparable co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the export goods cannot be determined under the provisions of rules 4 and 5, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules provided that local market price of the export goods may not be the only basis for determining the value of export goods. Rule 7. Declaration by the exporter. - The exporter shall furnish a declaration relating to the value of export goods in the manner specified in this behalf." 8.1. From the records of the case, we find that the appellants have declared the FOB value of export goods as given in their commercial invoices, which is the transaction value. Further, submitting the declaration form in terms of Rule 7 above, is primarily the responsibility of the exporter. In the present case, it is not in dispute that the values indicated in the Shipping Bills were matching the value particulars declared in the commercial invoices. Further, any exercise in re-determination of value other than the transaction value has to be adopted step-by-step approach on the basis Rule 3 ibid, and after rejection of transaction value as per Rule 8 ibid. In order to establish the allegati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art payment for six S/Bs so far; and the goods were mis-declared for size and composition. Thus, he concluded that no comparative exports could be relied upon for redetermining the value and hence it cannot be determined under Rule 4 and Rule 5 ibid. However, he relied upon the market survey report of the officers of CIU & SIIB of Customs conducted on 17.05.2009, as it has been conducted in the presence of power of attorney holder of exporter and these were market value of the goods of like kind and quality. Further, the impugned order also reiterated the grounds relied upon by the original authority for adjudging the confirmed demands and for upholding the re- determination of export value, as the investigation officers have followed the provision of Customs Valuation (Determination of Value of Export Goods) Rules, 2007 and have proceeded sequentially and resorted to Rule 6, i.e., market survey; and as per the market survey report, which was conducted along with the representative of the exporter. Thus, the impugned order had re-determined the FOB value of the export goods covered under 11 S/Bs as Rs. 2,34,42,440/-as against declared value of Rs. 6,40,08,137/-. In the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of export goods in foreign exchange as declared in the respective shipping bills have been realized by exporter-appellants. The above table indicates that in respect of 9 S/Bs at Sl. No. 3 to 11 above the full FOB value have been realised, and in respect of 2 S/Bs i.e., Sl. No. 1 & 2 above, whole of FOB value less commission charges have been realized. In the said e-BRCs, a note on the realised value has been given stating that the realized value in foreign currency may not include commission. It is also seen that in the above referred two shipping bills, the commission charges have been indicated, and after deducting the same, the foreign exchange received as reported in e-BRC indicate the full amount of FOB in respect of those two shipping bills. In view of the above, we find that the entire FOB value of export goods have been realized as duly reported in e-BRCs. We are surprised to note that how both the authorities below could have ignored the basic facts of bank realization of export proceeds in any export transaction. On the basis of above factual details, we find that the conclusion arrived by the original authority in Order-in-Original dated 27.02.2021 as well as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Revenue that there existed any parallel invoices which are of incriminating evidence to prove that the subject export goods have been over-valued in this case. Neither was there any data base in ECDB for comparison of transaction value of goods of like kind and quality of those goods that were exported, at or about the same time, to other buyers in the same destination country of importation, nor the value as computed on the basis of cost of production, manufacture or processing of export goods, have been attempted by the authorities below for determining the value of goods in this case. Further, while determining the value as per residual method under Rule 6 ibid, it was nowhere explained how it can be construed that the market survey report prices can be adopted as a reasonable means consistent with the principles and general provisions laid down in these Rules, inasmuch as the local market price of the export goods may not be the only basis for determining the value of export goods. 9. We also find that the Central Board of Excise & Customs (CBEC), Ministry of Finance had issued detailed instructions in Circular No. 37/2017- Customs dated 09.10.2007, while introduci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared value for the export goods in certain exceptional cases. These are situations where the assessing officer has reasons to doubt the truth or accuracy of the declared value and further enquiry or investigation is needed to determine the appropriate value. It is hereby instructed that when an investigation / enquiry is undertaken to determine whether or not the Declared Value should be accepted as Transaction Value, the export consignment shall not be ordinarily detained. Wherever there are doubts about the declared value of the export goods, the proper officer shall retain representative sealed samples, wherever considered necessary and feasible, and allow the goods to be exported after due processing. However, it is clarified that in a situation of serious violation such as outright mis-declaration of goods, attempt to export the goods unauthorisedly, i.e., smuggle the goods out of the country, or where there is forgery or fraudulent documentation, the goods may be detained or seized as required. No export consignment shall be detained for reasons of doubts regarding valuation without the approval of the jurisdictional Commissioner of Customs. 6. An 'Explanation' re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruth or accuracy of the declared export value. The Export Valuation Rules are not intended to bring about any significant change in the existing pattern of valuation of export goods. It is the responsibility of the supervisory officers to monitor regularly the export valuation practices, so as to ensure proper implementation of the said Valuation Rules without hindering the flow of bona fide export goods." We find that in the present case, none of the instructions, either with respect to determination of value in terms of the extant Rules, or with regard to issue a query memo specifying reasons for raising a doubt about truth or accuracy of the declared value in terms of Rule 8 was raised; further, the instruction for allowing/release of the goods for export against a simple undertaking after drawl of representative sample was also not followed. Even in case warranting seizure or detention of export goods, the provisional release of such goods were not allowed within the prescribed time for allowing it to be exported. In fact, in the present case, the goods had already been exported out of the country and subsequently, the same were brought back into the country, for examination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wback rate' and the amount of 'drawback cap per unit' for various commodities would vary and in respect of the impugned goods such rates may be varying depending upon the composition of the product, whether it is made of cotton; or made of blend containing cotton and the man-made fibre; or of man-made fibres; or of silk; are of wool etc. Thus, in our considered view there is no mis-declaration of the description of the goods and these test results are only helpful in determination of appropriate classification of export goods and for determining the correct drawback rate and other eligible export benefits in respect of the exports, if they are dependent on the customs classification of the goods. Further, in the declarations made by the appellants in the shipping bills, though it is stated that there is a mis-declaration of description of export goods, nowhere in the impugned order there is a detailed discussion on the nature of such mis-declaration and how this had impacted on availment of higher drawback and other export benefits; rather they simply relied on the investigation report of the Customs dated 18.01.2019. The learned Commissioner of Customs (Appeals) conforming the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same is liable to be set aside. Further, for refund of IGST as per Rule 96 of the CGST Rules 2017, refund is allowed in respect of IGST paid on goods exported out of India, by matching the details in the shipping bill filed by an exporter with the GST Returns data transmitted by GSTN. The matching between the two data sources is done at Invoice level and the IGST refund module has been designed in line with the above rule and has an in built mechanism to automatically grant refund on the basis of match of the laid down parameters, and hence redetermination of refund of IGST by reducing the eligible amount on the basis of market survey value is not legally sustainable and the same is also set aside. In the ROSL scheme, the Central Government provides rebate of State levies comprising of State VAT/CST on inputs including packaging, fuel, duty on electricity generation and duties and charges on purchase of grid power, as accumulated through the stages of production from yarn to finished garments. Thus, redetermination of the reduced amount of ROSL in the impugned order is liable to be set aside as the same is not legally sustainable. 12.1 It is on record that the export goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als mis-declaration with respect to sizes and composition. The appellant has filed the shipping bills certifying the truthfulness of the declaration. Examination revealed gross over valuation. Records reveal that the goods were carted and would have been exported but for the timely intervention of the Customs Officers. Accordingly it is proved beyond doubt that the exporter appellant has grossly overvalued their declared FOB consequently attempted to claim ineligible benefits on the basis of export documents with malafide intention to defraud the Govt. exchequer, which is undoubtedly in breach of Section 50(2) of the Customs Act, 1962 read with Rule 11 of Foreign Trade (Regulations) Rules, 1993. Thus, there is deliberate mis- declaration, mis-statement and suppression of facts regarding the actual value of the impugned goods on the part of the exporter with malafide intention to claim undue drawback, MEIS and IGST Refund. 14. I have carefully gone through the case when the considered the submissions made by the Appellant. I find that the impugned Order-in- Original No. 593/2020-21/ADC/NS-II/JNCH/CAC dated 27.02.2021 has been passed by the Addl. Commissioner of Customs, DBK, CAC ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever they drew representative samples in order to determine the alleged over-valuation and mis-declaration of export goods. We have already seen that in the earlier round of litigation, the appellants had prayed for provisional release of the export goods covered under detention by the Customs authorities, and they filed an appeal on the ground that the order of provisional release under Section 110A ibid, was too harsh on them. While deciding the case of the appellants in the first round of litigation, this Tribunal had already observed that is was quite evident that goods could have been provisionally released to the appellants immediately after panchnama proceedings on 10.04.2019, for which the appellant had made request on 12.04.2019, in terms of Circular No 01/2011-Customs dated 4th January 2011. However, there was a failure on the part of Revenue to complete the proceedings early within the prescribed time frame which had not only affected the interests of the exporters, but has also impacted the revenue interests. 14.2 In view of the above, we deem it necessary to examine the instructions issued by the Central Board of Excise & Customs (CBEC) in the context of provisional r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s when the goods are to be detained for purpose of tests etc. to confirm the declaration. In such cases the endeavour should be to quickly undertake the necessary action (test/enquiry etc.) and take appropriate legal action thereafter so that the period of detention is kept to the minimum. Thus, the following course of action is prescribed in respect of goods entered for exportation: (a) In case the export goods are found to be mis-declared in terms of quantity, value and description and are seized for being liable to confiscation under the Customs Act, 1962, the same may be ordered to be released provisionally on execution of a Bond of an amount equivalent to the value of goods along with furnishing an appropriate security in order to cover the redemption fine and penalty. (b) In case the export goods are either suspected to be prohibited or found to be prohibited in terms of the Customs Act, 1962 or ITC (HS), the same should be seized and appropriate action for confiscation and penalty initiated. (c) In case the export goods are suspected of mis-declaration or where declaration is to be confirmed and further enquiry/confirmatory test or expert opinion is required (as in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case. However, none of these instructions were followed in the present case and the goods were kept under customs detention from 10.04.2019 till an order for provisional release was communicated vide letter dated 13.06.2019; and this continued even during the first round of dispute till this Tribunal had passed an order on 29.01.2021, for either adjudication of the case within one month from the date of such order or if that was not feasible, then to provisionally release the detained export goods within a week of receipt of such order on execution of bond equivalent to the value of the goods and security in the form of Bank Guarantee of Rs. 20,00,000/-. Further, in the absence of any document or other evidence proving overvaluation of export goods, the claim of the Revenue that the appellants have mis-declared the description of the goods to claim higher ineligible export benefits does not sustain. Thus, we are of the considered view that the action taken by the department in the impugned order for confirmation of the adjudged demands along with confiscation of goods and imposition of penalty on the appellants is not legally sustainable. 15. We also find that the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals are, accordingly, dismissed." We further find that the case law cited by the learned AR in Om Prakash Bhatia (supra) is not applicable to the present case, inasmuch as the fact of the case before us is fundamentally different. It may be noted that in the present case, the appellants-exporter had produced e-BRC certifying the repatriation of foreign exchange for the full FOB value in respect of all eleven S/Bs through the banking channel as opposed to the case in Om Prakash Bhatia where the exporter had not led any evidence that export value mentioned in the shipping bill was the true sale consideration and the claim for drawback filed by the exporter was withdrawn. Thus, the facts of the present case is distinguishable from the one quoted in the Om Prakash Bhatia (supra) and thus the same is not relevant to this case. 16. In view of the above detailed discussions and findings recorded therein, we conclude that the impugned order upholding the order of original authority in confirmation of adjudged demands, confiscation of goods and imposition of penalty on appellants, is not legally sustainable and hence the same is set aside. Further, for the limited extent of determinat ..... 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