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TMI Blog2009 (3) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 shi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 26/2002-Cus. (N.T.), dated 13-5-2002. 7. 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 alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 to entire process. The process of manufacturing goes on to prove that a leather which is not finished cannot be exported and leather originally being hide of animal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 the only authority to file an appeal against the same, if the assessment were final and it is the law of the land settled by Hon ble Supreme Court in CCE, Kanpur v. Flock India Pvt. Ltd. reported in 2000 (120) E.L.T. 285 (S.C.). Further, regarding assessable value for the purpose of export duty, they claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 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 New Buck Leather in four colour and vide the Order the Learned Respondent him self has accepted that vide Shipping Bill No. 77-DFIA other than beige colour of which the sample was drawn all are finished leather from hide of buffalo. (2) Because the Learned Respondent in his order has observed as follows :- After carefully going through all material available on record. I observe that vide Shipping Bill No. 77-DF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Shipping Bill the Learned Respondent himself admits that Black , Whisky Red are finished leather from hide of buffalo then the Learned Respondent only on the basis of surmises and conjecture and without appreciating the fact that the test report of CLRI was unspecific, the Learned Respondent should have observed that the beige colour leather was finished leather from hide of buffalo. (4) Because the Learned Respondent al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 report was given on 15-10-2007. The said inordinate delay and improper storage of sample had all possibility of loosing its basic qualities and report on the basis of said sample can not be taken as a valid piece of evidence for confirming demand of duty. (11) Because the Appellant should have followed the law laid down by the Hon ble Supreme Court in the case of Flock India Pvt. Ltd. reported in 2000 (120) E.L.T. 285 (S.C.) and ought to have appreciated the fact that covered by plethora of judgment, Shipping Bill finally assessed being an A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 leather valued at Rs. 41,49,475/-. As per provisions, the appellants submitted CLRI certificate No. 1015, dated 24-11-06. Since the said consignment was first under the DFIA scheme, it was deemed essential to draw the sample to ascertain as to 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 Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 17-4-2007 was dropped totally whereas in respect of Shipping Bill No. 77-DFIA, dated 11-4-2007, the demand barring the beige coloured finished leather was dropped and both the said shipping bills were assessed finally. The demand of Export duty amounting to Rs. 5,12,709/- (Rs. Five lacs twelve thousand seven hundred and nine only) in respect of beige coloured leather valued at Rs. 13,67,223/- under Section 28 along with interest under Section 28AB was confirmed. The appellants not satisfied with the order filed this appeal. 18. From the facts and the relevant records of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 other correspondence or any speaking order to assess the goods provisionally is absent. Therefore, the adjudicating authority s observation regarding distinguishing the law laid down in the Flocks India case (supra) is not acceptable. The findings of the Apex Court are applicable in all sorts of assessments and this view has been affirmed in a plethora of judgments. The same is also applicable in the appellant s case because any evidence of provisional assessment is not on record. One more fact that would like to mention is that the provisions of Section 17(4) can be applied only when it is proved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. The inference drawn by the adjudicating authority that the exporter s representative did not ask for one copy of sample is not supported by any evidence. The said inference can be accepted, only if the signature of the owner or his representative in token of drawl of samples is available on the sample memo or the sealed packet containing sample. I find that the order in this regard is silent therefore, the benefit of doubt raised in respect of authenticity of samples goes to the appellants. I therefore hold that the report based on samples drawn behind the owner or his representative lacks legal backing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on the grain side. Shall undergo the following operations : (a) Leveling the substance with a tolerance of 0.2 mm. (b) Combination tanning; (c) Dyeing: leather treated with synthetic (Coal tar) dye/s thus imparting a medium/dark shade; (d) Fat liquoring; (e) Staking/Boarding; (f) Producing a clean flesh side by mechanical means; (g) Buffing to produce a suede nap on the grain. 27. As can be verified, all the processes mentioned above relate to chemical treatment of the leather. Therefore, the possibilities of change in chemical composition and colour due to passag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued 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 in this case in terms of sub-section (3)(a) of the said Section 28 as the provisional assessment was not done under Section 18 of the Act as admitted by the adjudicating authority in the order. 30. I have perused the aforesaid provisions of the Act. I observe that the order of Let Export was passed on 13-4-2007 whereas, the show cause notice was served upon the appellants on 31-3-2007 i.e. after 11 months. The provisions of extended period were also not invoked in the show-cause-notice. As per provisions of Section 28(1)(b) the show-cause-notice in this case was required to be served within six months from the relevant date. The relevant date in terms of sub-section (3)(a) of Section 28 in this case was 13-4-2007 in as much as the order for provisional assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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