Customs, Excise and Gold Tribunal - Tamil Nadu
Vijayalakshmi Leathers vs Commissioner Of Customs on 28 January, 2000
Equivalent citations: 2000(69)ECC795, 2000ECR875(TRI.-CHENNAI), 2000(119)ELT656(TRI-CHENNAI)
ORDER C.N.B. Nair, Member (T)
1. All these cases related to export of Leather.
2. The Appellants filed shipping bills for the export of the consignments covered by the impugned orders declaring the goods as finished leather in the drawback shipping bills. When the samples were drawn and tested by the Central Leather Research Institute, Chennai, they pointed out certain deficiencies and defects in the processing mentioned below.
(a) Absence of dyeing
(b) Colour not distinctly different from that of crust
(c) Thickness more than 1 mm.
(d) Absence of protective coat
(e) Absence snuffing/shaving on the grain.
3. The Export Trade Control Public Notice specified the processes required to be carried out in respect of various types of finished leather. In view of the deficiencies mentioned above, the C.L.R.I., held that the goods did not clarify as finished leather. Exporters explained that a large number of processes are required to be carried out to produce finished leather. The C.L.R.I., reports have found deficiencies only in respect of certain of the processes. These deficiencies cannot be treated as sufficient enough to treat the goods in question outside the description of finished leather. The consignments in question had been processed and prepared in accordance with the specifications of the buyers. The foreign buyers prescribed the type of colouring to be imparted and the itensity of the colour. Therefore, the leather exported ought to conform to the exporter's specification to meet the requirements of the contract. The observation of the C.L.R.I. with regard to the absence of dyeing is because the shades imparted is light and not dark of medium shade. This is not a reason to conclude that the process of dyeing was not carried out at all. The position with regard to other deficiencies are also the result of variation which occurs normally in the carrying out of mechanical and other operations. During the hearing the ld. Consultant Shri M.S. Kumarasamy for the Appellants pointed out that these cases could not be described as attempt to export goods contrary to any prohibition imposed by or under the Customs Act or any other law. The goods are bought and sold as finished leather and they have also fulfilled most of the norms except for minor variations. He submitted that even the I.S.I. specifications recognised that certain variations from norms takes place during the process of manufacture and the goods do not go out of the description of the finished leather on account of minor deficiencies in processing. He also submitted that the goods have been confiscated only based on the opinion given by the C.L.R.I. It only indicated that between commercial acceptance and technical specifications these are minor variations. This should not be a ground for holding the products to be different from the declared goods. The Exporters were manufacturers of the goods and they had taken care to produce the goods according to specifications as agreed to by their buyers and when the goods were produced for export they were under the bona fide belief that the goods manufactured by them for export fully conformed to specifications of finished leather. He submitted that even upon pointing out of the deficiencies by C.L.R.I. the exporters had only sought permission to take back the leather to the factories so as to make good the deficiencies, so that the goods could be presented again for export. He submitted that the confiscation of the goods in these circumstances was unwarranted and caused unmerited hardship to the exporters. He also submitted that penalties under Section 114 were also unjustified as the Appellants had not committed any act or omission which would make the goods liable to confiscation. He submitted that taking back of the goods to the processing unit, carrying out further processing of the goods and re-exporting them themselves have caused great additional expenses to the appellants and would cause as sufficient penalty.
4. Heard ld. DR for the Revenue. He submitted that the Export Control Public Notice specified that the processes as contained therein have to be satisfied to make the goods finished leather and to make such goods eligible for export without a licence. Further for claiming Drawback also, these processes are required to be carried out. He also submitted that the C.L.R.I. is a national level export authority with regard to leather and the Customs authorities could not be faulted for following their opinion in deciding whether the goods in question fulfilled the conditions for finished leathers. He also submitted that the redemption fine and penalty levied are also very low compared to the value of the goods (5%).
5. I have considered the submissions made by both sides. The finished leather is produced from raw skin by carrying out several processes. In all these cases deficiencies have been pointed out with regard to some of the processes. Therefore, it is agreed by all parties that the processes themselves have been carried out, though deficiencies have been pointed out with regard to very few of the procedures. The Appellants have explained that they are falling between two stools. The C.L.R.I. expects certain standards, while their buyers stipulate .certain others. The confiscation of the goods and the penalities have been caused by their failure to satisfy both the sides. As the goods tendered for export conforms to most of the criteria and the variations has been explained as minor and on account of differences between the C.L.R.I. deficiencies and requirements of the buyers, these cannot be considered to be deliberate or committed with intent to export prohibited goods out of the country. With regard to the deficiencies, the Appellants are only seeking permission to take the goods back to the units and to make good the deficiencies. There was also no deliberate attempt to conceal the deficiencies or to misdeclare the goods. The whole dispute has arisen only because of variations, inaccuracies in mechanical operations or the difference between experts and traders with regard to grades. There was no effort to export prohibited goods. The Appellants have already incurred considerable financial loss on account of taking the goods back for reprocessing and the delay in carrying out their exports and realisation of the export value. Taking all these facts and circumstances into account, the appeals are allowed with consequentials relief to the Appellants and the impugned orders are set aside.