Custom, Excise & Service Tax Tribunal
Siba International vs Nhava Sheve - Ii on 14 October, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH, MUMBAI
Customs Appeal No. 87733 of 2019
(Arising out of Order-in-Appeal No. 162 (CAC)/2019(JNCH)/Appeal-I dated
19.07.2019 passed by the Commissioner of Customs (Appeals), Mumbai-II.)
M/s Siba International ........Appellant
nd
T-222, 2 Floor, Gali No.-3,
Nawab Road, Sadar Bazar,
Delhi - 110 006
VERSUS
Commissioner of Customs, Nhava Sheva-II ........Respondent
JNPT, Customs House,
Nhava Sheva, Raigad,
Maharashtra - 400 707
APPERANCE:
Shri N.D. George, Advocate for the Appellant
Shri D.S. Maan, Dy. Commissioner, Authorised Representative for the
Respondent
CORAM:
HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL)
FINAL ORDER NO. A/85949 / 2022
Date of Hearing: 28.07.2022
Date of Decision: 14.10.2022
Confirmation of penalty by the Commissioner of Customs
(Appeals), Mumbai-II at the reduced rate of Rs.15,00,000/- from
Rs.20,00,000/- under Section 114 of the Customs Act for improper
export of buffalo meat is assailed by the Appellant-Exporter in this
appeal.
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2. Facts of the case, in a nutshell, is that Appellant-Exporter Siba
International was engaged in export of processed buffalo meat after
procuring the same from M/s. Al-Azlan Frozen Foods, Moradabad
(UP) an approved processing plant for export of boneless buffalo
meat as a prescribed condition under Chapter 2 of Schedule 2 of the
ITC (HS) Classification of Export and Import items requires the
exporter to produce certificate from the designated veterinary
authority as well as from the quality control and inspection authority,
besides the facts that a declaration is required to be furnished with
copies of authorised APEDA certificate to the effect that meat and
meat products were sourced exclusively from APEDA registered meat
processing plant M/s. Al-Azlan Frozen Foods was authorised by
APEDA from 27.09.2012 to 31.03.2013 to process such meat for
export and Appellant exported about 14862.737 MT of buffalo meat
during that period. Departmental enquiry was conducted upon
credible information. It revealed that processing capacity of M/s. Al-
Azlan Frozen Foods, authorised by APEDA, was limited to 62 MT of
meat per day and having regard to the period that covered total 185
days, it could at best have processed 11472 MT of buffalo meat
against which 14862.737 MT was exported and drawback was
received by the Appellant. It was, therefore, put to show-cause
notice for exporting 3392.737 MT of meat in excess of its production
capacity and to refund the drawback received alongwith interest and
penalty under Section 114 for improper exportation of buffalo meat.
Order-in-Original confirmed the demand but in the Order-in-Appeal,
learned Commissioner (Appeals) had dropped the demand for return
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of drawback on the ground that no provision exist in the Customs Act
for such recovery but confirmed the penalty under Section 114 of the
Customs Act by reducing it from Rs.20,00,000/- to Rs.15,00,000/-,
with appropriation of the said amount which was deposited by the
Appellant during investigation.
3. I have heard submissions from both the sides and perused the
case record, written note of submissions, relevant provisions as well
as relied upon case laws. At the outset, there is a requirement of
reproduction of Chapter 2 of Schedule 2 of ITC (HS) classification of
export and import items containing relevant restrictions. They are:-
"i On production of a certificate from the designated
veterinary authority of the state from which the meat or
offals emanate, to the effect that the meat or offals are from
buffaloes not used for breeding and milching purpose;
ii Quality control and inspection under Note 3 and 4
respectively as well as conditions stipulated at Chapter Note
6 and 8 are required to be fulfilled."
Further, Note 6 of the said Chapter 2 of Export Policy reads:-
"Note-6 export of meat and meat products will be allowed
subject to the exporter furnishing a declaration, attached
with the copies of valid APEDA Plan Registration
Certificates(s) to the customs at the time of export that the
above items have been obtained / sourced from an APEDA
registered integrated abattoir or from APEDA registered
meat processing plant which sources raw materials
exclusively from APEDA registered integrated abattoir /
abattoir. The stipulation that raw material for export of meat
and meat products must be sourced exclusively from APEDA
registered abattoir / integrated abattoir will come into effect
on 15.06.2012."
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4. There is no dispute concerning compliance of the conditions (i)
& (ii) but the Respondent-Department is of the opinion that since
Note 6 contains a direction that export of meat and meat products
must be sourced exclusively from APEDA approved plants and this
M/s. Al-Azlan Frozen Foods could not produce more than 62 MT of
frozen buffalo meat per day, there is improper export done by the
Appellant. On perusal of the show-cause notice, the Order-in-
Original and the Order-in-Appeal it would clearly indicate that they
have referred to 'buffalo meat' and 'processed frozen buffalo meat'
interchangeably at different places but consistently stated that M/s.
Al-Azlan Frozen Food's production capacity of buffalo meat per day is
62 MT. However, going by the APEDA certificate of registration
granted to M/s. Al-Azlan Frozen Foods, copy of which is annexed to
appeal memo at page 23, the production capacity of this food
processing unit M/s. Al-Azlan Frozen Foods was 62 MT of "frozen
meat" per day and 40 MT of "chilled meat" per day and if both are
taken together it would be consistent to the pleading of the Appellant
reiterated in para 27 of the Order-in-Original. It reads:-
"27. Shri George N. D., Advocate vide letter dated
02.03.2015 filed defence reply on behalf of Notice M/s Siba
International, wherein, they denied all the allegation made
in SCN and inter-alia stated they were permitted to Process
Chilled Meat 40 MT and Frozen Meat 62 MT therefore, the
total quantity of meat processed could have been only
11470 MT is not correct as the said Calculation is on the
basis of Frozen Meat. The Chilled, Meat has not been
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considered. That being so the total Quantity available for
export on the basis APEDA authorization was 18870 MT and
the total Quantity exported is 14862.737 MT. Hence, there
cannot be any Unlawful Processing or Export. Further, all
the Exports were accompanied by Veterinary Health
Certificate issued by the Government of India. There is no
Mis declaration and / or any wilful Suppression. Therefore,
there is no Unlawful Exports as alleged.
(Underlined to emphasise)
However, on scrutiny of the shipping bills and respective
invoices, it is crystal clear that description of the goods in
each shipping bills as mentioned in Table-A, was declared as
"Frozen Boneless Buffalo Meat". Also, Shri Anees Ahmad
common partner in both the firms M/s Al-Azlan Frozen
Foods vide his statements had admitted that the quantity of
3392.737 MT buffalo meat was unlawfully exported, and
they paid the amount of drawback availed on the impugned
quantity of exported buffalo meat. Thus, I find that goods
under export covered under shipping bills included in the
subject Show-Cause Notice were 'Frozen Boneless Buffalo
Meat'. Therefore, submission made by the noticee that the
Chilled meat was not considered appears an afterthought
and cannot be accepted at this juncture."
(Underlined to emphasise)
However, the ground of rejection of the said submissions, that could
be inferred from the sub paragraph of para 27 is that in the shipping
bills, goods were described as frozen boneless buffalo meat as per
Table A perhaps annexed to the show-cause notice and reproduced
in the Order-in-Original but not filed in the appeal memo. On the
contrary, show-cause notice did not propose for any action
concerning mis-declaration in the shipping bills or propose any
penalty, for which discussion on the same is outside the purview of
this appeal, besides the fact that not a single shipping bill is annexed
to the show-cause notice to substantiate that description of goods
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exported was different. Since nowhere during adjudication, the
Appellant had ever averred that it had exported only frozen meat and
as Note 6 has not kept the category of export of meats to frozen one
only, there is no basis in the claim made by the Department. This
being facts on record and having regard to the fact that Respondent-
Department had not taken into consideration the entire production
capacity of M/s. Al-Azlan Frozen Foods and confined it to 62 MT meat
to presume such mis-declaration though it is only in respect of frozen
buffalo meat only, imposition of penalty on the basis of mathematical
variation is unsustainable in law and facts. Hence the order.
ORDER
6. The appeal is allowed and the order passed by the Commissioner of Customs (Appeals), Mumbai-II vide Order-in-Appeal No. 162 (CAC)/2019(JNCH)/Appeal-I dated 19.07.2019 to the extent of confirmation of penalty at a reduced rate of Rs.15,00,000/- is hereby set aside with consequential relief to the Appellant.
(Order pronounced in the open court on 14.10.2022) (Dr. Suvendu Kumar Pati) Member (Judicial) Prasad