TMI Blog2000 (12) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of drawback per piece claimed by the appellants was Rs. 78/- as against the market price of Rs. 45/- per piece. The Commissioner of Customs - the adjudicating authority - as per the impugned order confiscated the said goods subject to the payment of redemption fine of Rs. 10,00,000/-. A penalty of Rs. 20,00,000/- was imposed. When the matter came up for hearing before the regular bench on 21-9-2000, the appellants relied upon the Tribunal's decision in the case of M.V.T. International v. Commissioner of Customs, New Delhi - 2000 (117) E.L.T. 258 (Tribunal). The Departmental Representative submitted that a contrary view had been expressed in a number of other decisions. Faced with such conflicting views expressed by different benches of the Tribunal having coordinate jurisdiction, the matter has been placed before the present Larger Bench of 5 Members. 2.The matter was heard on 23-10-2000 when Shri Prem Ranjan Kumar, Advocate submitted that the matter was already covered by the 3 Member Larger Bench decision of the Tribunal in the case of J.G. Exports Ors. v. Collector of Customs, New Delhi [2000 (121) E.L.T. 754 (T-LB) = 2000 (40) RLT 755 (CEGAT - LB)], wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exporters pleaded that it was an un-intentional mistake which had happened on the part of the fabricators and suppliers. It was prayed that a lenient view be taken. The issue of show cause notice was dispensed with, and it was admitted by the exporters that they were willing to abide by the decision of the Commissioner of Customs. During the course of hearing on 6-2-1999, it was admitted by the exporters, that the market price of Rs. 45/- per piece was acceptable to them and that their claim for drawback did not hold any ground. The adjudicating authority, the Commissioner of Customs, noted that this was the second such case belonging to the same exporters and that there was an organized racket to claim fraudulant drawback by deliberately over-invoicing the readymade garments. After analysing the matter and taking into consideration the relevant facts and circumstances of the case, he imposed a redemption fine of Rs. 10,00,000/-. A penalty of Rs. 20,00,000/- was also levied. It was held that no drawback was admissible even if the party exported the goods in terms of Section 76 of the Act as the market value of the goods was less than the amount of drawback claimed. 4. While i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the price is the sole consideration for the sale or offer for sale. There are further provisions regarding rate of exchange, valuation rules, etc. for determination of the value in accordance with the provisions of sub-section (1) of Section 14 aforesaid. Even where no duty of customs was chargeable on any goods, or was chargeable not with reference to their value (i.e. specific rates), the value of such goods for export was required to be declared. Such value was to be determined in accordance with the provisions of sub-section (1) of Section 14 of the Act. The provisions of sub-section (1) of Section 14 as how to determine the valuation of goods for the purposes of assessments, have been adopted in the Customs Act in all cases where there is a reference to the 'value' in relation to any goods, unless the context otherwise requires. The valuation for the purposes of Customs Law has been explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also extracted below :- "6.I have carefully considered the submissions of the parties herein. A perusal of the provisions of the Export Control Order 1977 with particular reference to Rule No. 13 would make it abundantly clear that an exporter is under a statutory obligation to furnish in the shipping bills and other connected documents the value, sort, specifications, quality and description of the goods that are exported. It will be useful to extract sub-clause (4) of Clause 2 and Clause 13 of Export Trade Control Order, 1977 : "2(4) If in any case, it is found, that the value, sort, specification, quality and description of the goods to be exported are not in conformity with the declaration of the exporter in those respects or the quality and specification of such goods are not in accordance with the terms of the export contract, the export of such goods shall be deemed to be prohibited." "13. Declaration as the value, sort, quality etc. of exported goods. - On the exportation from any Customs port of any goods, whether liable to duty or not, the owner or exporter of such goods shall, in the shipping bill, or other relevant document state the value, sort, specifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng exported for purposes of sale in a foreign country. The fact that the quality of rosewood veneers is determined mainly with reference to colour, structure, grains, absence of defects, thickness and other measurements, and the purposes for which they are used, does not admit of any controversy; nor is the same controverted by the appellants. Thickness of the veneers exported would be one of the surest indicators regarding the value of the same and as rightly pointed out by the Collector in the impugned order, while thickness of veneers exported is usually of two standard sizes, viz. 0.2 mm and 0.5 mm, 8 crates of veneers under seizure contain veneers of 0.5 mm thickness and the remaining 2 crates contain veneers of 0.6 mm thickness. I therefore do not find any substance in the submission of the learned counsel that there is no under-invoicing or mis-declaration of the value of the consignment for export. The plea of the appellants that there is no prohibition either under the Export Control Order or any other order and that there is no statutory definition of the item in question is hardly relevant for determination of the issue relating to under-invoicing or undervaluation withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, value of export consignments of rosewood veneers of similar quality exported from the same port in the preceding few months nor did they want to avail themselves of an opportunity to cross-examine the persons connected with the sources of such information. In such circumstances it is puerile for the appellants to merely assert that the market enquiry and the reliance on the aforesaid facts and circumstances are made conjectures. As rightly pointed by the learned DR, Sec. 14 of the Act deals with valuation of goods for purposes of assessment and the same shall be deemed to be, - (a) 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 the price is the sole consideration for the sale of offer for sale : Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Sec. 46 or a shipping bill or bill of export, as the case may be, is presented under Sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods enjoyed exemption from payment of duty, if the need arises for determination or declaration of the value, then unless there was anything repugnant in the subject or context, such value was to be determined or declared as per Section 4 of the Act of 1944. Valuation of goods under an exemption notification is to be done in accordance with the provisions of Section 4 of the Act of 1944. It was so even when there was no central excise duty chargeable on exempted goods and the provisions of Section 4 referred to the value for levy and collection of duty (refer Supreme Court decision in the case of Bata Shoe Company (P) Ltd. v. CCE - 1985 (21) E.L.T. 9 (S.C.). In the case of Continental Engg. Industries (Pvt.) Ltd. v. Collector of Central Excise - 1989 (42) E.L.T. 14 (Tribunal), it has been provided that unless the value has been differently defined in any exemption Notification, the value referred to therein would be governed by Section 4 of the Act of 1944. For the purposes of small scale exemption under Item No. 68 of the erstwhile Central Excise Tariff, it was held that the value for the purposes of Notification 176/77-C.E., dated 18-6-1977 was to be the Section 4 value. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. - 1994 (69) E.L.T. 228 (Calcutta), and the decision of the Tribunal in the case of Shilpi Exports v. Collector of Customs, Calcutta - 1996 (83) E.L.T. 302 (Tribunal) in support of their contention that when the exporter gives the full export value of the goods, Customs authorities have no jurisdiction to confiscate the goods under Section 113(d) of the Act or to impose penalty under Section 114(1) of the Act. The Tribunal in the case of Galani Infin Pvt. Ltd. v. Commissioner of Customs, New Delhi [2000 (118) E.L.T. 360 (T) = 1999 (35) RLT 3 (CEGAT)] had held in para-11 of their decision that the view taken by the Calcutta High Court in the case of Collector of Customs v. Lexus Exports Pvt. Ltd. - 1994 (69) E.L.T. 228 (Calcutta) could not be pressed into service in view of the subsequent Division Bench decision of the same Calcutta High Court in the case of Collector of Customs v. Pankaj V. Sheth - 1997 (90) E.L.T. 31 (Calcutta). The Tribunal held in that decision in the case of Galani Infin Pvt. Ltd. v. Commissioner of Customs, New Delhi [2000 (118) E.L.T. 360 (T) = l999 (35) RLT 3 (CEGAT)] that none of the above aspects were considered by the Tribunal in the case of Shilpi Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods which could be imported therefore will ultimately depend upon the value of the goods which is held to have been exported in the remand proceedings and the penal action also will have to be taken in regard to the same from the point of view of licensing angle and the exemption from payment of duty. For this purpose, the matter requires to be remanded." 13. We therefore find that the view taken by the adjudicating authority in the present case is consistent with the authoritative pronouncements on the subject. 14.The appellants have mainly relied upon the observations of the Tribunal's Three Member Larger Bench decision in the case of J.G. Exports and Ors. v. Collector of Customs, New Delhi [2000 (121) E.L.T. 754 (T-LB) = 2000 (40) RLT 755 (CEGAT - Larger Bench)]. We may now examine this decision. M/s. J.G. Exports had filed a shipping bill on 14-3-1999 for export of 215 quartz analog watches and declared FOB value at US $ 910 per piece (rupees 8275995 for the consignment). It was alleged that the exporters had over-valued the goods to avail higher Duty Entitlement Pass Book (DEPB) benefits. The appellants had contended that since the goods in question were not subjected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in Shilpi Exports v. Collector of Customs, Calcutta [1996 (83) E.L.T. 302 (Tribunal) = 1996 (13) RLT 39 (CEGAT)] had been upheld by the Supreme Court and thus, the ruling of the Calcutta High Court in the case of Collector of Customs v. Pankaj V. Sheth - 1997 (90) E.L.T. 31 (Tribunal) had been rendered nugatory, let us examine the aforesaid decisions in the case of Collector of Customs v. Pankaj V. Seth - 1997 (90) E.L.T. 31 (Calcutta) and of Shilpi Exports v. Collector of Customs, Calcutta - 1996 (83) E.L.T. 302 (Tribunal). In Shilpi Exports, it was a case of export of mulbery silk printed ties. The Customs Deptt. had alleged that there was over-valuation of the goods presented for export. The exporter pleaded that there was no over-valuation. The Deptt. had obtained two certificates from M/s. Mohan's, New Market, Calcutta-87 and M/s. Handloom House, Calcutta-87 to establish that there was over-valuation. The Tribunal on examining the certificates came to a conclusion that charge of over-valuation was not proved. It was observed in para-8 as under : - We have considered the submissions of both sides. The8. question for determination is whether these two certificates are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 of the Act was not applicable. It was a case where the adjudicating authority had recorded at page 4 that the appellants had realised the full export value as declared in the shipping bills as per copies of the submitted bank realisation certificates (para-15 of the Tribunal's decision). Again at page-6 of the impugned order, it was found on the basis of records of the case that the exporter had realised the full foreign exchange remittance back through the proper legal channels as declared by them as the export value for the subject - export consignments (again refer para-15 of the Tribunal's decision). It was with such facts and conclusions that the Tribunal had allowed the appeal of M/s. Shilpi Exports. Against this Tribunal's decision, the Collector of Customs, Calcutta filed Civil Appeals Nos. 10174-10175 of 1996 in the Hon'ble Supreme Court. While dismissing the appeals the Supreme Court passed the following orders:- "What is involved is a pure question of fact. The Tribunal having decided against the appellant that is where the matter must rest. The Civil appeals are dismissed." [refer A-219 of 2000 (115) E.L.T.] . The Hon'ble Supreme Court did not touch the lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to ascertain the correct value of the exports, and that if the customs authorities were merely to act as a rubber stamp on the value declared by the exporter, there would have been no necessity for the customs authorities to separately make an endorsement in the DEEC. It was added that it is on the basis of the value that the exporter becomes entitled to import duty free materials. The Hon'ble High Court analysed the place of Section 14(1) in the determination of value even in a case where no customs duty was chargeable on the goods in paras-16, 17, 18, 19, 20 and 21 of their order. In para-24 the position was summed-up as under :- "24. To sum up : the Customs Authorities power to assess the value of goods is not limited to cases where the goods are assessable to duty. The Customs Authorities are to certify the correctness of the value of the goods under the DEEC Scheme and they cannot be compelled to accept the declared value as correct. For the purposes of ascertaining such correct value the Customs are required to follow the mode prescribed in Section 14(1) of the Act." 16. The Hon'ble Supreme Court had dismissed on 3-11-1999 the Civil Appeals No. 10174-10175/1996 against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als filed by the Collector of Customs, Calcutta against the Tribunal's decision in the case of Shilpi Exports v. CCE - 1996 (83) E.L.T. 302 (Tribunal) as reported at page A-219 of 2000 (115) E.L.T. on a pure question of fact. 18.In the light of the above position, the view taken by the Bench that the ruling of the Calcutta High Court in Pankaj V. Sheth was rendered nugatory by the aforesaid dismissal of the Civil appeal by the Supreme Court, could not be sustained, and is not a correct statement of law. 19.As regards the Tribunal's decision in the case of Collector of Customs, Kandla v. Dimple Overseas Ltd. - 1995 (76) E.L.T. 48 (Tribunal), M/s. Dimple were found to be attempting to export plastic mewar/strips under DEEC Scheme by mis-declaring its actual value. In adjudication proceedings, the Collector of Customs had dropped the charges levelled against M/s. Dimple. He had held that M/s. Dimple had not mis-declared the description, nature and quality of the goods. The Tribunal in para-16 had observed that there was no specific charge of over-valuation in the show cause notice. The Tribunal did not held that the provisions of Section 14 were not applicable to export goods. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (69) E.L.T. 228 (Calcutta), in the documents stainless steel rods were mentioned while despatching the non-stainless steel rods. The Hon'ble Calcutta High Court observed that over-invoicing and in-correct description was not a violation of Section 18(1) of Foreign Exchange Regulations Act, 1973. In the Head Notes, the position has been summarised as under : - Export - Customs - FERA - Non-stainless steel rods presented for shipment but inadvertently higher value and description as of stainless steel rods declared in documents - Over-invoicing and incorrect description not a violation of Section 18(1) (a) of Foreign Exchange Regulation Act, 1973 and hence not a violation of Section 11 of Customs Act, 1962 - Clauses (d) and (l) of Section 113 of Customs Act not attracted either since goods not dutiable or prohibited - Export not stoppable once mistake in declaration corrected. - In Section 18(1)(a) of FERA, "full export value" means the value of the goods declared in the declaration must not be less than the actual export value of the goods sought to be exported. In other words, while exporting goods worth Rs. 100/- per metric ton, the declaration for the purpose of the FERA cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of getting benefit under the IPRS, 1981 because prescribed test report of the Export Inspection Agency would have shown, as it did, true nature of the goods. [paras 19 to 37] This decision has been referred to by the Tribunal in Galani Infin Pvt. Ltd. v. CC, New Delhi [2000 (118) E.L.T. 360 (Tribunal) = 1999 (35) RLT 3 (CEGAT)]. It was observed in para-11 as under : - "11. Learned counsel representing the appellant brought to our notice a Division Bench decision of the Calcutta High Court in Collector of Customs v. Lexus Exports Pvt. Ltd., 1994 (69) E.L.T. 228 (Cal.) and the decision of this Tribunal in Shilpi Exports v. Collector of Customs, Calcutta, [1996 (83) E.L.T. 302 (Tribunal) = 1996 (13) RLT 39 (CEGAT)] in support of his contention that when the exporter gives the full export value of the goods, customs authorities have no jurisdiction to confiscate the goods under Section 113(d) of the Act or to impose penalty under Section 114(1). The decision of the Calcutta High Court cannot now be pressed into service in view of a subsequent Division Bench decision of the same High Court in Collector of Customs v. Pankaj V. Sheth, 1997 (90) E.L.T. 31 (Cal.) where a contrary vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FERA, it does not become an offence under Section 11 of the Customs Act by virtue of Section 67 of FERA. In the circumstances, the confiscation of the goods and imposition of the penalty is not sustainable in law." In the impugned order before the Tribunal, the Commissioner of Customs had held that the contention of the Unit that over-valuation in exports is not an offence under FERA or Customs Act, is untenable. To the extent the observations relate to the over-invoicing in the aforesaid Tribunal's decision, we consider that it is not good law. We also find that although the final order in the above case was recorded by the Tribunal on 11-8-99, no cognizance was taken of the Calcutta High Court decision in the case of Collector of Customs v. Pankaj V. Sheth - 1997 (90) E.L.T. 31 (Cal.), decided by the High Court as early as on 20-12-1996. 24. After giving our careful consideration and thought to the issue referred to us, we hold that the over-invoicing of the goods for exportation was an offence under the Customs Act, 1962 and that the view taken by the Bench in the case of J.G. Exports Ors. v. CC, New Delhi [2000 (121) E.L.T. 754 (T-LB) = 2000 (40) RLT 755 (CEGAT - Lar ..... 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