Custom, Excise & Service Tax Tribunal
Kiran Styles vs Commissioner Of Customs, Chennai on 9 October, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.C/341/2007
[Arising out of Order-in-Original No.6484/2007 dated 9.7.07 passed by the Commissioner of Customs (Seaport-Export), Chennai]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
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 authoritative report or not? :
3. Whether the Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Kiran Styles
Appellants
Versus
Commissioner of Customs, Chennai
Respondent
Appearance:
Shri V.M.Doiphode, Advocate Shri Manohar Jeerige, Advocate Ms.Indira Sisupal, JDR For the Appellants For the Respondent CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Date of hearing : 9.10.2009 Date of decision : 9.10.2009 Final Order No.____________ Based on specific intelligence received by the DRI that the appellants herein, a 100% EOU, proprietary concern of Shri Sanjay Nopany, were declaring description, quantity and value of export consignments viz. silk quilts and wadding bound for Dubai in the shipping bills filed on 22.12.04 at Chennai, four export consignments bound for Dubai under Shipping Bill Nos.1967450, 1967451, 1967452 & 1967453 were intercepted at Chennai CFS on 27.12.04. In respect of shipping bill No.1967452, quilts were found to have stuffed with PU Foam and gauge cloth (Gada) sandwiched by silk on one side and polyester cloth on the other side. The actual gross weight of the quilts was found to be much lesser than the weight declared in the shipping bill and in the other three shipping bills, silk wadding was found to be wadding made of noils/ fibre waste, which were dyed with black dye. All the four consignments were seized. Representative samples of the seized goods were drawn and sent for testing to Central Silk Technological Research Institute (CSTRI), Bangalore in Jan05; CSTRI informed the department that the samples were insufficient for testing; sufficient samples were further drawn from the export consignments and sent for test and the test reports revealed that the wadding material is an admixture of hard and soft wastes that are normally generated in yarn and fabric manufacture and that the wadding was not manufactured out of high grade silk of Grade 2A and above imported by the appellants and percentage of silk contained in the quilts was found to be 30 to 40% of the net weight of the quilts which was lesser than the weight of other cheaper materials used and that the fabrics used in quilt contained synthetic fibres and indigenous dupion silk of lesser grade than that of imported silk yarn of 100 to 120 deniers.
2. On the above basis, show-cause notice dt. 16.6.05 was issued to the appellants proposing to consider wadding valued at over Rs.29.23 lakhs attempted to be exported under three shipping bills as wadding made out of noils and waste and not wholly manufactured out of imported duty-free silk yarn as declared, proposing that quilts valued at approx. 9.81 lakhs attempted to be exported under one shipping bill should not be considered as not made out of 100% silk yarn imported duty-free; proposing confiscation of the wadding and quilts, and proposing imposition of penalty under Section 114 of the Customs Act, 1962 and the notice also proposed to treat the goods as ineligible for fulfillment of export obligation under the EOU scheme. The notice was adjudicated by the Commissioner who arrived at the above conclusion that the appellants did not use raw silk imported by them free of duty in the manufacture of export goods and instead used locally procured cheap material in the export market, misdeclared the waddings as made out of 100% imported duty-free silk yarn with an intent to import high grade silk without payment of duty and divert the same in local market and that the net weight of silk goods was misdeclared; that the quilts were misdeclared as made out of 100% imported silk yarn, with an intention to avail the benefit of Notification No.52/03 dt. 31.3.03. He, therefore, confiscated the goods with an option to redeem them on payment of a fine of Rs. 4 lakhs, imposed a penalty of Rs.6 lakhs under Section 114 of the Act and also held that the goods in question were not eligible to be accounted for towards the fulfillment of export obligation under the EOU scheme. Hence this appeal.
3. I have heard both sides. The test report on waddings relied upon by the adjudicating authority pertains to sample No.56 which is, admittedly, not one of the export samples. The export samples were tested by CSTRI and the chemical test report dt. 3.2.05 an 11.2.05 clearly showed that the silk content ranged from 92.90 to 96.64 (in the report dt. 3.2.05) and 93 to 95.8 %, as per report dt. 11.2.05. It cannot be disputed that the report dt. 3.2.05 is in respect of samples of the goods under export as this is clearly brought in the DRIs letter. dt. 17.1.05 which is the letter under reference in the Chemical Testing Report. The report of 11.2.05 refers to the three shipping bills filed by the appellants for export of silk wadding. Since export samples themselves were tested and found to contain a very high percentage of silk, the Commissioner should not have reached a conclusion on the basis of report on sample No.56 which is not an export sample, although annexure to the report dt. 22.2.05 on sample No.56 states that the finding in respect of sample No.56 viz. that the goods are admixture of hard and soft wastes also applies to waddings samples in Sl.No. 1 to 9, 66, carton Nos.9, 37 & 41 also which are the goods under export. The appellants had drawn the attention of the Commissioner to the report on samples of their goods to support their contention that wadding under export was silk wadding but, strangely enough, the Commissioner has chosen not to deal with this submission. Further, there is no material on record to establish that the imported silk was diverted into the local market by the appellants.
4. In the light of the above, I set aside confiscation of the wadding. However, as regards quilts, the only plea of the appellants is for reduction in the quantum of fine and penalty and they do not challenge the confiscation thereof. Having regard to the fact that value of the quilts is only little over Rs.9.80 lakhs, I reduce the fine in lieu of confiscation thereof to Rs. 1 lakh (Rupees One lakh only) and the penalty to Rs.2 lakhs (Rupees Two lakhs only)
5. The appeal is thus partly allowed as above.
(Operative part of the order was pronounced in open court on 9.10.09) (JYOTI BALASUNDARAM) VICE-PRESIDENT gs 2