| SooperKanoon Citation | sooperkanoon.com/9959 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu |
| Decided On | Sep-02-1996 |
| Reported in | (1997)(89)ELT164Tri(Chennai) |
| Appellant | Jayant R. Patel |
| Respondent | Commissioner of Customs |
2. In this case, the facts are that M/s. Praga Tools Ltd. (PTL), a State Govt. Undertaking imported 100% polyester fabrics through Hyderabad and clearances of the said fabrics was sought by them with the benefits of Notification No. 159/90-Cus., dated 30-3-1990. During the course of the investigation with respect to licensing angle and the valuation angle, it was found out that a commercial quantity of 50,088.18 was imported by the abovesaid firm. It is this quantity which was confiscated in the impugned order and the confiscability of the same quantity is not seriously contested before us. Only the quantum of redemption fine of Rs. 2.00 lacs and the penalty of Rs. 20 lacs is challenged before us. The appellant who is a supporting manufacturer has sought the benefit of Notification No. 159/90 as well as Notification No. 204/92, dated 19-5-1992. The lower authorities have treated the appellant as the importer.
3. The learned authorised representative contended before us that the licence was accepted by the adjudicating officer and he held that the import is covered by the licence which is granted in this case. He also pointed out that the declared value of the goods in question was also accepted by the lower authority. He further pointed out that M/s. PTL and M/s. K.K. Harjani & Co. (KKH) against whom also show cause notice was issued was exonerated. He pointed out that in this case the adjudicating authority has dealt with the case in Para 38.7.2 and the relevant observations of the adjudicating authority is read before us.
4. He pointed out that what was imported was 100% polyester fabrics.
The licence also mentions 100% polyester fabrics. It was also pointed out that under the DEEC scheme the goods have already been exported and the replenishment is sought for these imported goods. In this connection, he drew our attention to the fact that the adjudicating authority erred in holding that it is unnecessary to examine whether the goods in question are suitable or capable of being used in the ladies dresses worn by the women folk abroad. He stated that the observations of the adjudicating authority that even if it so, the appellant is not entitled for the benefit is not correct. He further pointed out that the only basis in the show cause notice is that the goods imported with 100% polyester are not at all suitable for ladies dresses. On the other hand, they are in the nature of suitings of much heavier weight and sturdier construction. It is further supported by the trade panel/panchanama drawn on 18-11-1992. He drew our attention to these allegations as mentioned in Para 31 of the show cause notice.
Therefore, he stated that according to the adjudicating officer if these are all relevant consideration then there is no basis for the impugned order. Even otherwise, he stated that there was a trade panelist and its observation which is mentioned in the panchanama dated 18-11-1992. The appellant sought for the cross-examination of all these persons who signed the panchanama. But only one Sri M. Venkateswara Rao was produced for the cross-examination of the appellant. In fact, Sri Venkateswara Rao in his crossexamination has stated as follows : "100% Polyester fabrics were being used in the manufacturing of coats, skirts and ladies dresses etc. and he had agreed that 100% wool was thicker than 100% polyester fabrics. He had also agreed that 100% woollen fabrics were being used as dress materials in the western countries." He, therefore, stated that the only witness who was produced for cross-examination is Sri Venkateswara Rao who had admitted that these imported goods are 100% polyester fabrics and they were being used in the manufacturing of coats, skirts and ladies dresses and he had also agreed that 100% wool was thicker than 100% polyester fabrics. He also agreed that woollen fabrics were being used as dress materials in the western countries. The only witness who was produced for cross-examination has clearly admitted that these are all used for the manufacture of ladies dresses at abroad. In this view of the matter, he pointed out that there is no ground to hold that the appellants are not entitled for the benefit of the Notification No. 159/90. Alternatively, he contended that the appellant is also entitled for the benefit of Notification No. 204/92. In this connection, he relied on Chapter 1 of the EXIM Policy 1992-97 wherein at Para 4 with respect to transitional arrangements it is mentioned as follows: "Any notification made or Public Notice issued or anything done under the previous Export-Import policies, and in force immediately before the commencement of this Policy shall, in so far as they are not inconsistent with the provisions of this Policy, continue to be in force and shall be deemed to have been made, issued or done under this Policy. Licences issued before the commencement of this Policy shall continue to be valid for import/export of the items permitted therein." Relying on the above said para, he pointed out that licence issued before the commencement of this Policy shall continue to be valid for import/export of the items permitted thereunder. It was therefore stated that this licence will be applicable for the present import.
Hence, the benefit of notification is available. He stated that when the adjudicating authority has held that the licence is valid for the replenishment purpose, the finding that this licence is not valid for the import is contrary to his own findings. Once if it is held that the licence is valid, the question of denying the benefit of the notification also does not arise. This finding of the adjudicating authority is contrary to his earlier findings. No reasons are spelt out in the impugned order to show as to why such a heavy penalty is imposed on the appellant. In this regard, he pointed out the orders of the adjudicating authority in paras 42, 42.1 & 42.3. He pointed out that in this discussion there is absolutely nothing to show that he had imposed the penalty on account of the fact that the excess quantity had been imported by the appellants. He however pointed out that while denying the benefit of Notification No. 159/90, the lower authority have held that the imports were made at Hyderabad whereas the notification does not mention Hyderabad as one of the ports in which the goods could be imported for the purpose of notification. In this connection, he stated that in the notification other ports are mentioned and the Hyderabad is not mentioned thereunder and the same is not tenable for denying the benefit of notification. He relied on the decision of the Hon'ble Calcutta High Court in the case of Kalindi Woollen Mills (P) Ltd. v.UOI reported in 1994 (74) E.L.T. 827 (Cal.). He stated that denial of the benefit of the notification is not in accordance with law. He further stated that the quantity of redemption fine is excessive and the imposition of penalty is not in accordance with law. He therefore prayed that the appeal may be allowed.
5. The learned SDR submitted that the decision relied on by the learned representative in the case of Nitco Marble and Granite Pvt. Ltd. and Anr. v. CC, reported in 1996 (63) ECR 111 is not applicable to the facts and circumstance of this case. He drew our attention to Para 5 of the abovesaid judgment in this regard. He further pointed out that there was an opinion taken from the trade panelists which is mentioned in the panchanama dated 18-11-1992 wherein they have clearly stated that they examined the samples and gave their opinion in regard to the quantity of yarn of the fabrics. They have stated that they examined the yarn used in this case and found the fabrics made of 100% polyester filament yarn and the width of the sample fabrics is of 58". He also pointed out that they are of the view that these fabrics were meant for use in gents dresses popularly known as suitings. Therefore, it is proved beyond doubt that the fabrics in question are nothing but 100% polyester suitings. They cannot be used in the garments of the ladies.
He drew our attention to Para 38.7 of the impugned order and stated that the said trade panel had also examined the samples of the gowns exported on the above-mentioned date and opined that the same were made of 100% polyester filament yarn and the fabric used was found to be thin. He pointed out that the appellants are not entitled for the benefit of the notification. In this regard, he drew our attention to the decision of the Tribunal reported in 1995 (75) E.L.T. 865 in the case of M/s. Zenith Tin Works Ltd. v. CC. Replenishment can be given only by way of import of materials taking into consideration substantially which are used in the export of supplies already made.
6. The learned SDR submitted that the appellants are not entitled for the benefit of the Notification No. 159/90 in view of the fact that Hyderabad is not mentioned as a place of import in the above said notification. The Tribunal being a creature of statute is bound by the wordings in the notification. It was further pointed out that under Clause (d) of the abovesaid notification, there is a provision to the effect that where such exempt materials are imported for replenishment of materials having identical specifications and technical characteristics as those used in the manufacture of resultant products exported, the holder of an advance licence may utilise or dispose of the replenished materials in accordance with provisions of Para 250.
Therefore those materials imported must have identical specifications and technical characteristics. Therefore, it was contended before us that the appellant is not entitled for the benefit of Notification No.159/90. He drew our attention to the decision reported in 1987 (30) E.L.T. 641. Para 4 of Chapter 1 of EXIM Policy 1992-97 is also not applicable. The appellants are also not entitled for the benefit of Notification No. 204/92. Licence produced is dated 25-9-1991 much before the issue of the Notification No. 204/92. It was issued only on 19-5-1992 Since the excess quantity found was correctly confiscated by the adjudicating authority, the redemption fine is not excessive. In the facts and circumstances of the case, considering the duty evasion the penalty of Rs. 20 lacs imposed is justified.
7. We have considered the submissions. The point that arises for our determination is whether the appellants are entitled for the benefit of the Notification No. 159/90 and in the alternative 204/92. In this case, the show cause notice was issued to the appellants even before the bill of entry was filed. The adjudication order was also issued prior to the filing of the bill of entry. The goods imported by the appellants are polyester fabrics. These are covered by the licence. The department alleges that these polyester fabrics cannot be used in the ladies garments which are exported. In support of this contention, the department is relying on the panchanama dated 18-11-1992 wherein the trade panelist had made an observation that the above samples of fabrics are meant for use in the making of gents dresses. It is on this evidence the learned SDR contended before us that if these goods cannot be used in the garments of ladies which was actually exported then the appellants are not entitled for the benefit of this notification.
Therefore, he relied on the decision reported in 1995 (75) E.L.T. 865.
In this case, it is seen that the appellants have sought for the cross-examination of the persons who have signed the panchanama. In order to make the opinion of the expert admissible in evidence, it must be first shown that the persons who signed the same are experts in view of their qualification etc. In order to test this veracity, the appellants have sought for the cross-examination of these persons. The department had allowed the cross-examination of one person Sri Venkateswara Rao. In Para 38.7.2, the adjudicating officer has mentioned the deposition of these witnesses in the cross-examination.
He has stated that Venkateswara Rao in his cross-examination had stated that 100% polyester fabrics were being used in the manufacturing of coats, skirts and ladies, dresses, etc. and he had agreed that 100% wool was thicker than 100% polyester fabric. Therefore, the evidence of Venkateswara Rao who is one of the panelists is clear that this type of imported materials can be used for the manufacture of ladies dresses.
In our view of the above evidence the opinion given by the trade panelist loses its evidentiary value wherein it was stated that this is only suitable for making gents dresses lose its value. No reasons are furnished in the impugned order as to why this answer given by the witness that this can be used in the manufacture of ladies dresses cannot be accepted. The learned adjudicating officer also has not chosen to cross-examine this witnesses on this point. He has not given any reason in his order as to why this evidence of the witness Venkateswara Rao cannot be relied upon. On the contrary, in the adjudication order, it is stated that it is unnecessary to examine whether the goods in question are suitable for capable of being used in the ladies, dresses worn by the women folk abroad. We are not able to understand as to how this is not a relevant material. The very basis of the show cause notice is that the goods imported are not capable of use in the ladies garments which are exported. If that is the only allegation made in the show cause notice, we are at a loss to find out as to how this observation was made by the adjudicating officer that it is unnecessary to examine whether the goods in question are suitable or not suitable for being used in the ladies dress which was exported. In fact, in our opinion, this is the most important point to be decided in order to see whether the appellants are entitled for the benefit of Notification No. 159/90. On the contrary, we see that the Collector was convinced that these questions were used for the manufacture of the ladies garments and that is why he has allowed the import of these goods. Further, the evidence given by Venkateswara Rao clinches the issue in view of the fact that he has clearly stated that these goods imported are usable in the manufacture of suits and ladies dresses. The department has also taken five years to investigate the matter and no worthwhile evidence has been brought on record to show that these goods imported cannot be used in the manufacture of ladies dresses which were already been exported. It is further seen that the department wants to deny the benefit on the ground that Hyderabad is not a place which is mentioned in the abovesaid notification. In this connection, the learned representative had relied on the decision of the Hon'ble Calcutta High Court in the case of Kalindi Woollen Mills (P) Ltd. v.UOI reported in 1994 (74) E.L.T. 827 (Cal.). It was held in that decision that the said condition is arbitrary and discriminatory and without jurisdiction and is violative of Articles 14, 19, 18 & 34 of the Constitution of India as well as ultra vires of Section 3 of the Imports & Exports (Control) Act, 1947. This same view was taken by the Hon'ble Madras High Court in WP No. 2167 of 1990 and decided on 25-4-1990 [reported in 1991 (33) E.C.R. 419 (Mad.)] in the case of B.L.
Tandon v. UOI. This decision of the Hon'ble Madras High Court is binding on this Tribunal.
8. Reliance was placed by the learned representative on the decision of the Tribunal reported in 1996 (63) ECR 111 in the case of Nitco Marble and Granite Pvt. Ltd. and Anr. v. CC wherein at Para 4, the Hon'ble President of the Tribunal delivering the judgment on behalf of the Bench observed as follows : "4. When an exporter invoking the DEEC scheme exports goods, they are subjected to scrutiny by the customs authorities who, on satisfaction make necessary entries in the export book of the quantity, description and value of the exported goods. The export book is required to be audited by the customs authorities on receipt of foreign exchange by the exporter. The audited book is submitted along with the licence to the licensing officer under DGFT since the import application would have already been made. Such authority if satisfied on examination and scrutiny makes an endorsement regarding transferability of the licence. It is by virtue of this endorsement that licence could be transferred, thereby passing on entitlement to duty free import of the permitted raw materials or components. This being the procedure required to be followed, the matter receives scrutiny at the hands of two different authorities at two different stages. It may be possible for either of the authorities at the respective stages to examine the matter and arrive at the conclusion that the exported goods were not manufactured out of the goods in respect of which the import licence has been sought. If the customs authorities are not satisfied on examination of the exportable goods and the declaration and other papers, they would not make the requisite entries in the export book and that will be ordinarily the end of the matter so far as the DEEC scheme is concerned. If, however, the customs authorities on the basis of examination are so satisfied, they are required to make appropriate entries in the export book which along with the licence will be presented before the licensing authority to examine the entire matter and be satisfied about the correctness of the averments placed before it.
If the licensing authority is satisfied that no advance licence can be granted under the DEEC scheme in regard to the export obligation which is said to have been performed, it is open to the authority to decline to grant advance licence. At the third stage in relation to chain, namely, the stage of import, neither the exporter nor the transferee of the licence would be required to be called upon to satisfy the customs authorities once again that the duty free import entitlement was legitimate. It is unnecessary for us to consider that what would be the procedure required to be adopted if on further examination irregularities in the performance of the statutory functions at the earlier stages are discovered.
Irrespective of whether further examination or formation of opinion is permissible in the ordinary course, the importer cannot be required to prove once again the eligibility for duty free import of the permitted goods." A perusal of this decision clearly go to show that if the licensing authority is satisfied that no advance licence can be granted under the DEEC scheme in regard to the obligation which is said to have been performed, it is open to the authority to decline to grant advance licence. It was also held in that decision that at the third stage in relation to chain, namely, the stage of import, neither the exporter nor the transferee of the licence would be required to be called upon to satisfy the customs authorities once again that the duty free import entitlement was legitimate. It was, therefore, held in that decision that irrespective of whether further examination or formation of opinion is permissible in the ordinary course, the importer cannot be required to prove once again the eligibility for duty free import of the permitted goods. This is what exactly the department is now asking the appellant to do. Therefore, the abovesaid decision squarely comes to the aid of the appellant and accordingly, we hold that the appellant is entitled for the benefit of Notification No. 159/90. Alternatively, it was contended that the appellant is also entitled for the benefit of Notification No. 204/92. It is now seen that the appellants have filed the bill of entry after this notification was issued by the Govt. on 19-5-1992. Therefore, it is a relevant notification which has to be considered. As per Clause 4 of Chapter 1 of EXIM Policy 1992-97, it is made clear that licences issued before the commencement of this Policy shall continue to be valid for the import/export of the items permitted thereunder. It is to be seen that whether this licence is a quantity based licence and the quantity based licence shall specify the names and descriptions of items to be imported and the quantity of each item to be imported and the c.i.f. value of imports. In the present licence, the quantity as well as the value descriptions are clearly mentioned and therefore it is a quantity based advance licence. This licence issued for the previous policy period will continue to be valid for the present period also in view of the transitional arrangements as contained in Para 4 of Chapter 1 of EXIM Policy 1992-97. This argument of the learned representative is therefore having force and we accept the same. Therefore the alternative argument of the learned representative is that benefit of Notification No. 204/92 applies to the appellant. In this notification Hyderabad is also included as one of the place wherein the import can be made. On this count also, the appellants should get the benefit. Therefore, we are of the view that the import of the goods is permissible and denying the benefit of these two notifications in the impugned order is not in accordance with law.
We set aside the same and hold that the appellants are entitled for the benefit of these notifications in respect of the goods which are covered by the licence and not with respect to the goods which are found in excess.
9. In regard to excess goods, the plea of the appellant was that they did not know about the excess and therefore they stated that these goods are not excisable. The learned representative stated that there is no mis-declaration in this behalf as the bill of entry has not yet been filed and there is nothing to say that the appellants were aware of the excess. There is nothing on record to show that they have made any such correspondence with the supplier that it is in excess. In any transfer, the moment it is found that these goods weighing 50,088.18 mtrs. are in excess of the licence granted to the appellants and also the declared invoiced quantity, they are confiscable. The only question to be decided is whether the redemption fine of Rs. 2.00 lacs is required to be reduced.
10. The learned representative stated that these goods are lying for more than 5 1/2 years, as the import was made in the year January 1992.
The goods according to him have diminished in their value and these circumstances are also relevant for the purpose.
11. We have considered the submissions. In the fact and circumstance of the case, we reduce the redemption fine to a sum of Rs. 1.50 lacs. The appellants are also liable to pay the appropriate duty in accordance with law at the time of clearance of these goods after payment of the redemption fine.
12. The next question is whether penalty can be imposed on the appellants. It is now seen that penalty imposed on the appellant is under Section 112(a) of the Customs Act. It is also seen that this quantity was not invoiced which is in excess of the licence of the appellant. They have also not taken this matter with the supplier.
There is no record in this case to show that the appellants have mentioned about this fact to the supplier that they have sent this excess quantity. The appellants are therefore liable to be penalised in this regard. We have already extended the benefit of the notifications to the appellant. Now the penalty to be imposed will be only with respect to the excess quantity which is imported and the learned adjudicating officer has not given any specific reasons for imposing such huge penalty. In the fact and circumstances, the penalty is reduced to Rs. 75,000/- (Rupees seventy five thousand).
13. At this stage, the learned representative stated that there was no point in the show cause notice that the appellant has to pay the storage charges and that the adjudicating authority should not have given any finding in this regard. We agree. However, the administrative Collector is to look into this aspect and make appropriate orders in this behalf.