2018 (2) TMI 1839 - CGOVT - Customs

Duty Drawback - Section 74 of the Customs Act, 1962 - rejection on the ground that identity of the re-exported High Carbon Ferro Manganese Fines could not be established with the imported High Carbon Ferro Manganese Fines on the basis of documents submitted at the time of import and export - Held that - While Government agrees with the applicant s contentions that physical examination of the goods is not only the sole method for verification of identity of goods, each item must be identified by methods appropriate to the nature of goods and that the applicant has exported high carbon ferro manganese to the Korean company, no convincing evidence has been adduced by the applicant to establish that high carbon ferro manganese fines imported from South Africa only has been re-exported to the Korean company. The Government is convinced that identity of the exported goods with the imported goods cannot be established merely by one reason that the description of goods is common in both the imported as well as exported goods. Therefore, merely because high carbon ferro manganese has been exported by the applicant does not automatically mean that the applicant has exported the same high carbon ferro manganese fines which they had imported earlier. As the imported high carbon ferro manganese had been cleared by Customs under RMS without physical examination thereof and high carbon ferro manganese is of various qualities in terms of content etc., it cannot be accepted on the basis of the applicant s claim only that high carbon ferro manganese exported to South Korea is the same as was imported earlier - Thus apart from tallying of description and quantity of the exported goods with the imported goods, matching of contents of exported high carbon ferro manganese fines with the imported variety of high carbon manganese fines is of very crucial importance in this case to establish the identity of the exported goods with the imported goods. As per test report of Assmang Manganese Division Cato Ridge Works manganese contents are reported as 72.09%. But in respect of exported goods the manganese contents are reported as 68.02% by Customs House Lab. Thus there is a major difference in manganese content in the imported and exported high carbon ferro manganese fines as per these two reports also. The applicant has relied upon the other two test reports received from M/s. Inspectorate Griffity India Pvt. Ltd. and M/s. Posco Center Korea to claim that difference in manganese content is not very significant. But the Government does not consider these two reports relevant to the issue as these two test reports have not been given in respect of the samples drawn from exported goods in the presence of Customs officers and, therefore, their authenticity is not free from doubt. The applicant has not provided any convincing material on the basis of which it can be accepted at this juncture that the exported goods were the same which the applicant had imported earlier from South Africa. Hence, Government does not find any fault in the Order of Commissioner (Appeals) - Revision application rejected.

Issues Involved:
1. Eligibility for duty drawback under Section 74 of the Customs Act, 1962.
2. Identification of re-exported goods with imported goods.
3. Examination and verification methods for identity of goods.
4. Variance in content and quality of imported and exported goods.
5. Relevance of supporting documents and certificates.

Issue-wise Detailed Analysis:

1. Eligibility for Duty Drawback under Section 74 of the Customs Act, 1962:
The applicant sought a duty drawback claim under Section 74 of the Customs Act, 1962, for re-exporting High Carbon Ferro Manganese Fines imported from South Africa. The claim was rejected by the jurisdictional Assistant Commissioner and the Commissioner (Appeals) on the grounds that the identity of the re-exported goods could not be established with the imported goods.

2. Identification of Re-exported Goods with Imported Goods:
The primary contention was whether the re-exported goods could be identified as the same goods that were imported. The Assistant Commissioner (Drawback) and the Commissioner (Appeals) concluded that the identity of the goods could not be established based on the documents provided. The examination report by the Dy. Commissioner of Customs (Docks) indicated that while the labels on the bags matched, the physical identity of the goods was not verified at the time of import clearance.

3. Examination and Verification Methods for Identity of Goods:
The applicant argued that physical examination is not the sole method for establishing the identity of goods and that other methods appropriate to the nature of goods should be considered. The Government agreed that physical examination is not the only method but emphasized that no convincing evidence was provided to establish that the re-exported goods were the same as the imported ones. The Government highlighted that matching the overall quality and composition of the imported and exported goods is crucial.

4. Variance in Content and Quality of Imported and Exported Goods:
The Government noted significant differences in the manganese content between the imported and exported goods. The imported goods had a manganese content of 72.09%, while the exported goods had only 68%, which indicated an inferior quality. This discrepancy was supported by test reports from Assmang Manganese Division Cato Ridge Works and the Custom House Lab. The applicant's reliance on other test reports was dismissed as these were not conducted in the presence of Customs officers.

5. Relevance of Supporting Documents and Certificates:
The applicant provided certificates from a warehouse, a Chartered Accountant, and the State Bank of India to support their claim. However, the Government found these documents insufficient to establish the identity of the goods, as they were not issued by mineral experts and did not involve physical or chemical examination of the goods. The Government also dismissed the applicant's reference to a similar case where drawback was allowed, noting that the facts were different as the goods were bonded in a Public Bonded warehouse under Customs control in that case.

Conclusion:
The Government concluded that the applicant failed to provide convincing evidence to establish that the re-exported goods were the same as the imported ones. The significant variance in manganese content and the lack of direct evidence led to the rejection of the duty drawback claim. The revision application filed by the applicant was accordingly rejected.

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