The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) of Chennai Bench has held that a minor deficiency in processing leather does not make it as not fully finished and is allowable for free export.
M/s. Nabisha Leathers, the appellants filed a Shipping Bill No. 4090836 dated 16.03.2010 for the export of 37 cartons of “Goat Shoe Suede Upper Leather” of four different colours. On examination of the said consignment, the Appraising Officer (Leather Expert) opined that the item declared as “Goat Shoe Suede Upper Leather” of grey colour packed in 13 cartons might not be satisfying the norms prescribed for finished leather vide DGFT Public Notice No. 21/2009-14 dated 01.12.2009.
The sample was sent to the Central Leather Research Institute (CLRI), Chennai for their expert opinion. The consignment was allowed for export provisionally on the strength of a bond executed by the exporter.
The appellant argued that the item exported was finished leather only as per the purchase order and the buyer was satisfied with the consignment and effected full payment by accepting the goods as finished leather
In the case of Collector of Customs, Madras Vs. M. Aslam Aejaz & Co. it was held that where several processes are involved in converting raw leather into finished leather, a minor deficiency in the processing may not ipso facto make the leather not fully finished.
The department respondent justified the confiscation of the exported leather, demand of export duty, and imposition of penalty as the CLRI report has testified to the absence of snuffing.
A perusal of the DGFT’s Public Notice indicates that shaving and snuffing operations are the last in the manufacture of Suede Leather. Shaving is a mechanical operation of reducing the substance of leather to a uniform thickness. Moreover, snuffing is the process of buffing for the removal of visible grains.
A Coram comprising of Ms Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) observed that shaving/snuffing as used in the DGFT’s Public Notice dated 01.12.2009 to mean shaving or snuffing. As all the major manufacturing operations are carried out on the impugned goods, the same could not be termed as unfinished goods.
The Tribunal observed that in the case of Collector of Customs, Madras Vs. M. Aslam Aejaz & Co. held that to the effect that minor deficiency in the processing may not ipso facto make the leather not fully finished as the appellant’s have carried out all the major operations.
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