TMI Blog2024 (4) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... 10825, 10826, 10827, 10828 of 2022 - FINAL ORDER NO. 10798-10841/2024 - Customs - Valuation of exported CD ROMS - Import of goods by availing excess export promotion benefits i.e. DEBP/DEEC Credits - intention of fraudulently obtaining excess DEBP/DEEC Credits, which were subsequently utilized for duty free import thereby causing loss of the Customs Duty - mis-declaration of value - suppression of facts - whether the duty foregone amount is liable to recovered from the respondents? - HELD THAT:- The transaction value declared is fair and the exports are genuine, the second allegation that respondents are not eligible for the DEPB entitlements, automatically loses its sanctity. Since the issue is no longer res integra, the instant revenue s appeals can not be sustained. The department s appeal does not allege that the licences had been cancelled by the Additional Directo rGeneral of Foreign Trade in the instant case. Clearly, the facts are on record that the DGFT has not cancelled the DEPB credit scrips and same were valid in the eyes of law. The DGFT has still not cancelled or modified the DEPB licences already granted. So it is clear that DGFT does not agree with the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since issues involved in these appeals are common and arise from same investigation, all the appeals are taken up together for disposal. 2. Brief facts of the case are that intelligence was developed by the officers of DRI that various companies had overvalued their exports of CD ROMS with the intention of fraudulently obtaining excess DEBP/DEEC Credits, which were subsequently utilized for duty free import thereby causing loss of the Customs Duty. Based on the said intelligence, investigations were initiated into the exports of CD ROMS and goods exported by respondents and other exporters. The Investigations revealed that exports had been overvalued to claim undue export benefits. 3. Investigation further revealed that during the year 1998 1999 M/s Adani Exports Ltd. and its Directors had hatched a conspiracy along with M/s Padmini Polymers Ltd. to export junk CDs declared as software at a grossly over invoiced value under DEPB/DEEC scheme to defraud the exchequer and to avail benefits under DEPB/DEEC scheme. The correct FOB value of the CD ROMS exported by M/s. Adani Exports Ltd. were re-determined and the DEPB credit of Rs. 11,92,05,000/- availed on the said fraudulent exports o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. and 8 titles exported by M/s Intercontinental (India) under DEPB schemes and the export prices of various titles covered in the subject shipping bills exported by the respondents have been proposed to be re-determined on the basis of contemporaneous exports prices for the material period, US Customs Report, Invoices of like goods etc. Apex court vide its order No. 2015(326) ELT A35 (SC ) dismissed the appeal of the revenue against the CESTAT order 2012 (280) ELT 225 (Tri. Ahmd.) wherein the Order-in-Original confirming over-valuation in the case of Colourtex had been set aside on 2 points of the Board s Circulars 69/97-Cus dated 08.12.1997. (i) Declared FOB was less than 150% of AR-4 price therefore market enquiry not required and, (ii) Approval of shipping Bills by SIIB indicating knowledge of procedure and value of export. 6. He further submits that in the instant matter revenue is in possession of documentary evidence in the form of invoices of the like goods based on which the contemporaneous price were arrived at. Thus in the instant matter there is variation in the method of re-determination of the value which distinguishes the instant matter with the case decided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Advance Exports, Crown International and Colour Tex, which have been upheld by the Hon ble Supreme Court. 11. He further submit that the impugned goods i.e. CD ROMS and the method of valuation adopted in the instant case are similar to that which was adopted in the above mentioned decisions and therefore, the issue is no longer res-integra. Ld. Adjudicating authority after placing reliance on the aforesaid orders rightly dropped the charges of show cause notice against the Respondents. 12. He also submits that Ministry of Finance (Department of Revenue) vide Circular No. 69/97-Cus dated 08.12.97 also clarified that where the FOB value is within 150% of the manufacturer s price, the same shall be accepted. In the present case, it is an undisputed fact that the FOB value was within the range of/lesser than 150% of manufacturer s price and therefore, the issue is even covered by the above-mentioned Circular dated 08.12.97. 13. He also argued that subsequent to the Show Cause Notice issued by DRI, SCNs dated 17.06.2003 [in the case of Inter Continental (India)] and 09.07.2003 [in the case of Adani Exports Ltd.] show cause notices were also issued by the DGFT whereby it was alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious allegation against the respondents, DRI has also initiated investigation against several exporters. We find that DRI also carried out investigation against M/s Colurtex. M/s. Colourtex is a merchant manufacturer and was engaged in the business of export of dyes, chemicals and polished diamonds. M/s Colurtex purchased CD ROMs from M/s. Padmini Polymers Ltd., New Delhi at a price of Rs. 600/- to Rs. 615/- per piece and exported through Kandla Port. On an investigation conducted by DRI, show cause notice was issued seeking to re-determine the value of the CD ROMs exported on the ground that the value which was declared was excessive. The said show cause notice also sought to impose penalties on the partner of the exporter M/s. Colourtex, M/s. Adani Exports Ltd. and M/s. Padmini Polymers Ltd. All the said assessee contested the said show cause notices on merits before the adjudicating authority. The adjudicating authority did not agree with the contentions raised by the said assessees and vide Order-in-Original No. KDL/COMMR/78/2003, dated 26-12-2003 confirmed that M/s. Colourtex had overvalued the CD ROMs exported and coming to such a conclusion re-determined and reduced the FOB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Padmini Polymers Ltd. which was returned after two and a half months, and M/s. Colourtex did not seek any interest from them. After recording of the above findings, he holds that the price declared by the appellant of Rs. 764/- to Rs. 770/- per CD ROM cannot be accepted as genuine price and he has also held that the appellant had not declared the present marked value of the goods on the shipping bill . 9. We are unable to accept the reasoning given by the adjudicating authority which is summarized as hereinabove to come to a conclusion that there was an overvaluation of the CD ROMs exported by the appellant. We find that in the replies given to the adjudicating authority, the appellant has very clearly indicated in the reply dated 8-5-2003 that M/s. Padmini Polymers Ltd. had made payment of central excise duty on the CD ROMs sold by them. It is also seen that in the said reply, appellants have categorically stated that they had negotiated with the purchasers in Singapore for the sale of CD ROMs for Rs. 764/- to Rs. 770/- per piece. In the said reply, they had specifically pointed out that the difference, between the purchase price and selling price was not major one and which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not agree to lower the PMV below the 150% mark. (c) Where the Maximum Retail Price (MRP) is required to be printed on the products as per the Weights Measures Act, the MRP indicated on the products may also be accepted as PMV. (d) For the products for which manufacturers have a Printed Price list, or a Catalogue indicating the local price of the products, the price indicated on the price list/catalogue shall be accepted as PMV. 4. (ii) Merchant Exporters (a) In the case of export goods purchased from the open market, or from a Manufacturer, the PMV will be accepted on the basis of Guidelines in paras (a) to (b) of para 3(1) ibid. (b) In case the PMV of the goods can not be determined as per the para above, the exporters may be required to furnish the sale invoice of the Authorised Dealer, or any other evidence to determine the correctness of the PMV declared by the exporters. In such cases evidence of local prices of similar goods may also be accepted as PMV. 5. In any case where PMV declared by the exporter can not be verified with reference to the parameters mentioned above, or is higher than 150% of AR-4 value and Asstt. Commissioner is of the opinion that PMV declared is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls were approved by SIIB which indicates that the procedures for export and the value declared was in the knowledge and was in accordance with the circular issued by the Board. We also find that clause 7 of the said circular categorically states that if no show cause notice is issued within thirty days from the date of export, the PMV declared shall be deemed to have been accepted. In the instant case, the show cause notice was issued to the appellant almost after a period of three years though after the investigation conducted by the office of the DRI. 11. The findings recorded by the adjudicating authority for coming to a conclusion it does not indicate that the appellants case has been considered by him with reference to the submissions made by them at the time of personal hearings and the replies filed by them. The factual aspect of the purchase of CD ROMs from M/s. Padmini Polymers Ltd. at a price cannot be discarded by the Revenue simply for the reason that the said M/s. Padmini Polymers Ltd. had no domestic sale and even if there is any domestic sale, it was to the tune of just merely 0.5% of the total sales affected by them. It is undisputed that even the 0.5% of domestic s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps are fraudulently obtained by the respondents, It would have been appropriate that the department and customs authorities should have taken steps to get the DEPB scrips cancelled by making reference to the DGFT authorities who issued the scrips. Without taking any such action, to say that the DEPB scrips issued by competent authorities are invalid and fraudulently obtained is not proper and legal. The Hon ble Bombay High Court in the case of Pradip Polyfils Pvt. Ltd. 2004 (173) E.L.T. 3 (Bom.) considered the scope of jurisdiction of the customs authorities to question the validity of DEPB licences and held as under: We have heard Counsel on both the sides. In this case, it is not in dispute that pursuant to the application made by the petitioners seeking benefit of DEPB Schemes in respect of exports of filter plates and accessories made of polypropylene, two DEPB licences were issued by the DGFT in favour of the petitioners. The endorsement made on the licences clearly show that the DEPB licences have been issued against the export of Polypropylene filters Plates and accessories as contained in the shipping bills furnished by the petitioners. The said DEPB licences were required ..... X X X X Extracts X X X X X X X X Extracts X X X X
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