Custom, Excise & Service Tax Tribunal
Hi Fasn Leather Products Co vs Chennai(Air Port &Amp; Cargo) on 26 February, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal Nos. C/40174 to 40176/2013
(Arising out of Order-in-Appeal No. 1208 to 1210/2012 dated
30.10.2012 passed by the Commissioner of Customs
(Appeals), Chennai)
M/s. Hi Fasn Leather Products Appellant
Vs.
Commissioner of Customs, Airport, Chennai Respondent
Appearance Shri S. Raziaq Ali, Advocate for the Appellant Shri Jagan Babu, AC (AR) for the Respondent CORAM Hon‟ble Ms. Sulekha Beevi C.S., Member (Judicial) Hon‟ble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing :18.02.2019 Date of Pronouncement :26.02.2019 Final Order Nos. 40375-40377 / 2019 Per Bench All these appeals involve identical issue and hence they are taken up together for common disposal.
2. The common facts of the appeals are that the appellant had filed Shipping Bills for export of "Cow Crunch Upper Finished Leather". During examination, the Appraising Officer 2 felt that the leather may not satisfy the norms for prescribed finished leather vide DGFT Public Notice No. 3-ETC (PN)/92-97 dated 27.5.92. Accordingly, samples were sent to the Central Leather Research Institute, (CLRI) Chennai for expert opinion. In their report, CLRI informed that the samples of leather submitted did not satisfy the norms for finished leather. However, the three consignments of the impugned goods valued at FOB Rs.8,36,534/-„ Rs. 8,95,712/- and Rs.27,08,304/- were inter alia confiscated under section 103 of the Customs Act, however allowed redemption on payment of export duties, fines and penalties under sections 125 and 114(ii) ibid vide adjudication orders No. 646/2010, 641/2010 and 645/2010 all dated 7.12.2010. On appeal, Commissioner (Appeals) vide impugned order dated 30.10.2010 upheld the orders of the adjudicating authority and rejected the appeals. Hence these appeals.
2. When the matter came up for hearing, on behalf of the appellant ld. counsel Shri S. Raziaq Ali made a number of submissions which can be broadly summarized as under:-
2.1 Copies of the test memo on which the adjudicating authority had placed reliance had not been provided to the appellant.
2.2 Partners of the appellant firm are qualified leather experts with B. Tech graduation. They have confirmed that 3 they exported finished leather only. Hence the adjudicating authority‟s blind reliance on the basis of CLRI report is not sustainable.
2.3 The DGFT Public Notice on which reliance has been placed is more than 19 years old and technology has grown by leaps and bounds in all fields and hence proceedings initiated to adjudicate the case based on outdated methodology is invalid. 2.4 The lower authority has blindly gone by the report furnished by CLRI without actually understanding the same. No details of test carried out have been intimated in the CLRI certificate to show that there was absence of protective coat in the sample of leather tested. Hence test report should not have been used in the proceedings.
2.5 The ld. counsel submits that they had submitted the very same samples of leather to CLRI for causing testing as per the Public Notice dated 27.5.1992. Ld. counsel drew attention to copies of the reports received from CLRI vide their letters dated 22.10.2009 and 8.12.2009 at pages 33 to 35 of the appeal book wherein in each case CLRI has certified that the „leather satisfies‟ the norms and conditions laid down in the said Public Notice. All the types of finished leather is declared. 2.6 Ld. counsel drew attention to copy of the certificate of CLRI issued on the basis of the samples sent by department dated 16.10.2009 in page 39 of the appeal book wherein the 4 same sample has been certified as not satisfying the norms and conditions laid down in the public notice. 2.7 This type of discrepancy cannot be accepted for same sample. Ld. counsel further submits that in the report given to department, the leather has been termed "cow softy upper leather (crunch) and color olive" whereas in the sample sent by them the leather has been described as "cow lining leather and colour olive (Kissel)". It is not possible that the same sample can have two different descriptions. Also the leather that was declared for export was only e-leather waste. The CLRI have found it to be crunch leather which is not possible. 2.8 Thus, the test done by the CLRI is indiscriminative and inaccurate. Ld. counsel compared the report given by CLRI to doctor‟s prescription for blood test to confirm jaundice whereas the laboratory will give a report confirming malaria. 2.9 For these reasons, ld. counsel submitted that the impugned order is highly arbitrary, whimsical, unacceptable and irresponsible.
3. On the other hand, the ld. AR M. Jagan Babu opposes the appeals. He submits that the rejection of declared leather as finished leather was done only on the basis of CLRI report who are the authorized agency for that purpose. He submits that there is no infirmity in the orders passed by the authorities below and hence prays that the same may be sustained. 5
4. Heard both sides.
5. The samples of the leather are required to be sent to the CLRI as per the requirement of DGFT Public Notice dated 27.5.1992. We find that this is a detail Public Notice running into around 28 pages. The Public Notice has given description of types of leathers, manufacturing norms, conditions and the requirements to be tested. For example, in respect of „protective coat‟, we find as per Note 2, "the protective coat shall stand a minimum of 256 revolutions to grade 4 on Gray Scale (1-5) when tested on SATRA rub fastness tester for both dry and wet rubbing".
5.1 The ld. counsel was at pains to argue that the said Public Notice discussed is outdated. Be that as it may, when that is the only method of ascertaining the correctness of the type of leathers declared, that too by a recognized institute of national importance, have to be accepted. Interestingly, we find that in the appeal filed by the appellant, the appellants have enclosed a subsequent copy of Public Notice No.21/2004 dated 1.12.2009 also issued by DGFT concerning the latest leather norms. It is therefore obvious that the concerned authorities have been also seized of the matter and have issued revised norms as per the said notification. The exports in the present case are before the Public Notice No. 21/2004 came to be introduced.6
5.2 While casting aspersions in the CLRI report, ld. counsel has in the same breadth placed reliance on the said test reports issued by CLRI themselves in respect of samples sent by appellants. This has been done with intent to show that the CLRI reports in respect of the same leather are different and contradictory. However, it is not the case that the remnant samples of the one earlier tested by the CLRI have been cast to test by the appellant. On the other hand, appellant have themselves sent the samples on their own without following the procedural requirements of consignment samples. They have not drawn samples in the presence of all stake holders. In any case, it appears that they have been sent to CLRI after the earlier consignments have been allowed to be exported albeit on redemption fine etc. In the circumstances, when the appellant themselves are placing absolute reliance on CLRI report, in respect of sample sent by them, they cannot then make aspersions at reports of CLRI on samples sent by the department.
5.3 The appellant has filed Miscellaneous Application Nos.
C/Misc./40163, 40165 and 40167/2013 requesting to send the samples for retesting. After a lapse of more than a decade we do not think that such testing would serve any purpose. The remnant samples may well have been disposed of by CLRI after a prescribed time limit Even if the samples are still 7 available, the passage of time, namely of almost nine years would surely have caused at least some perceptible, if not irreversible changes in the physical or other characteristics of the samples. For these reasons, the miscellaneous application for retesting is dismissed.
5.4 We also find that the adjudicating authorities in each of these appeals have been quite reasonable in their adjudication. In the first place, relating to FOB value, the redemption fine for export imposed under section 125 ibid as also the penalty imposed under section114(ii) are quite reasonable, just and fair, as under:-
Shipping Bill FOB Value Redemption fine Penalty 3969869 8,36,534/- 70,000/- 10,000/-
3969871 8,95,712/- 70,000/- 10,000/-
3963901 27,08,304/- 2,00,000/- 25,000/-
6. In the circumstances, we do not find any infirmity in the orders passed by the authorities below, for which reason, the impugned order is sustained and the appeals are dismissed.
(Pronounced in court on 26.02.2019) (Madhu Mohan Damodhar) (Sulekha Beevi C.S.) Member (Technical) Member (Judicial) Rex