2004 (10) TMI 114 - AT - Central Excise

Confiscation and penalty - Whether the polyester fabrics imported by them is classifiable under sub-heading 5407 61 90 of the First Schedule to the Customs Tariff Act as declared on Bills of Entry or under sub-heading 5407 69 00 - whether the importers are eligible to get the goods cleared without payment of duty against Duty Free Replenishment Certificate (DFRC) - HELD THAT -The appellants have not brought on record any test report showing that the impugned goods contain non-texturised polyester filament 85% or more by weight. They have only referred to the Test Certificate given by the foreign supplier. The perusal of the said Test Certificate reveals that the supplier has only stated that the goods are non-texturised fabrics without indicating the contents of the texturised polyester filament. In view of this this Certificate is of no importance. On the other hand the Revenue has brought on record the test report given by CRCL. Accordingly we hold that the impugned polyester fabric is classifiable under sub-heading 5407 69 00 of the Customs Tariff. Clearance of the imported goods against DFRCs licences - Once the licence has been issued by the DGFT on the basis of export of goods it is not open to the Revenue to disallow the clearance of imported goods against these licences on the ground that these licences do not contain some further details. As long as the licence has been validly issued by the DGFT after ascertaining the export of goods the Customs have to allow the clearance of the specified goods against these licences. As observed by us earlier the Revenue has not denied that goods imported are polyester fabrics GSM of which is 200 /- 10%. We also observe that the Board in Circular No. 33/2000-Cus. dated 2-5-2000 has explained the salient features of DFRCs licence. One of the salient feature is that DFRCs licence shall permit import of inputs having same quality technical characteristics and specifications which have been used in the export product and which are specified in the Shipping Bills. In the present matter the export products were of polyester fabrics of GSM 200 /- 10% and the DFRCs licnence has also permitted the import of same product with same technical specifications. We therefore find no reason to disallow the clearance of the imported goods against DFRCs licence. We therefore allow both the appeals of the appellants on this count also. Both the appeals stand disposed of in the above terms.

Summary

Issues Involved:
1. Classification of imported polyester fabrics.
2. Eligibility for duty-free clearance against Duty Free Replenishment Certificate (DFRC).
3. Alleged misdeclaration and consequent confiscation and penalties.

Summary:

1. Classification of Imported Polyester Fabrics:
The primary issue was whether the imported polyester fabrics should be classified under sub-heading 5407 61 90, as declared by the appellants, or under sub-heading 5407 69 00 of the Customs Tariff Act. The Commissioner of Customs classified the goods under sub-heading 5407 69 00 based on test reports from the Textile Committee, Mumbai, and CRCL, New Delhi, which indicated the fabrics contained texturised yarn. The appellants argued that the test reports were inconsistent and that their supplier's certificate stated the fabrics were non-texturised. The Tribunal held that the Revenue had established the fabrics did not contain 85% or more by weight of non-texturised polyester filament, thus classifying the goods correctly under sub-heading 5407 69 00.

2. Eligibility for Duty-Free Clearance Against DFRC:
The appellants sought clearance of the imported goods without payment of duty against DFRCs. The Adjudicating Authority disallowed this, citing incomplete details about the quality, technical characteristics, and specifications of the inputs used in the export goods in the DFRCs. The Tribunal found that the DFRCs mentioned 100% polyester fabrics (GSM 200 +/- 10%), which was sufficient. It held that once the DGFT issued a DFRC based on export goods, the Customs authorities must allow clearance of the specified goods against these licences. The Tribunal allowed the appeals, permitting clearance under the DFRC scheme.

3. Alleged Misdeclaration and Consequent Confiscation and Penalties:
The Revenue argued that the goods were misdeclared and thus liable for confiscation and penalties. The appellants contended there was no intentional misclassification, as they relied on documents from their suppliers and had previously imported similar consignments classified as non-texturised. The Tribunal agreed with the appellants, noting the absence of evidence showing intentional misdeclaration. It referenced the Supreme Court's decision in Northern Plastics Ltd., which held that a declaration based on a bona fide belief does not constitute misdeclaration u/s 111(m) of the Customs Act. Consequently, the Tribunal set aside the confiscation, redemption fine, and penalties.

Conclusion:
The Tribunal concluded that the imported polyester fabrics were correctly classified under sub-heading 5407 69 00. However, it found no intentional misdeclaration by the appellants and allowed the clearance of goods against valid DFRCs. The confiscation, redemption fine, and penalties were set aside, and both appeals were allowed.