VISHAL EXPORTS OVERSEAS LIMITED Vs. C.C.

JUDGEMENT

(1.) THE appellant exported about 4.8 lakhs pieces of coffee mugs between February and November 2000. The export price (FOB) was US 3.40 per piece. The export goods were eligible for DEPB benefit. Accordingly, DEPB credit as available (11% or 10%) was also claimed. Since DEPB credit cannot exceed 50% of the market value of the goods the aprellant declared a market value of Rs.52.50 per piece which was worked out at 150% of the appellant's price. Purchases were from manufactureres in Rajasthan and according to the Central Excise clearance documents (AR -4) the sale price of the goods was Rs 35 per piece.

(2.) THE Assistant Commissioner of Customs proceeded against the appellant by charging that he has misdclared the FOB value at US 3.40 (about Rs 157 per piece). The order of adjudication held that the export price is not "genuine", since for a local purchase price of Rs 35 per piece, export price cannot be as high as Rs 157 (450%) and that a competitive export market would not accept such a vast variation between domestic price and export price. The order, therefore, fixed the FOB value at a computed price of Rs 80 per piece. It was ordered that the appellant shall be entitled to DEPB credit as available at Rs.80 FOB price, and not at the sale price. The FOB price declared at US 3.40 was held to be a misdeclaration. Accordingly, the goods were held as liable to confiscation and the appellant liable to penalty under Section 114 of the Customs Act. Since bulk of the goods had already been exported, the order confiscated 66 coffee mugs which had been retained as representative samples. The order also imposed a penalty of Rs.10 lakhs on the appellant. The matter was taken up before the Commissioner (Appeals). Under the order impugned in this appeal, the Commissioner (Appeals) upheld the order of adjudication. While doing so, the Commissioner (Appeals) observed as under:

(3.) THE contention of the appellant before us is that the entire proceeding is clearly illegal. It has been pointed out that the declared export price was the sale price of the goods and there was no misdeclaration whatsoever. It is also submitted that DEPB credit has been fixed by the foreign trade authorities as percentage of FOB value. It is submitted that since the FOB value in the present case was US 3.40, the DEPB benefit has to be based on that value, and not on the basis of FOB value computed by the Customs Authorities. It is contended that there was no basis whatsoever for holding that the export value was not "genuine". During the hearing of the case, the Learned Counsel for the appellant stressed that there is no material available which indicated that sale was at a different price than US 3.40 (FOB) which had been declared by the appellant. Learned Counsel for the appellant has also pointed out that the market value declared by the exporter was correct inasmuch as it was only 150% of the manufacturer's price. It is also his submission that there was no case for restricting the DEPB credit based on the computed FOB price, inasmuch as at the declared FOB and market values the credit amount claimed would be much less than 50% of the market value of the export goods.