CANNON STEEL PVT. LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THIS appeal is directed against Order -in -Original No. 2/2000 Commr. SIB, dated 13 -1 -2001 of Commissioner of Customs, Cochin. That order related to a consignment of 2500 pieces of woollen leggings tendered for export to Russia by the appellant. The FOB value of the consignment was declared around Rs. 19 Lakhs (Rs. 763 per piece). Further, the market value of the goods was declared at Rs. 400 per piece. The declaration of market value was significant as the export was under DEPB Scheme. Under that scheme the exporter would be entitled to credit at the rate of 15% of the export price of the goods. However, that credit was subject to the cap that it could not exceed 50% of the market value of the goods. This is how the market value assumes significance.

(2.) THE Customs Authorities doubted the market value declared, made their own enquiries and initiated proceedings against the appellant for misdeclaration of market value. Those proceedings culminated in the impugned order. Based on the evidence gathered during investigation, the Commissioner fixed the market value at Rs. 125 per piece (against the declared value of Rs. 400/ -). Further, he held the goods to be liable to confiscation under Section 113(i) of the Customs Act, 1962 and imposed a penalty of Rs. 5 Lakhs on the appellant under Section 114(ii) of the said Act. The present appeal challenges the finding regarding market value, the finding regarding confiscability of goods and the levy of penalty. The contention of the appellant with regard to market value is that the determination of market value has been done by discarding the relevant evidence and by relying on unreliable materials. It is their submission that the appellant had filed the purchase invoice of the export goods but the price indicated therein was discarded without any enquiry and without any basis while the opinion expressed by two dealers was accepted. During the hearing of the case it was also submitted that the authorities had, as a matter of fact, carried out verifications with their supplier of the leggings, but had chosen to keep the result of that verification undisclosed, presumably because, that evidence did not support the case sought to be made. The ld. Counsel for the appellant also pointed out that the so -called opinions expressed by the two witnesses, namely, Shri Ka -mal Kant, Partner of M/s. K.K.K. Mills and Shri Pankaj, Partner of M/s. Taxas Hosiery Mills, could not be given any credence in relation to the goods in question and its valuation. Ld. Counsel drew our attention to the fact that Mr. Pankaj has described the goods as made from Mohini Yarn and had stated that the value varied from Rs. 100/ - to Rs. 125/ - per piece depending on the quality of the yarn. Shri Kamal Kant had stated that sample was woollen Paijama and estimated its cost at Rs. 125/ - 150/ - per piece. Ld. Counsel argued that these opinions inspired no confidence inasmuch as Shri Kamal could not even distinguish between woollen paijamas and leggings, while it is common knowledge that paijamas and leggings are very different products. According to the ld. Counsel the opinion of Shri Pankaj merited no better respect since he dealt with the product as made of Mohini Yarn while the goods in question were of mixed -yarn;

(3.) WE have heard the ld. DR also. While, defending the impugned order, he pointed out that the market value had been estimated fairly after making enquiries with knowledgeable people in the market who were dealing in the same goods. He also pointed out that the goods will be liable to confiscation inasmuch as Rule 14 of the Foreign Trade Rules was attracted.