Custom, Excise & Service Tax Tribunal
Vas Noorullah And Co vs Chennai(Air Port &Amp; Cargo) on 1 November, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. III
Customs Appeal No.40133 of 2013
(Arising out of Order-in-Appeal C.Cus.No.1352/2012 dt. 29.11.2012 passed by
Commissioner of Customs (Appeals), Chennai]
M/s.VAS Noorullah & Co. Appellant
No.47, Wuthucattan Street,
Periamet,
Chennai 600003.
VERSUS
Commissioner of Customs (Air),
New Customs House,
Airport & Air Cargo Meenambakkam
Chennai 600 027. Respondent
APPEARANCE :
Shri G. Derricksam, Advocate for the Appellant Shri M. Jagan Babu, AC (AR) for the Respondent CORAM :
HON'BLE MS. SULEKHA BEEVI. C.S., MEMBER (JUDICIAL) HON'BLE MR. P. VENKATA SUBBA RAO,MEMBER (TECHNICAL) DATE OF HEARING : 01.11.2019 DATE OF DECISION : 01.11.2019 FINAL ORDER No. 41246 / 2019 PER P. VENKATA SUBBA RAO This appeal is filed against OIA No. C.Cus.No.1352/2012 dt. 29.11.2012.2
2. The facts of the case are that the appellant exported leather vide Shipping Bill No.3921088 dated 22.7.2009 describing it as "Sheep Nubuck (Snuffed) Finished Leather". The officers of customs doubted the description of the goods. However, the export was allowed without waiting for the test report based on an undertaking given by the exporter. Sample of the export consignment was sent by Customs officers to Central Leather Research Institute (CLRI) for testing who confirmed that the consignment does not conform to the description. Export of leather is restricted unless it conforms to the Public Notice No.92-97 dt. 27.5.1992 issued by DGFT. Accordingly, the original authority vide his order dt. 09.09.2009 held that the goods are liable for confiscation under Section 113 (i) & (ii) of the Customs Act, 1962 and imposed a redemption fine under Section 125 of Rs.10,000/- as the goods have already been exported. He further imposed a penalty of Rs.5000/- upon the exporter under Section 114 (ii) of the Customs Act, 1962 and demanded export duty applicable to the goods of Rs.1,56,457/-. He further ordered that the export to repay drawback, if any, availed with applicable rate of interest to the department. Aggrieved, the appellant appealed before the first appellate authority. An interim order dt. 19.5.2010 was passed by the first appellate authority observing as follows :
"On a perusal of the case, it is seen that CLRI has certified that the sample does not conform to the norms and conditions lay down in the said Public notice. The lower authority has passed the impugned order on the strength of the said certificate. But on the other hand, the appellants vehemently argues that the said entry in the PN does not cover goods made from sheep leather. The appellants sought to retest of the sample.3
Accordingly, I direct the lower authority to send the second sample that is available with the department to CLRI for retest and submit report before this forum. Thereafter, the issue will be decided on merits. The impugned order is stayed until then."
Accordingly, the department has sent the sample for retesting to check if the goods matched description. The second test report described the goods as follows :
"3. With reference to the above, we give below our technical opinion on the leather sample submitted on 27.07.09 by you and retested the same as follows.
"The leather sample which was submitted by you through your Letter No:S.Misc.50/2009-Exp.Exam dated 27.07.2009 (declared as Sheep Nubuck (Snuffed) finished leather) was tested as per the public notice that was in force that time 3-ETC-PN (1992-97) dated 27.05.1992 and the certificate issued as not a finished leather under the category of sheep nubuck leather (as per declaration) due the absence of snuffing to produce velvety nap. Since there was no nubuck leather listed under the sheep skin leathers, the leather was assessed as (VI) (1) (L) which is the cow nubuck leather. Irrespective of the substrate, the snuffing to produce velvety nap is the critical norm for deciding if a given leather is nubuck leather or not. No if the exporter feels it is not a nubuck leather but a finished leather under some other category, kindly arrange to declare the finished leather clearly to enable us to assess the same and give out certificate".
Thereafter, the appeal of the appellant was taken up by the first appellate authority and rejected. Hence the present appeal.
3. Ld. counsel for the appellant would submit that in the first round, the sample was tested for "Nubuck Leather of Cows" whose description was given in Public Notice No.3.ETC/27.05.1992 issued under EXIM Policy 1992-97 at Sl.No.1 (L). He would submit that their Nubuck Leather was made from goat/sheep skins and hence is not covered specifically by the public notice. Therefore, its export is not specifically permitted without a licence. However, he would draw the attention of the Bench to the public notice reads as follows :
4
"Any new type of finished leather not covered above may be permitted for export, subject to testing and certificate by the Central leather Research Institute."
He would therefore argue that any leather even if it is not covered by public notice can still be exported subject to testing by CLRI which was done in their case. Therefore, there is no restriction on export of the goods which they exported. In view of the above, the order of the first appellate authority upholding the order of the lower authority is incorrect and needs to be set aside.
4. Ld. A.R reiterates the findings of the lower authorities and asserts that the impugned order is correct and calls for no interference.
5. We have considered the arguments on both sides and perused the records. As is evident from the second test report of CLRI dt. 27.12.2010 reproduced above, the sample was tested by CLRI to see if it matches the description in the shipping bill. In the first test report, it was tested on the specifications for "Nubuck Leather of cows or buffaloes" while the description of the goods by the appellant was "Sheep Nubuck leather". The second sample was ordered to be tested which was tested and it was again confirmed that it is not Nubuck Leather at all as the process of snuffing essential for making nubuck leather has not been undertaken. From the above, it is clear that there was misdeclaration of the goods in the shipping bill by the appellant. The confiscation of the goods for improper export is provided for on various grounds under Section 113 of the Customs Act. Clause (d) of Section 113 provides for confiscation of any goods attempted to be exported or 5 brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force. Confiscation of goods where the description does not match with the declaration is provided for under Section 113 (i) and (ii). These are reproduced below :
"(i) any goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77;
(ii)any goods entered for exportation under claim for drawback which do not correspond in any material particular with any information furnished by the exporter or manufacturer under this Act in relation to the fixation of rate of drawback under section 75;"
6. In this case, as per the usual practice, the exports were not held up but were allowed after taking an undertaking from the appellant. After the testing, it was found that the nature of the goods exported did not match with the description given in the shipping bill. Therefore, they have been confiscated under Section 113 (i) and (ii) of the Customs Act, 1962. We also find that there is no confiscation under Section 113 (d) for export or attempted export in violation of the prohibitions under Foreign Trade Policy or any other law. We, therefore, find that the argument of the Ld. counsel that their goods were not prohibited from export under Foreign Trade Policy and the Public Notice issued therein does not come to their rescue because there is no confiscation on this count at all. The only confiscation was on the ground that the appellant has described the goods wrongly. We find that the second test report confirms that the goods were not which were described in the shipping 6 bill. For this reason, we find that confiscation of the goods under Section 113 and imposition of redemption fine of Rs.10,000/- under Section 125 in lieu of confiscation (as the goods have already been exported after the appellant gave an undertaking) calls for no interference. Consequently, we also find that the imposition of penalty of Rs.5000/- under Section 114 is liable to be upheld and we do so. The applicable export duty and recovery of drawback, if any, availed also call for no interference.
7. In view of the above, we find that the appeal is liable to rejected and we do so. The appeal is rejected and impugned order is upheld.
(Operative part of the order pronounced in court) (Sulekha Beevi C.S.) Member (Judicial) (P. Venkata Subba Rao) Member (Technical) gs 7