2019 (12) TMI 568 - AT - Customs

Misdeclaration of export goods - Export of restricted item or not - Sheep Nubuck (Snuffed) Finished Leather - compliance with the Public Notice No.92-97 dt. 27.5.1992 issued by DGFT - HELD THAT - As is evident from the second test report of CLRI dt. 27.12.2010, the sample was tested by CLRI to see if it matches the description in the shipping bill. In the first test report, it was tested on the specifications for Nubuck Leather of cows or buffaloes while the description of the goods by the appellant was Sheep Nubuck leather . The second sample was ordered to be tested which was tested and it was again confirmed that it is not Nubuck Leather at all as the process of snuffing essential for making nubuck leather has not been undertaken. There was misdeclaration of the goods in the shipping bill by the appellant. The confiscation of the goods for improper export is provided for on various grounds under Section 113 of the Customs Act. Clause (d) of Section 113 provides for confiscation of any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force. Confiscation of goods where the description does not match with the declaration is provided for under Section 113 (i) and (ii). In this case, as per the usual practice, the exports were not held up but were allowed after taking an undertaking from the appellant. After the testing, it was found that the nature of the goods exported did not match with the description given in the shipping bill. Therefore, they have been confiscated under Section 113 (i) and (ii) of the Customs Act, 1962. The argument of the Ld. counsel that their goods were not prohibited from export under Foreign Trade Policy and the Public Notice issued therein does not come to their rescue because there is no confiscation on this count at all - The only confiscation was on the ground that the appellant has described the goods wrongly. We find that the second test report confirms that the goods were not which were described in the shipping bill - confiscation of the goods under Section 113 and imposition of redemption fine of ₹ 10,000/- under Section 125 in lieu of confiscation (as the goods have already been exported after the appellant gave an undertaking) calls for no interference. The imposition of penalty of ₹ 5000/- under Section 114 is liable to be upheld Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Confiscation of goods for misdeclaration in export
2. Interpretation of Public Notice for export of leather goods
3. Application of Sections 113, 114, and 125 of the Customs Act, 1962

Issue 1: Confiscation of goods for misdeclaration in export
The appellant exported leather described as "Sheep Nubuck (Snuffed) Finished Leather," which was doubted by customs officers. The Central Leather Research Institute (CLRI) confirmed that the exported goods did not match the description. The original authority held the goods liable for confiscation under Sections 113 (i) & (ii) of the Customs Act, 1962, imposed a redemption fine of ?10,000, a penalty of ?5,000 under Section 114 (ii), and demanded export duty of ?1,56,457. The first appellate authority passed an interim order for retesting the sample, which again confirmed the misdescription. The Tribunal upheld the confiscation under Sections 113 (i) & (ii) due to misdeclaration, rejecting the appellant's argument that export was permitted based on CLRI testing. The imposition of fines and penalties was upheld.

Issue 2: Interpretation of Public Notice for export of leather goods
The appellant argued that their leather, not specifically covered under the Public Notice, could still be exported subject to CLRI testing. However, the second CLRI test report confirmed the goods did not meet the description in the shipping bill, leading to misdeclaration. The Tribunal emphasized that misdeclaration for export is covered under Section 113 (i) & (ii) of the Customs Act, regardless of specific coverage in the Public Notice. The Tribunal clarified that the goods were confiscated due to misdescription, not due to any prohibition under the Foreign Trade Policy or Public Notice.

Issue 3: Application of Sections 113, 114, and 125 of the Customs Act, 1962
The Tribunal analyzed the provisions of Sections 113, 114, and 125 of the Customs Act, 1962, in the context of the case. Section 113 (i) & (ii) provide for confiscation of goods for misdeclaration in export, which was the basis for the confiscation in this case. Section 125 allowed for the imposition of a redemption fine in lieu of confiscation, considering the goods had already been exported. The imposition of a penalty under Section 114 was upheld, along with the recovery of applicable export duty and drawback. The Tribunal concluded that the confiscation, fines, and penalties imposed were justified based on the misdeclaration of goods in the shipping bill.

This detailed analysis of the judgment provides insights into the Tribunal's decision regarding the confiscation of goods, interpretation of the Public Notice for export, and the application of relevant sections of the Customs Act, 1962 in the case.