Customs, Excise and Gold Tribunal - Delhi
Intrade Impex (P) Ltd. vs Commissioner Of Customs on 3 November, 2000
Equivalent citations: 2001(73)ECC199, 2001(128)ELT135(TRI-DEL)
ORDER S.S. Kang, Member (J)
1. The applicants filed these applications for waiver of duty and penalties. Vide impugned order, a duty demand of Rs. 32,55,280/- and penalty of the same amount has been imposed on M/s. Akay Cones Pvt. Ltd. and duty of Rs. 3,44,528/- and penalty of the same amount has been imposed on M/s. Intrade Impex Pvt. Ltd.
2. In this case, the duty was confirmed on the applicants on the ground that they wrongly availed the benefit under Notification 11/97 dated 1-3-1997 in respect of goods imported by them, as much as the goods, in question, incapable of being used as insole sheets in leather industry, were being cleared at concessional rate of duty under the above mentioned notification.
3. Ld. Counsel, appearing on behalf of the applicants, submits that the applicants made import of nylon tericot flocking fabrics and availed the benefit of Notification No. 11/97 dated 1-3-1997. The notification provides concessional rate of duty to the goods capable of being used as insole sheets in leather industry. He submits that the demand is confirmed only on the ground that the goods imported by them were not capable of being used as insole sheets in leather footwear industry. His submission is that the revenue is relying upon the report of the CLRI, Chennai, which is in respect of some other consignment. The revenue also relied upon the opinion provided by the Indian Institute of Leather Products (IIPL), Chennai.
4. His submission is that the applicants also produced a certificate issued by same CLRI stating therein that the subject material can be used as insole material for leather shoes. The applicants also produced, before the adjudicating authority, the opinion of Footwear Design & Development Institute to the same effect.
5. His submission is that in view of this contradictory opinion, the demand cannot be made against the applicants. He also relied upon the correspondence made between the Commissioner of Customs, Mumbai and the Addl. Director-General, Directorate of Revenue Intelligence. The letter dated 23-6-1998, written by Mumbai Customs House whereby it is admitted that nylon tericot fabric is used in the manufacture of insole for leather footwear. His submission is that from this letter, it is clear that the practice prevalent at that time in the Mumbai Customs House, was to treat the nylon tericot fabric to be used in the manufacture of insole of leather footwear. He also relied upon the Board's Circular No. 74/98-Cus., dated 6-10-1998 wherein it was stated that the existing practice of Customs House, Mumbai, was to allow the unconditional benefit of Notification 11/97 in respect of nylon tericot fabric and it was decided that nylon tericot flocking fabric can be granted benefit of Notification No. 11/97 and Notification 27/98 provides that importer should adduce the evidence to show that the goods imported by the applicants were meant for use in the leather industry. He submits that the applicants made import of the goods, in question, before October, 1998. Therefore, the change in practice, suggested in circular dated 6-10-1998, cannot be made applicable in their case.
6. Ld. Counsel also submits that no sample from the goods, imported by them, was taken. The case of the revenue is based on samples drawn from other consignments of some other importers of like goods. He submits that the import was made in the year 1998 and the show cause notice was issued on 3-12-1999 by invoking the period of limitation under Section 28(1) of the Customs Act, 1962 on the ground that the applicants misdeclared the goods as nylon tericot flocking fabric for use in the leather industry. The existing practice at that time was to allow the benefit of Notification 11/97 to the goods, in question, therefore, suppression or mis-declaration cannot be alleged against the applicants. He, therefore, prays that the applications be allowed.
7. Ld. DR, appearing on behalf of the revenue, submits that the applicants availed the benefit of notification by mis-declaring the goods as capable of being used in the leather industry. He submits that the opinion given by Indian Institute of Leather Products and the opinion of CLRI, Chennai show that the goods, in question, were not even capable of being used as insole sheet in the leather footwear industry. Hence, the applicants availed the benefit of notification and he reiterates the findings of the lower authorities.
8. Heard both sides.
9. In this case, the allegation against the applicants is that they mis-declared the goods and availed the benefit of notification wrongly. The applicants relied upon the Public Notice No. 74/98-Cus., dated 6-10-1998 and the correspondence between the Mumbai Customs House and Directorate of Revenue Intelligence, which shows that the prevalent practice in Mumbai Customs House at that time was to grant exemption under Notification 11/97 as claimed by the applicants in respect of nylon tericot flocking fabric. The circular dated 6-10-1998 provides that the nylon tericot flocking fabric can be cleared under Notification 11/97-Cus. on the condition that the importer should adduce the evidence to show that the goods imported by them were meant for use in the leather industry. In these circumstances, suppression or mis-declaration cannot be alleged against the applicants.
10. The revenue is not disputing the fact that no sample was taken from the goods imported by the applicants. The sample was taken from other consignment of some other importer of like goods. The revenue is also relying upon the opinion given by the CLRI and Indian Institute of Leather Products, Chennai to show that the goods, in question, were not capable of being used in the leather industry. The applicants also produced the opinion of CLRI and of the Leather Design Development Institute to show that the goods, in question, can be used in insole material for leather shoes. Taking into consideration, the facts and circumstance of the case, we find prima facie, the balance of convenience is in favour of the applicants. Therefore, the deposit of duty and penalty is waived unconditionally for hearing of the appeals. The applications are allowed.