OM PRAKASH BHATIA Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) IN this appeal filed by M/s. Om Prakash Bhatia, the matter has come up before the Larger Bench of 5 Members, on a reference by the Bench before whom it was argued on behalf of the appellants that over -invoicing of the goods for export was not an offence under the Customs Act, 1962 (hereinafter referred to as the 'Act'). It had been held in the impugned order -in -original dated 31 -3 -1999 passed by the Commissioner of Customs, Inland Container Depot (ICD), Tughlakabad, New Delhi that the appellants tried to export garments (ladies skirts) of cheaper quality by showing an enhanced value. Their attempt was to get drawback of more than the price of the same in the local market. Value of each lady's skirt in the market was found to be Rs. 45/ - per piece, while the declared value was of Rs. 434/ - per piece. The 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.

(2.) 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.

(3.) WE have carefully considered the matter. The facts of the case may be briefly narrated. M/s. Om Prakash Bhatia filed 4 shipping bills in 1998 for export of 28,000 pieces of ladies skirts @ of $ 10.25 per piece (Rs. 434/ - per piece), amounting to Rs. 1,21,54,447/ -, to Dubai. On checking, the actual quantity of the lady's skirts were found to be 21,184 pieces. On enquiry, the value was ascertained to be Rs. 45/ - per piece, of total value of Rs. 9,53,280/ -. The exporters had claimed a drawback of Rs. 21,87,800/ - on the consignment @ Rs. 78/ - per piece. Vide letter dated 4 -2 -1999, 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 fraudulent 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.