1986 (12) TMI 215 - AT - Central Excise

Appeal success: Confiscation and penalties overturned due to procedural lapses and Agmark certificate discrepancies.

The appeal involved misdeclaration of goods as Basmati rice, confiscation, and penalties imposed by the Additional Collector, validity of Agmark ... Export - Misdeclaration Issues Involved:1. Misdeclaration of goods as Basmati rice.2. Confiscation and penalties imposed by the Additional Collector.3. Validity and reliability of Agmark certificates from different regions.4. Discriminatory treatment compared to other exporters.5. Legal procedures and adherence to statutory provisions.Detailed Analysis:1. Misdeclaration of Goods as Basmati Rice:The appellants, M/s. Sachdeva & Sons, Amritsar, filed shipping bills for exporting rice to Dubai, supported by a certificate from the Deputy Senior Marketing Officer, Directorate of Marketing and Inspection, Amritsar, certifying the rice as Basmati. However, upon examination by Customs authorities at Bombay, the rice was found to be other than Basmati. The Customs authorities referred the matter to the local Agmark authorities, who confirmed that the rice did not meet Basmati specifications. The appellants argued that the proper procedure for Agmarking was followed by the Amritsar authorities and disputed the reliability of the Bombay Agmark report.2. Confiscation and Penalties Imposed by the Additional Collector:The Additional Collector confiscated the consignments and imposed fines and penalties, citing misdeclaration under Section 50 of the Customs Act and violation of Export (Control) Order 1977. The appellants contended that the contravention of Section 50 was a procedural issue and did not merit such severe penalties. They also argued that a mere caution should have sufficed, as shown in a similar case involving another exporter, M/s. Empire Exports, Bombay.3. Validity and Reliability of Agmark Certificates from Different Regions:The appellants relied on the Agmark certificate from Amritsar, which certified the rice as Basmati. The Bombay Agmark authorities, however, found a high percentage of non-Basmati rice. The appellants argued that the Bombay authorities did not follow the proper procedure for Agmarking, as their report lacked details on the length/breadth ratio of the rice grains. The Tribunal noted that the exporter should have sought a third opinion in case of conflicting reports, as prescribed in the Basmati Rice Grading and Marking Rules, 1979.4. Discriminatory Treatment Compared to Other Exporters:The appellants claimed discriminatory treatment compared to M/s. Empire Exports, whose consignment was allowed to be taken back without heavy penalties. The Tribunal, however, noted that the facts of that case were not before them and could not merit a comparison.5. Legal Procedures and Adherence to Statutory Provisions:The Tribunal examined the statutory provisions under the Agricultural Produce (Grading & Marketing) Act, 1937, and the Basmati Rice (Export) Grading and Marking Rules, 1979. The Tribunal found that the Bombay Agmark authorities did not follow the prescribed sampling and testing procedures. The Tribunal also noted procedural lapses by the Additional Collector, such as not issuing a show cause notice and not considering the appellants' submissions during the personal hearing.Separate Judgments:- K.S. Dilipsinhji (Member Technical): Upheld the Additional Collector's order, stating that the certificate from the Senior Marketing Officer, Bombay, carried more weight and justified the confiscation and penalties.- K. Gopal Hegde (Member Judicial): Disagreed with the confiscation and penalties, citing procedural lapses and conflicting Agmark certificates. He argued that the appellants should have been allowed to take back the consignments.- K.L. Rekhi (Third Member Technical): Agreed with Member Judicial, emphasizing the need for further investigation to resolve conflicting certificates and the lack of evidence to hold the exporters guilty of misdeclaration.Final Order:Based on the majority opinion, the appeal was allowed, and the order of confiscation and penalties was set aside. The fines and penalties, if paid, were ordered to be refunded to the appellants.