Custom, Excise & Service Tax Tribunal
Blossom Leathers vs Commissioner Of Customs -Commissioner ... on 30 June, 2022
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 40617 of 2021
(Arising out of Order-in-Appeal Seaport C.Cus. II No. 444/2021 dated 31.05.2021 passed
by the Commissioner of Customs (Appeals-II), No. 60, Rajaji Salai, Custom House,
Chennai - 600 001)
M/s. Sri Karpaga Leathers : Appellant
No. 12/30, Karpura Street,
Periamet, Chennai - 600 003
VERSUS
The Commissioner of Customs : Respondent
Chennai-IV Commissionerate No. 60, Rajaji Salai, Custom House, Chennai - 600 001 WITH Customs Appeal No. 40618 of 2021 (Arising out of Order-in-Appeal Seaport C.Cus. II No. 446/2021 dated 31.05.2021 passed by the Commissioner of Customs (Appeals-II), No. 60, Rajaji Salai, Custom House, Chennai - 600 001) M/s. Meenal Leather Exports : Appellant No. 1 (First Floor), Muthugramani Street, Periamet, Chennai - 600 003 VERSUS The Commissioner of Customs : Respondent Chennai-IV Commissionerate No. 60, Rajaji Salai, Custom House, Chennai - 600 001 WITH Customs Appeal No. 40619 of 2021 (Arising out of Order-in-Appeal Seaport C.Cus. II No. 445/2021 dated 31.05.2021 passed by the Commissioner of Customs (Appeals-II), No. 60, Rajaji Salai, Custom House, Chennai - 600 001) M/s. Blossom Leathers : Appellant No. 4A, New No. 2A, E.K. Guru Street, Periamet, Chennai - 600 003 VERSUS The Commissioner of Customs : Respondent Chennai-IV Commissionerate No. 60, Rajaji Salai, Custom House, Chennai - 600 001 2 Appeal. No(s).: C/40617-40621/2021-SM & C/40113 & 40114/2022-SM WITH Customs Appeal No. 40620 of 2021 (Arising out of Order-in-Appeal Seaport C.Cus. II No. 447/2021 dated 31.05.2021 passed by the Commissioner of Customs (Appeals-II), No. 60, Rajaji Salai, Custom House, Chennai - 600 001) M/s. Sri Vijayalakshmi Leathers : Appellant New No. 4, Wuthucattan Street, Periamet, Chennai - 600 003 VERSUS The Commissioner of Customs : Respondent Chennai-IV Commissionerate No. 60, Rajaji Salai, Custom House, Chennai - 600 001 WITH Customs Appeal No. 40621 of 2021 (Arising out of Order-in-Appeal Seaport C.Cus. II No. 448/2021 dated 31.05.2021 passed by the Commissioner of Customs (Appeals-II), No. 60, Rajaji Salai, Custom House, Chennai - 600 001) M/s. Vijayalakshmi Leather Industries Pvt. Ltd. : Appellant No. 19, Kumarappa Chetty Street, Periamet, Chennai - 600 003 VERSUS The Commissioner of Customs : Respondent Chennai-IV Commissionerate No. 60, Rajaji Salai, Custom House, Chennai - 600 001 WITH Customs Appeal No. 40113 of 2022 (Arising out of Order-in-Appeal Seaport C.Cus. II No. 44/2022 dated 12.01.2022 passed by the Commissioner of Customs (Appeals-II), No. 60, Rajaji Salai, Custom House, Chennai - 600 001) M/s. M.J.S. Iqbal & Co. : Appellant New No. 123/42, MBT Road, Ranipet, Tamil Nadu - 632 401 VERSUS The Commissioner of Customs : Respondent Chennai-IV Commissionerate No. 60, Rajaji Salai, Custom House, Chennai - 600 001 3 Appeal. No(s).: C/40617-40621/2021-SM & C/40113 & 40114/2022-SM AND Customs Appeal No. 40114 of 2022 (Arising out of Order-in-Appeal Seaport C.Cus. II No. 43/2022 dated 11.01.2022 passed by the Commissioner of Customs (Appeals-II), No. 60, Rajaji Salai, Custom House, Chennai - 600 001) M/s. Sri Swathy Exports : Appellant No. 4A, Karpura Street, Periamet, Chennai - 600 003 VERSUS The Commissioner of Customs : Respondent Chennai-IV Commissionerate No. 60, Rajaji Salai, Custom House, Chennai - 600 001 APPEARANCE:
Shri Sundaranathan T., Advocate for the Appellant Smt. K. Komathi, Authorized Representative for the Respondent CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) FINAL ORDER NOs. 40268-40274 / 2022 DATE OF HEARING: 24.06.2022 DATE OF DECISION: 30.06.2022 Order :
These appeals are filed by the exporters of leather goods to whom Show Cause Notices dated 27.10.2019, 27.11.2019, 03.12.2019, 21.08.2019, 06.09.2019, 05.12.2019 and 27.01.2020 were issued alleging, inter alia, that there was switching of the samples sent / taken to the Central Leather Research Institute (CLRI) for getting favourable certification for the goods as 'Finished Leather' and thereby facilitating fraudulent export of 'Semi-finished Leather', to evade payment of export duty and to avail duty drawback, apart from other incentives.4
Appeal. No(s).: C/40617-40621/2021-SM & C/40113 & 40114/2022-SM
2. A perusal of the Show Cause Notices reveal, inter alia, that a team of officers from the Special Intelligence and Investigation Branch (SIIB), Custom House, Chennai carried out a surprise check at the Container Freight Station (CFS), Virugambakkam, on 07.10.2016 where some of the consignments of finished leather meant for export were lying at Godown No. 03, which was sealed by the said officers; that the said officers visited the CFS on 14.10.2016 wherein they appeared to have found relevant documents, including the first test report of the CLRI dated 07.10.2016; that thereafter, the said officers, with the help of Custodian and CHA, examined the consignments in the presence of Mahazar witnesses and Customs Broker; that accordingly, Mahazar dated 14.10.2016 was drawn; that as per the Show Cause Notices, samples were forwarded for testing to the CLRI vide letter dated 08.11.2016; that the CLRI thereafter vide its letter dated 09.11.2016 certified that the samples did not satisfy the norms and conditions laid down in the Public Notice No. 21/2009-14 dated 01.12.2009; that thereafter, some of the exporters approached the Hon'ble High Court by filing writ petitions; that the Hon'ble High Court, in one of its orders, allowed the export of the impugned consignments subject to certain terms and conditions; that thereafter, the Revenue proposed confiscation of the goods in question covered under the shipping bills involved under Section 113(i) of the Customs Act, 1962, apart from proposing to demand duty, redemption fine, penalty under Section 114(ii) ibid., withdrawal of duty drawback amount claimed and penalty under Section 114AA ibid.; the Show Cause Notices have relied upon various documents.
3. The appellants filed detailed replies, but however, not satisfied with the same, the Joint Commissioner of Customs, Chennai passed Orders-in-Original, as under:-
5Appeal. No(s).: C/40617-40621/2021-SM & C/40113 & 40114/2022-SM Sl. Order-in-Original Date of order Appeal No. No. No. before CESTAT
1. No. 75915/2020 17.08.2020 C/40620/2021
2. No. 76012/2020 04.09.2020 C/40621/2021
3. No. 76334/2020 30.09.2020 C/40618/2021
4. No. 76360/2020 30.09.2020 C/40617/2021
5. No. 76362/2020 30.09.2020 C/40114/2022
6. No. 76704/2020 28.10.2020 C/40113/2022
7. No. 76784/2020 29.10.2020 C/40619/2021 wherein, confiscation order was passed as proposed in the Show Cause Notices, however, giving an option of redemption on payment of fine under Section 125 ibid. The Adjudicating Authority also confirmed the duty demand at 60% as per the Export Tariff for unfinished leather, along with applicable interest under Sections 28(4) and Section 28AA ibid., penalties under Section 114(ii) ibid. and 114AA ibid., apart from rejecting the drawback amount claimed.
He also ordered appropriation of the bank guarantee towards fine and penalty. Seriously aggrieved by the said Orders-in-Original, the appellants preferred first appeals before the Commissioner of Customs (Appeals-II), Chennai, who vide impugned Orders-in-Appeal dated 31.05.2022,11.01.2022 and 12.01.2022 rejected the contentions as well as the appeals of the appellants, against which the present appeals have been filed before this forum.
4. Heard Shri Sundaranathan T., Learned Advocate for the appellants and Smt. K. Komathi, Learned Additional Commissioner for the Revenue.
5. Learned Advocate for the appellants would submit that the issue in all these seven appeals is common and the relief sought in all these appeals is also the same and hence, requested that he may be permitted to present common facts.
6Appeal. No(s).: C/40617-40621/2021-SM & C/40113 & 40114/2022-SM 6.1 The Learned Advocate for the appellants would submit, at the outset, that the CLRI had initially certified vide its reported dated 07.10.2016 that the sample leather satisfied the norms and conditions laid down in the Public Notice ibid. He would further submit, while referring to the Mahazar dated 14.10.2016 drawn in the presence of witnesses at the premises of M/s. Central Warehouse Corporation Ltd., Continental Freight Station, No.1, Arcot Road, Virugambakkam, Chennai - 600 092, that there is no mention about drawing of the samples at all anywhere in the said Mahazar; that the Mahazar just mentions about the examination of the consignments lying at Godown No.
03. 6.2 He would also submit, referring to another Mahazar dated 07.11.2016 drawn in the presence of witnesses at Room No. K 306, SIIB Section, Narmada Block, 3rd Floor, Office of the Commissioner of Customs, III Commissionerate, No. 60, Rajaji Salai, Custom House, Chennai, that the Revenue has nowhere mentioned as to what was the subject matter of examination by the CLRI and from where the samples were drawn and that if at all there was a valid drawing of the sample leather from the impugned consignments, how and where the same was preserved from the first Mahazar dated 14.10.2016 to the other Mahazar dated 07.11.2016, which was drawn a day prior to sending the samples to the CLRI for examination/report.
6.3 He would submit that the Revenue has neither in the Orders-in-Original nor in the impugned Orders-in-Appeal answered this crucial aspect, since leather being an organic product, is required to be preserved carefully.
7.1 Per contra, Learned Departmental Representative relied on the findings of the lower authorities. She would also submit that the appellants have mis-declared the semi-finished goods as finished goods only to get duty drawback and to evade payment of export duty at 60% ad 7 Appeal. No(s).: C/40617-40621/2021-SM & C/40113 & 40114/2022-SM valorem. In this regard, she also referred to parts of paragraph 5 at page 19 of the impugned Order-in-Appeal No. Seaport C.Cus. II. No. 447/2021 dated 31.05.2021.
7.2 She further inter alia submitted that the samples were switched in transit to get the report as finished leather; that the SIIB drew samples under the Mahazar and sent the same to the CLRI for testing/report; that one of the exporters had made admissions in his voluntary statement and that at no point of time had the appellants- exporters disowned the samples or denied the test reports. She further placed reliance on an order of the co-ordinate Bench of the CESTAT in the case of M/s. Interglobe Aviation Ltd. v. Pr. Commissioner of Cus., Bangalore reported in 2022 (379) E.L.T. 235 (Tri. - Bang.) to justify the invoking of extended period of limitation.
8. I have considered the rival contentions, perused the documents placed on record as also the orders of the lower authorities. After hearing both sides, I find that since a common issue is involved and the relief sought is also common, these cases could be clubbed together for convenience and common disposal.
9. The first test report dated 07.10.2016 issued by the CLRI clearly mentions that the sample of leather 'satisfies' the norms and conditions laid down in the Public Notice ibid. for the type of finished leather as declared ("Sheep Leather with Finishing Coat, Colour: WHITE (0162), Category: I"). The second report dated 09.11.2016 certifies that the sample does not satisfy the norms and conditions laid down in the Public Notice for the type of finished leather as declared ("Sheep Finished Leather, Colour: OFF-WHITE, Category: I"). From the said reports, there is a difference inasmuch as the first report mentions the colour of the goods as "WHITE" as against "OFF- WHITE" in the second report.
8Appeal. No(s).: C/40617-40621/2021-SM & C/40113 & 40114/2022-SM
10. From perusal of the first Mahazar dated 14.10.2016, I do not find any mention as to the same witnessing the drawing of samples, as contended by the Learned Advocate for the appellants, and hence, the Revenue has to explain as to what was sent for examination since the same is not forthcoming even from the orders of the authorities below. Even if it is to be assumed that samples were drawn on 14.10.2016, the Revenue has not brought out on record as to how and where the samples were preserved since more than three weeks after drawing the samples have they sent the samples to the CLRI for examination/report, since, as contended by the Learned Advocate for the appellants, leather is such a goods on which even the weather will have an impact; hence, preservation of the same is very much material.
11. Further, the Revenue has only alleged about the switching of samples, but has nowhere established how and where the switching had taken place since, admittedly, right from day one, the goods were at the godown of the CFS, the accessibility of which may not be that easy.
12. These facts coupled with the fact that the Mahazar dated 14.10.2016 did not witness drawing of any samples, throws sufficient doubts about the allegation of switching of samples and, in any case, the Revenue has not explained anywhere as to the source of the sample which was sent to the CLRI for testing/report. The above is sufficient to dislodge the veracity of the second report which goes to the very root of the report of the CLRI dated 09.11.2016.
13. By this, I am of the view that the Revenue has not satisfactorily and effectively shook the first report of the CLRI dated 07.10.2016 and hence, it has to be held that the norms and conditions laid down under the Public Notice No. 21/2009-14 dated 01.12.2009 are satisfied, as opined by the expert. Hence, the demand of confiscation apart from demand of duty liability and the various penalties levied on the appellants cannot sustain, since the very 9 Appeal. No(s).: C/40617-40621/2021-SM & C/40113 & 40114/2022-SM basis on which the case of the Revenue rests is not well- founded. In view of the above, the impugned orders are set aside and so also the various demands confirmed therein.
13.1 In its order relied upon by Smt. K. Komathi, Learned Departmental Representative, the Learned co-ordinate Bench has only upheld the invoking of the extended period of limitation since the Bench found that it was a clear case of mis-declaration, which is not the case here. The Revenue has only alleged switching of the samples without substantiating the same and has obtained report from the CLRI dated 09.11.2016 without drawing any samples.
14. In the result, the appeals are allowed on all the grounds raised.
(Order pronounced in the open court on 30.06.2022) Sd/-
(P. DINESHA) MEMBER (JUDICIAL) Sdd