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2023 (3) TMI 183 - AT - CustomsExport of Finished Leather or Unfinished Leather - whether CLRI s interpretation of the conditions/norms prescribed in DGFT s Public Notice No. 21/2009-2014 dated 01.12.2009 is correct or not for Export of Finished Leather? - HELD THAT - We have been persuaded to come to the conclusion that shaving/snuffing as used in the DGFT s Public Notice dated 01.12.2009 to mean shaving or snuffing. As all the major manufacturing operations are carried out on the impugned goods, the same could not be termed as unfinished goods. The fact of buyer accepting the goods and making payment, ordering further quantities and terming only 13 cartons of suede leather of grey colour as unfinished leather when 24 cartons of other colours of the same consignment as finished leather have weighed in our mind. On consideration of the decision rendered in the case of COLLECTOR OF CUSTOMS, MADRAS VERSUS M. ASLAM AEJAZ CO. 1995 (5) TMI 130 - CEGAT, MADRAS , to the effect that minor deficiency in the processing may not ipso facto make the leather as not fully finished as the appellant s have carried out all the major operations. Appeal allowed.
Issues Involved:
1. Whether the CLRI's interpretation of the conditions/norms prescribed in DGFT's Public Notice No. 21/2009-2014 dated 01.12.2009 for Export of Finished Leather is correct. 2. Whether the exported leather consignment qualifies as "finished leather" under the DGFT norms. 3. Legitimacy of the confiscation, imposition of export duty, and penalty on the appellant. Issue-wise Detailed Analysis: 1. Interpretation of DGFT's Public Notice: The primary issue for determination was whether the Central Leather Research Institute (CLRI)'s interpretation of the conditions/norms prescribed in DGFT's Public Notice No. 21/2009-2014 dated 01.12.2009 for the export of finished leather was correct. The appellant argued that the CLRI's report, which noted the absence of snuffing on the grain side, should not be the sole basis for determining the leather's status as finished or unfinished. The appellant contended that the DGFT's Public Notice required either shaving or snuffing, not necessarily both. The guidelines from the Bureau of Indian Standards (BIS) were also cited, which indicated that shaving and/or snuffing may be done, suggesting that one of these processes suffices. 2. Qualification as "Finished Leather": The appellant argued that the leather exported was indeed finished leather as per the purchase order, and the buyer had accepted and paid for the goods as finished leather. The appellant highlighted that the Joint Commissioner did not consider their request for retesting the leather sample by CLRI. They relied on the precedent set in the case of Collector of Customs, Madras Vs. M. Aslam Aejaz & Co., which held that a minor deficiency in processing does not necessarily render the leather unfinished. The appellant maintained that all major and substantive steps to convert raw leather into finished leather were carried out, and the presence or absence of snuffing, which is a subjective check, should not solely determine the leather's status. 3. Legitimacy of Confiscation, Export Duty, and Penalty: The respondent justified the confiscation, export duty, and penalty based on the CLRI report, which confirmed the absence of snuffing. They cited decisions in Mondepal Vs. Commissioner of Customs, Chennai and Devi Enterprises Vs. Commissioner of Customs (Sea), Chennai, where confiscation, fine, and penalty were upheld based on CLRI reports. However, the tribunal noted that the DGFT's Public Notice and BIS guidelines indicated that either shaving or snuffing was required, not both. The tribunal also considered the fact that the buyer accepted the goods, made payment, and placed further orders, which supported the appellant's claim that the leather was finished. Conclusion: The tribunal concluded that the terms "shaving/snuffing" in the DGFT's Public Notice should be interpreted to mean "shaving or snuffing." Given that all major manufacturing operations were carried out on the impugned goods, the leather could not be termed unfinished. The acceptance of the goods by the buyer and the ordering of further quantities reinforced this conclusion. The tribunal allowed the appeal with consequential relief, if any, setting aside the confiscation, export duty, and penalty imposed on the appellant. Order Pronounced: The appeal was allowed with consequential relief, and the order was pronounced in the Open Court on 28.02.2023.
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