The Chennai bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no redemption fine when goods are allowed to be re-exported.
The appellants viz; M/s. ALM Leather Exports, M/s.Futan Leather and M/s. Avanthi Leathers Exports filed shipping bills dated 26/3/2012 and 27/3/2012 for the export of an item declared as “Goat shoe suede pure finished leather” through Customs House Agent (CHA) M/s. Kalki Shipping Associates.
On examination, it was seen that the consignments in respect of Shri ALM Leather Exports and M/s. Futan Leathers did not conform to the standards of finished leather. Samples were drawn and sent for testing to CLRI, Chennai.
The report was received stating that the goods did not fulfil the standard of finished leather as per public notice no.21/2009/14 dated 1/12/2009 for the reason that the processes of dyeing and shaving/snuffing had not been done. The appellants thereafter got provisional release of the goods, and after reprocessing the goods were exported.
The department issued the present Show Cause Notice alleging the attempted export of prohibited goods and proposing to confiscate the goods, to impose redemption file and penalties. After due process of law, the original authority held that as the goods which were unfinished leather were attempted to be exported as finished leather, the goods were liable for confiscation. As goods were already provisionally released and re-exported after reprocessing, the adjudicating authority imposed redemption fines and penalties. The proceedings were dropped regarding Arman Leather Exports.
Ms. V. Pramila appeared and argued on behalf of the appellants. The charge on the appellant exporters is that they attempted to export the unfinished leather in the guise of finished leather with an intent to escape export duty at the rate of 60% and to avail undue benefits on the export of goods. The counsel submitted that the department has concluded that the goods did not conform to the standard of finished leather by relying on the Public Notice No.21/2009 dated 1/12/2009 and the Central Leather Research Institute (CLRI) report.
The goods were released provisionally on execution of bond and bank guarantee. The appellant reprocessed the goods and exported the same after satisfying the norms as prescribed under the Public Notice. After such export, the impugned order has been passed holding that the goods which earlier did not conform to standards of the finished leather were attempted to be exported.
It was submitted that CLRI had pointed out the absence of a few processes, based on which the department alleges that the leather sought to be exported was not finished leather. According to the CLRI report dated 3.7.2012, the goods did not conform to the standard of finished leather for the reason of Absence of Dyeing and Absence of snuffing imparting visual evidence of removal of grain.
The decision in the case of Vijayalakshmi Leathers Vs. Commissioner of Customs, to argue that when the process of dyeing, as well as snuffing/shaving, was absent, the Tribunal held that these were minor variations. It was observed that the appellant having incurred considerable financial loss on account of taking the goods back for reprocessing and the delay in carrying out their exports and realization of export value, the Tribunal set aside the redemption fine and penalties imposed by the department.
It was submitted that the CHA had filed the shipping bill on behalf of another exporter M/s. Elite Leather also for 64 bundles which was examined and found to be finished leather. Later the goods of the present appellants which were of 63 bundles also came to the examination area of the Customs.
It was found that Shri Anand had deliberately tried to substitute the unfinished leather consignment of the appellants with the finished leather consignment of Elite exports to export the unfinished leather of the appellants without payment of duty. These facts have been admitted by Shri Anand in his statement recorded on 27/4/2012 given under Section 108 of the Customs Act 1962.
Shri Anand acted on behalf of the CHA firm. The penalties imposed on the CHA as well as the employee therefore legal and proper. It was also argued that the appellant exporters had knowledge that the export goods were unfinished leather, and therefore, the redemption fine and penalties imposed are proper.
A two-member bench comprising Ms Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) observed that the confiscation of the goods is not warranted and justified. Accordingly, the redemption fine imposed is also to be set aside. The appellants have already incurred considerable financial loss on taking back the goods reprocessing and exporting goods.
The CESTAT while allowing the appeal set aside the impugned order.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
