TaxTMI 
TaxTMI 
1990 (2) TMI 197
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....ack inter alia declaring on each of the shipping bills : (a) That 923 metres laminated polyurethane foam costing Rs. 27,690 were used in the consignment which was imported vide bill of entry No. 10102 dated 25-2-1986 duty free under DEEC Book No. 014905. (b) That the shipment was being made in discharge of under duty exemption scheme against advanced licence No. P/L/3089861 dated 19-12-1985 for Rs. 30 lacs. (c) That the exempt material, 923 mtrs. LP foam has been used for manufacturing of the resultant product. On examination of the goods by the Customs Officer in the light of declaration made by the appellants it was found that the foam actually used in the manufacture of ladies boots uppers described in the shipping bill was much less than the quantity indicated in the shipping bill. Statement of Shri Sushil Kumar Wason, partner of the appellant firm was recorded on 24-5-1986 wherein he inter alia stated that the quantity of PU foam used has been shown as 923 mtrs. on the basis of the norms fixed for this item in the relevant Import Policy i.e. to say 13 pairs equal to four sq. mtrs. of PU foam (which works out to .308 per pair) and that the actual consumption of foam for the....
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....hey had been allowed for import of 13 pairs, 4 sq. mtrs. of PU foam and due to this misunderstanding they had declared the quantity used calculated on the above basis and that they had no mala fide intention and the error is a technical one due to ambiguity in the import policy. However, the Additional Collector did not agree with the said defence plea advanced by the appellants holding that "as the norms fixed in Annexure V to Appendix 9 are purely for clearing the application for grant of advance licence. The same norms cannot be automatically applied for export of resultant products without taking into consideration the actual imported material used in manufacture. It is precisely for this reason the exporter is required to declare the actual duty exempt material that has been used for the manufacture of the resultant product. It is abundantly clear that the declaration regarding the quantity of laminated PU foam used and more particularly declaration at Sl. No. 2 given by the party was substantially wrong. If the exporter had succeeded in exporting the goods they would have evaded customs duty on 1911.86 mts. of PU foam and valued at Rs. 55,587.83, the duty on which works out t....
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....d been preparing the shipping bills in the same manner as they had been doing in the past and at least seven such consignments, the particulars of which were declared in identical manner had been shipped by air through Air Cargo Complex at Delhi between the months of January and April 1986 and it was only in the month of May 1986 that the department held the appellants guilty of making wrong declaration in the three shipping bills filed for exporting the goods in question under reference. In this premises it was submitted that keeping in view the past practice the department should have allowed the export of the subject goods under the three shipping bills filed by the appellants as stated above. It was also contended by Shri K. Narasimhan, learned counsel for the appellants that since the three shipping bills under reference were detained and the adjudication proceedings commenced the appellants were rendered helpless because of the commitments to export the shoe uppers by specified date and therefore, in order to expedite the proceedings the appellants waived the requirement of issue of a formal show cause notice and submissions of written reply and appeared before the Additional....
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.... used in the manufacture of 9000 pairs of Leather shoe uppers "wastages and rejection" during the manufacturing process were not taken into consideration, though in the letter dated 13th June, 1986 this fact was expressly brought to the notice of the Additional Collector of Customs (a photocopy of it was placed on our record by the appellants). As regards the applicability of clause 3(A) of the Export Control Order, 1974 it was contended that the same was nonexistent and it appears that the relevant clause and order which was in the mind of the Additional Collector was clause 3(3) of the Export Control Order, 1977, which speaks that "If in any case, it is found that the value, sort, specification, quality and description of the goods to be exported are not in conformity with the declaration of the exporter in those respects or the quality and specification of such goods are not in accordance with the terms of the export contract, the export of such goods shall be deemed to be prohibited." In the alternative it was also contended that the basis adopted by the Additional Collector for computing the duty difference between the declared quantity and quantity allegedly found to have bee....
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....antity was declared on the shipping bill under reference. This defence was negatived by the Additional Collector observing that the norm fixed in Annexure V to Appendix 19 of the said Import & Export Policy are purely for clearing the application for grant of advance licence and therefore the same norms cannot be automatically applied for export of resultant products without taking into consideration the actual imported material used in manufacture and further that it is precisely for this reason the exporter is required to declare the actual duty exempt material that has been used for the manufacture of the resultant product. 8. To appreciate the rival contentions of the parties it has become necessary for us to set out the relevant provisions of the Import & Export Policy, 1985-88 under reference. Chapter XVI provides for a "Duty Exemption Scheme" and contains only one paragraph (paragraph 242), which runs thus - "242. Duty Exemption Scheme also known as Advance Licensing Scheme was initially introduced in the Import Policy for 1976-77. The details of this Scheme, as amended, with the procedures for issue of different categories of Advance Licences thereunder, are given in Appe....
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.... 19 as referred to in paragraph 7 as stated above provides that the Advance Licensing Committee has already approved input-output norms in various types of cases mentioned therein and the applications of the parties whenever received for the grant of Advance Licences are cleared on the basis of these norms. In this Annexure at Srl. No. 80 the description of the export product is given as 'Leather shoe uppers' and in Col. No. 3 at Srl. No. 3 the description of raw-material against this export product is inter alia stated as "laminated Foam" and in Col. No. 4 quantity of export product is shown as 13 pairs and in Col. No. 5 quantity allowed for import is shown as 4 sq. mtr. and in Col. No. 6 the quantity allowed for duty exemption benefit is again shown as 4 sq. mtr. 9. In the instant case from the copy of the application made by the appellants for issue of the Advance Licence (a photo-copy filed by the appellants is on record) we find that in Part III of the Application (page 4) details of materials sought to be imported duty free are given. Under group (a) - 'Arranged and shown separately for each kind of export product', description of the raw-material to be imported is given at ....
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....ctual duty exempt material that was used in the manufacture of the resultant products in the shipping bills. In other words, on each of the 3 shipping bills the appellants stated that 923 meters laminated polyurethane foam was used for manufacturing of the resultant product (totally comes to 2769 linear mts. or 4153.5 sq. mts.). On being asked as to why in the shipping bills the appellants have shown quantity as 923 metres instead of sq. mts., Shri Sushil Kumar Wasan in his statement dated 24-5-1986 came out with an interesting explanation that Metre and Square metre implies the same thing. To quote his own words "that in the Shipping Bills we have shown quantity as 923 metres instead of Square metre because Metre and Square metre implies the same thing. However if the consumption was in linear Metre then it would have been written as such". 10. As stated above on the test result conducted by Sri Ram Institute of Industrial Research, Delhi the quantity of PU foam used in the manufacture of 9000 pairs in question was found to be only to the extent of 857.14 linear metres or 1285.71 sq. metres. Thus, there was a difference of 2867.79 sq. mtrs. between the quantity declared by the ap....
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.... of the learned counsel for the appellants that between the months of January and April 1986 the appellants declared the output in identical manner is also of no consequence. For, failure or omission on the part of the authorities concerned to detect such mis-declaration cannot constitute a long outstanding practice of the Customs House. 12. The other contention of the learned counsel for the appellants that in determining the quantity actually used in the manufacture of 9000 pairs of Leather shoe uppers in question "wastage and rejection" during the manufacturing process was not taken into consideration by the Adjudicating Authority has also no force in view of the peculiar facts and circumstances of the case. As stated above in their application for the grant of advance licence under the duty exemption scheme the appellants never claimed the wastage as could be seen from Part-111 of the said application. On the other hand in part-Ill of their application they have stated in Col. No. 11 "Net to Net basis". That apart, from the record we find that while conducting the test by the Sri Ram Institute this wastage was also taken note of while determining the actual quantity of polyure....