ORDER
V.K. Ashtana, Member (T)
1. This is an appeal against Order-in-Original No. 5/98 dt. 21.4.99 passed by Commissioner of Customs wherein he has confiscated the goods sought to be exported and allowed redemption on payment of fine of Rs. 20,000. He has confiscated the goods imported in excess of what was declared by the importer and allowed redemption on payment of fine of Rs. 1,50,000 and payment of duty of Rs. 10,61,731 alongwith interest w.e.f. 28.4.98. He has imposed penalty of Rs. 10,61,731 under Section 114A of the Customs Act as well as Rs. 50,000 under Section 114(i) of the Customs Act, 1962.
2. Heard Shri S.S. Radhakrishnan, Ld. Advocate for appellants and Shri S. Sudarsan, Ld. DR.
3. Ld. Advocate submits that the facts of the case briefly are that appellants had submitted for export of certain goods, which on examination were found to differ in quantity that what was declared in the Shipping Bills. The importer-appellant is a 100% EoU. In view of the shortages noticed, the Officers of DRI visited the unit and conducted stock taking of the goods available. The result thereof was that the Mahazar found specified excess of goods than what was accounted for. Ld. Advocate submits that since the appellants disputed the genuineness of these stock taking of highly technical items therefore the department allowed re-stock-taking to be done by technical inspection agency namely M/s. SGS India Ltd.
3. The results of these inspections showed a different set of items which were found in excess what was accounted for. Ld. Advocate further submits that these goods found in excess had been imported earlier as this 100% EOU works only on job work basis wherein goods are imported from foreign buyer, but processed and then re-exported to the same foreign buyer. During this entire period, the goods belonged to the foreign buyer and there is no sale. Therefore, the order impugned has erred in taking the invoice value as the transaction value of these goods imported under Section 14 of the Customs Act because there was no transaction value, there being no sale.
5. Ld. Advocate also submits that while the quantities found in excess were taken on the basis of SGS’s stock taking, the valuation was taken as per the import invoices relied on by DRI. He further submits that the terms of the 100% EOU is that it allows up to 5% moralty i.e., wastage when the imported goods are reconditioned/ reprocessed. The amount of goods found in excess are unaccounted and have been found less than this 5% limit of the cost value as arrived at by SGS. He therefore submits that the Order-in-Original needs to be modified accordingly and consequential relief made available to them. In this respect, Ld. Advocate also cites the decision of Hon’ble High Court of Calcutta in case of CC v. Lexus Exports Private Ltd. as in wherein it was held that over-invoicing and incorrect description are not violation of Section 18(1)(a) of FERA and therefore not a violation of Section 11 of the Customs Act. Thus, Clause (d) and (I) of Section 113 of Customs Act are not attracted in this case. Ld. Advocate submits that therefore confiscation has been wrongly adjudged in this case.
6. Ld. DR meets the submissions of Ld. Advocate with respect to the case-laws cited above by drawing our attention to Notification No. F1/67/EC/73-I dt. 1.1.1974 as amended upto 31.12.93 wherein the Govt. vide GSR 78 has prescribed under the Foreign Exchange Regulation Act, 1973 that the export of goods either directly or indirectly are prohibited unless the customer furnishes to the prescribed authority a declaration in the prescribed format supported by such evidence as may be prescribed or so specified and true in all material particulars. He further submits that this notification has to be read with Section 67 of the FERA, 1973 which comes out with Section 11 of the Act, therefore since value of export consignment was misdeclared vis-a-vis shortages in quantities noticed, hence the export thereof became prohibited under the Customs Act and therefore the confiscation of goods has been rightly adjudged. In this connection, he also draws our attention to the findings of Ld. Commissioner in page 8 of the Order-in-Original wherein he has distinguished the application of ratio of the said decision of Hon’ble High Court to the facts of the present case.
7. We have carefully considered the rival submissions and records of the case. We find that the Order-in-Original impugned erred on certain basic issues which have not been carefully considered as follows:
(i) It is not disputed that the 100% EoU functions only on job work basis and therefore whatever goods were imported were not on a sale transaction at all but merely on stock transfer for job worker. Under these circumstances, the valuation thereof was not possible under the main provisions of Section 14 of the Act, but the Ld. Commissioner should have resorted to the Customs Valuation thereunder as there was no sale involved. This has not been done. Instead, while valuing the goods, Ld. Commissioner has taken the invoice value which do not refer to any transaction value under the said section. This is, to our mind a serious error of misapplication of law in the order impugned.
(ii) We also find that when the matter was submitted before the original authority a number of decisions had been submitted with respect to the issue of whether misdeclaration of quantity would render the export goods as prohibited. Ld. Commissioner has not considered all the decisions cited and to that extent the order appears to be partly not a speaking order.
8. In view of the aforesaid analysis, and findings we set aside the Order-In-Original Impugned and remand the matter for de novo consideration by the original authority as per directions noted above.
9. No doubt, the Ld. Commissioner shall give an effective opportunity of hearing to appellants and proceed to pass a fully speaking order after all the submissions made before him including the case-laws cited. Since the goods have not been redeemed by appellants, therefore the Ld. Commissioner is directed to take up these denovo proceedings expeditiously.
10. The appeal is allowed by way of remand.