JUDGMENT

V.S. Sirpurkar, J. — Final order of Customs, Excise & Gold (Control) Appellate Tribunal (hereinafter called “the Tribunal” for short) allowing the appeal filed by M/s.Vishal Exports Overseas Limited (hereinafter called “the assessee” for short) is in challenge at the instance of Commissioner of Customs (hereinafter called “the Revenue” for short).

2. The assessee exported 4.8 lakh pieces of coffee mugs between February and November, 2001. The export price (FOB) was US $3.40 per piece. The exported goods were eligible for Duty Entitlement Pass Book (DEPB) Benefit/Scheme. Accordingly, the same was claimed as per Rules at the rate of 11% or 10%. The assessee had declared a market value of Rs.52.50 per piece which was worked out at 150% of the assessee’s purchase price which was Rs.35/- per piece. These purchases were made from the manufacturers in Rajasthan and as per the clearance documents of Central Excise (AR-4), Rs.35/- was the price per piece.

3. The Assistant Commissioner of Customs proceeded against the assessee by alleging that the assessee had mis-declared the FOB value at US $3.40 (Rs.150/-) per piece. It was the view of the Department that the price was inflated to get more DEPB benefit. The original order ensued wherein it was held that the export price was not genuine considering the local purchase price to be Rs. 35/- per piece only. It was held that the export price could not be as high as Rs. 157/- (450%) and that it was unlikely that there would be such a vast variation between the domestic price and export price acceptable in the competitive export market. By making his own calculations, the FOB price was computed and fixed at Rs.80/- per piece in place of Rs.157/- per piece by the Assistant Commissioner. It was further ordered that the assessee would be entitled to DEPB credit on the basis of the FOB price of Rs. 80/- per piece and not at the sale price. Holding the declared FOB price of Rs.157/- per piece or US $3.40 per piece a mis-declaration, the Assistant Commissioner held that the goods were liable to be confiscated and the penalty under Section 114 of the Customs Act was also ordered.

4. Commissioner (Appeals) upheld the order in appeal filed by the assessee. The Commissioner (Appeals) held that the assessee was not liable to any further benefit than the one which was granted by the adjudicating authority. On appeal, the Tribunal set aside the orders of the authorities below and allowed the appeal. It is against this order that the present statutory appeal has been filed.

5. Shri R. Basant, Learned Advocate appearing on behalf of the Revenue assailed the order of the Tribunal and pointed out that there could not be such a vast variation in between the domestic price of Rs. 35/- per piece and the declared FOB value of Rs. 157/- per piece, therefore, it was obvious that the assessee had claimed inflated price with the sole objective of getting undeserved DEPB credit. Learned counsel secondly contended that the Tribunal had not taken into consideration the evidence on record regarding the price. Lastly, the learned counsel contended that the matter was completely covered by a decision of this Court in Om Prakash Bhatia vs. Commissioner of Customs, Delhi reported in 2003 (155) ELT 423 (SC) = (2003) 6 SCC 161.

6. As against this Shri M. Chandrasekharan, Senior Counsel drew our attention to the Export and Import Policy (1st April, 1997 – 31st March, 2002) and more particularly at para 7.25 which reads as under:

“Under the Duty Entitlement Pass Book (DEPB) Scheme an exporter shall be eligible to claim credit at a specified percentage of FOB value of exports made in freely convertible currency. The credit shall be available against such export products and at such rates as may be specified by the Director General of Foreign Trade by a Public Notice issued in this behalf.

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7. Learned Senior Counsel argues that the basis for the benefit of DEPB is the FOB value in support of which volumin