M/S. R.K. Creations Pvt. Ltd vs C.C. (Export), New Delhi

(Arising out of Order-in-Original No. ACE/DDR/06/2010 dated 15.1.2010 passed by the Commissioner of Customs (Export), New Delhi)

M/s. R.K. Creations Pvt. Ltd. Appellant

Vs.

C.C. (Export), New Delhi Respondent

Appeal No. C/173/2010 (SM)

(Arising out of Order-in-Original No. ACE/DDR/06/2010 dated 15.1.2010 passed by the Commissioner of Customs (Export), New Delhi)

C.C. (Export), New Delhi Appellant

Vs.

M/s. R.K. Creations Pvt. Ltd. Respondent

Appearance

Ms. Reena Khare, Advocate, for the Appellant

Shri V.P. Batra, DR for the Respondent

CORAM

Honble Shri D.N. Panda, Judicial Member

Reserved on: 17.10.2014

Pronounced on:20.03.2015

Final Order No. 50789-50790/2015

PER D.N. Panda

Exporters M/s. R.K. Creations (P) Ltd. when attempted to export silk carpets presenting exporting documents on 5.1.2010 declaring export of 282 pieces and 186 pieces of silk carpet in terms of Shipping Bill No. 2104684 and 2104852 both dated 2.1.2010 declaring FOB of Rs.47,26,455/- and Rs.47,97,236/- claiming duty drawback of Rs.6,85,336/- and Rs.6,95,599/- respectively it was found that neither such quantities were available in the exporting consignments nor the values declared were correct.

2. Upon detection by customs as above, immediately on 6.1.2010, exporters filed revised Shipping Bill declaring lower quantities of the above goods covered by the above said Shipping Bills. The revision revealed that there was excess declaration of 188 pieces in Shipping Bill No. 2104684 and 124 pieces in Shipping Bill No. 2104852 originally filed. Customs noticed that there was resultant misdeclaration of the quantity and value of goods meant for export. The higher value declared in original shipping bills without really higher quantity of goods consigned resulted in higher claim of drawback of Rs.19,20,652/- which remained unrebutted by appellant before customs authorities except the only plea that due to clerical error wrong invoice and wrong packing list were sent along with the Shipping Bill for which revised Shipping Bills were filed.

3. Appellant pleaded in the course of appeal hearing before Tribunal that there was no deliberate misdelcaration made. Therefore no mis-construction is possible to hold since appellant had not misdeclared the quantity as well as export value of goods nor the appellant contravened the law. The invoice and packing list were revised, when the mistake came to its notice. On such premise, appellants prayer was that drawback being allowed on the basis of Shipping Bill but not on invoice value, the appellant having declared proper value in the Shipping Bills, it is neither liable to redemption fine nor penalty. Therefore, learned Commissioner did not impose any redemption fine. But levy of penalty of Rs.9,20,652/- by him under section 114 of Customs Act, 1962 was also unwarranted when the appellant has not made any deliberate misdeclaration.

4. Per contra, Revenues contention is that only upon detection by customs, misdeclaration was unearthed. Had that not been done, then the misdeclared quantity and value could not have been surfaced and appellant would have made claim of higher amount of duty drawback at the cost of the exchequer. When entries in invoice and packing list details were wrong, that brought out the case of misdeclaration. No prudent exporter shall export higher quantity than the real exportable quantity when he was not paid for such higher quantity. Lower quantity was evidently exportable as per revised invoice as well as packing list filed subsequent to check by customs. Therefore deliberate misdeclaration made by appellant invited provision of section 113(i) and section 113(ii) of Customs Act, 1962. Accordingly, the appellant is not only liable to redemption fine in view of confiscation warranted by law, but also liable to penalty under law. When learned Commissioner did not impose redemption fine, Revenue has come in appeal while Assessees appeal is against imposition of penalty of Rs.9,20,652/- only.

5. Heard both sides and perused the records.

6. It is an established fact from the materials on record that higher quantity of goods were covered by both the Shipping Bills filed on 5.1.2010. So also packing list declared higher quantity. Only upon detection by customs appellant came forward to file revised invoice and packing list declaring lower quantity meant for export in terms of both the Shipping Bills. Misdelcaration of the quantity gave raise to mis-declaration of the value of the export.

7. No doubt, export is not liable to duty but misdeclration of the higher value to claim higher drawback is breach of law. Misdeclaration of the higher value is one of the modality of hawala transactions. Honble Supreme Court in the case of Om Prakash Bhatia Vs. Commissioner of Customs, Delhi  2003 (155) ELT 423 (SC) in para 18 of the judgment has viewed that in cases where export value is not correctly stated but there is international over-invoicing for some other purpose, that is to say not mentioning true sale consideration of the goods, then it would amount to violation of the conditions for import/export of the goods. The purpose may be money laundering or some other purpose, but it would certainly amount to illegal/unauthorized money transaction. In any case, over-invoicing of the export goods would result in illegal/irregular transactions in foreign currency.

8. Revenue is correct to submit that there was violation of provision of section 113(i) and 113(ii) of Customs Act, 1962 since there was a misdeclaration of the quantity and value of the goods with material departure to the particulars relating to quantity and value of the goods being attempted to be exported under drawback claim not corresponding in material particular with the information furnished in the export documents. Revenues contention that appellant acted deliberately cannot be ruled out for the reason that an exporter who has not remitted higher amount of foreign exchange to this country does not expect higher quantity of goods with higher value. Accordingly, confiscation of the goods was justified. Since the goods were under drawback claim, imposition of redemption fine is also warranted under law. But learned Commissioner did not record his finding on redemption fine. Therefore it is desirable to work out the same in the interest of justice. He has not recorded what was the difference in value between original shipping bill and revised shipping bill. Therefore, to determine appropriate quantum of redemption fine and penalty imposable, matter is remanded to him.

9. In view of the above observations and findings as well as decision, Revenue succeeds in its appeal subject to redetermination of the penalty and determination of redemption fine in readjudication. In the result appeal of both assessee and Revenue are disposed in the manner indicated above.

(D.N. PANDA) JUDICIAL MEMBER

Rex

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