Legal principle

Once a shipping bill is assessed and a Let Export Order issued, the adjudicating authority cannot reopen the assessment, and rejection of transaction value under the Export Valuation Rules affects only the assessable value for duty — not the FOB transaction value on which DEPB scrips are issued by the DGFT.

Court decision

The Tribunal set aside the impugned order to the extent it applied to Mungad and Jiji and allowed both appeals with consequential relief, holding that the Commissioner could not reopen assessed shipping bills, deny DEPB claims, confiscate already-exported goods, or sustain the Section 114A/114AA penalties.

Facts

Mungad Strips & Alloys and Jiji Industries (formerly Krishna Profiles) exported goods described as 'Aluminium Alloy Conductors' (and, in Mungad's case, a 'Cross Linking Agent') during 24.12.2010–14.01.2011 under the DEPB scheme and obtained DEPB scrips from the DGFT. Following DRI/DGCEI investigation, the department alleged the goods were exported at inflated values and under mis-description to obtain higher-value scrips. By order dated 29.07.2019, the Commissioner of Customs, Indore rejected the declared transaction values, re-determined value under Rule 8 of the Export Valuation Rules, 2007 read with Section 14, changed the goods' description, ordered confiscation under Sections 113(d) and 113(i), denied the DEPB claims, ordered recovery of import duty to the extent DEPB scrips were used by invoking the extended period under the proviso to Section 28(1) and Section 28(4), and imposed penalties of Rs. 50–60 crore under Section 114AA and duty-equivalent penalty under Section 114A. Both exporters appealed to the CESTAT.

Key provisions

• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 113(i), Customs Act, 1962 — Confiscation of goods attempted to be improperly exported
• Rule 8, Customs Valuation (Determination of Value of Export Goods) Rules, 2007 — Rejection of declared value
• Section 28(4), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 11(2), The Foreign Trade (Development and Regulation) Act, 1992 — Contravention of provisions of this Act, rules, orders and foreign trade policy.
• Section 14, Customs Act, 1962 — Valuation of goods