- (1.)The appellants are merchant -exporters. They filed 3 Shipping Bills in Customs House, Cochin for export of synthetic garments under the Duty Exemption Pass Book (DEPB) Scheme. Relevant particulars were declared in the Shipping Bills (S/Bs) as under: -
S/B No. and date Descreption of goods Quantity Unit price Declared Total FOB value declared PMV declared 1000 8.12.98 Woollen blended leggings 6125 pcs.

Rs.677 Rs. 41,17,001 Rs. 375 2088 21.1:99 Woollen blended Pullovers 3000 pcs. Rs. 1252 Rs. 37,27,993 Rs. 1200 2106 21.1.99 Woollen blended jersey 2750 pcs.

Rs.1252 Rs. 34,61,538 Rs. 1250 The appellants claimed DEPB credit @ 16%. The goods were allowed provisional clearance for export subject to result of chemical test on the samples drawn from the consignments. The export goods had been purchased from parties at Ludhiana (Punjab). The test report of the Custom House Laboratory, Cochin showed that the goods exported under S/B No. 2106 contained 55% synthetic fibre and 45% animal hair (wool) (as against the party's declaration of composition: synthetic fibre 69.4 - 70.5 %). In respect of the goods in S/B No. 1000, the chemical composition as per the test report was: acrylic fibre 89.5% and cellulosic fibre 10.5% (as against the party's declaration of compostition: wool 12%: acrylic fibre 9.7%: polyster fibre 57.7% and other fibres 20.6%). In respect of the goods in S/B No. 2088, however, the test result somewhat tallied with the parry's declaration inasmuch as the synthetic fibre content was found to be above 65%. It appeared to the department that the appellants had misdeclared the composition of goods in S/B Nos. 1000 and 2106. Market enquiries were also conducted by the department to ascertain the PMV (Present Market Value) of the goods at Ludhiana and their results showed that the appellants had declared higher PMVs and FOB values in the Shipping Bills. It appeared to the department that the appellants had indulged in misdeclaration of composition and value of the goods deliberately with intent to claim higher DEPB credits in connection with the exports. On this basis, a show -cause notice [SCN] was issued to the appellants proposing lower FOB values for the goods (Rs. 150 per piece in respect of goods in S/B No. 1000, Rs. 450 per piece in respect of goods in S/B No. 2088 and Rs. 500 per piece in respect of goods in S/B No. 2106). The SCN proposed to deny DEPB credit in respect of the goods in S/B No. 1000, alleging that those goods were not made of woollen blended yarn. In respect of the goods in S/B No. 2106, the SCN proposed to reduce the DEPB credit from 16% to 13% on the basis of the chemical test result indicating synthetic fibre content of only 55%. The notice also proposed to confiscate the entire goods under Section 113(i) of the Customs Act as also to impose penalty on the party under Section 114(i) of the Act on the ground of misdeclaration. The allegations in the show -cause notice were denied and the proposals contained therein were contested. The appellants relied on CBEC's Circular No. 69/97 dated 8.12.97 and contended that FOB value could be higher than PMV depending upon the terms of the contract between the exporter and the foreign buyer. They also relied on the Board's Circular No. 79/98 dated 22.10.98 to contend that the show -cause notice was time -barred vis -a -vis the 3 S/Bs. They also contested the market enquiry results by submitting that the same reflected the wholesale price of the goods for the off -season period of March 2000 and that the real price of the goods during 1998 and 1999 was much higher. The appellants produced a certificate from Bajwa Nagar Hosiery Association, Ludhiana to substantiate this point. They also contested the test report of the Custom House Laboratory and wanted samples to be retested by 'SASMIRA' an independent textile laboratory at Mumbai. The Commissioner of Customs who adjudicated the dispute passed the following order:

1. The department is fully justified in redetermining the FOB in respect of all the three cases as discussed above while finalizing the provisional assessment of the three Shipping Bills for grant of eligible DEPB credit. The assessment is to be finalized immediately and eligible credit allowed to the exporter as per the prescribed procedures.

2. The exporter is entitled to DEPB credit under Group 89, Sl. No. 62 in respect of goods declared as children's legging vide S/Bill No. 1000 dt. 8.12.1998.

3. The exporter is entitled to DEPB credit under Group 89 Sl. No. 68 (b) @ 13% where the synthetic content is only 55% in respect of Shipping Bill No. 2106 dated 21.1.1999.

4. The goods covered vide S/Bill No. 2088/21.10.1999 and S/B No. 2106/21.1.99, wherein the exporter has deliberately declared a wrong composition to claim higher ineligible DEPB credit is liable for confiscation under Section 113 of the Customs Act for misdeclaration of the goods. As the goods are no longer available for confiscation, it is felt that justice would be made if the exporter is penalized by way of penalty.

5. I impose a penalty of Rs. 25,000 (Rupees twenty -five thousand only) on M/s. Cannon Steels Pvt. Ltd., Ludhiana under Section 114of the Customs Act."

(2.)Heard both sides. Ld. Counsel for the appellants submitted that there was no reliable evidence in this case to show that the FOB value declared by them was incorrect. The department's own Circular dated 8.12.97 had acknowledged the fact the declared PMV could be higher by upto 50% of the export price. As the value declared by the appellants did not exceed 150% of export price, there could not be a valid charge, against them, of misdeclaration of value. Invoices issued by the Ludiana parties (manufactures) from whom the export goods had been purchased by the appellants were produced before the adjudicating authority but the same were not accepted, which was against the law laid down by the Supreme Court. The certificates of Bajwa Nagar Hosiery Association, which were produced by the appellants and would have gone a long way to disprove the department's allegation of misdeclaration, were also not accepted by the Commissioner. The appellants' request for cross -examination of the persons with whom the market enquiries were conducted by the department was also turned down. In the absence of cross -examination of such persons, their evidence ought not to have been relied upon by the adjudicating authority. The Commissioner erroneously applied the Board's Circular No. 23/99 -Cus. Dated 11.5.99 which had been issued after the time limit of 90 days fixed in the earlier circular for issue of show -cause notice expired. In this connection, Ld. counsel relied on the Tribunal's decision in Merchant Exports (India) Ltd. v. CC, Cochin, 2001 (74) ECC 339 (T) : 2001 (128) ELT 428 (Tri. - Del). Ld. counsel also raised a grievance that the appellants' request for retest of samples in an outside laboratory was not allowed by the Commissioner. The PMV deed Shipping Bills was as per the Ludhiana manufacturers' invoices and, therefore, there was no basis for the allegation of misdeclaration of value. Finally, Ld. counsel relied on Final Order No. 282/02/A dated 4.6.2002 passed by the Tribunal in the present appellants' own case (Appeal No. C/142/01/A).
(3.)The DR submitted that the finding of overvaluation of goods was based on the results of market enquiry conducted in accordance with law. The market enquiry reports were also taken under Panchnama which was signed by the appellants and, therefore, the reports could not be challenged by them. Ld. DR. also forcefully relied on the Supreme Court's decision in Om Prakash Bhatia v. CC, Delhi, 2003 (88) ECC 457 (SC) : 2003 (155) ELT 423 (SC) and submitted that, when margin of profit was apparently unreasonable, it was for the exporter to establish that the export value declared in the Shipping Bill was correct. The appellants did not discharge this burden of proof. Hence, the allegation of misdeclaration of value stood unrebutted. The chemical test report of the Custom House Laboratory was legally authentic and the same was binding on the party, who did not ask for any retest in the Central Revenues Control Laboratory of the department. On the other hand, they wanted to have the samples retested in an outside laboratory, for which they did not state any valid reason. The DR also vehemently argued that the penalty imposed by the Commissioner on the basis of the finding of misdeclaration was not assailable in the facts of this case. In this connection, he, again, relied on the Supreme Court's decision in Om Prakash Bhatia (supra).