Custom, Excise & Service Tax Tribunal
The Craft Harvest vs Commissioner, Customs (Import)-New ... on 13 July, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. IV
CUSTOMS APPEAL No. 51266 of 2023
(Arising out of Order in Appeal No. CC(A)/Cus/D-1/Export/NCH/03/2022-23
dated 06.04.2022 passed by Commissioner (Appeals), New Customs House,
Near IGI Airport, New Delhi-110037)
M/s. The Craft Harvest ...Appellant
H. No.2/6B, Fourth Floor,
Jangpura-A, New Delhi-110014.
Versus
Commissioner of Customs, ....Respondent
New Customs House, New Delhi.
APPEARANCE:
Mr. Avijit Dikshit, Advocate for the appellant Ms.Tamanna Alam, Authorized Representative for the Respondent CORAM : HON'BLE DR.RACHNA GUPTA, MEMBER (JUDICIAL) Date of Hearing: 02/05/2023 Date of Decision: 13/07/2023 FINAL ORDER No. 50902/2023 DR.RACHNA GUPTA The appellant in the present case is an exporter and is also registered with goods and service tax Department. Through the Custom Broker, namely, M/s.A & A International Freight Forwarders (CHA), the appellant filed the shipping bill No.4692472/- dated 06.06.2019 for export of 59 woollen shawls of Pashmina wool having FOB value of Rs.1097700/-. However, Wild Life Inspector, Wild Life Crime Control Bureau, when examined the aforesaid goods on 07.06.2019 he reported that out of 59 pieces of the shipment 6 pieces of shawls were suspected to contain guard 2 C/51266 / 2023 hair of Tibetan antelope (Chiru). Since Chiru is listed in Schedule I of Wild Life Protection Act, 1972 and Appendix I of Convention on International Trade in Endangered Species (CITES), being endangered species, the Inspector recommended the Shawls to forensic lab of Wile Life Institute of India, Dehradun for final confirmation based on that recommendation that the samples were drawn under Panchnama dated 12.06.2019.
2. Six pieces of shawls were stuffed in a box and sealed in the presence of Authorised Representative of appellant/exporter, CHA Wild Life Inspector and two witnesses. The test report from the lab was received vide letter No.3874/2019 dated 13.07.2019 confirming that the sample contains hair of Tibetan Antelope. However, the appellant objected the said report vide letter dated 25.07.2019 requesting for retesting thereof. The samples were got re-examined by Zoological Survey of India, Kolkata Lab. The said Lab also confirmed vide their letter No.653/1284 dated 22.01.2020 that the samples i.e. six Shawls contain guard hair of Tibetan Antelope. Based on the said two reports, that those six Shawls were seized under section 110 of Customs Act vide order dated 06.02.2021 on the reasonable belief that the said goods are liable for confiscation under section 113 of the Customs Act, 1962. Accordingly, the appellant was alleged to have deliberately engaged in dealing, keeping, concealing, selling or purchasing the shawls containing guard hair of Tibetan Antelope (prohibited goods) by mis-declaring and concealing them alongwith 53 Pashmina Shawls.
3
C/51266 / 2023
3. However, while considering the request of the appellant- exporter for waiver of Show Cause Notice and considering the reply in his letter dated 22.02.2021 and 24.02.2021, while granting the exemption from personal hearing that the original adjudicating authority vide Order-in-Original No.09/2021-22 dated 12.04.2021 ordered absolute confiscation of 6 Shawls which were found containing guard hair of Tibetan Antelope. Confiscation of remaining 53 Pashmina Wools Shawls was also ordered, however, with an option to the exporter-appellant to get redeem the said export goods on payment of redemption fine of Rs.1,00,000/- in terms of section 125 of Customs Act, 1962. Penalties were also imposed on the appellant of Rs.1,20,000/- each under section 114
(i) and 114 (AA) of Customs Act 1962. The appeal against the said order has been rejected vide Order - in - Appeal No.3/2022-23 dated 06.04.2022. Being aggrieved, the appellant is before this Tribunal.
4. I have heard Shri Avijit Dikshit, ld. Counsel for the appellant and Ms. Tamanna Alam, ld. Authorised Representative for the Revenue.
5. Ld. Counsel for the appellant has mentioned that Provisions of Section 113, 114 (i) and 114 A of Customs Act, 1962 are not applicable in the given facts as the Shawls exported by the appellant are not the prohibited goods. It is submitted that 6 Shawls out of 59 Shawls in the consignment were separated on the basis of suspicion. Due to suspicion, the report was obtained from 4 C/51266 / 2023 Wild Life Institute of India, Dehradun (WLI). The report concluded that said six Shawls contain guard hair of Tibetan Antelope is not acceptable, for the reason that the report is completely silent about the procedure followed, observations made, noted statistics and reasons for the conclusion. Even the report of retesting by the lab of Zoological Survey of India, Kolkata is alleged to have the same lacuna. Both the reports are alleged to be nothing more than a bare statement, thus, are alleged as arbitrary. The order based upon such vague and cryptic report is, therefore, prayed to be set aside. It has also been challenged for being passed even without issuing the Show Cause Notice. It is mentioned that even the retraction letter of the appellant dated 24.02.2021 has not be relied upon by the adjudicating authorities.
6. Ld. Counsel has also placed on record of testing methodology and reports conducted by reputed Labs in India and abroad certifying the absence of Shahtoosh fibres. It is impressed upon that the bare perusal of said test reports would reveal several details and various parameters that have to be observed while concluding such tests. Both the test reports in question are miserably silent about these details and parameters hence are liable to be rejected and the findings based upon said reports are also liable to be set aside. It is further submitted that as per Centre for Cellular and Molecular Biology (CCMP) also the identification using morphological keys are often not reliable and do not lead to successful prosecution of the offender. The circular rather emphasises on using modern technology which would lead 5 C/51266 / 2023 to greater utility. A paper titled as "the advantageous of scanning electron microscope in the forensic studies of hair" in domesticated and wild animals published in international journal of scientific research has also been relied upon to impress that techniques as that of Scanning Electron Microscope (SCM) and of Lighter Transmission Electron Microscopy (TEM) are much more advantageous. The paper acknowledges that there can be confusion with respect to the hair of animals if out-dated techniques are used. Ld. Counsel further impressed upon that section 119 and 125 of Customs Act are not applicable with respect to the remaining 53 shawls. Ld. Counsel hence, the order of giving option of redemption fine is also not sustainable. Ld. Counsel has relied upon two decisions as follows:-
1. Mazda Chemicals v. Commissioner of Customs (Preventive) Ahmedabad [1996 (88) ELT 769 (Tribunal).
2. Commissioner v. Finesse Creation Inc.[2009 (248) ELT 122 (Bom.)
7. The order imposing penalty is also prayed to be set aside, for want of any culpability of mind of the appellant, ld. Counsel relied upon the decision of Commr. of Customs (Import) vs. M/s. Trinetra Impex Pvt. Ltd. Reported as 2019 (11) TMI 72. With these submissions order under challenge is prayed to be set aside and appeal is prayed to be allowed.
8. Ld. D.R., on the other hand, has submitted that two test reports of well established government institutes have established that six suspected shawls contain guard hair of Tibetan Antelope. 6
C/51266 / 2023 It is impressed upon that presence of any part of scheduled animals in any percentage makes such article a prohibited item, hence, the adjudicating authorities below have rightly held those six shawls to be the shawls of Shahtoosh (made from the guard hair of Tibetan Antelope/ Chiru) There is no infirmity in ordering absolute confiscation of the said shawls. There is also no infirmity in the finding that remaining 53 Pashmina shawls were used to conceal the said six Shahtoosh shawls. Hence, the order of confiscation but with an option to redeem 53 shawls is quite reasonable and justified. These findings are impressed upon to be sufficient ground for imposition of penalty. Finally, ld D.R. has submitted that the request of the appellant for retesting has rightly been rejected for the second time on the ground that the testing had been done by the renowned governmental forensic laboratories. With these submissions, ld. DR has prayed to the dismissal of the appeal.
9. Having heard the rival contentions and perusing the entire record, I observe and hold as follows:-
I observe that the issue herein depends upon the distinction between two kinds of shawls one made by Pashmina Wool and another by Shahtoosh wool. For the purpose I need to understand the morphological differences between the two kinds of shawls and different scientific methods to distinguish the two. I judicially notice that Shahtoosh is the name given to the wool of Tibetan Chiru-Antelope. These species are trapped killed and skinned for their short fine fleece called Shahtoosh which is the warmest and 7 C/51266 / 2023 the softest wool of the world. Pashmina on the other hand comes from Tibetan mountain goats without killing the animal but the fleece is obtained. Hence I can conveniently say that Shahtoosh is a wool obtained by killing the animal, resulting into the animal getting endangered whereas Pashmina is a craft. For the same reason the possession and sale of Shahtoosh are illegal in most of the countries including India, due to being prohibited under CITES and Wild Life Act, 1972. The table below gives few more differences.
Sl. Characteristic Shahtoosh Pashmina (P)
No. (s)
(a) Guard Hair
1 EXTERNAL FEATIRES
Colour Fawn White
a
Average 145+11.8 85.16+13.01
b Thickness (pm) (120-180) (67.5 - 100)
c Curvature Wavy Straight
Weight/unit 0.85-1.13 2.32-2.97
d length (pg/mm)
2 MICROSCOPIC FEATURES
a Cuticular Margin Smooth Rippled crenate
characteristic Distance Large Large
between
scales
Pattern Regular mosaic Irregular mosaic
Medullary Thickness 131+14.12 69.5+20.45
b characteristic (pm)
Medullary 90.34 81.6
index (%)
Pattern Lattice type (bigger Lattice type
cavities) (smaller cavities)
c Cross section Circular /oval Circular/ dumb bell
Root bulb Club-like and width Carrot-like
d structure gradually increasing andbecoming
towards tip narrow towards tip
(b) Underfur
1 EXTERNAL FEATIRES
Average 14.2+1.42 18+4.23
a thickness (pm) (12-16) (12-28)
2 MICROSCOPIC FEATURES
Cuticular Margin Smooth Smooth
a characteristic Distance Large Large (less than in
between shahtoosh)
scales
Pattern Simple coronal with Simple coronal
furrow and shoulder without furrow and
shoulder
Medullary Thickness 10.14+1.85 14.5+2.38
b characteristic (pm)
8
C/51266 / 2023
Medullary 71.45 80.76
index (%)
Pattern Not distinct but has Not distinct and has
scatter faint pattern
10. It has been judicially noticed that because of many
consignments carrying Pashmina wool are being identified as Shahtoosh, possession and sale of which is banned under the Wild Life Protection Act and CITES that the shawl traders have filed a public interest litigation in February, 2022 before High Court of Delhi complaining of being subjected to Customs and Criminal Prosecutions on the ground that their export consignment carry articles suspected to be Shahtoosh.
11. Responding to a plea seeking improved infrastructure in the forensic science laboratories (FSLs) that are engaged in wildlife forensics, a division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad of Delhi High Court has issued notice and sought response from several Ministries of the Central Government; the Central Board of Indirect Taxes and Customs, Wildlife Institute of India, Zoological Survey of India and Wildlife Crime Control Bureau.
12. The plea moved by three unions of exporters, manufacturers, traders, and artisans of Pashmina shawls demands modern „Scanning Electron Microscopic‟ technology and DNA testing procedures in the labs.
Their grievance as per the plea is that customs and criminal prosecutions are initiated against stakeholders of the Pashmina trade on the premise that their consignment for export carry 9 C/51266 / 2023 articles „suspected to be shahtoosh guard hair‟. Such actions are adversely impacting the industry at large, the plea adds.
14. I further judicially notice that the said PIL Urges that the techniques used for identifying and distinguishing shahtoosh and pashmina are "obsolete". The plea reads that "the sole basis of these prosecutions emanates from forensic reports that are issued by the forensic science laboratories using technologically obsolete methods [referred to as „Light Microscopy‟], that erroneously conclude various exporters‟ consignments to be „positive for Shahtoosh‟ guard hair‟,"
Consequent to such forensic reports, the accused stakeholders are subjected to "onerous customs proceedings", leading to huge monetary losses and delays in release of seized shipments, the petition argues. Many exporters facing prosecutions, including the Petitioners, have countless experiences of conflicting results of the government‟s own forensic reports, it adds. Plea further states that at present there are two forensic science laboratories in Dehradun and Kolkata and both of which use Light Microscopy for examining consignments suspected to be „shahtoosh‟.
16. "Despite making all efforts to ensure quality control, many times it is noticed that the shawl which is otherwise 100% pure pashmina and manufactured/weaved from pashmina wool contains a few stray „guard hairs‟ superficially or somehow contamination found belonging to different species or for that matter of Tibetan 10 C/51266 / 2023 Antelope (Chiru) / Shahtoosh. However, it is to be noted that accidentally falling hair are a case of contamination and by no stretch of the imagination can be said to constitute trading an illegal item or „Animal Article‟ as defined under Wildlife Protection Act," the PIL contends.
17. Reverting to the facts of the present case, I observe that the reports from both the Government Laboratories while confirming that the sample contains hair of Tibetan Antelope, reads as follows:-
"Samples (06 Shawls) were examined scientifically and confirmed that the shawls containing guard hair of Tibetan Antelopes Pantholops hodgsonii (Abel, 1862) [Mammilia Artiodactyla: Bovidae]"
18. The report is absolutely silent about what scientific method was being used by both those Labs. I observe from the arguments and notes provided by the appellant that either of the following methods can be used for identifying the guard hairs of Chiru (Sahtoosh) from that of Circus (Pashmina) goats.
1. Scanning Electron Microscopy (SEM)
2. Light Microscope
3. OFDA Technique &
4. DNA Technique
19. In addition, the difference can be observed from fibers surface morphology in such parameters as already tabulated above. The report is absolutely silent about any of these methodologies and even about the noticed characteristics. I observe that both the times the reports have been objected. 11
C/51266 / 2023 Appellant even requested for cross-examination of the examiner. However, the same has been denied. I am of the opinion that denial to cross-examine amounts to violation of principle of natural justice. The confiscation has been confirmed based on un-detailed insufficient report, the examiner whereof was denied to stand the test of veracity. As already observed above, the issue has already been raised by the shawl traders before Delhi High Court, the PIL has been accepted. Notice has already been issued. Finally, keeping in view that shawls of both kind of stuff are soft and warm and it is difficult for a layman or a non-technical person to distinguish between the two merely on the basis of appearance.
20. I convinced with the submissions put forth on behalf of the appellant that though the forensic labs where the shawls in question were got tested, are the Government Laboratories but there is no denial that these labs are insufficiently laced with the proper and modern techniques. Hence, I hold that reports from both these labs cannot be the sole basis of confirmation that 6 seized shawls are Shahtoosh shawls. I rely upon the decision of CESTAT, Kolkata in the case of Unsun Systems Consulting Pvt. Ltd. reported as 2015 (2) TMI wherein it is held that where the examining authorities neither consider the technical aspect nor disclose the details of examination report in respect of the impugned goods vis-à-vis their physical and scientific characteristics. Such examination reports are in conclusive as they lead to nowhere. Hon‟ble Apex Court also in the case of Aparna Ajinkya Firodia vs. Ajinkya Arun Firodia in SLP Civil No. 12 C/51266 / 2023 9855/2022 dated 20.02.2023 has held where the truth of fact is not known there is no need or room for any presumption. Thus, when there is a conflict between a conclusive proof envisaged under law and a proof based on scientific advancement accepted by the World Community to be correct, the later must prevail over the former.
21. As already discussed above that there has been several scientific advancement in the techniques identifying Shahtoosh as well as differentiating it from other animal craft wool, the conclusion can be drawn only on the basis of modern scientific advancements. I observe that the test reports based on such scientifically advanced techniques have been placed on record by the appellants about the impugned shawls. The perusal reveals the elaborations as far as the morphological as well as scientific characteristics of Chiru hair and Circus hair are concerned. Since those features are missing in this report such report is held to have been wrongly relied upon to prosecute the appellant. Otherwise also the admitted fact is that the consignment of 59 shawls was found to have 53 Pashmina Shawls and six Shawls were detained on the basis of mere suspicion. As already discussed above, no cogent verification has been arrived at to confirm the said suspicion. The prosecution is nothing but an outcome of presumption and surmises. Above all, both kind of shawls are being crafted by the Artisans in Kashmir the procedure as detailed in the appeal itself shows that the possibility of few strands of the 13 C/51266 / 2023 hairs of a different species getting mixed with the hair of Circus goat (Pashmina) cannot be ruled out. Unintentional and unavoidable mixing cannot be the basis of criminal prosecution and imposition of penalty. I hold that the reports are insufficient to prove that the 6 shawls were prohibited goods. Question of those six shawls to be concealed on the ground of it being a prohibited product doesn‟t arise. Remaining 53 shawls also cannot be subjected to confiscation as question of them to be used for concealing the prohibited goods stands redundant in the light of above discussion.
12. With all the above observations, I hereby set aside the order under challenge. Consequent thereto, the appeal stands allowed.
[Pronounced in the open Court on 13/07/2023] (DR.RACHNA GUPTA) MEMBER (JUDICIAL) Anita