2023 (9) TMI 579 - AT - Customs

Attempt to export unfinished leather in the guise of finished leather - Prohibited goods or not - goods were already provisionally released and re-exported after reprocessing - Confiscation - redemption fine - penalty - HELD THAT - It has to be noted that the goods were provisionally released, reprocessed and exported. Thus the goods are not available for confiscation at the time of passing the order by the adjudicating authority. In a similar situation, when the goods were exported after re-processing, in the case of VIJAYALAKSHMI LEATHERS VERSUS COMMISSIONER OF CUSTOMS, CHENNAI 2000 (1) TMI 90 - CEGAT, CHENNAI it was held that the imposition of redemption fine and penalties are required to be set aside. The facts of the said case revealed that the samples drawn and tested by CLRI, Chennai showed certain deficiencies and defects in the nature of a) absence of dyeing b) colour not distinctly different from that of crust c) thickness more than 1mm d) absence of protective coat e) absence snuffing / shaving on the grain. In the case of COMMISSIONER OF CUS. (AIR PORT) , CHENNAI VERSUS AVANTHI LEATHERS LTD. 2009 (7) TMI 1130 - CESTAT CHENNAI , the issue was similar whether the department held the goods to be unfinished leather for the reason of absence of protective coating. The goods were provisionally released. The exporter reprocessed the goods and exported the same. It was held that the confiscation and imposition of penalties are not warranted. After taking note of the fact that the goods have been provisionally released, re-processed and exported, it is opined that the confiscation of the goods is not warranted and justified. Accordingly, the redemption fine imposed is also to be set aside. The department has not been able to show any mens rea on the part of the appellant. Appellants herein have taken release of the goods reprocessed the same and exported. The appellants have already incurred considerable financial loss on taking back the goods reprocessing and exporting goods - noting these facts the penalty also set aside. The impugned order is set aside. The appeals are allowed.

Summary

Issues Involved:
1. Attempted export of unfinished leather as finished leather.
2. Imposition of redemption fine and penalties.
3. Allegations against CHA and its employee.

Summary:

1. Attempted Export of Unfinished Leather as Finished Leather:
The appellants filed shipping bills for the export of "Goat shoe suede pure finished leather." Upon examination, the consignments did not conform to the standards of finished leather as per Public Notice No.21/2009/14 dated 1/12/2009. Samples tested by CLRI, Chennai indicated the absence of dyeing and snuffing. The appellants reprocessed and exported the goods after provisional release. The department issued a Show Cause Notice alleging attempted export of prohibited goods and proposed confiscation, redemption fine, and penalties.

2. Imposition of Redemption Fine and Penalties:
The original authority held that the goods were unfinished leather attempted to be exported as finished leather, making them liable for confiscation. As the goods were re-exported after reprocessing, the adjudicating authority imposed redemption fine and penalties. The appellants argued that there was no deliberate intention to export unfinished leather and cited previous Tribunal decisions (Vijayalakshmi Leathers and Avanti Leathers) where penalties and fines were set aside in similar circumstances. The Tribunal noted that the goods were reprocessed and exported, and therefore, confiscation and imposition of redemption fine were not warranted. The penalties were also set aside, considering the financial loss incurred by the appellants.

3. Allegations Against CHA and Its Employee:
The department alleged that the CHA, M/s. Kalki Shipping Associates, and its employee, Shri M. Sarath, attempted to substitute unfinished leather with finished leather. The Tribunal observed that Shri Anand, who was in charge of the CHA firm, was responsible for the alleged substitution. However, Shri Anand was no more, and the appeal filed by him was dismissed as abated. The Tribunal found no deliberate intention on the part of Shri M. Sarath and the CHA firm to export unfinished leather as finished leather and set aside the penalties imposed on them.

Conclusion:
The Tribunal set aside the impugned order, including the confiscation, redemption fine, and penalties, allowing the appeals with consequential reliefs. The decision emphasized the absence of mens rea and the financial losses incurred by the appellants due to the reprocessing and re-exporting of goods.