Customs, Excise and Gold Tribunal - Tamil Nadu
Venponn Tannery vs Collector Of Customs on 21 October, 1994
Equivalent citations: 1995(75)ELT296(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This appeal is against the order of the Collector of Customs, Madras. Under the impugned order, the goods namely Polyvinyl Alcohol (PVA) which was claimed for clearance by the appellants as Binder (Resin) the description as set out in the Advance Licence issued to the appellant under the DEEC Scheme and claimed for assessment under Notification No. 159/60/90/CE, dated 30-3-1990, free of duty, have been confiscated by the learned lower authority for the reason that the description as set out in the licence does not cover the goods and also inasmuch as the description given by the appellant was wrong namely PVA-Binder (Resin) and that there was misdeclaration and provisions of Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports (Control) Act, 1947 and Section 111(m) of the Customs Act, 1962 have been invoked. The goods valued at Rs. 13,39,145/- have been allowed to be redeemed on payment of redemption fine of Rs. 1,25,000/- and penalty of Rs. 1,00,000/- has been imposed by the learned lower authority on the appellants and the appellants have been directed, in the event of the clearance of the goods, to pay appropriate duty, denying them the benefit of Notification No. 159/90.
2. The stay application filed by the appellant has been taken up and it was pleaded by the learned Counsel for the appellant that the goods imported and allowed redemption on payment of fine by the learned lower authority could not be cleared and the goods are incurring demurrage. After hearing the learned Counsel for the appellant and the SDR of the Department for a considerable length of time and going through the impugned order and the report of the Customs Chemical Examiner dated 27-5-1992 and also the letter of CLRI dated 29-4-1988 and the allegations in the show cause notice, it was felt that the appeal itself could be disposed of as the issue lies in a short campass and also that the goods have been under detention without being cleared and the goods are eventually to be used for export of finished leather goods for discharging the appellants' export obligations. We also took note of the plea of the appellant that proceedings had been initiated by the licensing authorities for non-performance of the export obligations and an enquiry in this regard had also been posted. Accordingly as pleaded by both the parties, the case was posted for hearing on 23-9-1994 dispensing with the pre-deposit of the penalty levied on the appellant pending appeal.
3. The learned Advocate for the appellant pleaded that the import of the goods was made under the Advance Licence scheme permitting the export obligations. He pleaded that the goods allowed under the import licence are Binder (Resins) for manufacture and export of finished leather. He pleaded that the appellant cleared the goods in the Bill of Entry as Binder (Resins) Polyvinyl Alcohols i.e. PVA. He pleaded that the sample was drawn from the consignment and the report of the Chemical Examiner clearly shows that goods are synthetic Resin and answer to the description of PVA. He pleaded that in this background there is no question of misdeclaration on the part of the appellant and the goods imported are PVA Resin for use as Binder for the finished leather manufacture. He pleaded that the goods are usable for leather finishing as binder. In this connection he drew the attention to the description for uses of goods imported namely PVA as set out in the Condensed Chemical Dictionary, Tenth Edition, revised by Gessner G. Hawley. The uses as set out in this book for the goods are reproduced below :
"Uses : Textile wraps and yarn size; laminating adhesive moulding powders; binder for cosmetic preparations, ceramics, leather, cloth, non-woven fabrics and paper, paper coatings, grease proofing paper, emulsifying agent, thickener and stabiliser photosensitive films, cements and mortars; intermediate for other polyvinyls, limitation sponges; printing inks (glass)."
As seen from the above, he pleaded that among other uses, PVA finds use in the leather manufacture as binder. He pleaded on the basis of the book, 'An Introduction to the Principles of Leather Manufacture' Third Edition, S.S. Dutta, copy of which is available in the paper took, the use of polyvinyl alcohol in the leather industry in the nature of a binder is indicated at page 635. He further pleaded that the information of the Central Research Institute which was obtained by the learned lower authorities in support of the case of the department which is dated 29-4-1988 much before the import of the goods by the appellant, would also support the case and the use of PVA for the leather industry is accepted. He pleaded that it has been shown by the appellant that the goods imported are Resin and find use as a binder in the manufacture of finished leather and the learned lower authority should have allowed them import against the licence produced and given consequential benefit for clearance of the goods, free of duty, under the notification as stated above. He pleaded that under the Advance Licensing Scheme for import of the goods free of duty, the licensing authorities have to be satisfied that the use of the goods has been for the finished product namely finished leather and have also to meet the export obligations and based on the Advance Licence in respect of which the duty free importation is made. He pleaded, for the satisfaction of the Customs Authorities, the appellant is prepared to execute any bond with the authorities and the authorities can also do a test check by physical verification regarding the use of the material in the appellant's factory and he will abide by any condition imposed in this regard by the Tribunal.
4. The learned SDR for the Department pleaded that even if it is accepted that the material can be used as a binder (Resin) the quantity required to be used is very small and the appellant cannot use the quantity imported for the manufacture of the leather. He, however, pleaded that he has no objection to the release of the goods as pleaded by the appellant subject to the safeguards that may be provided for physical verification with regard to the use of the goods and the bonds to be executed by the appellant.
5. We observe that the goods have been imported for meeting the export obligations under the Advance Licensing Scheme and the goods covered by the licence are Binder (Resin). It is seen that the PVA imported and described as above has been found to be synthetic resin on test by the Chemical Examiner of the Department. The appellants have referred to the standard book namely Condensed Chemical Dictionary by Gessner G. Hawley, wherein it is clearly set out that the goods imported are used as binder for the leather. The other book referred to by the appellant also establishes its use in the same light. The CLRI report of 1988 relied upon by the Department is of much earlier date to the importation of the goods by the appellant and in any case this also shows the use of the goods imported for the manufacture of leather. The learned lower authority appears to have been influenced by the possible quantum of use of the material for the manufacture of the leather. We observe that while the licensing authorities have issued licences, unless there is any quantity restriction, the importation is to be allowed once it is found that the goods are covered by the licences. We observe in the present case, the appellants have established before us that the goods have been cleared under the description as set out in the licence. We therefore hold that the appellants are entitled to import the goods under the licence produced and there is no question of any misdeclaration by them as the appellants have gone on records with the full description of the goods and they have held back nothing from the authorities. In the above view of the matter we hold the goods being Binder (Resin), the appellants will be entitled to the consequential benefit of the notification claimed by them. In order to safeguard the interest of revenue and also inasmuch as the appellants have no objection, we direct the appellants to execute a bond with the authorities to the extent of duty leviable on the goods for the purpose of action in the event of their not satisfying the Customs Authorities regarding the use of the material imported as a Binder (Resin) for the manufacture of leather. The appellants will also inform the authorities 24 hours before the start of the manufacturing process involving the use of the imported goods, to the Customs Authorities, who will be free to verify physically, by on-the-spot check which they may like to do in regard to the use of the material. The appellants will also maintain batchwise records regarding the use of the material for each batch of the finished leather manufactured. Subject to the above direction, we set aside the impugned order of the learned lower authority [and] allow the appeal in the above terms.