[Order per : V.K. Ashtana, Member (T)]. - This is an appeal against Order-in-Original No. 56/98, dated 23-3-1998 passed by the Commissioner of Customs consequent to the matter having been remanded by the Tribunal for de novo consideration. The issue involved, in brief, are as follows :

1.1 Non-repatriation of export proceeds in full.

1.2 Mis-declaration of the quantity of goods submitted for export and shipping bill and

1.3 Mis-declaration of their value on the shipping bill.

2. In these de novo proceedings, the impugned order records that two opportunities were given to the appellants for personal hearing, but since no one attended, the impugned order was passed ex-parte again. The order imposes penalty of Rs. 14.45 lakhs and Redemption Fine of Rs. 2.89 lakhs on the goods exported.

3. Heard Shri K.L. Rekhi, learned Consultant for the appellants. He submits that whereas in the first order-in-original which had been remanded by the Tribunal to the learned Commissioner of Customs, the penalty had been Rs. 10 lakhs, in the present order impugned, which has been passed ex-parte, as neither of the two intimations purported to have been sent were received by the appellants (he refers to the affidavit on this count on record), the learned Commissioner has even increased the quantum of penalty to Rs. 14.45 lakhs.

3.1 With respect to the charge of non-repatriation of export proceeds, learned Consultant submits that since the export was made on DB basis through the Syndicate Bank and since the said Bank did not take effective steps to recover the entire amount involved from the foreign buyer before parting with the negotiated copies of documents sent through the bank, therefore, after protracted correspondence with the foreign buyer a Civil Suit 2236 of 95 in the High Court of Delhi has been filed by the appellants both against the foreign buyer and the Syndicate Bank, New Delhi.  On the question of law involved on this issue, learned Consultant submits that the delay for non-receipt of remittances on export goods is a matter falling  under Section 18(2) of  the  Foreign  Exchange Regulation Act. The cross linkage between Customs Act (Section 11) and the FERA is only with respect to Section 18(1). Therefore, the order impugned suffers from lack of  jurisdiction  to adjudicate upon this issue.  This is further made by provisions of Section 50 of the FERA which  clearly lays down that in such cases, the matter is to be adjudicated by the Director of Enforcement or the delegated subordinate authority. Learned Consultant, therefore, submits that the order-in-original impugned needs to be totally set aside as for as this issue is concerned.

3.2 With respect to misdeclaration of quantity of goods alleged, learned Consultant submits that the facts on record and not in dispute are that after the goods were removed to the Air Cargo Complex for export and the shipping bill had been filed with the Customs, the appellant, assisted by his CHA found that the packing of the goods had been tampered with. Fearing theft/pilferage while the goods were in the custody of Air Cargo Complex, they had immediately reported the matter to the Customs authorities and had also filed an  FIR with the jurisdictional Police Station. They had applied for 100% examination of the goods to the Assistant Collector of Customs, which was allowed. The resultant examination showed that the goods now physically available in the Air Cargo Complex is much less than those which were declared in the shipping bill in view of the tampering on the said packages by unknown persons. In consideration thereof, the Assistant Collector of Customs, Air Cargo Complex allowed the appellants’ request for amendment to the shipping bills so that the documents would reflect the correct quantity of goods exported. The value of the goods were also reduced on pro-rata basis in relation to the actual quantity found. Learned Consultant has shown us copies of the shipping bills on record wherein the endorsement of the Customs authorities that  such an amendment was allowed is clearly on record. Learned Consultant, therefore, submits that there is no question of misdeclaration of quantity involved, as the true quantity after possible pilferage; was ascertained by Customs only consequent to the appellants’ own request for 100% examination. Therefore, instead of any misdeclaration, the appellants vigilance concerning discovery of tampering of the cartons led to a proper amendment to the shipping bill and thus making the document reflect the truth.

3.3 With respect to the allegation of misdeclaration of value as alleged and held in the order impugned, the learned Consultant submits that firstly, since the goods were examined 100%, as even sample was drawn by the Customs as is evident from an endorsement  on the shipping bill, therefore, the Department cannot allege over valuation after a period of almost 1^1/₂ years. This is so because when the goods were permitted to be exported under the DEEC Scheme, a letter of undertaking had been given to the Department by  the appellants binding themselves towards any errors or omissions for a period of 3 months. This was in terms of the then ruling Circular No. 3/92, dated 1-6-1992 which requires that such an undertaking for this specified period to be submitted. Learned Consultant submits that this undertaking, therefore, expired on 8-6-1993. He submits that the Customs have issued a letter dated 8-6-1993, but despatched on 10-6-1993 as per the postal stamp available on the envelope with the appellants, which was received by the appellants around the middle of June, 1993. In this letter, the Customs had requested for extension of the validity. However, since the validity had long back expired, their request could not be acceded to. Therefore, the records clearly showed that the said undertaking expired on 8-6-1993. This being so, the Customs authorities had no powers to allege under-valuation after 1^1/₂ years. Secondly, learned Consultant submits that the nature of market enquiries conducted in this respect which has been noted in the order impugned is related to the cash memo submitted by the Department. Perusal thereof would show that the enquiry did not relate to the goods which were actually exported, for two reasons, firstly, there is no mention on any document that the trade enquiries were with respect to the samples drawn and shown in the market. Secondly, the cash memo prices relied upon by the Department clearly show various other brand names and are, therefore, having no nexus with the goods actually exported. Learned Consultant submits that the value of the goods would depend upon many factors including their design, as well as brand name existing in the market enabling the goods to be sold at different prices depending on the market goodwill. Learned Consultant further cites the case of J.G. Exports reported in (Mad.) wherein the Hon’ble High Court had held that the declared values on export goods cannot be challenged long afterwards. Learned Consultant has also referred to Circular No. 69/97, dated 8-12-1997 issued by Ministry of Finance wherein time limit of 30 days is laid down for any investigation into the declared value and that if no such allegation is made within this time limit, that the declared value shall be deemed to be acceptable.

4. Learned Consultant further submits that since the goods having been exported, were not available for confiscation, and since the plain letter of undertaking had also expired on 8-6-1993, therefore, the order impugned totally errs in imposing a redemption fine of Rs. 2.89 lakhs. He submits that a redemption fine can be levied only when the goods themselves are available for confiscation. It is also no body’s case, he submits, any bank guarantee as the security against a bond had been in the possession of the Department, covering the said amount of Rs. 2.89 lakhs. If that had been the case, then the Commissioner could have proceeded in terms of the bond to appropriate the security deposit. However, this is not the case on record here. He, therefore, prays that the fine in lieu of confiscation has been imposed illegally.

5. In view of the aforesaid submissions, learned Consultant submits that since non-repatriation of export proceeds was beyond jurisdiction of Customs, since there was no misdeclaration of quantity or value proved in the order impugned, therefore, the exports were not tainted but were done in a bona fide manner and hence there was no question of imposing any penalty.

6. Heard Shri Satnam Singh, learned DR who reiterates the findings of the order-in-original. He submits that in view of Section 11 of the Customs Act, provisions of FERA are linked in this case and, therefore, it would not be correct to say that the Commissioner of Customs has no jurisdiction regarding the matter. He further submits that since on examination, the goods were found to be less than what were originally declared on the shipping bill, therefore, the allegation of misdeclaration of quantity stands proved. He submits that proper market enquiries were conducted to establish under-valuation. He submits that the learned Consultant has himself considered that the goods though resembled, the style and shape of a famous brand name of MONT BLANC, yet the  appellants  had  refused  to  affix  any  such misleading brand on the goods and that the goods were unbranded. Learned DR submits that this itself shows that the appellant exports were a party to export of goods in a dubious manner.

7. We have carefully considered the rival submissions and records of the case.  We find that on a plain reading of Section 18(2) of the FERA, the issue of repatriation of  export proceeds is covered by the said legislation. We further find that while the Customs authority have the power to assess the declared value of export goods on a shipping bill, as Section 18(1) of the FERA has been linked with Section 11 of the Customs Act by Section 67 of the FERA. The same is not true with respect to Section 18(2) of FERA. We find great  merit in learned Consultant’s submissions that Section 50 of FERA clearly lays down that other than this sub-section therein, all other violations would be adjudicated by the Director of Enforcement. Since Section 18(2) is not specified therein,  therefore,  it  is  clear  that  any  omission  with  respect  to  repatriation  of  export proceeds,  as noticed by the  Reserve Bank of India would be adjudicated upon only by the Director of Enforcement or the delegated subordinate authority as per law. We, therefore,  find that the impugned order errs in attempting to come to a finding against the appellants on this ground, as the facts concerned are governed by Section 18(2) and not 18(1) of the FERA.

8. On a detailed consideration of the facts on  record with respect to the appellants noticing tampering of the cartons, while in the custody of Air Cargo Complex,  their logically consistent action of reporting  the  matter  to both  the Customs and  the Police and their request for amendment of the shipping bills concerned as per law, we find that the Assistant Collector of Customs had correctly allowed the said amendment to the shipping bill and that the so amended  shipping bill reflected the correct ground realities with respect to the quantities and, therefore,  the value declared of the consignment. Since the entire  effort to ensure export documents reflected the true position of the facts was on the initiatives of the appellants, therefore, the charge of misdeclaration cannot be sustained in any manner whatsoever.

9. With respect to the allegation of misdeclaration of the value by over declaring it by sixty times approximately, we are of the considered opinion that the said charge also does not survive in view of the following reasons :

(a) The Customs authorities did 100% examination of the goods over a period of few days in view of the reported tampering of the cartons in the Air Cargo Complex.  If  they  had  any  doubt  regarding  the declared value, the same should have been reflected on the export documents at that time.  A sample was also drawn, but no further action was taken for 1^1/₂ years. It is extremely difficult to believe that after 1^1/₂ years, the light suddenly gone on them in its behalf.

(b)  Recognising the necessity of a limitation to be prescribed after export of which no liability to keep hanging over the neck of exporters on valuation matters. The Hon’ble High Court of Madras had held in  the  case of  J.G. Exports (supra) that the Department was not free to levy  charges of misdeclaration of value after a passage of a considerable period of time from the date of export. When this law is read along with the letter of undertaking demanded by the Customs for only a period of 3 months, under the DEEC Scheme, it is clear that beyond the period of the said 3 months, unless the said undertaking had been extended by mutual consent of the two parties before its expiry, the Department was not legally empowered to raise this issue after 1^1/₂ years.

(c)  Even more distressing is the nature of evidence led by the Department to support their charge of over valuation. It need not be stated again and again that cardinal principles of determination of correct value of any goods is that when the declared value is compared to the value of an identical or even comparable goods, facts should be clearly enunciated in this regard, bringing out that the value of the goods relied upon are truly either identical or at least comparable goods. The cash memo on record does  not  satisfy  this  cardinal principle for the simple reason that  the goods exported bore no brand name whereas the goods purchased thereunder had well established brand names. Merely because they were fountain pens, it does not fall under the category of identical or comparable  goods.

10. In view of the aforesaid findings and analysis, we are of the considered opinion that none of these charges upheld in the order impugned are in fact sustained by our analysis. In this connection we are also surprised to find that the redemption fine of Rs. 2.89 lakhs has been imposed when the goods were not available for confiscation, the same having been exported many years ago. Neither was any bond with a security in any format available with the Department to be enforced. In view of this it is clear that the redemption fine imposed was totally outside the purview of legal provisions in this regard. Therefore, we set aside the order impugned and allow the appeal with consequential relief as per law.