2001 (7) TMI 120 - SC - Customs

Whether the goods exported under the export obligation were misdeclared inasmuch as the respondent had used the material of inferior grade to the one required in the manufacture of utensils? Held that - The only objection of the respondent was that such an offer was made suo moto and the respondent had not asked for it. The objection was frivolous and misconceived. Therefore, we fail to understand, how the respondent having failed to avail the opportunity to cross-examine the Chemical Examiner could urge that there was violation of principles of natural justice by non-grant of request of the respondent for retesting of the samples. Unfortunately, in the order of the Tribunal there is not even a whisper about the offer given to the respondent to cross-examine the Chemical Examiner. Thus, the first reason given by the Tribunal for coming to the conclusion that there has been violation of the principles of natural justice is not sustainable. The second reason given by the Tribunal is also unsustainable as the non-supply of copy of the shipping bills containing the examination report was of no consequence as admittedly the report of the test conducted on the samples drawn on the respective consignments establishing that the inferior material has been used had been supplied to the respondent. Under these circumstances the reasoning of the Commissioner of Customs could not be faulted. Therefore, the conclusion of the Tribunal that the order passed by the Commissioner of Customs was in violation of principles of natural justice is unsustainable. The Tribunal also held that the demand in respect of consignments was time barred as the test report was received by the revenue 6 months before issue of show cause notice. In view of the finding that the charge of mis-statement and suppressing the correct quality has been established against the respondent, the demand cannot be held to be time barred. The conclusion of the Tribunal that the extended period of limitation is not available to the appellant is clearly erroneous. Appeal allowed.

Issues:
1. Allegations of misdeclaration in export goods under advance licence.
2. Commissioner's order of confiscation, penalty, and denial of benefits challenged before Tribunal.
3. Challenge to the maintainability of appeal under Section 130E of the Customs Act.
4. Tribunal's decision on violation of natural justice due to denial of retesting samples and non-supply of shipping bills.
5. Analysis of the Tribunal's reasoning on natural justice violation.
6. Tribunal's finding on time-barred demand and applicability of extended period of limitation.
7. Applicability of precedent in similar cases.
8. Final decision and restoration of Commissioner's order.

Analysis:

1. The case involved allegations against the respondent for misdeclaration in export goods under an advance licence. The Commissioner of Customs found the charges proved based on a report by the Chemical Examiner, leading to confiscation of goods, denial of benefits, and imposition of penalties.

2. The respondent challenged the Commissioner's order before the Tribunal, which set aside the order citing violations of natural justice related to retesting samples and non-supply of shipping bills. The Commissioner appealed under Section 130E of the Customs Act.

3. The maintainability of the appeal under Section 130E was questioned by the respondent, arguing it did not relate to customs duty or goods' value assessment. The appeal was converted into a special leave petition, following a precedent allowing such conversion for cases pending for an extended period.

4. The Tribunal found violations of natural justice due to the denial of retesting samples and non-supply of shipping bills. However, the Supreme Court noted that the respondent had the opportunity to cross-examine the Chemical Examiner but did not avail it, rendering the objections unsustainable.

5. The Supreme Court analyzed the Tribunal's reasoning on natural justice violations, emphasizing the respondent's failure to utilize the opportunity to cross-examine the Chemical Examiner, which undermined the claim of unfair treatment.

6. The Tribunal's finding on the demand being time-barred was overturned by the Supreme Court, emphasizing that the charge of misstatement and suppression justified the extended period of limitation, contrary to the Tribunal's conclusion.

7. Precedents cited by the Tribunal were deemed inapplicable to the current case due to differences in establishing misdeclaration and suppression, further supporting the reversal of the Tribunal's decision.

8. Ultimately, the Supreme Court set aside the Tribunal's order, reinstating the Commissioner's decision on confiscation, penalties, and benefits denial. The appeal was allowed with costs, concluding the legal proceedings.

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