2016 (1) TMI 876 - AT - Customs

Addendum to show-cause notice after receipt of the reply to show-cause - Export of other rice in the name of Basmati Rice - export of Non-Basmati Rice was prohibited - Confiscation of goods - Held that - the learned Commissioner has erred in issuing addendum to show-cause notice after receipt of the reply to show-cause notice dated 18.12.2009. The addendum is also vitiated on the ground that there is no reference in the show-cause notice of any samples being forwarded for test. Further, the findings of the learned Commissioner are vitiated for not following the prescribed procedure of testing as noted herein above. When the law prescribes for a particular thing to be done in a particular manner, the same is to be done in the prescribed manner or not done at all. Further, the learned Commissioner has erred in observing that the DGFT Circular No. 33/08, permits only export of Basmati rice, but on perusal of the said Circular, I find that the export of PUSA 1121 variety is also permitted. - the goods (rice under export) was not liable to confiscation - Decided in favor of assessee - Decided against the revenue.

Issues involved:
1. Confiscation of Basmati and Non-Basmati Rice under export.
2. Compliance with DGFT Notification No. 38/07 regarding export restrictions.
3. Validity of testing procedures and reports.
4. Role of Customs Officers in supervision and identification of exported goods.
5. Admissibility of addendum to show-cause notice.
6. Interpretation of DGFT Circular No. 33/08 on permissible rice exports.
7. Confiscation and redemption of goods under Customs Act.

Issue 1: Confiscation of Basmati and Non-Basmati Rice under export:
The case involved the detention and subsequent confiscation of Basmati and Non-Basmati Rice under export by the Customs Department due to suspicions regarding the nature of the rice being exported. The appellant contested the allegations, leading to a detailed examination of the circumstances surrounding the export and the identification of the rice.

Issue 2: Compliance with DGFT Notification No. 38/07 regarding export restrictions:
The judgment analyzed whether the exporter violated DGFT Notification No. 38/07, which prohibited the export of Non-Basmati Rice. The Customs Department relied on this notification to justify the detention and confiscation of the rice under export, emphasizing the importance of adhering to trade regulations.

Issue 3: Validity of testing procedures and reports:
The validity of the testing procedures and reports used to determine the nature of the exported rice was a crucial aspect of the case. The judgment scrutinized the testing process, including the delay in testing, the laboratory used, and the parameters considered, to assess the reliability of the test report in confirming the identity of the exported rice.

Issue 4: Role of Customs Officers in supervision and identification of exported goods:
The involvement of Customs Officers in supervising the export process and identifying the goods under export was a significant point of contention. The statements of the Customs Officers regarding their role in inspecting the rice and the challenges they faced due to workload and external factors were considered in evaluating the validity of the confiscation.

Issue 5: Admissibility of addendum to show-cause notice:
The judgment examined the admissibility of an addendum to the show-cause notice issued by the Revenue authorities after the appellant responded to the initial notice. The procedural correctness of issuing additional information post-reply was deliberated to determine its impact on the fairness of the proceedings.

Issue 6: Interpretation of DGFT Circular No. 33/08 on permissible rice exports:
The interpretation of DGFT Circular No. 33/08 regarding permissible rice exports, specifically mentioning the allowance of 'PUSA 1121' variety, was crucial in assessing the exporter's compliance with the regulations. The judgment clarified the scope of permissible exports under the circular to ascertain any misinterpretation by the authorities.

Issue 7: Confiscation and redemption of goods under Customs Act:
The final issue revolved around the confiscation and redemption of the goods under the Customs Act. The judgment evaluated whether the confiscated rice was liable for absolute confiscation or if redemption through payment of fines was a more appropriate course of action, considering the circumstances of the case.

This detailed analysis of the judgment highlights the complexities involved in the case, ranging from regulatory compliance to procedural fairness, ultimately leading to the decision to set aside the impugned order and dismiss the appeal of the Revenue while allowing the appeal of the exporter.

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