Custom, Excise & Service Tax Tribunal
M/S. Ahmed Overseas Corporation vs Commissioner Of Customs, Chennai on 3 May, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal Nos. C/40037/2015
[Arising out of Order-in-Appeal C. Cus. No. 1866/2014 dated 10.10.2014 passed by the Commissioner of Customs (Appeals), Chennai]
M/s. Ahmed Overseas Corporation : Appellant
Versus
Commissioner of Customs, Chennai : Respondent
Appearance:
Ms.Pramila.V, Advocate For the Appellant Shri. K.P.Muralidharan AC (AR) For the Respondent CORAM :
Honble Shri P.K. Choudhary, Judicial Member Date of Hearing: 28.3.2016 Date of Pronouncement: 03.05.2016 FINAL ORDER No. 40699 / 2016 Shipping bill was filed for export of goods declared to be finished leather. Two types of leather were declared in shipping bill for export. One described as Goat wax coated upper finished leather. The other described as Goat shoe suede finished leather. While on physical examination, Customs Officers were satisfied on the declaration given for Goat shoe suede finished leather. They had doubts on the correctness of declaration in regard to Goat wax coated upper finished leather in view of the DGFT Public Notice No.21/2009 dated 01.12.2009 issued under the provisions of Foreign Trade (Development & Regulation ) Act. Accordingly, samples were drawn and sent to Central Leather Research Institute for test. CLRI vide their report certified that the samples did not satisfy test of finished leather in view of absence of wax coat and finishing coat. Accordingly, Section 113 (d), 113 (II) of Customs Act, 1962 were invoked for confiscation, and penalty was sought to be imposed under Section 114 (II) as goods were alleged to have not satisfied the norms for Finished Leather.
2. In the original adjudication order No. 594/2014 dated 12.09.2014, the goods were held to be semi-finished leather and allegation of mis-declaration was set out with intention to evade export duty. Redemption fine and penalty were imposed. Order-in-Appeal No.1866/2014 at 10.10.014 had been passed confirming the Assistant Commissioners finding on merits, though fine and penalty were reduced. Being aggrieved, the present appeal has been preferred before the Tribunal.
3. I have heard both sides. The appellant assessee is represented by Ms. V. Pramila, Advocate, and the department is represented by Shri K. P. Muralidharan, A.C.(AR). It is observed from the grounds of appeal that appellants are not contesting CLRIs report but are praying for one more opportunity to reprocess the goods as per requirements. It is also contended by the appellants that in absence of few processes it would not mean that the leather to be exported was not finished leather. It is an admitted position that two processes had not been done on the goods viz., wax coating and finishing coat, and the appellant had cured this deficiency by re-processing these goods. The goods have also been exported. The Tribunal in similar circumstances has set aside the order of confiscation and imposition of fine and penalty, in the case of M/s. Expos Leather Company Vs. CCE, Chennai, vide Final Order No.473/2010 dt.23/04/2010 by relying on the decision in Vijayalakshmi Leathers Vs. Commissioner of Customs, Chennai - 2000 (119) ELT 656 (T). All the above factors apply mutatis mutandis to the facts of the present case. The relevant portion of the Tribunals decision in the case of M/s. Expos Leather Company Vs. CCE, Chennai, is reproduced as under:-
2. I have heard both sides. I find that there is no dispute that it is only the process of protective coating which was not carried out on the goods. I find that in similar circumstances in the case of M/s. Avanthi Leathers Ltd. - Final Order No.902/09 dated 20.07.2009, the order of the Commissioner (Appeals) setting aside confiscation and imposing penalty was upheld after noting that no effort was made to export the goods in question and that the goods had been allowed to be taken back for the purpose of applying protective coating so as to make the goods conform to the definition of finished leather. Similar view was taken in the case of M/s. Meena Leather Exports - Final Order No.1844, 1845/09 dated 27.11.2009, following the Tribunals decisions in Sri Shanmuga Prima Tannery Vs. Commissioner of Customs, Chennai - Final Order No.688/2003 dated 04.09.2003 and Vijayalakshmi Leathers Vs. Commissioner of Customs, Chennai [2000 (119) E.L.T.656 (Tribunal)]. The ratio of these decisions is squarely applicable to the facts of the present case and hence following the same I set aside the impugned order of confiscation and imposition of penalty and direct the appellants to carry out the process of protective coating before exporting the goods. The appeal is thus allowed with consequential relief. An appeal by the department before the Honble High Court did not yield any favourable result. The relevant portion of the Order of the Honble High Court of Madras dated 19.11.2010 in the case of CC (Imports), Chennai Vs. M/s. Expos Leather Company in CMA No. 2937 of 2010 is reproduced as under:-
3. In the above stated background, the Tribunal, by applying its own earlier decisions in more than one case and the one reported in 2000 (119) ELT 656 (Vijayalakshmi Leathers Vs. Commissioner of Customs, Chennai, set aside the order of the Original Authority;, ordering confiscation as well as imposition of penalty and permitted the respondent to carry out the process of protective coating before exporting the goods.
4. In Vijayalakshmi Leathers case also, the Tribunal noted the exporters application for permission to take the goods back to the unit for rectifying the deficiencies. While considering the said claim, the Tribunal has specifically found that there was no deliberate attempt to conceal the deficiencies or to mis-declare the leather goods. The Tribunal therefore held therein that the dispute only related to the variations, inaccuracies, in mechanical operations or the difference between exports and traders with regard to grades. Ultimately, it was held that there was no effort to export prohibited goods. The Tribunal also took into account the considerable financial loss on account of taking the goods for re-processing and the delay in carrying out their exports and realisation of the export value.
4. By respectfully following the ratio laid down in the Tribunals decision in the case of M/s. Expos Leather Company as upheld by the jurisdictional High Court, the impugned order imposing fine and penalty is hereby set aside. Accordingly, the appeal is allowed with consequential relief.
(Order Pronounced in open court on 03.5.2016) (P.K. CHOUDHARY) JUDICIAL MEMBER BB/RKP 5