2016 (5) TMI 502 - AT - Customs

Invokation of Section 113 (d), 113 (II) of Customs Act, 1962 - Confiscation of goods and imposition of fine and penalty under Section 114 (II) - Two types of goods exported viz., Goat wax coated upper finished leather and Goat shoe suede finished leather. Goods alleged to have not satisfied the norms for Finished goods - Appellant contended that in absence of few processes it would not mean that the leather to be exported was not finished leather. Two processes had not been done on the goods viz., wax coating and finishing coat , therefore it had cured this deficiency by re-processing these goods. Also the goods have been exported. Held that - By following the ratio laid down in the Tribunal s order in the case of M/s. Expos Leather Company Vs. CCE, Chennai 2010 (4) TMI 1112 - CESTAT CHENNAI as upheld by the jurisdictional High Court, the impugned order imposing fine and penalty is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues: Mis-declaration of goods for export, confiscation under Customs Act, imposition of penalty, reprocessing of goods to meet export requirements.

Analysis:
1. The case involved a shipping bill filed for the export of goods declared as finished leather, specifically two types: Goat wax coated upper finished leather and Goat shoe suede finished leather. Customs Officers had doubts regarding the declaration of Goat wax coated upper finished leather due to a public notice issued under the Foreign Trade (Development & Regulation) Act. Samples were sent to the Central Leather Research Institute (CLRI) for testing, which revealed that the samples did not meet the criteria for finished leather, leading to the invocation of relevant sections of the Customs Act for confiscation and penalty imposition.

2. In the original adjudication order, the goods were deemed to be semi-finished leather with an allegation of mis-declaration to evade export duty. Redemption fine and penalty were imposed, which were partially upheld in the Order-in-Appeal. The appellant appealed to the Tribunal challenging the findings and penalties imposed by the Assistant Commissioner.

3. During the hearing, the appellant did not contest CLRI's report but requested an opportunity to reprocess the goods to meet the export requirements. It was argued that the absence of certain processes like wax coating and finishing coat did not necessarily mean the leather was unfinished. The appellant rectified the deficiencies by reprocessing the goods before export, similar to previous cases where orders of confiscation and penalties were set aside by the Tribunal based on the need for additional processing to meet the definition of finished leather.

4. The Tribunal, following previous decisions and the High Court's ruling, set aside the order imposing fines and penalties, allowing the appellant to carry out the necessary processes to conform to the definition of finished leather before export. The decision highlighted the absence of deliberate concealment or misdeclaration, focusing on rectifying deficiencies to meet export standards. As a result, the appeal was allowed with consequential relief, overturning the penalties imposed on the appellant.