1997 (2) TMI 315 - AT - Customs

Summary

Issues:
1. Confiscation of goods under Section 113(i) of the Customs Act, 1962.
2. Denial of duty drawback to the appellants.
3. Export of substandard goods.
4. Certification requirements for export quality standards.
5. Reduction of penalties under Section 114(iii) of the Customs Act, 1962.

Confiscation of Goods:
The Commissioner of Customs, New Delhi confiscated goods covered by two Shipping Bills under Section 113(i) of the Customs Act, 1962, with an option to redeem them for home consumption on payment of fines. The goods were found to be substandard and used garments, not corresponding to the declaration made in the shipping bills. The goods were seized as they were deemed unfit for export, leading to the invocation of Section 113(i) for confiscation.

Denial of Duty Drawback:
The appellants were denied duty drawback under the Customs and Central Excise Duties Drawback Rules, 1971, as the goods were substandard and used garments, not meeting the requirements for drawback eligibility. Despite the appellants' argument that the goods were certified by the buyer, the denial was upheld as the goods did not conform to the export quality standards as per the contract and relevant policies.

Export of Substandard Goods:
The appellants sought to export the goods even though they were found to be substandard and used garments. The argument that the goods should be permitted for re-export based on the contract with the buyer was rejected, emphasizing that the goods did not meet the export quality standards and were not fit for export as per the contract terms.

Certification Requirements for Export Quality Standards:
The appellants contended that the goods were certified by the Apparels Exports Promotion Council (AEPC) for export quality standards. However, it was clarified that the certification referred to in the contract was self-certification by the buyer, not a formal certification by a designated authority. The absence of proper certification led to the rejection of this plea.

Reduction of Penalties:
While upholding the confiscation of goods, the penalties imposed under Section 114(iii) of the Customs Act, 1962, were reduced considering the circumstances. The penalties on the appellants were reduced due to the prolonged period the goods had been with the Customs authorities and the failure to redeem them, leading to a reduction in the penalties imposed.

In conclusion, the appellate tribunal upheld the confiscation of goods and denial of duty drawback, emphasizing the substandard nature of the goods and their failure to meet export quality standards. The penalties imposed were reduced, taking into account the specific circumstances of the case.