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Section 14 in The Customs Act, 1962
The Customs Act, 1962
Section 18(1)(a) in The Customs Act, 1962
Section 4 in The Customs Act, 1962
Section 14(1) in The Customs Act, 1962
Citedby 4 docs
Dipen Enterprises vs Cc on 9 December, 2003
Satyender Singh vs Commissioner Of Customs, Icd on 14 November, 2005
Cce vs Sidhachalam Exports Pvt. Ltd. on 14 September, 2006
Guru Nanak Exports vs Cc on 24 April, 2007

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Customs, Excise and Gold Tribunal - Delhi
Om Prakash Bhatia vs Commissioner Of Customs on 1 December, 2000
Equivalent citations: 2001 (73) ECC 724, 2001 (127) ELT 81 Tri Del

ORDER

Lajja Ram, Member (T)

1. In this appeal filed by M/s. Om Prakash Bhatia, the matter has come up before the Larger Bench of 5 Members, on a reference by the Bench before whom it was argued on behalf of the appellants that over-invoicing of the goods for export was not an offence under the Customs Act, 1962 (hereinafter referred to as the 'Act'). It had been held in the impugned order-in-original dated 31-3-1999 passed by the Commissioner of Customs, Inland Container Depot (ICD), Tughlakabad, New Delhi that the appellants tried to export garments (ladies skirts) of cheaper quality by showing an enhanced value. Their attempt was to get drawback of more than the price of the same in the local market. Value of each lady's skirt in the market was found to be Rs. 45/- per piece, while the declared value was of Rs. 434/- per piece. The amount of drawback per piece claimed by the appellants was Rs. 78/- as against the market price of Rs. 45/- per piece. The Commissioner of Customs - the adjudicating authority - as per the impugned order confiscated the said goods subject to the payment of redemption fine of Rs. 10,00,000/-. A penalty of Rs. 20,00,000/- was imposed.

When the matter came up for hearing before the regular bench on 21-9-2000, the appellants relied upon the Tribunal's decision in the case of M.V.T. International v. Commissioner of Customs, New Delhi - 2000 (117) E.L.T. 258 (Tribunal).

The Departmental Representative submitted that a contrary view had been expressed in a number of other decisions. Faced with such conflicting views expressed by different benches of the Tribunal having coordinate jurisdiction, the matter has been placed before the present Larger Bench of 5 Members.

2. The matter was heard on 23-10-2000 when Shri Prem Ranjan Kumar, Advocate submitted that the matter was already covered by the 3 Member Larger Bench decision of the Tribunal in the case of J.G. Exports and Ors. v. Collector of Customs, New Delhi [2000 (121) E.L.T. 754 (T-LB) - 2000 (40) RLT 755 (CEGAT - LB)], wherein the Larger Bench of the Tribunal had held that Section 14 of the Act was not applicable to the over-valuation of the export goods. According to the understanding of the Bench, Tribunal's earlier decision in the case of Shilpi Exports v. Collector of Customs, Calcutta - 1996 (83) E.L.T. 302 (Tribunal) had been up-held by the Supreme Court as reported at 2000 (115) E.L.T. A-219. He pleaded that the contrary decision of the Tribunal dated 26-8-1999 in the case of Galani Infin Pvt. Ltd. v. Commissioner of Customs, Neiv Delhi 1999 (35) RLT 3 (CEGAT) has been overruled by the aforesaid Larger Bench decision in the case of J.G. Exports and Ors. v. Collector of Customs, New Delhi 2000 (40) RLT 755 (CEGAT - LB). He also referred to the Calcutta High Court's decision in the case of Collector of Customs, Calcutta v. Lexus Exports Pvt. Ltd. - 1994 (69) E.L.T. 228 (Calcutta). It was also submitted that as no export duty was chargeable on the garments, the provisions of Section 14 of the Act were not applicable and there was no requirement of declaration of value of the exported goods as per the provisions of that Section 14 of the Act.

In reply Shri P.K. Jain, SDR and Shri Sanjeev Srivastava, JDR submitted that the declaration of value was a requirement of the shipping bill, and for any export, a shipping bill was required to be filed under Section 50 of the Act. The value in relation to any goods, including the goods for exportation, meant the value of such goods determined in accordance with the provisions of subsection (1) of Section 14 of the Act. Reference was made to the definition of Value' under Section 2 (41) of the Act. The ld. DR also referred to the provisions of Shipping Bill and Bill of Export (Form) Regulations, 1991.

3. We have carefully considered the matter. The facts of the case may be briefly narrated. M/s. Om Prakash Bhatia filed 4 shipping bills in 1998 for export of 28,000 pieces of ladies skirts @ of $ 10.25 per piece (Rs. 434/- per piece), amounting to Rs. 1,21,54,447/-, to Dubai. On checking, the actual quantity of the lady's skirts were found to be 21,184 pieces. On enquiry, the value was ascertained to be Rs. 45/- per piece, of total value of Rs. 9,53,280/-. The exporters had claimed a drawback of Rs. 21,87,800/- on the consignment @ Rs. 78/- per piece. Vide letter dated 4-2-1999, the exporters pleaded that it was an un-intentional mistake which had happened on the part of the fabricators and suppliers. It was prayed that a lenient view be taken. The issue of show cause notice was dispensed with, and it was admitted by the exporters that they were willing to abide by the decision of the Commissioner of Customs. During the course of hearing on 6-2-1999, it was admitted by the exporters, that the market price of Rs. 45/- per piece was acceptable to them and that their claim for drawback did not hold any ground. The adjudicating authority, the Commissioner of Customs, noted that this was the second such case belonging to the same exporters and that there was an organized racket to claim fraudulant drawback by deliberately over-invoicing the readymade garments. After analysing the matter and taking into consideration the relevant facts and circumstances of the case, he imposed a redemption fine of Rs. 10,00,000/-. A penalty of Rs. 20,00,000/- was also levied. It was held that no drawback was admissible even if the party exported the goods in terms of Section 76 of the Act as the market value of the goods was less than the amount of drawback claimed.

4. While in the appeal, the appellants had assailed the impugned order largely on the ground of in-sufficient evidence for alleging overvaluation and the denial of the principles of natural justice, before the Larger Bench, the matter has been argued mainly for lack of jurisdiction of the Customs Officers to challenge the export value declared, the goods entered for export being non-dutiable. Reliance has been mainly placed on the 3 Member Larger Bench decision of this Tribunal in the case of J.G. Exports and Ors. v. Collector of Customs, New Delhi 2000 (40) RLT 755 (CEGAT-Larger Bench)].

5. Before we take up the Larger Bench decision for examination, the legal provisions for declaration of value in respect of the goods entered for exports may be studied.

Under Section 50 of the Act, the exporter of any goods is required to make entry of such goods for exportation by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form. The exporter of any goods while presenting a shipping bill or bill of export had to make and subscribe to a declaration at the foot of such shipping bill or bill of export, as to the truth of its contents.

The form of the shipping bill is specified in the Shipping Bill and Bill of Export (Form) Regulations 1991, made by the Central Board of Excise & Customs in exercise of the powers conferred by Section 157, read with Sections 50 and 60 of the Act.

In the shipping bill for export of goods under claim for duty drawback, (Customs Series Form No. 93), the value, Free on Board (FOB) was required to be declared along with the description of the goods, and other particulars. The declaration of FOB value was required to be declared irrespective of the fact whether the goods were chargeable to export duty or not.

As defined in Section 2 (41) of the Act 'Value' in relation to any goods means the value thereof determined in accordance with the provisions of subsection (1) of Section 14 of the Act.

Under Sub-section (1) of Section 14 of the Act, it is provided that for the purposes of the Customs Tariff Act, 1975 or any other law for the time being in force, whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods was deemed to be the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation or exportation as the case may be, in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. There are further provisions regarding rate of exchange, valuation rules, etc. for determination of the value in accordance with the provisions of Sub-section (1) of Section 14 aforesaid.

Even where no duty of customs was chargeable on any goods, or was chargeable not with reference to their value (i.e. specific rates), the value of such goods for export was required to be declared. Such value was to be determined in accordance with the provisions of Sub-section (1) of Section 14 of the Act. The provisions of Sub-section (1) of Section 14 as how to determine the valuation of goods for the purposes of assessments, have been adopted in the Customs Act in all cases where there is a reference to the Value' in relation to any goods, unless the context otherwise requires.

The valuation for the purposes of Customs Law has been explained in Section 14(1) of the Act. Unless the context otherwise requires wherever the expression 'value' occurs in the Act, Rules or Regulations, the same meaning has to be given to it as provided in Section 14 (1).

6. Under Section 20 of the General Clauses Act, 1897, where by any Central Act or Regulation, a power to issue any Notification, order, scheme, rule, form or bye-law is conferred - then expressions used in the Notification, order, scheme, rule, form or bye-law, if it is made after the commencement of that General Clauses Act, 1897, shall, unless there is anything repugnant in the subject or context, have the same respective meanings as in the Act or Regulation conferring the power.

7. Under Section 50 of the Act, the exporter of any goods was required to make entry of such goods to be exported by presenting a shipping bill. In the shipping bill for export of goods under claim for duty drawback (Annexure I) under Regulation-2 of the Shipping Bill and Bill of Export (Form) Regulations 1991 (Customs Series Form No. 93), value of the goods to be exported was to be entered. The value had to be the value as per the Section 14 of the Act.

8. In the case of Commissioner of Sales Tax v. Radha Dyeing and Printing Mills - 1981 (48) STC 61 (Bombay), the Bombay High Court had held that in view of the provisions of the General Clauses Act, where any Act conferred a power to issue a Notification, order, rule or bye-law, an expression used in such notification, order, rule or bye-law ought, unless there was anything repugnant in the subject or context, to bear the same meaning as it bore in the Act conferring the power [also refer State of Karnataka v. Prabha Soaps and Synthetics -1992 (87) STC 401 (Karnataka, Bangalore)].

The expression used in the Rules made under a statute bear the same meaning as in the Act unless otherwise provided [refer Shree Ram Steel Rolling Mills v. State of Maharashtra -1983 STC (53) 202 (Bombay)].

In the case of Bird & Company (Pvt.) Ltd. v Kalyan Kumar Sen Gupta -1988 (37) E.L.T. 70 (Calcutta), the Calcutta High Court had held that the mode of valuation under Section 14 of the Act was also applicable for determining the value under exemption notification.

In this connection, para-6 from the Tribunal's decision in the case of United Veneers (P) Ltd. and Ors. v Collector of Customs, Cochin -1986 (26) E.L.T. 322 (Tribunal) is also extracted below :-

"6. I have carefully considered the submissions of the parties herein. A perusal of the provisions of the Export Control Order 1977 with particular reference to Rule No. 13 would make it abundantly clear that an exporter is under a statutory obligation to furnish in the shipping bills and other connected documents the value, sort, specifications, quality and description of the goods that are exported. It will be useful to extract sub-clause (4) of Clause 2 and Clause 13 of Export Trade Control Order, 1977 :

"2(4) If in any case, it is found, that the value, sort, specification, quality and description of the goods to be exported are not in conformity with the declaration of the exporter in those respects or the quality and specification of such goods are not in accordance with the terms of the export contract, the export of such goods shall be deemed to be prohibited."

"13. Declaration as the value, sort, quality etc. of exported goods. - On the exportation from any Customs port of any goods, whether liable to duty or not, the owner or exporter of such goods shall, in the shipping bill, or other relevant document state the value, sort, specifications, quality and description of such goods to the best of his knowledge and belief, and certify that the quality and specification of goods, as stated in those documents, are in accordance with the terms of the export contract entered into with the buyer or consignee in pursuance of which the goods are being exported and shall subscribe to a declaration to the truth of such statements at the foot of such shipping Bill or other documents."

In the instant case admittedly these factual particulars have not been clearly indicated and mentioned in the shipping bill and other connected documents. In terms of Section 18 of the Foreign Exchange Regulation Act an exporter should declare the full export value of the goods that are exported. In the instant case, John Philipose, the acting Managing Director and Chairman at the relevant time appeared before the authorities pursuant to the summon issued to him under Section 108 of the Act and stated that veneers are graded according to their colour, stripes, absence of defects, thickness, length and width, and are priced on the basis of these characteristics, in addition to the cost of finished product. He has further stated that veneers having more length, width, thickness and quantity (more number of veneers in one flitch) would fetch higher price. In the context of this factual background and the statutory legal obligation cast on an exporter under the provisions of the Export Control Order and Foreign Exchange Regulation Act, besides the Customs Act, non-mention of the relevant particulars relating to the valuation of the export consignment in question would certainly be a contravention entailing confiscation. It is indeed strange that the Chairman and acting Managing Director has stated before the authority that he could not say whether the value of the consignment of rosewood veneers covered by shipping bill No. 1699 dated 22-6-84 represents "full export value of the goods". The acting Managing Director could not even say how much was the cost of slicing of the veneers in the consignment in question. Even in the statement given before the Superintendent of Customs (Intelligence) on 10-8-84, the acting Managing Director has admitted that he had not mentioned the quality of the veneers in the contract or in the other shipping documents such as shipping bill, invoice etc., notwithstanding the fact that the consignment was being exported for purposes of sale in a foreign country. The fact that the quality of rosewood veneers is determined mainly with reference to colour, structure, grains, absence of defects, thickness and other measurements, and the purposes for which they are used, does not admit of any controversy; nor is the same controverted by the appellants. Thickness of the veneers exported would be one of the surest indicators regarding the value of the same and as rightly pointed out by the Collector in the impugned order, while thickness of veneers exported is usually of two standard sizes, viz. 0.2 mm and 0.5 mm, 8 crates of veneers under seizure contain veneers of 0.5 mm thickness and the remaining 2 crates contain veneers of 0.6 mm thickness. I therefore do not find any substance in the submission of the learned counsel that there is no under-invoicing or mis-declaration of the value of the consignment for export. The plea of the appellants that there is no prohibition either under the Export Control Order or any other order and that there is no statutory definition of the item in question is hardly relevant for determination of the issue relating to under-invoicing or undervaluation within the provisions of the Customs Act, Export Control Order and Foreign Exchange Regulation Act. The ratio of the ruling in the case of Bimex International Maha Singh Gate, Am-ritsar v. Union of India and Ors. reported in 1984 (16) E.L.T. 212 (P&H) has absolutely no relevance or application to the facts of the present case. That was a case where the Punjab and Haryana High Court held that in the absence of statutory definition of rags the meaning assigned to the term "woollen rags" in the trade have to be accepted. In the present case there is no dispute or controversy that the appellants attempted to export rosewood veneers. As a matter of fact in terms of Section 13 of the Export Control Order, 1977, on the exportation from any Customs port of any goods whether liable to duty or not the owner or exporter of such goods shall in the shipping bill or other relevant documents state the value, sort, specification, quality and description of such goods to the best of his knowledge and belief and shall subscribe to a declaration to the truth of such statements at the foot of such shipping bill or other documents. The export of such goods shall be deemed to be prohibited if they are not in conformity with the declaration as per sub-clause (4) of clause 3 of the Export Control Order. The plea of the learned counsel that enquiries by the authorities of the market prices is only a conjecture cannot be countenanced. It is clearly stated in the show cause notice that on the basis of the result of market enquiries, the component opinions expressed by experienced traders and exporters in the field after personal inspection and evaluation of the consignment in question, the comparison of the prices or various export consignments of rosewood veneers of similar quality made from Cochin during the preceding few months, the comparison of the prices of rosewood veneers of comparable quality ruling in the local market and also after valuation of the consignment by the Department, the real value of the rosewood veneers under seizure was estimated at U.S. $ 2.40 per sq. mtr. The appellants notwithstanding the receipt of the show cause notice and their reply to the same, besides participation in the personal enquiry, never joined issue with the authorities with reference to the enquiries conducted by the Department, the opinion of the experts, comparative prices ruling in the market, value of export consignments of rosewood veneers of similar quality exported from the same port in the preceding few months nor did they want to avail themselves of an opportunity to cross-examine the persons connected with the sources of such information. In such circumstances it is puerile for the appellants to merely assert that the market enquiry and the reliance on the aforesaid facts and circumstances are made conjectures. As rightly pointed by the learned DR, Section 14 of the Act deals with valuation of goods for purposes of assessment and the same shall be deemed to be,

(a) the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale of offer for sale : Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46 or a shipping bill or bill of export, as the case may be, is presented under Section 50;

(b) where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf.

I do not find any substance in the argument of the learned counsel that there is no need at for an exporter to undervalue the goods since incoming money is essential for the running of the firm and one would not be inclined to forgo the advantages of export incentive, cash assistance etc. by undervaluation. The question is whether materials available on record under-invoicing or under-valuation is proved against the appellants and therefore the mere plea that an exporter would not have recourse to such undervaluation is neither here nor there. The learned counsel assailed the impugned order for placing reliance on the letter dated 11-10-1983 addressed by the appellants to M/s. Shingu Shoko Ltd., Tokyo. It is true that this particular letter does not have a direct nexus or connection with the export consignment in question. But in the context of the plea of the appellants that they are ignorant of the relevant rules and regulations and the full export value of the goods, this letter can be taken into consideration to show and prove that in the past the appellants have resorted to activities of undervaluation or under-invoicing contrary to law. This letter would disprove the plea of the appellants about their complete ignorance of the relevant rules and regulations. It is in. the context of these facts and circumstances one would have to construe whether the appellants were actuated by mala fides and mens rea in respect of the goods under seizure. The plethora of circumstances and factual details do not leave any doubt in my mind that in the instant case the appellants had mens rea in attempting to export the goods under seizure in contravention of the provision of law."

9. On the central excise side, the valuation of excisable goods, for purposes of charging of duty of excise has been provided in Section 4 of the Central Excises Act, 1944 (hereinafter referred to as the Act of 1944). Subsection (1) of that Section 4 provided that where under the Act of 1944 the duty of excise was chargeable on any excisable goods with reference to the value, such value shall be deemed to be the normal price as explained and provided in that Section.

Even where no duty of excise was chargeable on any goods or the goods enjoyed exemption from payment of duty, if the need arises for determination or declaration of the value, then unless there was anything repugnant in the subject or context, such value was to be determined or declared as per Section 4 of the Act of 1944.

Valuation of goods under an exemption notification is to be done in accordance with the provisions of Section 4 of the Act of 1944. It was so even when there was no central excise duty chargeable on exempted goods and the provisions of Section 4 referred to the value for levy and collection of duty (refer Supreme Court decision in the case of Bata Shoe Company (P) Ltd. v. CCE -1985 (21) E.L.T. 9 (S.C.).

In the case of Continental Engg. Industries (Pvt.) Ltd. v. Collector of Central Excise - 1989 (42) E.L.T. 14 (Tribunal), it has been provided that unless the value has been differently defined in any exemption Notification, the value referred to therein would be governed by Section 4 of the Act of 1944. For the purposes of small scale exemption under Item No. 68 of the erstwhile Central Excise Tariff, it was held that the value for the purposes of Notification 176/77-C.E., dated 18-6-1977 was to be the Section 4 value.

Similarly in the case of L.V.T. Products v. Collector of Central Excise, Bel-gaum - 1996 (88) E.L.T. 251 (Tribunal), it was held that the value of clearances under Notification No. 175/86-C.E., dated 1-3-1986 was the value as determined under Section 4 of the Act, 1944.

10. Similar, question had come up for consideration before the Tribunal in the case of Galani Infin Pvt. Ltd. v. Commissioner of Customs, New Delhi 1999 (35) RLT 3 (CEGAT). It was a case wherein the appellants filed shipping bills for export of musical greeting cards with a declared value of Rs. 190/- per piece. On investigations, it was found that the value of those musical greeting cards had been inflated and that the real value was about Rs. 50/- per piece. On behalf of the exporters, it was pleaded that as no customs duty was chargeable on the exportation of musical greeting cards. Section 14(1) of the Act could not be pressed into service for alleging overvaluation of the goods entered for export. The Tribunal after making a reference to the views expressed by the Supreme Court in the case of McDowell & Company Ltd. v Commercial Tax Officer - 1997 (69) ECR 29 (S.C.) repulsed this contention and held in para-6 as under :-

6. Section 14(1) of the Customs Act prescribes a method for determination of the value of the goods. Such determination of the value of the goods has no correlation with the liability of those goods to duty. According to us, whether the goods are chargeable to duty or otherwise, the officials of the customs department can determine the value. Other enactments also define "value" as having the same meaning as in Section 14(1) of the Customs Act. Under the Foreign Exchange Regulation Act as also under the Foreign Trade Regulation Rules, the customs authorities are empowered to deal with the transactions they are to determine the value. It is the customs authorities who are to determine the value of goods under Section 14(1). Depending on the value they can prohibit the export of the goods. So, the power to assess the value under Section 14(1) of the Customs Act is independent of any question of assessability of the goods to duty which are sought to be exported.

11. The ld. Counsel representing the appellants had relied upon the Division Bench decision of the Calcutta High Court in the case of Collector of Customs v. Lexus Exports Pvt. Ltd. -1994 (69) E.L.T. 228 (Calcutta), and the decision of the Tribunal in the case of Shilpi Exports v. Collector of Customs, Calcutta -1996 (83) E.L.T. 302 (Tribunal) in support of their contention that when the exporter gives the full export value of the goods, Customs authorities have no jurisdiction to confiscate the goods under Section 113(d) of the Act or to impose penalty under Section 114(1) of the Act.

The Tribunal in the case of Galani Infin Pvt. Ltd. v. Commissioner of Customs, New Delhi 1999 (35) RLT 3 (CEGAT) had held in para-11 of their decision that the view taken by the Calcutta High Court in the case of Collector of Customs v. Lexus Exports Pvt. Ltd. - 1994 (69) E.L.T. 228 (Calcutta) could not be pressed into service in view of the subsequent Division Bench decision of the same Calcutta High Court in the case of Collector of Customs v. Punkaj V. Sheth -1997 (90) E.L.T. 31 (Calcutta). The Tribunal held in that decision in the case of Galani Infin Pvt. Ltd. v. Commissioner of Customs, Nezv Delhi 1999 (35), RLT 3 (CEGAT) that none of the above aspects were considered by the Tribunal in the case of Shilpi Exports v. Collector of Customs, Calcutta 1996 (13) RLT 39 (CEGAT).

12. We may also refer to the Tribunal's decision in the case of G.K. Lath v. Commissioner of Customs, Madras -1998 (102) E.L.T. 444 (Tribunal). It was a case where the values declared in the shipping bills and the supporting invoices filed were less than what was found in the purchase documents. The value declared by the appellants in the shipping bills did not cover the purchase price of the goods under export. The Tribunal held that when there was mis-declaration of the value of the goods to be exported with intention to procure larger duty free import entitlement of yarn under advance licence under DEEC Scheme, the goods were liable to confiscation under Section 113(d) of the Act, read with Section 18 of the Foreign Exchange Regulations Act, 1973, and that the penalty imposed was also justified.

In Shree Tirumala Udyog v. Collector of Customs, Bangalore - 1998 (77) ECR 169 (Tribunal), the appellants were charged that the plastic garbage bags exported under DEEC Scheme had been over-valued while the imported materials - plastic scrap had been under-valued. The exported plastic garbage bags were over-valued with a view to avail more import value entitlement. The Tribunal had held that the value of the export goods were required to be determined with reference to the parameters under Section 14 of the Act. In para-91, it was held as under : -

"91. The next question which falls for consideration is whether the quantum as has been imported by the appellants was allowable. As it is the value of the licence covers the goods under the DEEC scheme. However, the quantum of the goods which could be imported has to be related to value of the goods which had been exported in terms of condition (ii) of the DEEC licence. In this regard, the ld. Vice-President has dealt with the matter in para 31 to 38 of his order, and I agree with the view of the ld. Vice-President that the ld. lower authority has rightly entertained a suspicion about the value of the goods as declared before coming to any conclusions, and that ld. Lower authority should have examined the issue in the context of parameters as set out under Section 14. Hence, I agree with his findings so far as the value of the export goods is concerned that the issue required to be re-examined and the value of the goods which could be imported therefore will ultimately depend upon the value of the goods which is held to have been exported in the remand proceedings and the penal action also will have to be taken in regard to the same from the point of view of licensing angle and the exemption from payment of duty. For this purpose, the matter requires to be remanded."

13. We therefore find that the view taken by the adjudicating authority in the present case is consistent with the authoritative pronouncements on the subject.

14. The appellants have mainly relied upon the observations of the Tribunal's Three Member Larger Bench decision in the case of J.G. Exports and Ors. v. Collector of Customs, New Delhi 2000 (40) RLT 755 (CEGAT - Larger Bench). We may now examine this decision. M/s. J.G. Exports had filed a shipping bill on 14-3-1999 for export of 215 quartz analog watches and declared FOB value at US $ 910 per piece (rupees 8275995 for the consignment). It was alleged that the exporters had over-valued the goods to avail higher Duty Entitlement Pass Book (DEPB) benefits. The appellants had contended that since the goods in question were not subjected to any levy of duty, Section 14 of the Act could not be employed for the purposes of valuation of the said goods and therefore, the FOB value of the goods declared in the shipping bill could not be faulted with the aid of Section 14. This contention was accepted by the Bench on the ground that the Tribunal's earlier decision in the case of Shilpi Exports v. CC, Calcutta reported in 1996 (13) RLT 39 (CEGAT) had been upheld by the Supreme Court as reported in 2000 (115) E.L.T. A219. The Bench did not agree with the view taken in Galani Infin Pvt. Ltd. v. Collector of Customs, New Delhi 1999 (35) RLT 3 (CEGAT), Calcutta High Court decision in the case of Collector of Customs v. Pankaj V. Seth -1997 (90) E.L.T. 31 (Calcutta) and CEGAT's Final Order No. 1573/99-A, dated 5-11-1999 in Appeal No. C/115/98-A in the case of Amit Batra v. Commissioner of Customs, New Delhi. In para-27, the Bench recorded as under : -

"27. In the case of Galani Infin (supra) cited by ld. DR, the Tribunal was following the Calcutta High Court's decision in the case of Pankaj V. Sheth (supra) in its finding that the power to assess the value of goods under Section 14(1) of Customs Act was independent of any question of assessabil-ity of the goods to duty, which were sought to be exported. This decision in Galani Infin (supra) cannot be accepted as good law inasmuch as the ruling of the Calcutta High Court in Pankaj V. Sheth was rendered nugatory by the Supreme Court's decision upholding the Tribunal's decision in Shilpi Exports (supra). For the same reason, the decision of the Tribunal in the case of Amit Batra (supra), which was rendered by following the decision in Galani Infin, also cannot be successfully relied on by the Revenue. We, therefore, hold that, since the goods in question were not assessable to duty, it was not open to the Customs authorities to determine the PMV of the goods by having recourse to the provisions of Section 14 of the Customs Act, which were not applicable to cases like this one as rightly held in Shilpi Exports (supra). Ld. Commissioner's reliance on the Calcutta High Court's decision in Pankaj V. Sheth (supra) with reference to the provisions of Section 14 of the Customs Act is totally in apposite to the facts of the case."

For appreciating the view taken by the Bench that the Tribunal's decision in Shilpi Exports v. Collector of Customs, Calcutta 1996 (13) RLT 39 (CEGAT) had been upheld by the Supreme Court and thus, the ruling of the Calcutta High Court in the case of Collector of Customs v. Pankaj V. Sheth -1997 (90) E.L.T. 31 (Tribunal) had been rendered nugatory, let us examine the aforesaid decisions in the case of Collector of Customs v. Pankaj V. Seth -1997 (90) E.L.T. 31 (Calcutta) and of Shilpi Exports v. Collector of Customs, Calcutta -1996 (83) E.L.T. 302 (Tribunal).

In Shilpi Exports, it was a case of export of mulbery silk printed ties. The Customs Deptt. had alleged that there was over-valuation of the goods presented for export. The exporter pleaded that there was no over-valuation. The Deptt. had obtained two certificates from M/s. Mohan's, New Market, Calcutta-87 and M/s. Handloom House, Calcutta-87 to establish that there was over-valuation. The Tribunal on examining the certificates came to a conclusion that charge of over-valuation was not proved. It was observed in para-8 as under:-

8. We have considered the submissions of both sides. The question for determination is whether these two certificates are sufficient to prove that the valuation arrived at by the Department on the strength of the same, is correct and the goods in question which were exported by the appellants herein were liable to confiscation in terms of Section 113(d) of the Customs Act, 1962. These certificates furnished by M/s. Handloom House and M/s. Mohan's Tailors & Men's Wear read as follows :

"To 27-9-1994

Appraiser, Export Investigation Branch,

15/1, Strand Road,

Custom House,

Calcutta.

Dear Sir,

In response to your letter No. S41/18/93/EIB, dated 27-9-1994 I have seen the sample of Silk Ties which is approximately to our knowledge should be about Rs. 100.00 per pc. in retail.

Thanking you,

Yours faithfully,

Sd/-

For Mohan's"

"To

The Appraiser, 27-9-1994

Export Investigation Branch,

15/1, Strand Road,

Custom House,

Calcutta.

Sir,

In response to your letter No. S41/18/94/EIB, dated 27-9-1994, I have seen the samples of Silk Ties of which resembles with the ties i.e., sold through our handloom house, the rate to the same is Rs. 102.10 at retail price....

Thanking you,

Yours faithfully,

Sd/-

For Handloom House"

These certificates are very vague in nature. They do not show as to what are the goods which the above companies have examined. These two certificates do not mention that they have examined the Mulberry Silk Superior Ties which were the goods seized from the appellants. They also do not state as to the basis on which they came to the conclusion that the prices mentioned by them were correct. There is no correlation of the samples of the goods seized as well as the samples examined by these agencies. There is no basis provided in these two certificates to show that the prices determined by them are correct ones with respect to the similar goods which were exported by the appellants. On that ground, the charge of overvaluation by the respondent Collector is not proved and that the appellants are entitled to succeed.

In that case, the goods entered for exportation were not under a claim for drawback (refer para-13 of the decision).

The appellants had realised the full export value and the full foreign exchange remittance had been brought to the country through the proper legal channels. It was with such facts that the Tribunal observed in para-11 that the method adopted by the Deptt. in arriving at the value as per Section 14 of the Act was not applicable. It was a case where the adjudicating authority had recorded at page 4 that the appellants had realised the full export value as declared in the shipping bills as per copies of the submitted bank realisation certificates (para-15 of the Tribunal's decision). Again at page-6 of the impugned order, it was found on the basis of records of the case that the exporter had realised the full foreign exchange remittance back through the proper legal channels as declared by them as the export value for the subject - export consignments (again refer para-15 of the Tribunal's decision).

It was with such facts and conclusions that the Tribunal had allowed the appeal of M/s. Shilpi Exports.

Against this Tribunal's decision, the Collector of Customs, Calcutta filed Civil Appeals Nos. 10174-10175 of 1996 in the Hon'ble Supreme Court. While dismissing the appeals the Supreme Court passed the following orders:-

"What is involved is a pure question of fact. The Tribunal having decided against the appellant that is where the matter must rest. The Civil appeals are dismissed." [refer A-219 of 2000 (115) E.L.T.].

The Hon'ble Supreme Court did not touch the legal issue, and the matter was decided on the basis of the facts of that case.

On the basis of the above analysis we consider that the inference drawn by the Bench in M/s. J.G. Exports in para-27 that the Calcutta High Court decision in Collector of Customs v. Pankaj V. Sheth was rendered nugatory, was not correct.

15. We may now also refer to the Calcutta High Court decision in the case of Collector of Customs v. Pankaj V. Seth -1997 (90) E.L.T. 31 (Calcutta). The goods exported in that case were found to be over invoiced. The exporter had pleaded that the Customs authorities had no jurisdiction to question the valuation of the goods. It had been held by the Commissioner of Customs, who had adjudicated the matter that the FOB value of the export consignment covered by the relevant shipping bills should be Rs. 92,000/- against the declared value of Rs. 48,46,850/-. The issue for consideration before the Hon'ble High Court of Calcutta was of the jurisdiction of the Customs authorities to determine the value of an export consignment under the DEEC Scheme. In para-9, the High Court noted the arguments of Pankaj V. Sheth. It was argued that the power of the customs authorities to assess the value of the goods was limited to Section 14 of the Act; Section 14 provided inter alia that for the purposes of Customs Tariff Act, 1975 or any other law for the time being in force, where under a duty of customs is chargeable on any goods by reference to their value, the value of such goods was to be deemed to be a price at which such or like goods were ordinarily sold or offered for sale for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade where the seller and the buyer have no interest in the business of each other and the price was the sole consideration for the sale or offer for sale. It was submitted that as no export duty was chargeable on the goods in question, the Customs authorities could not determine the value under Section 14 of the Act or at all. It was pleaded that jurisdiction of the Customs authorities to determine the value was limited to cases where the duty was leviable, and not in a case where no duty was leviable.

The Hon'ble High Court had held that they were unable to accept the submission of the writ petitioner. In para-13, it was observed that the customs authorities are required to ascertain the correct value of the exports, and that if the customs authorities were merely to act as a rubber stamp on the value declared by the exporter, there would have been no necessity for the customs authorities to separately make an endorsement in the DEEC. It was added that it is on the basis of the value that the exporter becomes entitled to import duty free materials. The Hon'ble High Court analysed the place of Section 14(1) in the determination of value even in a case where no customs duty was chargeable on the goods in paras-16, 17, 18, 19, 20 and 21 of their order. In para-24 the position was summed-up as under :-

"24. To sum up : the Customs Authorities power to assess the value of goods is not limited to cases where the goods are assessable to duty. The Customs Authorities are to certify the correctness of the value of the goods under the DEEC Scheme and they cannot be compelled to accept the declared value as correct. For the purposes of ascertaining such correct value the Customs are required to follow the mode prescribed in Section 14(1) of the Act."

16. The Hon'ble Supreme Court had dismissed on 3-11-1999 the Civil Appeals No. 10174-10175/1996 against the CEGAT Order dated 24-10-95 in the case of Shilpi Exports v. CCE -1996 (83) E.L.T. 302 (Tribunal) on the ground that "what is involved is a pure question of fact". On the other hand, the Hon'ble Calcutta High Court in the case of Collector of Customs v. Pankaj V. Sheth 1997 (90) E.L.T. 31 (Calcutta) had decided purely the question of the jurisdiction of the Customs Authorities to determine the value of an export under the DEEC Scheme, and left the facts to be re-determined by the Commissioner of Customs after observing the principles of natural justice.

17. It is beyond an iota of doubt that the question before the Hon'ble Calcutta High Court in the case of Commissioner of Customs v. Pankaj V. Sheth -1997 (90) E.L.T. 31 (Calcutta) was one of jurisdiction. The jurisdiction is a question of law. The Tribunal's decision in the case of Shilpi Exports v. CC -1996 (83); E.L.T. 302 (T) was based on facts as given in para-8 of the decision. The word "jurisdiction" is defined in "Webster's Third New Internatioal Dictionary" as under: -

"...the legal power, right or authority to hear and determine a cause considered either in general or with reference to a particular matter...." [refer N.K. Tholia v. Additional Commissioner of Income Tax -1992 (194) ITR 371 (Rajasthan, Jaipur Full Bench)].

Rankin C.J. in T.C. Bhattacharyee v. K. Haldar - ILR 56 Calcutta 723 had observed cited in M.P. Bajoo Jaiswal v. Dossibai N.B. Jee Jee Bhoy -1970 (3) SCR 830) that questions affecting jurisdiction were question of law.

In Mathura Prasad Bajoo and Ors. v. Dossi Bat N.B. Jee Jee Bhoy - 1970 (3) SCR 830 at page 836 a Bench comprising three ld. judges of the Supreme Court has taken the view that a decision on the question of jurisdiction of the Court was a pure question of law. (also refer Smt. Isabella Johnson v. M.A. Susai -1990 (2) SCALE 928.

In the case of Atlas Radio & Electronic Industry Pvt. Ltd. v. State of Gujarat -1993 (88) STC 278 (Gujarat, Ahmedabad), the Hon'ble Gujarat High Court in para-12 of their judgment had held that "determination of jurisdictional facts is a question of law."

It is, thus, clear that the judgment of the Calcutta High Court in the case of Collector of Customs v. Pankaj V. Sheth -1997 (90) E.L.T. 31 (Calcutta) was entirely on a question of law while the Hon'ble Supreme Court had dismissed the Civil Appeals filed by the Collector of Customs, Calcutta against the Tribunal's decision in the case of Shilpi Exports v. CCE -1996 (83) E.L.T. 302 (Tribunal) as reported at page A-219 of 2000 (115) E.L.T. on a pure question of fact.

18. In the light of the above position, the view taken by the Bench that the ruling of the Calcutta High Court in Pankaj V. Sheth was rendered nugatory by the aforesaid dismissal of the Civil appeal by the Supreme Court, could not be sustained, and is not a correct statement of law.

19. As regards the Tribunal's decision in the case of Collector of Customs, Kandla v. Dimple Overseas Ltd. -1995 (76) E.L.T. 48 (Tribunal), M/s. Dimple were found to be attempting to export plastic mewar/strips under DEEC Scheme by mis-declaring its actual value. In adjudication proceedings, the Collector of Customs had dropped the charges levelled against M/s. Dimple. He had held that M/s. Dimple had not mis-declared the description, nature and quality of the goods. The Tribunal in para-16 had observed that there was no specific charge of over-valuation in the show cause notice. The Tribunal did not held that the provisions of Section 14 were not applicable to export goods. It was mentioned as under : -

"Even if one were to invoke Section 4 of Foreign Trade (Development and Regulation) Act, 1992 read with Rule 2(h) of Exports (Control) Order, 1988 (as has been done in the Departmental appeal) it would still lead one to Section 14 only. Even assuming that Section 14 is applicable, it will be necessary and logical for the Department, as per the principle laid down by the High Court decision cited above, to indicate with evidence the price at which such or like goods are ordinarily sold at the time and place of exportation so as to establish that the value declared by the respondents is at variance with the value as envisaged under Section 14."

It was on the basis of the facts in that particular case that the Tribunal affirmed the view of the adjudicating authority when it was observed as under :-

" Hence, for the above said reasons, the Collector's conclusion that the rigours of Section 14 on valuation are not in terms applicable to the present case where the goods exported are not subject to any levy of duty at all, calls for no interference so far as this aspect of the case is concerned."

No general law for universal application had been laid-down by the Tribunal with regard to the export goods in that case.

It was with such facts that the Supreme Court on 31-7-1996, dismissed the Civil Appeals No. 6366 and 6367/1995 filed by the Collector of Customs, Kandla with the following observations -

"The appeals must be dismissed having regard to the earlier orders of this Court, in C.A. No. 608 of 1995 on 8th September, 1995 and in C.A. No. 184 of 1996 on 19th January, 1996 between the same parties. No order of rectification shall now be passed by the Tribunal in the rectification application made by the appellant which is stated to be pending.

The appeals are dismissed, the point of law relating to the applicability of Section 14 of the Customs Act to goods exported duty free being left open. There shall be no order as to costs."

The Supreme Court had not gone into the law relating to the applicability of Section 14 of the Act to the goods exported duty free as is clear from the order passed itself.

20. Thus, it could not be said that the Supreme Court had confirmed the general observation made by the Tribunal in the case of Dimple Overseas Ltd.

21. In the case of Collector of Customs v. Lexus Exports PVt. Ltd. - 1994 (69) E.L.T. 228 (Calcutta), in the documents stainless steel rods were mentioned while despatching the non-stainless steel rods. The Hon'ble Calcutta High Court observed that over-invoicing and in-correct description was not a violation of Section 18(1) of Foreign Exchange Regulations Act, 1973. In the Head Notes, the position has been summarised as under : -

Export - Customs - FERA - Non-stainless steel rods presented for shipment but inadvertently higher value and description as of stainless steel rods declared in documents - Over-invoicing and incorrect description not a violation of Section 18(1) (a) of Foreign Exchange Regulation Act, 1973 and hence not a violation of Section 11 of Customs Act, 1962 - Clauses (d) and (1) of Section 113 of Customs Act not attracted either since goods not dutiable or prohibited - Export not stoppable once mistake in declaration corrected. - In Section 18(1)(a) of FERA, full export value" means the value of the goods declared in the declaration must not be less than the actual export value of the goods sought to be exported. In other words, while exporting goods worth Rs. 100/-per metric ton, the declaration for the purpose of the FERA cannot say that the goods are valued at Rs. 90/-. In the above example, while exporting goods worth Rs. 100/-per metric ton, if in the declaration an exporter mentions Rs.110/- per metric ton, then what is mentioned is not less than "full export value of goods" and Section 18(1)(a) will not be attracted. FERA is concerned with the regulation of foreign exchange and not of any goods nor is it concerned with over-invoicing. Violation of Section 18(1)(n) only restricts export. There is no other offence prescribed in the Statute for such violation. The Act does not provide for any punishment for such violation. Therefore, once the full export value is mentioned, export cannot be stopped. In the instant case, even assuming that there had been a technical violation of Section 18(1)(a) of FERA by mentioning that the goods in the containers were stainless steel rods when in fact the goods were non-stainless steel rods, as soon as such mistake is rectified and correct description of the goods and the full export value thereof is mentioned, then the export cannot be stopped under the FERA. Section 11 of Customs Act, 1962 does not provide for any total prohibition for export of goods once there is a violation of Section 18(1)(a) of FERA. There is no application of Section 113(d) and (I) of Customs Act, 1962 in this case. As regards violation of FERA Rules and Regulations, the Division Bench held in 77 CWN 501 that if a declaration is made in contravention of the Foreign Exchange Rules, a person may be penalised under Section 23 of FERA, but such contravention will not attract the provisions of the Sea Customs Act. Applying the same logic it can be said here that Section 18(1)(a) does not require that the respondent-writ petitioner was obliged to give correct description of the goods in the declaration, hence incorrect description would not amount to violation of Section 18(1)(a) of the FERA. Therefore, even by operation of Section 67 of FERA it could not be said that there has been a violation of Section 11 of the Customs Act. The incorrect particulars in the declaration filed by the respondent-writ petitioner even if such allegation is correct, is in violation of the Foreign Exchange Regulations and Rides, but not a violation of FERA Act. Finally, there is no basis for contending that the exporter deliberately made incorrect statement in the customs document for the purpose of getting benefit under the IPRS, 1981 because prescribed test report of the Export Inspection Agency would have shown, as it did, true nature of the goods, [paras 19 to 37]

This decision has been referred to by the Tribunal in Galani Infin Pvt. Ltd. v. CC, New Delhi 1999 (35) RLT 3 (CEGAT). It was observed in para-11 as under : -

"11. Learned counsel representing the appellant brought to our notice a Division Bench decision of the Calcutta High Court in Collector of Customs v. Lexus Exports Pvt. Ltd., 1994 (69) E.L.T. 228 (Cal.) and the decision of this Tribunal in Shilpi Exports v. Collector of Customs, Calcutta, 1996 (13) RLT 39 (CEGAT) in support of his contention that when the exporter gives the full export value of the goods, customs authorities have no jurisdiction to confiscate the goods under Section 113(d) of the Act or to impose penalty under Section 114(1). The decision of the Calcutta High Court cannot now be pressed into service in view of a subsequent Division Bench decision of the same High Court in Collector of Customs v. Pankaj V. Sheth, 1997 (90) E.L.T. 31 (Cal.) where a contrary view was taken. The later decision appears to be in consonance with the observations made by their Lordships of the Supreme Court in McDowell & Co. Ltd. In the decision of the Tribunal reported in Shilpi Exports reported in 1996 (83) E.L.T. 302 (Tribunal), none of the above aspects were considered. Therefore, we feel that the decision relied on by the learned counsel is not of any assistance to him."

22. We do not find that this Calcutta High Court decision in the case of Lexus Exports in any way advance the case of the present appellants before us particularly in view of the subsequent Division Bench decision of the same High Court in the case of Pankaj V. Sheth as discussed above.

23. The appellants have also relied upon the Tribunal's decision in the case of M.V.T. International v. Commissioner of Customs, New Delhi 2000 (36) RLT 799 (CEGAT). In para-7, the Tribunal had observed as under :-

"7. On careful consideration of the submissions made by both the sides and the case law cited we find that the issue boils down to determine whether over-invoicing as is done in the instant case is an offence under Section 18(1)(a) of FERA. We find that two decisions have been cited by the appellants and two decisions have been cited by the respondent. In the decision cited by the appellants which was given by the Hon'ble Calcutta High Court we find that the Hon'ble High Court has ruled that over-invoicing is not an offence under Section 18(1)(a) of FERA whereas in the case relied upon by the respondent there is a decision of the Hon'ble Calcutta High Court in the case Tosh & Sons cited above, wherein it has been held that the particulars given in the declaration are not true or correct in all respects immediately under Section 18 is attracted and there is a violation of the said Act. We note that this decision cited by the respondent pertains to under-invoicing and therefore, is distinguishable inasmuch as the case which we are concerned pertains to over-invoicing. The other decision that has been relied upon by the respondent pertains to the old Foreign Exchange Act and not to FERA of 73 under which the present case comes. In view of the Hon'ble Calcutta High Court ruling cited by the appellant we hold that over-invoicing as in the present case is not an offence under Section 18(1)(a) of FERA and since it is not an offence under FERA, it does not become an offence under Section 11 of the Customs Act by virtue of Section 67 of FERA. In the circumstances, the confiscation of the goods and imposition of the penalty is not sustainable in law."

In the impugned order before the Tribunal, the Commissioner of Customs had held that the contention of the Unit that over-valuation in exports is not an offence under FERA or Customs Act, is untenable.

To the extent the observations relate to the over-invoicing in the aforesaid Tribunal's decision, we consider that it is not good law.

We also find that although the final order in the above case was recorded by the Tribunal on 11-8-99, no cognizance was taken of the Calcutta High Court decision in the case of Collector of Customs v. Pankaj V. Sheth -1997 (90) E.L.T. 31 (Cal.), decided by the High Court as early as on 20-12-1996.

24. After giving our careful consideration and thought to the issue referred to us, we hold that the over-invoicing of the goods for exportation was an offence under the Customs Act, 1962 and that the view taken by the Bench in the case of J.G. Exports and Ors. v. CC, New Delhi 2000 (40) RLT 755 (CEGAT - Larger Bench) and in the case of M.V.T. International v. Commissioner of Customs, New Delhi 2000 (36) RLT 799 (CEGAT), to the contrary, does not reflect the correct position of law, and is over-ruled accordingly.

25. Accordingly, the appeal filed by M/s. Om Prakash Bhatia has no merit and the same is rejected. Ordered accordingly.