Commissioner of Customs,New Customs House, Mumbai Vs. M/S.Vishal Exports Overseas
Limited  Insc 119 (12 February 2007)
Tarun Chatterjee & V.S. Sirpurkar
V.S. SIRPURKAR, J.
Final order of Customs, Excise & Gold (Control) Appellate Tribunal
(hereinafter called "the Tribunal" for short) allowing the appeal
filed by M/s.Vishal Exports Overseas Limited (hereinafter called "the
assessee" for short) is in challenge at the instance of Commissioner of
Customs (hereinafter called "the Revenue" for short).
The assessee exported 4.8 lakh pieces of coffee mugs between February and
November, 2001. The export price (FOB) was US $3.40 per piece. The exported
goods were eligible for Duty Entitlement Pass Book (DEPB) Benefit/Scheme.
Accordingly, the same was claimed as per Rules at the rate of 11% or 10%. The
assessee had declared a market value of Rs.52.50 per piece which was worked out
at 150% of the assessee's purchase price which was Rs.35/- per piece. These
purchases were made from the manufacturers in Rajasthan and as per the
clearance documents of Central Excise (AR-4), Rs.35/- was the price per piece.
The Assistant Commissioner of Customs proceeded against the assessee by
alleging that the assessee had mis-declared the FOB value at US $3.40
(Rs.150/-) per piece. It was the view of the Department that the price was
inflated to get more DEPB benefit.
The original order ensued wherein it was held that the export price was not
genuine considering the local purchase price to be Rs.35/- per piece only. It
was held that the export price could not be as high as Rs.157/- (450%) and that
it was unlikely that there would be such a vast variation between the domestic
price and export price acceptable in the competitive export market. By making
his own calculations, the FOB price was computed and fixed at Rs.80/- per piece
in place of Rs.157/- per piece by the Assistant Commissioner. It was further
ordered that the assessee would be entitled to DEPB credit on the basis of the
FOB price of Rs.80/- per piece and not at the sale price. Holding the declared
FOB price of Rs.157/- per piece or US $3.40 per piece a mis-declaration, the
Assistant Commissioner held that the goods were liable to be confiscated and
the penalty under Section 114 of the Customs Act was also ordered.
Commissioner (Appeals) upheld the order in appeal filed by the assessee. The
Commissioner (Appeals) held that the assessee was not liable to any further
benefit than the one which was granted by the adjudicating authority. On
appeal, the Tribunal set aside the orders of the authorities below and allowed
the appeal. It is against this order that the present statutory appeal has been
Shri R. Basant, Learned Advocate appearing on behalf of the Revenue assailed
the order of the Tribunal and pointed out that there could not be such a vast
variation in between the domestic price of Rs.35/- per piece and the declared
FOB value of Rs.157/- per piece, therefore, it was obvious that the assessee
had claimed inflated price with the sole objective of getting undeserved DEPB
credit. Learned counsel secondly contended that the Tribunal had not taken into
consideration the evidence on record regarding the price. Lastly, the learned
counsel contended that the matter was completely covered by a decision of this
Court in Om Prakash Bhatia vs. Commissioner of Customs, Delhi reported in 2003
(155) ELT 423 (SC)=(2003) 6 SCC 161.
As against this Shri M.Chandrasekharan, Senior Counsel drew our attention to
the Export and Import Policy (1st April, 1997 31st March, 2002) and more
particularly at para 7.25 which reads as under:
"Under the Duty Entitlement Pass Book (DEPB) Scheme an exporter shall
be eligible to claim credit at a specified percentage of FOB value of exports
made in freely convertible currency. The credit shall be available against such
export products and at such rates as may be specified by the Director General
of Foreign Trade by a Public Notice issued in this behalf.
xx xx xx xx"
Learned Senior Counsel argues that the basis for the benefit of DEPB is the
FOB value in support of which voluminous evidence was given by the assessee and
more particularly such evidence was in the form of (i) S/Bs (print-outs); (ii)
Invoices; (iii) Packing lists; (iv) Bills of Lading; (v) BRCs; and (v) AR4s.
Learned counsel painstakingly points out that there was no dispute anywhere
regarding the BRC which showed that the FOB price claimed by the assessee was,
actually, received by the assessee. According to the learned counsel it was
unthinkable that the party to which the exports were made would act
hand-in-glove with the assessee to make inflated payments to the assessee with
the sole objective of obliging the assessee so as to enable him to get
undeserved DEPB credit. He points out that the fixing of the price at Rs.80/-
per piece by the Adjudicating Authority as also by the Commissioner (Appeals)
was based on no evidence.
Learned counsel further urged that those authorities could not have been
allowed to "imagine" the price. Learned counsel further invites our
attention to the findings by the Tribunal in para 4 of its judgment wherein the
Tribunal has clearly held that there was no material on record to indicate that
the export price declared by the appellant was not genuine or that the
transaction was at a different price. Our attention was also drawn by the
learned counsel towards further finding that the market value declaration made
by the appellant is also fully supported by its purchase price from the
manufacturer in India. Learned counsel also argued that the Tribunal has correctly
held that the finding regarding the FOB price being Rs.80/- per piece was based
on the computation of the price from manufacturer's price which had no relation
with the price in export trade. Our attention was further drawn to the finding
that there was no evidence whatsoever to support the finding that the export
price is not genuine and was mis-declared with the intent to avail higher DEPB
Lastly, the learned counsel pointed out that the aforementioned judgment in
Om Prakash Bhatia's case (supra) could not be pressed into service because that
judgment was in the draw-back scheme and not related to DEPB Scheme.
We have considered the matter in the light of the above contentions.
The first contention of the appellant herein to the effect that the FOB
value being 450% more than the purchase value is unreasonable and cannot be
accepted for the simple reason that there is no evidence on record to support
such a contention. The Tribunal has also specifically held so and returned a
final finding of fact that the FOB price was correctly shown by the assessee.
Learned counsel for the appellant could not show us anything concrete in
support of his contention. From the orders of the first and the appellate
authorities nothing can be found to hold that the FOB price was excessive or
not genuine. The Tribunal has also given a finding that the Adjudicating
Authority has arbitrarily computed the FOB value and have fixed the credit on
that basis. We accept findings of the Tribunal in the absence of any concrete
evidence having been put to support the contention of the learned counsel that
the FOB price is inflated. In this behalf we cannot ignore the documents
supplied by the assessee before the Revenue which we have already mentioned
earlier. It is not a case of the Revenue that the assessee has not received the
FOB price at all. That is clear from the BRCs. Therefore, the FOB price is
supported amply by the BRCs with which no fault is found. Once that is clear,
there will be no question to hold that the FOB is inflated.
As per the policy also the credit has to be linked with the FOB price. Again
we cannot ignore the fact that the PMV is also correctly fixed and is within
the permissible limits i.e. 150% of AR4 value. The market value is fixed at
Rs.52.50. That has also been found to be in order by the Tribunal. Therefore,
we accept the finding of the Tribunal in this behalf and reject the contention
of the learned counsel for the Revenue.
It was lastly contended that the matter is covered by the decision in Om
Prakash Bhatia's case (supra). This was clearly against draw back scheme and
not DEPB credit. We have carefully seen the judgment. We do not find that on
the basis of the factual scenario therein it applies in any manner to the
There the factor of over-invoicing was found established. In the present
case on the factual aspect also the FOB price could not be said to be inflated.
In our opinion the aforementioned judgment would be of no consequence and help
to the Revenue.
In view of the above we are of the opinion that the appeal has no merits and
it must be dismissed. It is accordingly dismissed.
There will be no order as to costs.