2023 (9) TMI 143 - AT - Customs

Confiscation - redemption fine - penalty - cow crumbled upper finished leather-off-white - goods did not conform to the criteria of finished leather as per the Public Notice dated 27.05.1992 - HELD THAT - The Bench directed the Department to furnish the copy of the report. Though several adjournments were given, the Department could not furnish the CLRI report. It has to be seen that part of the consignment has been exported and only one item had been denied the benefit of duty exemption. When the Department is relying upon the report of an expert to hold that the goods do not conform to the standard of Public Notice, they ought to have extracted the relevant portion as part of the order - both the authorities below have not placed the discussions or tests made in the report or the method of testing done by CLRI as part of the report. In the Order-in-Original as well as the Order-in-Appeal it is merely stated that CLRI reported that the goods do not conform to the criteria of Public Notice. If the report was available it would have been possible to check the type of test done and as to how the testing authority has arrived at the conclusion that there is no protective coating. The CLRI report is a very crucial document in deciding the issue as to whether the impugned goods are finished leather or not. The Department has failed to supply the copy of the report to the appellant and also furnish copy before the Tribunal - the confiscation of goods, imposition of redemption fine, penalty and the demand of duty therefore cannot sustain and requires to be set aside. The impugned order is set aside. The appeal is allowed.

Summary

Issues:
The issues involved in the judgment are duty drawback claim for export consignment, conformity to norms for finished leather, confiscation of goods, imposition of redemption fine, penalty under Customs Act, 1962, and duty payment.

Duty Drawback Claim for Export Consignment:
The appellant filed a shipping bill for export claiming duty drawback for a consignment of 'cow crumbled upper finished leather'. The consignment included three different colored items, with one item being questioned for not meeting prescribed norms. Samples were tested at CLRI, which reported non-conformity to norms due to lack of protective coat. Despite an assurance from the exporter, the goods were confiscated, and a penalty and duty payment were imposed.

Conformity to Norms for Finished Leather:
The dispute arose from the CLRI report stating non-conformity of the exported leather to prescribed norms for finished goods. The appellant argued that the goods had a protective coating, essential for transit, and that the CLRI report was not provided to them, leading to a violation of natural justice. The Tribunal noted the absence of detailed discussions or testing methods from the report in the authorities' orders, emphasizing the crucial role of the CLRI report in determining the goods' classification.

Confiscation of Goods and Imposition of Penalties:
The original authority ordered confiscation of the disputed item, redemption fine, penalty under Section 114(ii) of the Customs Act, and duty payment. The Commissioner (Appeals) upheld the decision but increased the penalty, equaling the duty amount. The Tribunal found the lack of CLRI report provision to the appellant as a violation of natural justice, leading to the setting aside of the confiscation, penalties, and duty demand.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief. The absence of the CLRI report being provided to the appellant was deemed a violation of natural justice, leading to the decision to overturn the confiscation, penalties, and duty demand.