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CASE NO.: Appeal (civil)  2269 of 2004

PETITIONER: Commissioner of Customs,New Customs House, Mumbai

RESPONDENT: M/s.Vishal Exports Overseas Limited

DATE OF JUDGMENT: 12/02/2007

BENCH: Tarun Chatterjee & V.S. Sirpurkar

JUDGMENT: J U D G M E N T

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 filed.         Shri R. Basant, Learned Advocate appearing on behalf of the  Revenue assailed the order of the Tribunal and pointed out that there

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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 \026 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 benefit.   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

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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 present controversy.   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.