Custom, Excise & Service Tax Tribunal
Lasco Chemie Pvt Ltd vs Commissioner, Customs (Export)-New ... on 13 October, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH,
COURT NO. I
CUSTOMS APPEAL NO. 50208 OF 2020
[Arising out of the Order-in-Appeal No. CCA/CUS/D-II/EXP/ICD/TKD/778-
779/2019 dated 19/11/2019 passed by The Commissioner of Customs
(Appeals), New Customs House, New Delhi-110037.]
M/s Lasco Chemie Pvt. Ltd. ......Appellant
10489, Sadar Thana Road,
Motia Khan,
New Delhi - 110 055.
Versus
Commissioner of Customs (Export), ....Respondent
ICD, Tughlakabad,
New Delhi - 110 020
AND
CUSTOMS APPEAL NO. 50207 OF 2020
[Arising out of the Order-in-Appeal No. CCA/CUS/D-II/EXP/ICD/TKD/778-
779/2019 dated 19/11/2019 passed by The Commissioner of Customs
(Appeals), New Customs House, New Delhi-110037.]
Shri Amit Kumar Jain, Director, ......Appellant
M/s Lasco Chemie Pvt. Ltd.
10489, Sadar Thana Road,
Motia Khan,
New Delhi - 110 055.
Versus
Commissioner of Customs (Export), ....Respondent
ICD, Tughlakabad,
New Delhi - 110 020
APPEARANCE:
Shri Alok Aggarwal and Shri Prachit Mahajan, Advocates for
the appellant.
Shri Rakesh Kumar and Shri Girijesh Kumar, Authorized
Representative for the Department
CORAM:
HON'BLE JUSTICE MR. DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
FINAL ORDER NO. 51556-51557/2025
2 C/50208 OF 2020 and another
DATE OF HEARING : 30.06.2025
DATE OF DECISION: 13.10.2025
P.V. SUBBA RAO
M/s Lasco Chemie Pvt. Ltd.1 and it's Director Shri
Amit Kumar Jain2 filed these two appeals to assail the order-
in-appeal dated 19.11.2019 wherein the Commissioner
(Appeals) rejected the appellant‟s appeals and upheld the
order-in-original dated 31.08.2017 passed by the Joint
Commissioner.
2. The Joint Commissioner had, in his order, decided the
proposals made in the show cause notice 3 dated 29.01.2015
issued to the importer and Shri Jain.
3. The facts which resulted in issue of the impugned order
are that the importer had filed five Bills of Entry in 2014 in
which it paid duty using Duty Free Import Authorization4
licences. Receiving specific intelligence that the importer had
fraudulently imported epoxy resin under the DFIA licenses
issued to certain Kanpur based leather exporters, the
Directorate General of Revenue Intelligence5 initiated
investigation. It found that the DFIA licenses were issued to
leather exporters in lieu of export of „Finished Leather from
Hide of Buffalo/Cow‟. After fulfilling the export obligation, the
1. importer
2. its Director - Jain
3. SCN
4. DFIA
5. DRI
3 C/50208 OF 2020 and another
exporters sold the licenses to the importer herein who used
them to import epoxy resin. DRI came to the conclusion that
the DFIA licenses permitted import of impregnating resin and
that the importer had mis-declared epoxy resin as
impregnating resin to fraudulently claim exemption under the
DFIA licenses. It was, therefore, proposed in the SCN to
demand differential duty under section 28 (1) of the Customs
Act, 19626. Penalties were proposed on the importer under
section 114A and 114AA of the Act and penalty was proposed
under section 112 on Shri Jain. It was also proposed to hold
the imported goods valued at Rs. 1,28,77,505/- liable to
confiscation under section 111 (o) and 111 (m) of the Act.
4. The Joint Commissioner confirmed the proposals in the
show cause notice and this order was upheld by the impugned
order. The operative part of the order of the Joint
Commissioner is as follows :-
(i) I hold that the goods referred to in Table A of the show
cause notice having assessable value of Rs. 1,28,77,505/-
are liable for confiscation under the provisions of section
111 (o) and section 111 (m) of the Customs Act, 1962. As
the goods are not available for confiscation, I do not
impose any redemption fine under the provisions of
section 125 of the Customs Act, 1962 as discussed above.
(ii) I confirm the demand of Rs. 33,29,154/- (Rupees Thirty
Three lakhs, Twenty Nine Thousand, One Hundred and
Fifty Four only) in terms of payment of customs duties
because of wrong availment of the exemption under
Notification No. 98/2009-Customs dated 11.09.2009. I
6. the Act
4 C/50208 OF 2020 and another
appropriate the amount of Rs. 33,29,153/- (Rupees Thirty
Three Lakh, Twenty Nine Thousand, One Hundred and
Fifty Three only) deposited voluntary as detailed in the
show cause notice against the demand of Customs duties
confirmed.
(iii) I also confirm demand of applicable interest under the
provisions of section 28AA of the Customs Act, 1962 on
the duty confirmed under S. No. (2) above, from the first
day of the month succeeding the month in which the duty
ought to have been paid upto the date of payment of such
duty.
(iv) I impose penalty of Rs. 33,29,154/- (Rupees Thirty Three
Lakh, Twenty Nine Thousand, One Hundred Fifty Four
only) on M/s Lasco Chemie Pvt. Ltd., being equal to the
duty determined at Sl. No. 2 above under the provisions
of section 114 of the Customs Act, 1962. However, if duty
as determined at Sl. No. 2 above and the interest payable
thereon as determined at Sl. No. 3 above, is paid within
thirty days from the date of the communication of this
order, the amount of penalty liable to be paid by such
person under this section shall be twenty-five per cent of
the duty so determined at Sl. No. 2 above subject to the
condition that the amount of penalty so determined is also
paid within the said period of thirty days.
(v) I hold that M/s Lasco Chemie Pvt. Ltd. is liable for penalty
under section 112 of the Customs Act, 1962, however I do
not impose penalty on M/s Lasco Chemie Pvt. Ltd. under
section 112 of the Customs Act, 1962 in terms of fifth
proviso to section 114A of the customs Act, 1962.
(vi) I impose penalty of Rs. 12,00,000/- (Rupees Twelve Lakh
only) on M/s Lasco Chemie Pvt. Ltd. under section 114AA
of the Customs Act, 1962.
(vii) I impose penalty of Rs. 1,50,000/- (Rupees One Lakh Fifty
Thousand only) on Shri Amit Jain under section 112 of the
Customs Act, 1962. Since penalty under section 112 is
being imposed, I do not impose any penalty under section
117 of the Customs Act, 1962".
5 C/50208 OF 2020 and another
5. Aggrieved, appellant filed this appeal with the prayer to
set aside the impugned order upholding the order of the Joint
Commissioner.
Submissions of the appellant
6. Learned counsel for the appellant made the following
submissions :-
(i) The importer had filed five Bills of Entry in January
2014 under freely transferred DFIA licenses procured
from leather exporters and cleared goods ;
(ii) The SCN dated 29.01.2015 was issued alleging that
the goods imported by the appellant were not
covered under the DFIA licenses on the ground that
what was imported was epoxy resin which is not an
impregnating resin and that it finds limited use in film
forming systems in leather finishing as stated by the
Central Leather Research Institute7, Chennai ;
(iii) Epoxy Resin (Impregnating Resin) imported by the
appellant was specifically classifiable under Customs
Tariff Heading8 3907 and hence was allowed to be
imported under the disputed DFIA licenses.
(iv) In the Epoxy Resin imported by another importer, the
Central Revenue Control Laboratories9 issued test
7. CLRI
8. CTH
9. CRCL
6 C/50208 OF 2020 and another
report No. 164/11-12 dated 11.06.2011 after testing
the sample and stated that the Epoxy Resin finds
mention in Impregnating Resin.
(v) The opinion of CLRI, Chennai is unsustainable since it
had not examined or tested the samples of the
imported goods.
(vi) It has been alleged in the SCN that the exporters who
obtained the DFIA licenses gave statements that they
had not used Epoxy Resin in manufacture of finished
leather which they exported. These statements were
made under section 108 of the Act and since they
were not put to the procedure under section 135B of
the Act and admitted as evidence, they were not
relevant to proving anything in this case.
(vii) As per Notification No. 31 (RE)-2013/2009-2014
dated 01.08.2013 only inputs used in the
manufacture of the exported products can be
imported under the DFIA licenses.
(viii) The department cannot rely on the Notification dated
01.08.2013 because all the licenses used in the
disputed Bills of Entry were issued prior to this date
and there is no retrospective application of the
notification.
(ix) The SCN also states that as per condition VI of the
DFIA licenses, "Synthetic Resin in any broad heading
of chemicals will not be allowed".
7 C/50208 OF 2020 and another
(x) The appellant had correctly imported Epoxy Resin
which is a type of impregnating resin used in the
leather industry using the DFIA licenses and within
the quantities indicated in the licenses.
(xi) All the Bills of Entry were assessed, examined and
were allowed clearance for home consumption after
debiting the DFIA licenses by the customs officers.
(xii) An amount of Rs. 33,29,153/- was deposited by the
appellant during investigation which needs to be
refunded to the appellant.
(xiii) The impugned order may be set aside and the
appeals of the importer and Shri Jain may be allowed
with consequential relief to the appellant.
Submissions made by the Revenue :
7. Learned authorized representative for the Revenue made
the following submissions :-
(i) It has been clearly established that the appellant
imported of Epoxy Resin under the DFIA licenses in
direct violation of the licence issued.
(ii) The classification of the Epoxy Resin as Impregnating
Resin has not been disputed by the appellant.
(iii) The importer‟s claim that the Epoxy Resin was used
in leather processing and hence DFIA licenses were
issued is not correct. The report of the CLRI and the
statements of the leather exporters confirmed that
8 C/50208 OF 2020 and another
the Epoxy Resin was not used in leather finishing.
Thus, the import was not only unauthorized but
unrelated to the export product.
(iv) The importer fraudulently misused DFIA licenses by
importing high value Epoxy Resin in the guise of low
value impregnating resin.
(v) The report of the CLRI is a binding technical report by
a Government authorized body and it cannot be
brushed aside.
(vi) The appellant is consequently liable to pay the
differential customs duty. The imported goods were
liable for confiscation under section 111 (m) mis-
declaration and 111 (o) of the Act.
(vii) Consequently, the penalty imposed on the importer
and Shri Jain also needs to be sustained.
Findings :
8. We have considered the submissions advanced by both
sides and perused the records.
9. The key issue to be decided is whether the appellant was
entitled to the exemption from duty under notification no.
98/2009-Cus dated 11.9.2009 on the resin imported by it
using several DFIA licences which it had purchased from
exporters of leather.
9 C/50208 OF 2020 and another
10. The undisputed legal position is that if the resin imported
by the appellant was covered by the DFIA licences, it would be
entitled to the benefit of the notification no. 98/2009 and not
otherwise.
11. The undisputed facts are also that the DFIA licences in
question allowed duty free import of impregnating resins and
that the appellant had imported goods which it had declared as
„epoxy resin (impregnating resin)‟ in the Bills of Entry.
12. The case of the Revenue is that the Epoxy Resins cannot
be impregnating resins and therefore, the imported goods
were not covered by DFIA licences. The case of the appellant is
that Epoxy Resins can be impregnating resins and the resins
which it had imported were indeed such resins and therefore,
they were squarely covered by the DFIA licences.
13. The details of the DFIA licences and the Bills of Entry
under which the resin was imported using them are as follows:
Sl. BE No. & DFIA license Details of Description of Description Inputs used Remarks
No. Date Nos. the DFIA the Item of item as by the
license imported as per License exporters
holder per BE
1. 4854558 0610031942 M/s Iqwal Epoxy Resin Impregnating As CTH and
dated dated Leathers (Impregnating Resin - CTH mentioned in description
10.03.14 10.05.13 Ltd., Resin) - - 29262000 Statement of import
Kanpur 39073010 (RUD-2) by not
Shri Nihal tallying
Bin Iqwal, with the
M/s Iqwal input
Leathers mentioned
Ltd., have in the
used acrylic license and
water based the input
impregnating actually
10 C/50208 OF 2020 and another
resin used by
mentioned as the
item 28 in exporter/
the said DFIA
license falling license
under ITCHS holder.
- 29262000
0610026934 M/s Impregnating M/s Model Description
dated Model Resin - CTH Exim vide of import
08.05.12 EXIM, - 39070000 letter dated not
Kanpur 19.12.2014 tallying
(RUD - 9) with the
has input
submitted BE mentioned
No. 2467767 in the
dated license and
19.06.2013 the input
for import of actually
impregnating used by
resin used by the
them and at exporter/
Serial No. 1 DFIA
- 38099390 license
- holder.
Impregnating
Agent -
Lambinder
CTR is
mentioned.
2. 4905521 0610028915 M/s Epoxy Resin Impregnating M/s Model Description
dated dt. 12.09.12 Model (Impregnating Resin - CTH Tanners (I) of import
14.03.14 Tanners Resin) - - 39070000 Pvt. Ltd., not
(India) 39073010 Kanpur in tallying
Pvt. Ltd., their letter with the
Kanpur dated input
10.01.2015 mentioned
(RUD - 12) in the
submitted BE license and
No. 00583 the input
dated actually
06.12.2012 used by
for import of the
impregnating exporter/
resin used by DFIA
them and at license
Serial No. 1 holder.
- 38099390
-
Impregnating Agent is mentioned 0610028915 Do Impregnating M/s Model Description dt. 12.09.12 Resin - CTH Tanners (I) of import
- 39070000 Pvt. Ltd., not Kanpur in tallying their letter with the dated input 10.01.2015 mentioned (RUD - 12) in the submitted BE license and No. 00583 the input dated actually 06.12.2012 used by for import of the impregnating exporter/ resin used by DFIA them and at license Serial No. 1 holder.
- 38099390
-
Impregnating
Agent is
mentioned.
11 C/50208 OF 2020 and another
0610031942 M/s Iqwal Impregnating As CTH and
dt. 10.05.13 Leathers Resin - CTH mentioned in description
Ltd., - 29262000 Statement of import
Kanpur (RUD - 2) by not
Shri Nihal tallying
Bin Iqwal, with the
M/s Iqwal input
Leathers mentioned
Ltd., have in the
used acrylic license and
water based the input
Impregnating actually
resin used by
mentioned as the
item 28 in exporter/
the said DFIA
license falling license
under ITCHS holder.
- 29262000
0610026934 M/s Impregnating M/s Model Description
dt. 08.05.12 Model Resin - CTH Exim vide of import
EXIM, - 39070000 letter dated not
Kanpur 19.12.2014 tallying
Solid Epoxy (RUD - 9) with the
Resin Razeen has input
submitted BE mentioned
No. 2467767 in the
dated license and
19.06.2013 the input
for import of actually
impregnating used by
resin used by the
them and at exporter/
Serial No. 1 DFIA
- 39099390 license
- holder.
Impregnating
Agent -
Lambinder
CTR is
mentioned
3. 4510187 0610031556 M/s (Impregnating Impregnating Shri Mohd. Descriptoin
dated dt. 08.04.13 Enayat Resin) (GRA Resin - CTH Rafiullah, of import
30.01.14 Overseas, 26 DE-SR- - 39070000 Partner in not
Kanpur 5004) - M/s Enayat tallying
39073010 Overseas, with the
Kanpur in input
statement mentioned
dated in the
25.09.2014 license and
(RUD - 5) the input
stated that actually
they have used by
used various the
brands of PU exporter/
resin/ DFIA
binders license
available in holder.
the market
for use in
leather
industry with
brand names
such as
„UNICHEM‟
and „EXCEL‟
4. 4510185 0610031556 M/s Solid Epoxy Impregnating Shri Mohd. Description
dated dt. 08.04.13 Anayat Resin Razeen Resin - CTH Rafiullah, of import
30.01.14 Overseas, (Impregnating - 39070000 Partner in not
Kanpur Resin) (GRA M/s Enayat tallying
26 DE - SR - Overseas, with the
5004) - Kanpur in input
39073010 statement mentioned
dated in the
25.09.2014 license and
12 C/50208 OF 2020 and another
(RUD - 5) the input
stated that actually
they have used by
used various the
brands of PU exporter/
resin/ DFIA
binders license
available in holder.
the market
for use in
leather
industry with
brand names
such as
„UNICHEM‟
and „EXCEL‟
5. 4763013 0610024457 M/s Epoxy Resin Impregnating M/s Model Description
dated dated Model (Impregnating Resin - CTH Tanners (I) of import
27.02.14 08.11.11 Tanners Resin) - - 39070000 Pvt. Ltd., not
(India) 39073010 Kanpur in tallying
Pvt. Ltd., their letter with the
Kanpur dated input
10.01.2015 mentioned
(RUD - 12) in the
submitted BE license and
No. 00533 the input
dated actually
06.12.2012 used by
for import of the
impregnating exporter/
resin used by DFIA
them and at license
Serial No. 1 holder.
- 38099390
-
Impregnating
Agent is
mentioned.
14. The case of the Revenue is based on 20 Relied Upon Documents listed in Annexure -A to the SCN. This includes 8 statements of various persons recorded under section 108 of the Act, one panchnama, two letters from the importer and Shri Jain, letters from various exporters who had exported the leather, obtained the DFIA licences and sold them to the appellant importer and a letter dated 5.11.2014 from the Central Leather Research Institute, Chennai.
15. In the letter of CLRI signed by Chief Scientist and Head of Tannery Division, Dr. C. Muralidharan, written to the Senior 13 C/50208 OF 2020 and another Intelligence Officer, DRI in response to his enquiry is as follows:
"Soft acrylic and polyurethane resins are normally used as impregnating resin in Leather Finishing/Processing.
Epoxy resin is not an impregnating resin. Due to its cross linking property, it is mostly used as adhesives/cross linking agents and finds limited usage in film forming systems in Leather Finishing."
16. In the SCN, the Additional Director DRI had:
i) relied on the above expert opinion of the CLRI to assert that Epoxy resin is not an impregnating resin;
ii) relied on statements of various exporters recorded under section 108 to conclude that they had not used epoxy resin in manufacture of the exported leather;
iii) relied on the fact that epoxy resin was not mentioned in the DFIA licences and only „impregnating resin‟ was mentioned in them;
iv) relied on the Handbook of procedures (Vol.I) published by the Directorate General of Foreign Trade to assert that the description of the inputs used and those which can be imported must match;
14 C/50208 OF 2020 and another
v) relied on the condition in the DFIA licences which mentions " Synthetic Resins and Hydroxy Cellulose in any broad heading of chemicals may not be allowed"
to assert that only such resins which were used could be allowed to be imported;
vi) asserted that the average price of impregnating agents was US$ 1.5 per kg during 2013-14 while the average price of epoxy resin during the same year was US $ 2.5 per kg to conclude that since epoxy resin was of higher value, and it is therefore, not used in leather industry; and
vii) concluded that the appellant importer had mis-
declared epoxy resin as impregnating resin.
17. The appellant resisted the proposals in the SCN. The Joint Commissioner reproduced the reply of the appellant verbatim in paragraph 11 of his order and confirmed the proposals in the SCN. He concluded that the appellant was not entitled to the benefit of the DFIA licences for the following reasons:
i) The Wikipedia lists epoxy resin, synthetic casting resin, acetal resin, Ion exchange Resins, Solvent Impregnating resins (SIR) and unsaturated polyester resins as different types of synthetic resins and therefore, epoxy resin is not impregnating resin;
15 C/50208 OF 2020 and another
ii) As per the Handbook of Procedure and the Foreign Trade Policy, while issuing DFIA, the relevant type of synthetic resin is to be specifically mentioned and since epoxy resin is not mentioned and only impregnating resin is mentioned, epoxy resin cannot be imported;
iii) The appellant had not contested that epoxy resin is a synthetic resin;
iv) CLRI also clarified that epoxy resin is not an impregnating resin;
18. The Commissioner (Appeals) upheld the above findings of the Joint Commissioner.
19. Of the various relied upon documents, the statements of various exporters recorded under section 108 of the Act would have been relevant as per section 135B of the Act to prove the truth of their contents had the adjudicating authority admitted them as evidence after examining the persons who made the statements as witnesses. Since this has not been done, the statements are not relevant to prove the department‟s case.
20. Heavy reliance placed by both the Joint Commissioner and the Commissioner (Appeals) on Wikipedia is highly misplaced. Wikipedia is an open source information available online and anyone can write about the topic and anyone else 16 C/50208 OF 2020 and another can edit it. Thereafter, somebody else can further edit it. It is not the opinion of any one expert but is only crowd sourced information. What is on Wikipedia today about say, epoxy resins today may not be what will be on it tomorrow because someone else may edit and alter the information. Such information cannot form the basis of any adjudication or fastening liability on any assessee.
21. The expert opinion of Dr. Muralidhar of CLRI is categorical that epoxy resins cannot be impregnating resins.
22. On the other hand, the appellant produced before us a copy of the test memo, test report and note sheet (placed at pages 220-222 of the appeal)in respect of another consignment of another importer M/s. Hazel Mercantile Limited in respect of Bill of Entry No. 369476 dated 3.6.2011. The New Custom House, Mumbai had sent a sample of the imported good described as „Epoxy Resin Epiran 6‟ under the cover of a Test Memo dated 9.6.2011 to the Central Revenue Control Laboratory (CRCL) with two queries (1) "Nature and Composition" and (2) Whether impregnation resin". The test report dated 24.6.2011 states Test Result Nature: Colourless viscous liquid Composition: Epoxy resin Technical opinion: It finds use as impregnation resin 17 C/50208 OF 2020 and another
23. Thereafter, the Superintendent of Customs put up a note stating "M/s. Hazel Mercantile Limited sought clearance of goods declared as "Epoxy Resin‟ under DFIA Scheme under SION as „impregnating resin‟. Since it was not clear whether epoxy resin can be used as impregnation resin, RSS (must be representative samples) was forwarded to DYCC (must be Deputy Chief Chemist of CRCL). DYCC vide Test report No. Lab No. 1245-VIIII dated 11.6.11 confirmed that it finds mention in impregnation resin.
In view of DYCC above test report, if approved, we may assess the BE. Submitted please.
Signed by the Superintendent and the Deputy Commissioner.
24. What is clear from the above is that in at least one case, Epoxy Resin imported by an importer was tested and certified by CRCL that it was an impregnation resin and the goods were cleared by the Customs under DFIA as „impregnation resin‟.
25. It must be pointed out that the samples of the goods imported by the appellant in this case were not drawn and sent for testing to either the CLRI or by the CRCL. Had the DRI, while investigating, sent samples to some expert (CLRI or CRCL), we could have had a definite expert opinion as to whether the imported goods was impregnating resin or otherwise.
18 C/50208 OF 2020 and another
26. It is not within our field of expertise to decide if the CLRI‟s opinion was correct or that of CRCL. We, therefore, do not find sufficient evidence to say with certainty that the epoxy resin imported by the appellant importer was not impregnating resin or not and hence whether it was covered by DFIA or not. Samples were not sent for testing either to CLRI nor CRCL during investigation.
27. In the absence of any evidence, we must hold that the allegation in the SCN and the finding in the order of the Joint Commissioner upheld in the impugned order of Commissioner (Appeals) that the Epoxy Resin imported by the appellant was not impregnating resin cannot be sustained.
28. Consequently, the demand of duty denying the benefit of DFIA licences and imposition of penalties also cannot be sustained.
29. The impugned order dated 19.11.2012 is set aside and both appeals are allowed with consequential relief to the appellants.
(Order pronounced in open court on 13/10/2025.) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK