The Miscellaneous application has been filed in terms of CEGAT Notice No. 1 of 1987, dated 23-1-1987 for permitting the appellants to file the appeal before the Tribunal, in the Southern Bench at Madras, since the appellant is residing within the jurisdiction of Southern Region at Madras. The petition is allowed.
2. This is an application for waiver of prior deposit of penalty of Rs. 10,000/- imposed on Shri N. Krishnamoorthy, Managing Partner of M/s.
Deccan Enterprises, the petitioner herein. Since we propose to dispose of the appeal itself on a question of law with the consent of the parties, prior deposit of penalty is dispensed with pending disposal of the appeal today.
3. Since both the appeals arise out of a common impugned order and are interconnected, they are taken up together and disposed of by a single order. The appeals are directed against the Order of Collector of Customs (Preventive), Calcutta, dated 24-9-1986, confiscating 148 bales of cotton powerloom fabrics "Seconds" FOB value of Rs. 4,95,016.15 under Section 113(d) and permitting redemption of the same to the appellant on payment of a fine of Rs. 2,50,000/- besides a personal penalty of Rs. 10,000/- on the appellant Shri Krishnamoorthy.
4. On 24-5-1985 at about 4.45 p.m. on behalf of the Appellants, Shri Swapan Kumar Seth presented an Export Application No. 3416, dated 16-5-1985 which was appraised on 23-5-1985 along with the Export Consignment loaded in a lorry for examination and clearance. The goods were declared to be 100% cotton power loom fabrics "Seconds". The authorities examined the goods and found that the word "Seconds" was not stamped on the fabrics as per Millmade Cotton Cloth Inspection Regulation, 1966 and Textile Control Order. The goods were, therefore, seized by the authorities under a Mahazar as per law on a reasonable belief that prime or first quality goods were illegally attempted to be exported out of India in contravention of law. The authorities sent samples of the goods for analysis by the expert body namely, the Textile Committee and the Textile Committee reported that if the quality of the goods are "Seconds" export is permissible without 'Quality Inspection Certificate' from the Textile Committee and in the present case, the Textile Committee found -that the length of the samples were inadequate for them to give a definite opinion with reference to the nature of the goods as to whether they are "Seconds" or not. The authorities, therefore, sent a second set of samples as required by the Textile Committee and after a detailed sample analysis, the Textile Committee gave the results of the analysis and observed, that the goods were "Seconds". However, as the appellant had not marked the goods as "Seconds" in terms of Millmade Cotton Cloth Inspection Regulation, 1966, proceedings were instituted against the appellant which ultimately culminated in the present impugned order now appealed against.
5. Shri Vasudevan, the learned Consultant, submitted that the gravamen of the charge against the appellant is one of misdeclaration and undervaluation and under the impugned order, the appellants have been exonerated of the same in clear and categorical terms. Nevertheless, the adjudicating authority chose to confiscate the goods and impose a penalty on the appellant under the impugned order on the ground that the appellant had not marked the goods "Seconds" in terms of the Millmade Cotton Cloth Inspection Regulation, 1966. It was urged that even if there is any infraction in not marking the goods as "Seconds" that would not clothe the Collector of Customs with any authority or jurisdiction under the Act either to effect confiscation or to impose penalty. The learned Consultant submitted that the goods in question are admittedly permissible for export under OGL and the goods were declared by the appellant as "Seconds". When these facts have been clearly found in their favour in the impugned order by the adjudicating authority, it was submitted that consistent with such finding viz. that there was neither mis-declaration nor under-valuation, the goods should have been permitted for export without being confiscated.
6. Shri Knshnan, the learned Departmental Representative submitted that in the present case there was no mis-declaration or under-valuation and the only infraction on the part of the appellant is not to have marked the goods "Seconds" though the goods under Export were really "Seconds" only. The learned Departmental Representative did not dispute the fact that if at all for the infraction, if any, committed by the appellant, it is only the competent authorities under the Textile Committee Act, 1963 who should have initiated action.
7. We have carefully considered the submissions made before us. It is not disputed that 100% Cotton Powerloom Fabrics "Seconds" are permissible for Export under OGL 3 under the relevant Import-Export (Control) Act, 1947 and under the relevant Export Policy for the year in question. We find that except for hot stamping the goods as "Seconds", the appellant had fulfilled all other formalities enjoined on them by law. We further find that the samples of the goods were analysed by the Expert Body, namely, the Textile Committee, at the instance of the Customs authorities and the goods were found to be "Seconds" permissible for export as per law. We also find from the records that the appellants had declared the goods as 100 % Cotton Powerloom Fabrics "Seconds" in the export application arid as well as in the Invoice. It is unfortunate that even the opinion of the Textile Committee which is admittedly in favour of the Appellants has not been set out in the show cause notice. The adjudicating authority himself has observed in the impugned order - "I am also quite surprised to find that while references were made to the Textile Committee - not once but twice and the Textile Committee's opinion was duly tendered - not once but, twice, it is not reflected or incorporated in the Show Cause Notice." When the Textile Committee's opinion is very much in favour of the appellants and when the indisputable fact remains that the goods in question are "Seconds" and clearly permissible under the relevant provisions of law for export, we are at a loss to understand as to why the goods should have been confiscated at all and more-so a penalty levied on the appellant under the impugned order. In this context, we would like to extract the observations of the adjudicating authority himself.
"It is very clear that expert opinion was obtained by the office and according to the expert opinion the goods sought to be exported were indeed Second as declared by the exporters in the export application as well as in the invoice but were not marked as such on the DCS. Therefore, the charge made by the Department that the goods were illegally sought to be exported by misdeclaring the prime and fresh quality cotton fabrics as Seconds fails; the charge has no material or factual basis. The charge of the Department that there was attempt at under-valuation also ipso-facto fails." 8. In the light of the above categorical finding by the adjudicating authority in the impugned order, in our opinion further proceedings against the appellant should have been dropped and goods should have been permitted for export. The authorities could have also directed the appellant to impress the goods with the stamp "Seconds" in terms of the Regulation under the Textiles Act referred to above, since the export of goods earns valuable foreign exchange to the country. Be that as it may any contravention under the provisions of the Textile Committee Act, 1963 or the regulations made thereunder would not invest the Customs authorities with any jurisdiction to effect confiscation under the provisions of the Act, in terms of Section 113(d) of the Act. We, therefore, hold that the order of confiscation of the goods under the impugned order is without jurisdiction under the Act. In this view of the matter, we set aside the order of confiscation of the goods under the impugned order and consequently the penalty imposed on appellant in Customs Appeal No. 262/87. In the result the impugned order appealed against is set aside and the appeals are allowed.