2017 (8) TMI 1032 - AT - Customs

Redemption fine - penalty - Confiscation of export goods - misdeclaration - whether the goods exported are Finished Leathers? - Held that - Section 113 of the Customs Act, 1962 provides for confiscation of goods that are entered for exportation which do not correspond in any material particular with any information furnished by the exporter. Since the finding has been entered that the goods declared as Finished Leathers do not conform to the standards of Finished Leathers , the same are liable for confiscation - however, imposition of both the Redemption Fine and penalty are on the higher side and both are required to be reduced to ₹ 1,00,000/- and ₹ 50,000/- respectively - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Determining whether exported goods are Finished Leathers, contesting the quantum of redemption fine and penalty.

Analysis:
The case involved the detention of a container suspected of exporting semi-finished leathers as finished leathers without paying duty. Samples were tested by M/s. CLRI, which certified that the leathers did not meet the standards of Finished Leathers as per DGFT's Public Notice. The original authority held the goods were misdeclared and not Finished Leathers, confiscating them with an option to redeem on payment of a fine and imposing a penalty under the Customs Act, 1962.

The appellants contested the redemption fine and penalty, arguing that while the quantitative processes were met, qualitative processes like dyeing and coating could vary based on buyer requirements. They claimed that further dyeing and coating might be necessary for temperate countries, and the exported leathers could still be considered Finished Leathers. They requested a reduction in the redemption fine and penalty, stating the imposed amounts were excessive.

The Authorized Representative supported the original order, stating that the export of Unfinished Leathers disguised as Finished Leathers was only revealed due to departmental intervention. The appellants acknowledged their errors and paid a portion of their liability. The Representative argued that the redemption fine and penalty were justified.

The Tribunal found that the goods declared as Finished Leathers did not meet the required standards, making them liable for confiscation. However, they deemed the imposed redemption fine and penalty excessive, reducing them to &8377; 1,00,000 and &8377; 50,000, respectively. The appeal was partly allowed with the modified orders.

In conclusion, the Tribunal upheld the confiscation of the goods due to non-conformity with Finished Leather standards but reduced the redemption fine and penalty, considering them excessive. The decision highlighted the importance of meeting specific standards for exported goods and the need for proportionate penalties in such cases.