By TIOL News Service

MUMBAI, MAY 08, 2017: THE appellant challenges the confiscation of 4247.56 carats of 'rough diamonds' sought to be exported vide shipping bill dated 28 th December 2004 but allowed to be withdrawn from export subject to payment of redemption fine of Rs.10,00,000/- and imposition of penalty of Rs.3,00,000/-.

The exporter had declared a value of Rs.28,57,000/- in the shipping bill which was re-assessed at Rs.72,76,799/- and subject to proceedings u/ss 113 &114 of the CA, 1962.

Earlier, against the imposition of redemption fine of Rs.15 lacs and penalty of Rs.5 lacs, the exporter had appealed to the Tribunal which remanded the matter with a direction that the valuation should be done by independent experts chosen by the exporter and the tax authority.

Pursuant thereto, a 'trade panel' was constituted and the value of Rs.58.57 lakhs was arrived at - 2515.56 carats valued at USD 25 per carat and 1732.60 carats valued at USD 39 per carat.

Be that as it may, the Commissioner of Customs, CSI Airport passed the impugned order in remand proceedings.

Appellant contends that the directions of the Tribunal to determine the value had not been complied with. It is also the contention that the original authority had not considered their submission that the diamonds were part of a lot that had been imported earlier and, being exported as such, was to be valued on the same terms as had been assessed then. They also submit that invoking of section 113(i) of CA, 1962 was inappropriate.

The Bench observed -

++ This Tribunal in dealing with this dispute on the former occasion had specified the manner in which the valuation of the goods was to be arrived at. The contention of the appellant that the so-called 'trade panel' is no expert body would appear to be borne out by the lack of any description of their qualifications in the impugned order and by the differing values that appear at different points in time in relation to the dispute. There is also no indication that the report of the 'trade panel' had been made available to the appellant. The adoption of the value recommended by the 'trade panel' would, therefore, not be in consonance with the directions of the Tribunal.

++ It is admitted that there is no revenue involvement in the dispute and that no duties are liable to be collected on the declared or enhanced value. In these circumstances, the initiation of proceedings to reassess the value is, itself, questionable.

++ It is quite clear from the findings of the original authority that an enhancement of value by customs authorities in the shipping bill or bill of entry does not carry with it the concomitant obligation to repatriate or remit the differential value from, or to, the buyer, or supplier, respectively. In the circumstances, the disallowance of exports even after imposition of redemption fine is not justified by law . There is no ban on export of diamonds and no authority is vested in the Commissioner of Customs to disallow an export in the absence of a ban. The impugned order is vitiated by arbitrary and unauthorized exercise of power.

Noting that there is no justifiable reason for the adjudicating authority to accept the value recommended by 'trade panel' and there is also no finding to sustain the invocation of section 113 (i) of Customs Act, 1962,the impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-1522-CESTAT-MUM )