Customs, Excise and Gold Tribunal - Delhi
C.L. Jain Woollen Mills vs Collector Of Customs on 4 April, 1997
Equivalent citations: 1997(96)ELT599(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. The appellants had been issued an Advance Licence which authorised them to import Acrylic Fibre with the requirement that they should export 2,00,000 Kilograms of the resultant product containing a minimum of 75% Acrylic Fibre. A quantity of 1,50,000 Kilograms of the said resultant product acrylic yarn had been duly exported by them. For the balance quantity of 50,000 Kgs. they sent 1,000 bales of 50 Kgs. each to Inland Container Depot (ICD), New Delhi on 17-5-1989 where 6 samples were drawn at random by the proper officer of Customs who passed the order permitting the clearance for export. The bales were stuffed into 5 containers and one container was loaded in the train for transport to Bombay for export and the balance from containers remained in the ICD awaiting transport to Bombay. On 24-5-1979 the Directorate of Revenue Intelligence officials seized the containers and drew 12 samples. Thereafter, on 4-7-1989 the containers were provisionally .released on the condition that the appellant should furnish Bank Guarantee for 25% of the FOB value. Show cause notice dated 16-11-1989 was then issued to the appellants along with test reports dated 7-6-1989 alleging that the goods contained only 61.6% to 69.7% of Acrylic Fibre. After the appellants replied to the notice contesting the allegation, Additional Collector of Customs, New Delhi granted personal hearing to the appellants when they were represented by their counsel and thereafter passed his adjudication order confiscating the goods covered under the subject Shipping Bill under Section 113(d) of Customs Act and imposing redemption fine of Rs. 5 lakhs in lieu of their confiscation. He ordered that as the goods had been allowed to be exported in terms of the undertaking executed on 4-7-1989 that understanding be enforced. In addition, he imposed penalty of Rs. 15 lakhs under Section 114 of Customs Act. Aggrieved with the order the present appeal has been filed.
2. Shri G.L. Rawal, learned counsel for the appellants stated that the Additional Collector had wrongly rejected their different submissions. They had contended that the samples were not drawn by the DRI officers in their presence. The Custom House Agents had been engaged by them only for the purpose of presenting the Shipping Bills for the export of the goods. Once the Shipping Bills were completed and the goods cleared for export and the goods stuffed in containers for despatch to Bombay, the work of the Custom House Agents was over and they were no more the agents of the appellants. That apart, samples had been drawn by the Customs Officers at the Inland Container Depot and sent for test to the department's laboratory and such Test Reports showed the percentage of acrylic contents as more than 75% which was the requirement under the Advance Licence issued to them. These test reports, the adjudicating authority refused to accept stating that the said Test reports did not contain any details to connect them with the consignment in question. Shri Rawal contended that if that was so, the Test Reports purportedly relating to the samples drawn by the DRI officers had also no indication that they were in respect of the samples drawn from their goods. The adjudicating authority had gone by the Test Reports received by the department but refused to accept the Test Reports issued by the departmental laboratory itself. Moreover the DRI Officers had drawn three samples each from the four containers, viz., twelve samples from 4 containers. When the Test Reports were communicated by them along with the show cause notice the appellants did not accept the Test result and wanted re-test with the other samples drawn. The re-test was not done. The learned counsel relied upon the judgment of the High Court of Bombay in Madhu Wool Spinning Mills v. Union of India reported in 1983 (14) E.L.T. 2200 (Bom.) wherein it was held that merely because the different analysis show different conclusions it is not permissible to select that conclusion which suits the authorities. They had submitted the Test Report of the exported goods carried out at the foreign buyer's end which was rejected by the Additional Collector who held that as the goods were exported to Hong Kong as per the Shipping Bill, the Test Report which was of a Testing Agency in South Korea could not be related to the appellants' goods. This ignored the fact that the buyer of the goods was a Korean importer to whom the goods were sent without transhipment. The Shipping Bill as well as the Bill of Lading showed the final destination of the goods as Busan, South Korea. The learned counsel concluded his arguments with the plea that the impugned order be set aside and the appeal allowed.
3. The submissions were resisted by Shri Mewa Singh, learned Senior Departmental Representative. He contended that the DRI Officers who had information about the appellants selling the imported material were not bound to accept the action of the ICD Officers who had passed the goods for export. The Test Report of Revenue Laboratory relied upon by the appellants related to six samples. The same has been rejected by the Additional Collector in the absence of a clear indication that these related to the goods exported by the appellants. The goods were packed in four containers and it was not clear how six samples were drawn for goods packed in 4 containers. He pleaded that the appeal be dismissed.
4. We have considered the submissions. We have perused the record. We find that the contention in the appeal is that samples were drawn by the customs officers of ICD while checking the Shipping Bills and passing the order for shipment and that the Test Reports of the Revenue Laboratory 15-11-1989 were in favour of the appellants. The finding of the Additional Collector that the samples numbering six could not be correlated to four containers has been challenged by the appellants pointing out that the samples were drawn at random from the yarn sent by them from their factory to ICD and before the material was stuffed into the containers and that is why the container numbers were not shown the Test Reports. It has been pointed out that if that be the objection of the Additional Collector, the Test Reports of the samples drawn by the DRI Officers behind the back of the appellants also did not bear any reference to the container numbers or the number of the Shipping Bill. One set of Test Reports was in their favour while the other was allegedly against them. They contested the Test finding adverse to them. In the circumstances, it was required of the departmental authorities to send the remnant samples or the extra samples drawn from the containers for test. This was not done. Moreover, we find that the Test Reports relied upon in the show cause notice were dated 7-6-1989. The goods were lying detained at that time. Only subsequently in July, 1989 the goods were released, on an undertaking furnished by the appellants. The department should have communicated the Test Report earlier instead of waiting for nearly five months and send the report only along with the show cause notice. If the goods had been found to contain less than the required percentage of acrylic material the provisional realease should not have been allowed. It would have been possible to draw representative samples of the material beyond any doubt so that the test result could not be called into question. What has happened actually is that the officers drew 12 samples from 4 containers and sent 4 samples and received the Test Reports and applied them for the contents of 5 containers including the one which had already been despatched and was not available for examination and drawing of samples. When the test report was questioned by the appellants the other samples were not sent for re-test. This, coupled with the fact that the test results of the samples drawn by the customs officers of the ICD showed the product to be having more than 75% acrylic content is a factor in the appellants' favour. Those test reports cannot be rejected as not applicable on the ground that the reference to containers from samples had been drawn was not there in the Test Reports as it has been explained by the appellants that samples were drawn by the officers on receipt of the goods in the ICD and before the goods were stuffed into the containers. The Bombay High Court judgment cited by the learned counsel is also supports the appellants' case for acceptance of those test reports which are in their favour. In the circumstances, we hold that the impugnes order requires to be interfered with. We set aside the impugned order and allow the appeal.