9911796707
TMI Blog2009 (3) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 11-4-2007 under Section 50 of the Customs Act, 1962 under shipping bill and Bill of Export (Form) Regulations 1991 requesting to allow export of 100096.25 square feet of finished leather valued at Rs. 41,49,475/-. As per provisions, the appellants submitted CLRI certificate No. 1015 dated 24-11-06. Since the consignment was first under the DFIA scheme, it was deemed essential to draw the sample to ascertain whether the goods declared as 'finished leather' were actually 'finished leather manufactured out of hides of buffalo'. Accordingly, sample no. 267-T/07 (for test) & 304-R/07 (for record) were drawn out of the goods relating to shipping bill no. 077/DFIA dated 11-4-07 and sample no. 267-T/Exp./07 was sent to Regional Centre for extension and development (Central Leather Research Institute, Chennai) Kanpur (herein after referred as CLRI) for testing on Test form No. 267/T/Exp./07, dated 13-4-07 vide C. No. VIII (6)/ICD/JRY/Cus/KNP/63/ 2000, dated 13-4-07 and the assessment was made provisional pending test of sample by the proper officer and export was allowed. Further on 17-4-07, the appellants submitted another shipping bill no. 082/DFIA, dated 17-4-07 proposing to export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellants submitted detailed reply in respect of allegations made in the show cause notice, which are summarized as under :- * The first shipping bill no. 77-DFIA has been finally assessed as per the endorsement made on the shipping bill on 12-4-2007, therefore, it merits to be kept out of the purview of the show cause notice. Shipping Bill No. 00077/BFIA, dated 11-4-2007 has been finally assessed and not provisionally as stated in the SCN. The Hon'ble Tribunal in 2008 (224) E.L.T. 241 (Tri.-Mumbai) in Bittessee Export Import held that once assessment is not challenged by revenue by filing of an Appeal it attains finality and by invoking charge of mis-declaration, the revenue cannot ask for reassessment of consignment. The said law has been laid down by the Hon'ble Tribunal following an earlier judgment in the case of Lord Shiva Overseas reported in 2005 (181) E.L.T. 213 (Tri.-Mumbai). Further reliance is placed on judgment of Calcutta High Court reported in 2001 (133) E.L.T. 558 in M.M. Exports, wherein the Hon'ble Calcutta High Court has settled law that department not competent to reopen a case when final assessment already made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt being strongly challenged is not sustainable in the eyes of law. The report is non speaking to the extent that the goods exported, if are not finished leather, then what the goods are? Secondly, the report does not detail as to under what norms the said sample has been tested by CLRI. * The party sought for the cross examination of the Scientist-in-Charge of testing agency CLRI on the ground of technical necessity. Especially when there is no other evidence in the show cause notice to support the allegations except the Test Report. Reliance is placed on 1994 (69) E.L.T. 39 - Indoplast v. CC, Kandla and - 2003 (157) E.L.T. 627 (Mad.) - Tulsiyan NEC v. CC, 2004 (167) E.L.T. 331 - Ultra Fine Filteres (P) Ltd. v. CCE, Jaipur-II. * That no foreign buyer would ever accept any unfinished leather or leather which is not matching with the specified norms. As given in the Exim Policy with regard to specification of finished leather, the raw hide at the outset exposed to the process of liming with lime and sodium wherein the sodium have quality of hair removing subsequently scatting is done, and is further subjected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut to use, if not stored properly the sample would dilapidate and would have a snowballing effect on the sample precipitating the same for no use as such, and in view of the above decisions it behoves that the sampling being faulty and no reliance can be placed on the same, for fixing an artificial liability of export duty on them for none of their fault. * That as alleged, had this leather not been finished, the Italy Customs would have not have cleared the consignment because of alleged mis-declaration. * They have also submitted the CLRI sample of Buff Split Barton Printed upper leather of black colour finish leather exported vide Shipping No. 00082/DFIA, dated 17-4-2007. By no stretch of imagination the printing leather can be taken as leather which is not finished. * They have requested for re-quantification of duty liability as the drawing of sample was faulty and the test report being vague and unspecific, the same is not reliable evidence. The said submissions are only an additional plea and primarily the said shipping bill cannot be re-opened and the revenue had t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue on the basis of assumptions, presumptions, surmises, and conjectures, cannot proceed to raise a demand of export duty @ 60% under Second Schedule of Central Excise Tariff Act, 1985 even on Shipping Bill No. 00082/DFIA, supra. * That penal provisions not having been invoked in the Show Cause Notice, no penalty can be imposed at this stage. Further, demand for interest is also not legally sustainable, even for provisional assessment. 8. The adjudicating authority after examining the entire issue dropped the demand of Customs duty in respect of the Shipping Bill No. 82-DFIA and also the Customs duty in respect of all the Finished Leather covered by Shipping Bill no. 77-DFIA, except the finished leather of Beige Color in respect of which the report from CLRI was not positive. 9. Being aggrieved with the impugned order, the appellant filed the instant appeal along with application for stay under Section 129E of the Customs Act, 1962 mainly on following grounds : (1) Because the Learned Respondent ought to have appreciate that fact that in respect of Shipping Bill No. 77-DFIA, the Appellant had exported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention sample of leather in light of Public Notice No. 3 ETC(PN)/92-97, dated 25-5-92 and certifies that the leather to above SATISFIES the norms and condition laid down in the aforesaid order for the type of finished leather as declared i.e. Buffalo Coloured Nubuck Shoe Upper Leather (vi-1-D)." From the above, I observe that all the exported goods were covered with pre-tested CLRI samples and the examination reports of both the Shipping Bills clearly mention that the exported goods were found to be as per CLRI samples covering the consignment. The first consignment was containing leather in four colours, namely 'black', 'whisky', 'beige' & 'red' and second consignment was containing leather of only 'black' colour. If at the time of examination of first consignment, it would have appeared that the goods are not finished leather, the examination report would have mentioned that same and the samples of all the four colours would have been taken, at least for record purpose. It, therefore, behoves that the Learned Respondent has himself admitted that the beige colour leather is finished leather from the hide of buffalo. (3) Because when covered by one Ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent summoned the CLRI's Authorised person, the Appellant would have proved that the method of CLRI was faulty and the report was vague and unspecific and cannot be relied upon to fasten an artificial liability of Export Duty on hypothetical basis. (9) Because the Appellant further say that the Learned Respondent further should have appreciated the fact that the case of Ruchi Soya Industries v. CCE, Jamnagar reported in 2006 (206) E.L.T. 827 (Tri.- Mumbai) covered the case of the Appellant countering the CLRI Report, for the reason that finished leather, of a particular colour, being a bovine product has to be stored at a particular temperature before subjecting to testing and it was also pointed out that if subjected sample get exposed to sunlight it will loose its colour, texture. It was also pointed out that delay in draw of sample would make sample not fit for test being a bovine product it will get dilapidated as the said product i.e. finished leather has limited self life if not put in to further use in the manufacture. (10) Because the Learned Respondent also should have appreciated the fact that sample was drawn on 12-4-2007 and testing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents on record, the grounds of appeal, the case laws relied upon by the appellants mentioned in the grounds of appeal and those submitted at the time of personal hearing, the additional written brief submitted at the time of personal hearing. The appellants have filed the appeal along with the application under Section 129E of the Customs Act, 1962. I am taking up the stay application as well as the appeal simultaneously, in the interest of speedy disposal of the appeal. 12. The facts of the case in brief are that the appellants having import- export code no. 0694004758 are engaged in the manufacture and export of leather goods. On 11-4-07, they proposed to export the goods namely finished leather made from hides of buffalo falling under Sl. No. 14 of the IInd Schedule of the Customs Tariff 1975 on the strength of application dated 9-4-07 submitted to Director General of Foreign Trade under 'Duty Free Import Authorization' scheme (DFIA in short). They submitted shipping bill no. 077/DFIA, dated 11-4-2007 under Section 50 of the Customs Act 1962 under shipping bill and Bill of Export (Form) Regulations 1991 requesting to allow export of 100096.25 square feet of finished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngth of CLRI certificate, exported the same without payment of export duty leviable thereon as per the IInd schedule of the Customs Tariff 1975 read with notification. By virtue of this act they have evaded the payment of export duty to the tune of Rs. 43,51,083/- @ 60% on FOB value of Rs. 72,51,805/- in respect of the leather other than finished leather exported by them in the garb of finished leather. 16. Accordingly, the appellants were required to show cause to the Assistant Commissioner, ICD, JRY, Kanpur vide show cause notice bearing C. No. VIII(6)ICD/JRY/Cus/KNP/316/07/1526, dated 28-3-2008 as to why the 'leather other than finished leather' exported by them may not be placed under Sl. No. 14 of the IInd schedule of the Customs Tariff 1975 (Export Tariff Schedule); and export duty to the tune of Rs. 43,51,083/- may not be demanded from them under Section 28 along with interest @ 15% leviable thereon under Section 28AB of the Customs Act, 1962 read with Notification No. 26/2002-Cus. (N.T.), dated 13-5-2002. 17. On the basis of detailed reply to the show cause notice, the export duty in respect of the consignments covered under Shipping Bill No. 82-DFIA, dated 17-4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under sub-section (3); but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be re-assessed to duty." 21. As regards the submissions hereinbefore, after going through the facts of the case, I find that the adjudicating authority's observation to the extent of applicability of said provisions are liable to be accepted. The provisions of Section 17(4) clearly empower the authorities to adopt the procedure for re-assessment in case of declaration is found to be incorrect at letter stage, but at the same time I observe that the adjudicating authority has not succeeded in proving that the facts of permission of assessing the duty, provisionally and drawl of sample was known to the appellants. The shipping bill pertaining to said consignment is silent on this aspect. Any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that their buyer has already confirmed vide their letter dated 25-5-2007 that they are fully satisfied with the goods; (vi) the party has sought cross examination of the Scientist-in-Charge of testing agency CLRI on the ground of technical necessity, especially when there is no other evidence in the show cause notice to support the allegations except the Test Report. 23. The adjudicating authority as regards procedure for sampling has submitted that due procedure of drawing sample was followed. He has mentioned that as a routine practice a copy of sample is drawn for the exporter also, if he so desires. In this case, one sample was drawn for test and another for record, which clearly goes on to show that the exporter's representative did not ask for one copy of sample. I do not agree with these submissions of the adjudicating authority. Section 144 clearly stipulates that samples are to be taken in presence of the owner thereof. No scope has been left for owner's desire or for his insistence for representative sample. Presence of owner at the time of taking samples has been made statutory to avoid any conflict in case the test result is not as per the expectations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods as per the test report. The other test report dated 15-10-07 (received almost after a year) on the basis of sample sent by the department in respect of same consignment was differing as can be seen from the report itself, which is being reproduced below :- "Kindly refer to your Test form no. 267/T/Exp/07, dated 13-4-07 regarding verification of given sample of leather. After examination, it is verified that given sample is NOT a FINISHED LEATHER as per norms. It may please be noted that the above opinion is technical and not intended for any advertisement/publicity/legal purpose. The institute shall be indemnified against any dispute arising out of issue of this letter. I observe that the time span between two reports was almost of one year. The possibilities of change in composition of the chemicals coated on the leather cannot be ruled out and due to this very reason the look and colour of two samples of same leather may vary. The norms as prescribed under the Public Notice No. 3 ETC(PN)92-97 specify that :- Coloured Nubuck Leather should have following qualities :- Shall be drum dyed to a level and uniform shade with full dye penetration and shall have velvety nap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be made applicable in the appellants case because the declaration of the appellants was not found to be incorrect or faulty. 28. I further notice that the appellant has also submitted a letter of the buyer, wherein it has been mentioned that the consignment exported to him under the said shipping and invoice was "Buff finished Nubuck Leather" of four colours including beige coloured. I observe that the adjudicating authority has opined that such letters cannot be a deciding factor. I differ with the opinion of the adjudicating authority. The importance of this letter cannot be ignored because the buyers abroad would have never accept the material if the same was not as per requirement specified in the purchase order and also would not have issued any certificate like that. I therefore take this evidence on record. 29. The appellants at the time of personal hearing submitted that the demand was also time barred as the show-cause-notice under Section 28 of the Customs Act, 1962 without invoking the provisions of extended period, for recovery of export duty was issued on 28-3-2008 i.e. after more than six months from the date of export, which is the relevant date i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
