2010 (8) TMI 238 - HC - Customs

Confiscation mis-declaration of county of origin Exemption from declaring county of origin Respondent is a partnership firm and being as such, the partners of the Respondent qualify for exemption - Respondent qualify under clause (f) as the goods which have been manufactured beyond the limits of India, imported into India not for trade purposes - interpretation of the CESTAT of the exemption clause plausible Goods not liable for confiscation

Summary

Issues:
1. Interpretation of exemption clause under Section 117 of the Trade and Merchandise Act.
2. Whether the Respondent contravened provisions of Section 11 of Customs Act read with Trade and Merchandise Mark Act, 1958.
3. Applicability of exemption clauses (d) and (e) to the Respondent.
4. Compliance with the requirement of mentioning the country of origin on imported goods.

Interpretation of Exemption Clause under Section 117 of the Trade and Merchandise Act:
The case involved an appeal by the Commissioner of Customs against an order passed by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) concerning the interpretation of an exemption clause under Section 117 of the Trade and Merchandise Act. The Respondent, a partnership firm, imported industrial sewing machines with a declaration of the country of origin as China. The dispute arose when the inspection revealed markings indicating Japan as the country of origin instead of China. The Respondent claimed exemption under clause (e) of the exemption clause, stating that the goods were imported for manufacturing purposes and not for trade. The CESTAT allowed the appeal, ruling in favor of the Respondent based on the interpretation of the exemption clause and previous tribunal judgments. The High Court upheld the CESTAT decision, emphasizing that the Respondent qualified for exemption under clauses (d) and (e) as a partnership firm importing goods for manufacturing purposes, not for trade.

Contravention of Provisions of Section 11 of Customs Act:
The Respondent was alleged to have contravened provisions of Section 11 of the Customs Act by giving deceptive markings on the imported goods, leading to confusion regarding the country of origin. The Customs authorities imposed penalties under Sections 111(d) and 112(a) of the Customs Act due to the misdeclaration of the country of origin on the goods. However, the Respondent argued that the mentioning of China as the country of origin was a technical matter and did not render the goods liable for confiscation. The High Court's decision focused on the interpretation of the exemption clause under the Trade and Merchandise Act, ultimately dismissing the Appeal in favor of the Respondent.

Applicability of Exemption Clauses (d) and (e) to the Respondent:
The High Court analyzed the eligibility of the Respondent for exemption under clauses (d) and (e) of the exemption clause. It was established that the Respondent, being a partnership firm, qualified under clause (d) as members of unincorporated associations and under clause (e) as the goods were imported for manufacturing purposes and not for trade. The Court agreed with the CESTAT's interpretation of the exemption clause, emphasizing that the goods were imported for manufacturing final products, exempting the Respondent from compliance with Section 117 of the Trade and Merchandise Act.

Compliance with the Requirement of Mentioning the Country of Origin:
The case highlighted the obligation to mention the country of origin on imported goods as mandated by Section 117 of the Trade and Merchandise Act. The Notification issued under the Act specified the goods requiring such indication, with exemptions provided for certain categories like goods imported for personal use or for reexport. The High Court's decision revolved around the correct application of the exemption clause to the Respondent's case, ultimately concluding that the Respondent met the criteria for exemption and dismissing the Appeal filed by the Commissioner of Customs.