The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) has upheld confiscation Goods under the Customs Act as there was a declaration of Wheat in the Export Shipping Bill for Availing Benefit under the Merchandise Export from India Scheme (MEIS).
M/s. C.L. International, the appellant filed 8 shipping bills with the ICD-Export, Tughlakabad, New Delhi for the export of goods, namely “Whey Flour (Powder)”, which were classified under CTH 04041020. These shipping bills were filed claiming benefits under the Merchandise Export from India Scheme (MEIS).
As per Public Notice No.23/2015-2020 dated 13.07.2018 issued by the Director General of Foreign Trade, Ministry of Commerce & Industry, Department of Commerce, Udyog Bhawan, New Delhi, the impugned goods i.e. “Whey Flour Powder (Customs Tariff Head04041020)” was added in the MEIS Appendix 3 B, Table 2 @ 10% of FOB value during 13.07.2018 to 12.01.2019. The declared FOB value of the impugned orders was Rs.6,89,41,504/- wherein the MEIS benefit @ 10% of the FOB value that would be available to the appellant was Rs.68,94,150/-.
The consignments covered under these shipping bills were examined by the officers of Directorate of Revenue Intelligence (“DRI”) at Mundra Port and the samples of the consignments were sent for testing to Fair Quality Institute (Food Analysis & Industrial Research Quality Institute), New Delhi, which confirmed the impugned goods to be “Maida” (Wheat Flour), against which there was no Merchandise Export from India’s Scheme benefit during the relevant period. As the goods were found to be mis-declared, they were seized vide seizure memo dated 19.01.2019.
The appellant, therefore, filed appeal before the Commissioner (Appeals), inter alia, submitting that ‘Star Export House’ are exempted from imposition of any bank guarantee for provisional release of export goods in terms of FTP 2014-2019 and also referred to the Circular No.17/2009-CUS dated 25.05.2009 issued by the Government of India, Ministry of Finance, whereby facility of ‘nil’ rate of bank guarantee was extended to Star Export House firms.
Moreover, the demand for bank guarantee cannot be made as the appellant would be entitled to the benefit of MEIS only upon realization of the export proceedings and, therefore, mis-declaration, if any, is of no immediate benefit to the appellant.
The Commissioner of Customs considered the report of the Testing Agency and observed that the goods in question were mis-declared. The power to fix the quantum of bank guarantee was entrusted to the Competent Authority, which as per the said Circular covered the probable redemption fine and penalties that may be imposed at the time of adjudication.
As the Department had also alleged the charge of overvaluation of the goods to wrongly avail the MEIS benefit, it was observed that the export goods appeared to be liable for confiscation under the Customs Act, 1962 and accordingly, the redemption fine and penalties under Section 114 (iii) and Section 114 (AA) were liable to be imposed and in that view, the quantum of bank guarantee was held to be justified.
The appellant has described the goods as ‘Whey Flour Powder’, however, they were found to be ‘Maida’. By the said misdeclaration, the appellant attempted to achieve the benefit of 10% of the FOB value as whey flour powder was covered under the MEIS whereas Maida was not covered under the said Scheme and therefore the appellant would not have been entitled to the benefit of the Scheme. Similarly, even in respect of valuation, the appellant has overvalued the goods.
It was observed that reliance placed by the appellant on Circular No. 17/2009 dated 25.5.2009 is misconceived as it specifically refers to norms for the execution of bank guarantees under specified export promotion schemes, i.e.. Advance License and EPCG Schemes, whereas the Circular dated 4.1.2011 specifically provides for conditions while ordering the provisional release of export goods where they have been mis-declared.
A two-member bench of Ms Binu Tamta, Member (Judicial) And Ms Hemambika R Priya, Member (Technical) upheld the impugned order and dismissed the appeal.
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