SURYAKIRAN INTERNATIONAL LTD. Vs. COMMR. OF CUS., HYDERABAD

JUDGEMENT

(1.) M /s. Surya Kiran International Ltd., (SIL for short), the appellant herein had filed a Shipping Bill No. 6042551 dated 8 -8 -2008 for export of 100% cotton denim garments. The quantity declared was 16,000 pieces and the value Rs. 56,48,617.84. SIL claimed drawback of Rs. 6,21,348/On receipt of information that SIL over -valued the garments exported to avail undue drawback, officers of the Department visited the ICD Hyderabad on 16 -8 -2008. The goods under export were examined in presence of witnesses. It was found that as against 16,000 pieces declared in the Shipping Bill, there were 16415 pieces sought to be exported. These included 6531 pieces of damaged garments not fit for use. The exporter had declared a price of 8.5 USD per piece in the Shipping Bill. The authorities took a tentative view that the. exporter had mis -declared the quality, quantity and value of the. goods under export in order to obtain higher amount of drawback not admissible in law. After obtaining statements from the General Manager of SIL, the CHA and the Branch Manager of the freight forwarder M/s. Expo Freights Private Ltd., a show cause notice was issued to SIL, the CHA, and the freight -forwarder proposing to confiscate the goods under export and penalize the noticees. It was alleged in the show cause notice that SIL had attempted to export goods by mis -declaring the quality as well as quantity of goods under export with intention to avail higher Rs. 6,21,348/ - as drawback against law. After due process, the Commissioner passed the impugned order confiscating the export goods seized under Section 113(d), 113(h)(ii) read with Section 119 of the Customs Act, 1962 (the Act) offering an option to redeem the same on payment of a fine of Rs. 5,00,000/ -. He imposed a penalty of Rs. 56,00,000/ - on SIL under Sections 114, 114AA and 117 of the Act for rendering the impugned goods liable for confiscation u/s 113 for attempt at improper export, misdeclaration etc. He imposed a penalty of Rs. 5,00,000/ - on the CHA and Rs. 1,00,000/ - on the freight forwarder under Section 114 of the Act. In the appeal before the Tribunal, while seeking to vacate the impugned order, the appellants SIL have raised the following grounds. Several of these arguments had also been raised before the Commissioner.

(2.) ON 23 -4 -2008, the impugned goods had been inspected by the foreign buyer, M/s. Global Impex Pvt. Ltd., UAE and it had placed purchase order at an average price of USD 8.5 per garment. The purchase order was for the entire stock lot and that the variation of 415 pieces found was 2.5%. The Commissioner had not appreciated the relevant facts. He had sermonized that the appellants should have established a system of checks and cross -checks; it should not have depended on semi -skilled workers to ascertain the quantity under export. In his view, even if the buyer had consented to purchase stock lot, export documents should have been more specific as to the quality of goods. It is argued that from the E -mail of the buyer dated 19 -7 -2008, it was evident that the garments under export were seconds/stock lot and the average price of USD 8.5 per piece had been mutually agreed. The appellants had realized full export value. The declarations in the invoice and the export documents were as per the purchase order and they had not violated Rule 11 of Foreign Trade (Development and Regulation) Rules, 1993 which prescribed that details such as value, quality and description had to be in accordance with the terms of export contract entered into with the buyer.

(3.) WE have heard both sides.