Per S.S. Sekhon :

The appellants are regular exporters of goods and had filed 2 Shipping Bills both dated 6.3.2003 for export of 120 packages of fabrics declared as 100% polyester filament yarn/texturised yarn with or without embroidery under DEPB Scheme. The fabrics were wrapped around cardboard sheets rolled in the length of more than 20 yards per roll. The total FOB value declared was Rs. 75,65,471.29.

1.2 On 11.3.2003, through their Custom House Agent, they filed an application requesting the goods to be returned 'back to town'.

1.3 However, on 12.03.03 the goods were examined by the Customs authorities and it was alleged that the said goods were rags/chindis instead of fabrics as declared and they were grossly overvalued as per the FOB declaration. Enquiries were conducted and statements were recorded and a Show Cause Notice dated 13.7.2004 was issued calling upon the exporters to show cause:

(i) why the goods covered under the two Shipping Bills should not be confiscated under Section 113 (h) (ii) of the Customs Act, 1962;

(ii) A penalty under Section 114 of the Customs Act, 1962 should not be imposed;

(iii) Why the credit of DEPB benefit amounting to Rs. 8,32,200/- should not be rejected, as well as rebate claim amounting to Rs. 6,39,845/ - should not be rejected, as they were inadmissible goods under DEPB Scheme and the claims were fraudulently made.

2. The Commissioner, after granting a hearing, rejected the contentions made by the appellants and arrived at a conclusion by himself examining the sample that:

(a) The sample of the goods detained was irregularly woven warp and weft, which was defective weaving material which cannot be used as fabric, as per the personal assessment of the Ld. Commissioner;

(b) Hence declaring the same as Dyed/Printed Synthetic fabric of FOB value Rs. 75,65,471.28 was clearly misdeclaration;

(c) The appellant was trying to push the same as fabrics for availing DEPB credit;

(d) From the time sequence, it appeared that the original material which was moved from the factory for export was not entered for export and was diverted and its place the rejected material of the weaving mills was entered for export for availing DEPB;

(e) No DEPB or rebate is admissible on goods.

And on this basis arrived at the liability to confiscation under Section 113 (h) (ii) of the Customs Act, 1962 confirming the same, and offered a redemption fine of Rs. 5.00 lakhs with a penalty of Rs. 10.00 lakhs under Section 114 of the Customs Act, 1962 and further held that no DEPB or rebate would be allowed on the said goods. Hence this appeal.

2.1 After hearing both sides, and considering the issues it is found:

(a) the question of applicability of and liability to confiscation under Section 113 (h) (ii) of the Customs Act, 1962 cannot be upheld in the facts of this case, when Section 113 (h) (ii) does not exist in the Customs Act; there is a Section 113 (ii) which is applicable to export goods under claim of Draw Back which are found to be misdeclared & inadmissible Draw Back is claimed. Since the present exports are admittedly under DEPB Scheme, and not under claim of Draw Back, provisions of the Customs Act, 1962, 113 (ii) or & the invocation of Section 113 (h) (ii) in the facts of this case as arrived cannot be upheld.

(b) Examining the plea, that there could be a typographical error or mistake in mentioning an incorrect sub section and calling for relating the liability to confiscation under Section 113 (d) of the Customs Act, 1962, it is found that the issue of 'no confiscation liability to arise on DEPB exports under Section 113 (d) of the Customs Act, 1962 is settled by this Tribunal in the case of M/s. Prayag Exporters Pvt. Ltd. Vs. CC, Mumbai I, 2001 (42) RLT 691 (CEGAT)=2000 (121) ELT 819 (Tri.) which has been upheld by the Supreme Court by their decision reported in 2003 (57) RLT 4 (SC)=2003 (155) ELT 4 (SC) and a review petition filed by the Revenue against this dismissal by the Apex Court has been dismissed as reporte