1996 (3) TMI 534 - AT - Customs

Summary

Issues Involved:
1. Misdeclaration of export consignments.
2. Fulfillment of export obligation under DEEC scheme.
3. Justification of the penalty imposed under Section 114 of the Customs Act.

Detailed Analysis:

1. Misdeclaration of Export Consignments:
The Collector held that 4200 sets of Baby Beds sought to be exported under three Shipping Bills were liable to confiscation due to misdeclaration. The goods were declared as "Baby bed sets made of 100% polyester with upholstery of cotton fabric." However, upon examination, the fibre stuffed in the pieces was found to be polyester soft waste, not 100% polyester fibre as declared. Samples tested by the Dy. Chief Chemist confirmed the presence of polyester waste. The General Manager admitted that they used polyester fibre waste in manufacturing the beds for export under the DEEC scheme. The Collector concluded that the goods were misdeclared, thus rendering them liable to confiscation under Section 115(i) & (d) of the Customs Act.

2. Fulfillment of Export Obligation under DEEC Scheme:
The appellant declared that the goods were exported to fulfill export obligations under the DEEC scheme. However, the Collector found that the material used was polyester waste, not 100% polyester fibre as required. The DEEC scheme allows duty-free import of materials used in export goods, but the appellants used polyester waste instead of fibre. The Collector held that the export obligation could not be fulfilled by these consignments, as they did not meet the declared specifications. The appellants argued that the goods conformed to the buyer's requirements and that there was no misdeclaration. However, the tribunal found that the material was a mix of fibre and waste, not 100% polyester fibre, thus upholding the Collector's decision.

3. Justification of the Penalty Imposed under Section 114 of the Customs Act:
The Collector imposed a penalty of Rs. 16 lakhs under Section 114 of the Customs Act, citing the misdeclaration and potential duty evasion. The appellants argued that the penalty was excessive and that there was no mala fide intent. The tribunal agreed that the penalty was harsh and reduced it to Rs. 6 lakhs, considering that the goods were exported against a bank guarantee, and the buyer was satisfied with the quality. The tribunal noted that the material used was a mix of fibre and waste, and some duty benefit might be available for the fibre used.

Conclusion:
The tribunal upheld the Collector's findings on misdeclaration and the non-fulfillment of export obligations under the DEEC scheme. However, it reduced the penalty from Rs. 16 lakhs to Rs. 6 lakhs, providing some relief to the appellants. The judgment emphasized the importance of accurate declarations under the DEEC scheme and the consequences of misdeclaration.