Custom, Excise & Service Tax Tribunal
M/S.Chemsilk Commerce Pvt.Ltd vs Cc(Port), Kol on 5 November, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
1-3) Appeal Nos. CA-75215, 75296, 75297/15
(Arising out of Order-in-Original No.
Sl.No.1) S-60/(Misc) 268/2014A Group-III dated 08.01.2015
Sl.No.2 & 3) KOL/CUS/Port/15/2015 File No.S-60 (Misc)-268/14 PG-3 dated 05.03.2015
Both passed by the Commissioner of Customs(Port), Kolkata.)
FOR APPROVAL AND SIGNATURE
HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL)
HONBLE H.K.THAKUR, MEMBER(TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s.Chemsilk Commerce Pvt.Ltd.
Shri Aditya Sarda
Applicant (s)/Appellant (s)
Vs.
CC(PORT), KOL
Respondent (s)
Appearance:
Shri S.K.Mehta, Advocate for the Appellant(s)
Shri A.Kumar, AC(AR) for the Revenue
CORAM:
Honble Dr. D.M. Misra, Member(Judicial)
Honble Shri H.K.Thakur, Member(Technical)
Date of Hearing :- 05.11.2015
Date of Pronouncement :- 15.12.2015
ORDER NO.FO/A/75736-75738/2015
Per Shri H.K.Thakur.
These appeals have been filed by the main appellant M/s.Chemsilk Pvt.Ltd. and Shri Aditya Sarda against orders dated 08.01.2015 & 05.03.2015 passed by Commissioner of Customs(Port), Strand Road, Kolkata. Order dated 08.01.2015 was passed against the main appellant under which their request for amendment of bill of entry No.7535365 dated 21.10.2014 was rejected and provisional release of imported goods was allowed by executing a bond for full value of goods, executing a bank guarantee/ cash security equal to Rupees One Crore and on payment of duty of Rs.68,24,340/-. Under Order-in-Original dated 05.03.2015 Adjudicating authority held that Item No.7 & 8 of the Bill of Entry No.7135365 is velvet woven fabric classifiable under CTH 58013711 and rejected the classification of CTH 50079090 claimed by the appellant. Adjudicating authority also denied the benefit of Notification No.30/2004-CX dated 09.07.2004 to all the items of Bill of Entry No.7135365 dated 21.10.2014 to determine a total duty liability of Rs.78,88,149/-. The goods imported were confiscated under sections 111(m) and 119 of the Customs Act, 1962 and allowed redemption on payment of Rs.13.00 Lakh as (Rs.9 Lakh + Rs.4 Lakh) as redemption fine under section 125 of the Customs Act, 1962. Besides penalty of Rs.15 Lakh upon the main appellant and Rs.20 Lakhs (Rupees 13 Lakhs + Rs.7 Lakhs) upon Shri Aditya Sarda were imposed under section 112(a) and 114AA of the Customs Act, 1962 by the Adjudicating Authority.
2. Shri S.K.Mehta (Advocate) appearing on behalf of the appellant, as well as through written submissions, argued that conditions of provisional release of imported goods were highly unreasonable, therefore, appellant did not get the imported goods provisionally released. That amendment of Bill of Entry was sought after receipt of a letter dated 03.11.2014 (page 35 of Appeal Memo) from the supplier of imported goods. That first amendment was sought to be made by an oral request to the assessing officer on 03.11.2014. That Assessing Officer insisted for making a written application while could be made only on 07.11.2014, as 04.11.2014 to 06.11.2014 were closed holidays due to Muharram, Gurunanak Jayanti, but their application could not be accepted on the same day. That 08.11.2014 & 09.11.2014 were Saturday and Sunday, therefore, amendment application under section 149 of the Customs Act, 1962 was accepted by the department only on 10.11.2014 but not processed. That on 17.11.2014 main appellant filed writ petition in Calcutta High Court and Revenue seized their goods on 18.11.2014 and their amendment application was also rejected on 08.01.2015 on the grounds that amendment request was made after receipt of intelligence from DRI. That a request made on 03.11.2014 by the appellant was corroborated by the statement of Shri Sudip Kundu (page 164 of the paperbook) which has not been disputed in the show cause notice or adjudication order. That statement of Shri Aditya Sarda before DRI on 19.11.2014 also states that oral application was made on 03.11.2014 which has not been disputed in the adjudication proceedings. That order of rejection of amendment application dated 08.01.2015 should be set aside.
2.1 That description of Item No.7 & 8 of the Bill of Entry was given as per broad description given in Foreign Sellers Invoice. That there is no dispute on valuation of imported goods and due to an E-mail dated 03.11.2014 from the foreign supplier appellant itself sought for amendment and 100% examination of goods on first check basis. That samples of disputed goods were sent for test on 26.11.2014 and after receipt of test report appellant sought classification under CTH 58013720 whereas Revenue decided the classification under CTH 58013711 and that classification of the goods was initially claimed under chapter 50. That the test reports also support the view of the main appellant. That the imported goods are Cut Pile Velvet fabrics classifiable under CTH 58013720 and not under CTH 58013711 claimed by the Revenue which is meant for Uncut Pile. Learned Advocate relied upon certain technical literature on textiles where uncut pile fabrics are also called as Velvets, like EPINGLE uncut valvet. That elsewhere in the country similar goods imported by the appellant and other importers are classified under CTH 58013720. It was also argued by the learned Advocate that uncut pile velvets like Epingle do exist in technical literature/Textile Dictionary and findings of Adjudicating authority that all categories of velvets will fall under 58013711 is fallacious and should be set aside. That admissibility of Notification No.30/2004-CE and payment CVD was required to be decided in conformity with law and based on case laws under which benefit of Notification No.30/2004-CE was extended to similar imports. He relied upon case laws of Apex Court and Tribunals to argue that no credit on the inputs used in the manufacture of imported goods is taken as the goods are not manufactured in India. In support of his argument Learned Advocate made the bench go through a recent case law of Apex Court in the case of SRF Ltd. v. CC, Chennai [2015(318) ELT 607(SC)]=2015-TIOL-74-SC-CUS.
2.2 On the issue of confiscation of imported goods and imposition of penalties it was argued by the learned Advocate that appellants came to know of wrong supply of goods through an e-mail from the supplier and accordingly sought amendment in the Bill of entry as per E-mail intimation. That amendment in description sought was also not what was found on examination and test because amendment application was made on the basis of description provided by the seller in the e-mail. It was his case that appellant was not sure of the nature of imported goods, therefore, 100% examination on first-check basis was asked. That as intention to evade duty was not existing in the facts of this case hence confiscation of goods and imposition of penalties is not justified.
3. Shri A.Kumar, AC(AR) appearing on behalf of the Revenue, as well as through written submissions dated 20.11.2015, argued that request for amendment was made by the appellant only after the receipt of intelligence by DRI and has to be considered as an after-thought. That on examination only the exact description was found which was even different than the intended amendment claimed. That all categories of velvet fabrics will be classifiable under CTH 58013711 and chargeable to basic customs duty @ 10% or Rs.140 per sq. m. whichever higher. That no velvet can be classified under 58013720 chargeable to 10% or Rs.68 per sq.m. as claimed by the appellant. That test report is not binding upon the Revenue to determine the classification of the fabrics. That all the other goods were also liable to confiscation under section 119 of the Customs Act, 1962. Regarding non-admissibility of exemption Notification No.30/2004-CE it was argued that Adjudicating authority has elaborately discussed this issue in para 30.3 to 30.6 of the Order-in-Original dated 05.03.2015 and correctly denied the exemption to the appellant. Learned AR also reiterated the reasoning given for imposition of redemption fine and penalties upon the appellants and strongly defended the orders passed by the Adjudicating authority.
4. Heard both sides and perused the case records. The issues involved in these appeals are
(i) Whether main appellant M/s.Chemsilk Commerce (P) Ltd. has asked for timely amendment of Bill of Entry No.7535365 dated 21.10.2014 before the same was detected by the Revenue?
(ii) Whether the goods imported at Sr.No.8 of the B/E dated 21.10.2014 should be classified under CTH 58013720(Cut Pile Fabrics) claimed by Appellant after test or the same should be under CTH 58013711 (Uncut Pile Fabrics) decided by Department?
(iii) Whether the benefit of exemption Notification No.30/2004-CE is admissible to the appellant so far as levy of CVD is concerned?
(iv) Whether confiscation of goods and imposition of penalties have been correctly adjudicated by the adjudicating authority?
5. Regarding point mentioned at para 4(i) above is concerned there is a dispute between the appellants and the Revenue. It is the case of the Revenue that application for amendment was not made on 03.11.2014 but was received only on 10.11.2014. Appellant on the other hand contend that oral request was made on 03.11.2014 and the statement of the CHA and statement of Shri Aditya Sarda recorded by DRI clearly mention this aspect. It is observed from the case records that an e-mail dated 03.11.2014 was received by the appellant M/s.Chemsilk Commerce Pvt.Ltd. from the seller Zhejiang Cathaya Transtra Co.Ltd., 105, TI Yu Chang Road, Hangzhou, China. The content of this letter is as follows:-
While tallying with our stocks manager at the warehouse in Hangzhou, it came to our notice that 25487.70 Mtrs Silk Mixed dyed and unprinted 130 Grams per meter width 44 which was sent to you under our Invoice No.RS14TE050104 dated September, 28, 2014 was not shipped and by mistake packers and dispatchers at our warehouse dispatched the quantity out of other stock lying at the warehouse waiting for export which was 25487.70 MTRS of 100% POLYESTER FABRICS Dyed and unprinted 120 Grams per meter width 44.
This came to our information after we did not get the said quantity of goods out of the stock meant for our other buyer.
We regret for this export. You can return the cargo to us at our cost if you want to keep the goods, you can. Price is equal. We can sit for settlement and compensate you for which our representative shall visit you after fixing time.
5.1 The original description given in the bill of entry was 2547.70 mtrs. Silk Mixed Fabrics Dyed and Printed weight 130 grams per meter width 44- and as per the e-mail received on 03.11.2014 the same quantity was mentioned to be consisting of 100% polyester Fabrics Dyed and Printed 120 grams per meter. There is no investigation to the effect that e-mail dated 03.11.2014 was not received by the appellant from the seller in China on 03.11.2014. Further the aspect of making oral request to the assessing officer on 03.11.2014 has been corroborated by the statement dated 19.11.2014 of Shri Sandip Kundu employee of Sadguru Forwarders Pvt.Ltd. (CHA). If the appellant had been aware of the intelligence received by DRI then amendment should have been sought exactly for the description as per the details found during examination of the goods. The amendment was sought only as per the e-mail dated 03.11.2014 received from the supplier of the goods which was not the actual description found on examination. Accordingly we are of the view that oral request for amendment was made on 03.11.2014 and appellant was not aware of the exact description of goods at the time of filing the bill of entry that a part of the goods will be fabrics of CTH 5801. Appellant also asked for 100% examination of the imported goods and there was an option from the seller of the goods to return the same. However, as the amendments sought was not for the correct description of goods, therefore, the same could not have been allowed by the Adjudicating authority. However, reasoning of Adjudicating authority for rejection, that amendment application was filed after receipt of DRI intelligence, is not correct as appellant has not sought the exact description of goods in the written amendment application dated 10.11.2014. It is accordingly held that request for amendment was not influenced by the intelligence received by DRI.
6. So far as the classification of goods imported at Item No.8 of the Bill of Entry are concerned the samples of the goods were drawn and sent to Textiles Committee, Ministry of Textiles, Govt. of India, Mumbai who confirmed the same to be warp cut Pile fabrics. It is the case of the Revenue that all categories of velvet fabrics has to be classified under CTH 58013711 irrespective of the fact whether Pile yarn is cut or uncut. Appelalnt on the other hand argued that warp cut pile velvet has to be classified under CTH 58013720 and there are uncut pile velvets in the market, like Epingle velvet, as per the technical literature and dictionary meanings. It is observed from the Customs Tariff Act, 1985 that CTH 580137 covers all warp fabrics of man made fabres. This tariff description along with its sub-classifications are as follows:-
CTH
Description
Rate of Duty
5801 37
5801 37 11
5801 37 19
5801 37 20
5801 37 90
-- Warp pile fabrics :
--- Warp pile fabrics, epingle (uncut)
---- Velvet .
---- Other
--- Warp pile fabrics, cut .
--- Other ..
10% or Rs.140 per sq.metre, whichever is higher
10% or Rs.140 per sq. metre, whichever is higher
10% or Rs.68 persq. Metre, whichever is higher
10% or Rs.140 per sq. metre, whichever is higher
-
-
-
-
6.1 As per above tariff description uncut warp pile fabrics are classifiable under CTH 58013711 & 58013719 whereas cut warp pile fabrics are classifiable under CTH 58013720. Further according to Fairchild Dictionary of Textiles a cut pile is defined as follows:-
cut pile : a pile cut during fabric manufacture by means of cutting wires or by a reciprocating knife blade, as in double plush or dress velvet, or cut in a separate finishing operation as in corduroy, velveteen, knitted velour, and cut-pile tufted carpet. Woven pile fabrics are made with an extra warp or an extra filling and, in weaving, floats of this yarn are formed. Subsequently, these floats are cut to form the pile, which is held firmly in the cloth by closely woven ground yarns hidden by the pile. Cutting wires carry knives at their ends. The pile is formed by looping the yarn over the wires, and as each wire is withdrawn its knife severs the pile loop, producing the cut pile. In contact, in uncut pile the loops are not cut and present a different surface appearance. Synonym; velvet pile, See DOUBLE-WOVEN PILE FABRIC.
6.2 Similarly uncut pile fabric and uncut velvet has been described in the above dictionary as follows:-
Uncut pile fabric A looped fabric, having a texture produced by the use of wires over which the pile yarns are looped in weaving. These wires, having no cutting or knife edge, leave the loops intact when they are withdrawn. UNCUT VELVET is made in this way.
6.3 The World Book Dictionary also describes the word velvet as follows:-
Velvet (Velvit), n, 1. a cloth with a thick, short soft pile on one side, velvet may be made of Silk, rayon, cotton, nylon or some combination of these. In wearing velvet the warp is pulled over a needle making loops that are cut (cut velvet or uncut (pile velvet).
2. Something like velvet in softness or appearance.
3. The furry skin that covers the growing antless of a deer (Emphasis supplied) 6.4 From the above literature and the test reports of the present consignment it is observed that goods imported by the main appellant are warp cut pile fabrics whereas velvet effect can be obtained both by uncut pile as well as warp cut fabrics. As per above distinctions available an uncut pile fabrics will be classifiable under CTH 58013711 and 58013719 but all such uncut pile fabrics need not be known as velvets. On the other hand warp pile fabrics (including cut velvet) will be classifiable under CTH 58013720. Scientific literature furnished by the appellant do indicate that there are categories of uncut pile fabrics in the market which are also known as velvets (Epingle & Terry Velvet). Corresponding entries under Customs Tariff for Cotton Velvet fabrics are 5801 2710 & 5801 2720 but the word velvet has not been mentioned in these classification at all. The crucial words are warp pile fabrics, cut (58012710) & other (5801 2720). Thus more important in the classification of a fabric under 5801 3711/19 and 5801 3720 will be the cut or uncut nature of warp pile. Accordingly we are of the considered opinion that stand of the Adjudicating authority and the learned A.R., that all categories of velvet fabrics will invariably fall under 5801 3711, is not correct and is rejected. It is held that classification of goods at Item No.8 of bill of entry will be under 5801 3720. However, differential basic customs duty is required to be worked out by the appropriate assessing authority to complete the assessment.
7. So far as exemption from CVD under Notification No.30/2004-CE dated 09.07.2004 is concerned, the case of the appellant is that no CENVAT Credit used in the manufacture of imported goods could have been taken as the same were not manufactured in India. Learned A.R. relied upon the findings of the adjudicating authority in paras 30.3 to 30.6 of the Order-in-Original dated 05.03.2015 where the benefit of exemption under Notification NO.30/2004-CE dated 09.07.2004 has been denied on the basis of Five Member CESTAT case law of Priyesh Chemicals & Metals [2000 (120) ELT 259 (Tribunal-LB)] and Apex Courts order in the case of Collector of Customs vs. Presto Industries [2001 (128) ELT 321 (SC)] where similar conditions regarding not taking of credit were existing in the Central Excise exemption Notifications. It is observed from case records that five member bench of CESTAT has relied upon the Apex Courts decision in the case of Thermax Private Limited vs. Collector of Customs [1992 (4) SCC 440] = 2002 TIOL-683-SC-CUS-LB.
7.1 A recent case, with respect to exemption Notification No.6/2002-CE dated 01.03.2002 (serial No.122) and condition No.20 of this notification, was considered by Honble Apex Court in M/s.SRF Ltd. vs. Commissioner of Customs, Chennai [2015-TIOL-74-SC-CUS]. Relevant Sr.No.122 of Notification No.6/2002-CE & condition No.20 are reproduced below.:-
S. No. Chapter or Heading No. or sub-heading No. Description of goods Rate under the First Schedule Rate under the Second Schedule Condition No. 122 5402.10 5402.41 5402.49 5402.51 5402.59 5402.61 or 5402.69 Nylon filament yarn or polypropylene multifilament yarn of 210 deniers with tolerance of 6 per cent. Nil
-20
?20. If no credit under Rule 3 or Rule 11 of the Cenvat CreditRules, 2002, has been taken in respect of the inputs or capital goods used in the manufacture of these goods. 7.2 Observations made by the Honble Apex Court on this issue, while allowing the appeal of M/s.SRF Ltd., are very relevant and are reproduced below:-
6.In the present case, admitted position is that no? such Cenvat credit is availed by the appellant. However, the reason for denying the benefit of the aforesaid Notification is that in the case of the appellant, no such credit is admissible under the Cenvat Rules. On this basis, the CEGAT has come to the conclusion that when the credit under the Cenvat Rules is not admissible to the appellant, question of fulfilling the aforesaid condition does not arise. In holding so, it followed the judgment of the Bombay High Court in the case of Ashok Traders v. Union of India [1987 (32) E.L.T. 262], wherein the Bombay High Court had held that it is impossible to imagine a case where in respect of raw nephtha used in HDPE in the foreign country, Central Excise duty leviable under the Indian Law can be levied or paid. Thus, the CEGAT found that only those conditions could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied.
7.We are of the opinion that the aforesaid reasoning? is no longer good law after the judgment of this Court in Thermax Private Limited v. Collector of Customs (Bombay), New Customs House [1992 (4) SCC 440 = 1992 (61) E.L.T. 352 (S.C.)] which was affirmed by the Constitution Bench in the case of Hyderabad Industries Limited v. Union of India [1999 (5) SCC 15 = 1999 (108) E.L.T. 321 (S.C.)]. In a recent judgment pronounced by this very Bench in the case of AIDEK Tourism Services Private Limited v. Commissioner of Customs, New Delhi [Civil Appeal No. 2616 of 2001 - 2015 (318) E.L.T. 3 (S.C.)], the principle which was laid down in Thermax Private Limited and Hyderabad Industries Limited was summarised in the following manner :-
15. The ratio of the aforesaid judgment in Thermax Private Limited (supra) was relied upon by this Court in Hyderabad Industries Ltd. (supra) while interpreting Section 3(1) of the Tariff Act itself; albeit in somewhat different context. However, the manner in which the issue was dealt with lends support to the case of the assessee herein. In that case, the Court noted that Section 3(1) of the Tariff Act provides for levy of an additional duty. The duty is, in other words, in addition to the Customs duty leviable under Section 12 of the Customs Act read with Section 2 of the Tariff Act. The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under Section 3(1) would be the Excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanation deals with the situation where a like article is not so produced or manufactured. The use of the word so implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced or manufactured in India. The words if produced or manufactured in India do not mean that the like article should be actually produced or manufactured in India. As per the explanation if an imported article is one which has been manufactured or produced, then it must be presumed, for the purpose of Section 3(1), that such an article can likewise be manufactured or produced in India. For the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined that the article imported had been manufactured or produced in India and then to see what amount of Excise duty was leviable thereon. (Emphasis supplied)????????????????????????
8.We are of the opinion that on the facts of these? cases, these appeals are squarely covered by the aforesaid judgments. We accordingly hold that appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/2002. The appeals are allowed and the demand of CVD raised by the respondents-authorities is set aside. 7.3 In view of the above settled proposition of law appellant are entitled to CVD exemption under Notification No.30/2004 dated 09.07.2004 and accordingly we hold it so.
8. So far as confiscation of goods under Section 111(m) and section 119 and imposition of penalties under the Customs Act, 1962, are concerned, it is already observed that appellant came to know about the discrepancy and mix up in some of the imported goods as per e-mail dated 03.11.2014 from the supplier and appellant made a bill of entry amendment request as per the changed description given by the supplier of the goods. Existence of such an e-mail and its receipt by the appellant is not disputed. If the appellants had come to know of the investigation being conducted by DRI then they could have given the exact description of the goods found during physical examination. There is no evidence on record that appellants had prior knowledge of the exact description of goods and we hold that the conclusions drawn by Adjudicating authority are based on presumptions and surmises. Under the existing factual matrix orders regarding confiscation of goods and imposition of penalties upon the appellants and confiscation of goods under Section 111(m) and Section 119 of the Customs Act, 1962 are not justified and are set aside.
9. But for the re-quantification of basic customs duty, indicated in para 6.4 above, appeals filed by the appellants are allowed.
(Pronounced in the open court on 15.12.2015.)
Sd/ sd/
(D.M.MISRA) (H.K.THAKUR) MEMBER(JUDICIAL) MEMBER(TECHNICAL)
sm
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Appeal No.CA-75215, 75296, 75297/15