Custom, Excise & Service Tax Tribunal
M/S. Zarina Leather Exports vs Commissioner Of Customs, Mumbai-I on 4 March, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. C/87829/14
(Arising out of Order-in- Appeal No. 1346(DRAWBACK) /2014(JNCH) /EXP-57 dated 26/3/2014 passed by the Commissioner of Customs(Appeals), Mumbai-II]
For approval and signature:
Honble Mr Ramesh Nair, Member(Judicial)
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1. Whether Press Reporters may be allowed to see : No
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 Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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M/s. Zarina Leather Exports
:
Appellants
VS
Commissioner of Customs, Mumbai-I
:
Respondent
Appearance
Shri. S. Ravi, Advocate for the Appellants
Shri. Kamal Puggal, Asstt. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 4/3/2016
Date of decision: 4/3/2016
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in- Appeal No. 1346(DRAWBACK) /2014(JNCH) /EXP-57 dated 26/3/2014 passed by the Commissioner of Customs(Appeals), Mumbai-II, whereby Ld. Commissioner(Appeals) upheld the Order in Original No.08/2013 dated 12/6/2013 however reduced the redemption fine imposed on the appellant under Section 125 of the Customs Act, 1962 from Rs. 3.50 Lakhs to Rs. 2.65 lakhs and penalty of Rs. 1.50 lakhs to Rs. 1 lakh, with this Orde-in-Original stood modified.
2. The fact of the case is that the appellant filed a shipping bill No. 4643329 dated 25/3/2013 for export of 27010.86 sq ft of Goat Burnished Upper Finished Leather having declared FOB value of Rs. 26,43,779.32 under duty drawback scheme. The total drawback claimed under the Tariff No. 411301A was Rs. 1,58,626.76. On the specific information it was revealed that the goods have been misdeclared with respect to description and that unfinished leather was being fraudulently exported. The unfinished leather is restricted as per the Export Policy and only finished leather which complies with the terms and conditions specified in DGFT public notice No. 21/2009-14 dated 1/12/2009 is permissible for export. After examination, the representative samples were forwarded to Central Leather Research Institute (CLRI) Chennai. The said Institute certified that the samples were not that of finished leather. Appellant vide letter dated 7/5/2013 interalia submitted that their export order has been cancelled and requested for taking goods back to town. The Adjudicating authority in the Order-in-Original on the charge of mis-declaration of the description and intent to avail fraudulent drawback rejected the drawback claimed and confiscated the goods with option to redeem the same for taking goods back to town on payment of redemption fine of Rs. 3.50 lakhs under Section 125 of Customs Act, 1962, a penalty of Rs. 1.50 lakhs was also imposed upon the appellant under Section 114(i) of the Customs Act, 1962. Aggrieved by the Order-in-Original, appellant filed appeal before the Commissioner(Appeals) for waiver of redemption fine and penalties. Ld. Commissioner(Appeals) vide impugned order considering facts and submissions made by the appellant reduced the redemption fine from Rs. 3.50 Lakhs to Rs. 2.65 lackhs and penalty of Rs. 1.50 lakhs to Rs. 1 lakh. Being aggrieved by the impunged order, appellant is before me for waiver of reduced penalty.
3. Shri. S. Ravi, Ld. Counsel for the appellant submits that Ld. Commissioner has gravely erred in passing the order in violation of principles of natural justice by not providing CLRI report dated 3/5/2013 to the appellant. He submits that even though the goods were found to be unfinished leather it was freely exportable therefore the goods were not liable for confiscation. He submits that the Ld. Commissioner and Adjudicating authority failed to notice that processes performed by the appellant was required by the buyer and even as per the buyer it was sufficient to qualify the subject goods as finished leather therefore the appellant was of bonafide belief that the leather required by the buyer is finished leather therefore there is no mis-diclaration on the part of the appellant.
4. Shri. Kamal Puggal, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.
5. I have carefully considered the submissions made by both sides and perused the record.
6. I find that there is no dispute that the goods attempted to be exported is unfinished leather as per CLRI report whereas the appellant has mis-declared as finished goods. The drawback is available on finished leather therefore it is clearly established that the misdeclaration of the goods is with clear intention to claim fraudulent drawback. Right from the adjudication and first appellate stage, the appellant though submitted that there is violation of principles of natural justice but the fact that the goods were mis-declared could not be rebutted. The Commissioner (Appeals) with proper application of mind, considering all the aspects taken lenient view and accordingly reduced the redemption fine and penalties. The findings of the Ld. Commissioner(Appeals) is reproduced below:
6. I have gone through the impugned order and the submissions of the appellant. The appellant has already paid the fine and penalty. Accordingly, I proceed to decide the case on merit.
7. I find that the appellant filed a Shipping Bill No. 4643329 dated 25.03.2013 for export of 27010.98 sq ft of Goat Burnished Upper Finished Leather having declared FOB value of Rs. 2643779.32 under duty drawback scheme. The total drawback claimed under Tariff item no. 411301A was Rs. 158626.76. After examination, the representative samples were forwarded to Central Leather Research Institute (CLRI), Chennai. The said Institute certified that the samples were not that of finished leather. Appellant vide letter dated 07.05.2013 interalia submitted that their export order has been cancelled and requested for taking the goods back to town. The adjudicating authority observed that the description of the impugned goods was mis-declared, hence was liable for confiscation under Section 113(d) and Section 113h (i) & (ii) of the Customs Act, 1962. The appellant had accepted the fact that since the impugned goods meant for temperate countries, further dyeing and coating is required to make the product suitable for use in the temperate countries. The appellant also accepted the fact that there was mis-declaration but the same was unintentional. The appellant by their act of omission and commission rendered themselves liable to penalty under Section 114(iii) of the Customs Act, 1962. Accordingly, the adjudicating authority rejected the drawback claim of Rs. 158626/- under DBK Tariff item no. 411301A. The impugned goods were confiscated under Section 113(d) & 113h(i) and (ii) of the Customs Act, 1962. However, an option to redeem the goods was given on payment of fine of Rs. 3,50,000/- under Section 125 of the Customs Act, 1962. Penalty of Rs. 1,50,000/- was also imposed on the appellant under Section 114(i) of the Customs Act, 1962.
8. I have gone through various judicial pronouncements. I find that Honble CESTAT in Commissioner of Customs, Tuticorin Vs. Sai Copiers [2008(226) ELT 486] has reduced the amount of penalty and redemption fine to 5% and 15% of the value of the goods. Honble CESTAT in the case of Susmi Impex Vs. Commissioner of Customs[2008(228) ELT 444] has reduced the redemption fine imposed from 25% to 15% of the enhanced value. Honble Tribunal in Vikas Chandra Vs. Commissioner of Customs, Chennai [2003(158) ELT 316(Tri. Chennai), has held that only offending goods are liable for confiscation and not the entire consignment. Honble CESTAT in the case of Comptech Electronics Pvt Ltd Vs. Commissioner of Customs, Chennai[2003(59) RLT 783(Tri Chennai)] has held that only those goods which were not declared and not the entire consignment is liable to confiscation under Section 111(m) of Customs Act, 1962; redemption fine reduced.
9. I find that in the instant case, the appellant had admitted to the fact that there was mis-declaration of the description. The goods were liable for confiscation and the respondent had correctly levied redemption fine under Section 125 of the Customs Act, 1962. The appellants contention that the mis-declaration was unintentional is not convincing. The fine and penalty are leviable even no mens rea is involved. Honble Madras High Court have in their decision in Bansal industries 2007(207) ELT 346(Md) has held that mens rea is not required for imposition of penalty under Customs Act. Honble CESTAT in the case of Sundaram Finance Vs. Commissioner of Customs, Chennai [2012(279) ELT 220(Tri. Mad) has held that mens rea is relevant only for quantum of fine and penalty and not for liability to confiscation or penalty. Under the facts and circumstances of the case and respectfully relying on the above quoted decision of Honble High Court and CESTAT, I hold that the appellant is liable for fine and penalty under the Customs Act, 1962. However, I find that fine and penalty imposed require modification in view of the FOB value of the impugned goods.
10. In view of the above discussion, I pass follo wing order.
ORDER
I uphold the Order-in-Original No. 08/2013 dated 12.06.2013 passed by the Adjudicating authority. However, I reduce the Redemption fine imposed on the appellant under Section 125 of the Customs Act, 1962 from Rs. 3,50,000/- to Rs. 2,65,000/- and penalty from Rs. 1,50,000/- to Rs. 1,00,000/-. With the said modification, the appeal No. 859/2013 JNCH, is disposed off accordingly. From the above findings of the impugned order, it is clear that there is no infirmity in the impugned order, therefore it does not require any interference. Accordingly, I am in complete agreement with the Ld. Commissioner (Appeals) therefore upheld the impugned order and dismiss the appeal. (Operative order pronounced in court) Ramesh Nair Member (Judicial) sk 7 C/87829/14