TaxTMI 
TaxTMI 
2017 (10) TMI 223
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....f finished leather. They submitted that shipping bills have been filed for export, of above said goods. Samples were drawn by CLRI in terms of Customs Facility Circular No.1/2014 dated 02.01.2014 and a report dated 07.10.2016, was issued by CLRI, Madras, certifying that the sample satisfy the norms and conditions prescribed by the Director General of Foreign Trade (DGFT) Public notice No.21/2009-14 dated 01.12.2009. 3. Subsequently, the entire consignments under Shipping Bills were examined by SIIB officers on 14.10.2016, in the presence of two independent witness, representatives of the concerned Customs Broker (who have filed shipping bill on behalf of the exporters/respondents) and the godown Supervisor of CWC Virugambakkam CFS. Samples were drawn for testing and verification under Mahazar dated 14.10.2016. Samples were sent to CLRI for testing on 14.10.2016. Subsequently, on testing and verification, CLRI, vide report dated 11.11.2016, forwarded the test results certifying that the samples do not satisfy the norms and conditions as laid down in DGFT Public notice No.21/2009-14 dated 01.12.2009, for the type of 'Finished Leather' as declared by the respondents. 4. The ....
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.... above, which includes the judgment of the Supreme Court in Navshakti Industries case, the condition imposed sub clause (i) of paragraph 6 of the impugned order can be relaxed, by substituting the said condition, with an option being given to the petitioners to seek release of the subject goods/consignments by furnishing a Bank Guarantee of a nationalized bank equivalent to 30% of the export duty. This is so, as finished leather, as per the extant policy, is freely exportable, while, generally, unfinished leather, i.e., hides, skins, leather - tanned and untanned, are subject to export duty, at the rate of 60%. It is ordered accordingly. 20.1. It is made clear, however, that, all other conditions contained in paragraphs 6, 7 and 8 shall remain unaltered." 8. Reading of the above, makes it clear that writ Court had given an option to the petitioners therein, to seek for release of the goods by furnishing bank guarantee from a nationalised bank equivalent to 30% of the export duty. Dispute is whether the goods are finished goods or unfinished goods, the latter, subject to export duty at the rate of 60%. Except duty, insofar as other conditions contained, in paragraphs 6,7 and 8, ar....
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....62, thus rendering the good liable for confiscation under the provisions of the Customs Act, 1962. As per the SIIB communication, you had mis-declared the value of goods presented for export as Finished Leather, whereas upon investigation and testing by CLRI the subject goods were identified as Unfinished Leather and did not meet the norms and conditions for the type of Finished Leather as laid down in the DGFT Public Notice no.21/2009 dated 01.12.2009 and hence the subject export consignment is seized under section 110 of the Customs Act, 1962. The Principal Commissioner (Chennai III) had accorded permission for the provisional release based on the final order dated 22.12.2016 in W.P.No.43063 of 2016 filed before Hon'ble High Court of Madras of the subject consignment of Finished Leather covered under Shipping bill 1454214 dated 04.10.2016, upon the execution of an Indemnity Bond towards the FOB value of the subject goods, in this case it is the declared value of Rs. 33,25,068/- (Rupees Thirty Three Lakhs Twenty Five Thousand and Sixty Eight Only), and you are hereby requested to execute an Indemnity Bond for a value of Rs. 33,25,068/- (Rupees Thirty Three Lakhs Twenty Five Th....
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....n indemnity bond and security in the form of bank guarantee, as per the provisions CBEC Circular No.01/2011 dated 04.01.2011, and ordered provisional release covered under the shipping bills submitted by the exporters / writ petitioners, in W.P.Nos.1620 to 1628 of 2017, the writ Court, at paragraph No.6 of the common order made in W.M.P.Nos.1580 to 1588 of 2017 in W.P.Nos.1620 to 1628 of 2017 dated 25.01.2017, observed that seeking security in the form of Bank Guarantee is uncalled for and, in a sense, diluted the very essence of the order dated 22.12.2016, passed by the writ Court, in W.P.Nos.43062 to 43070 of 2016. Writ Court further observed that the respondents therein in the earlier round of litigation, had not articulated that they would require the petitioners therein, to offer security towards fine and penalty, in the form of a Bank Guarantee. So saying, writ Court, in W.M.P.Nos.1580 to 1588 of 2017 in W.P.Nos.1620 to 1628 of 2017 dated 25.01.2017, stayed the advice contained in the communication dated 10.01.2017, requiring the writ petitioners to declare the goods as unfinished goods and further directed the release of goods forthwith, upon fulfillment of conditions alread....
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...., has categorically held that all other conditions contained in paragraphs 6, 7 and 8 shall remain unaltered. So saying, writ petitions have been disposed of. 20. In the subsequent writ petitions viz., W.P.Nos.1620 to 1628 of 2017, when communication dated 10.01.2017, requiring the exporters to offer bank guarantee for fine and penalty, in terms of monetary value of the goods and in terms of CBEC Circular No.01/2011 dated 04.01.2011, was challenged, writ petitions have been finally disposed of on 30.01.2017, stating that they were closed. Here again, there is no specific finding as to whether the department can insist for bank guarantee on the monetary value for fine and penalty. 21. When there is no final adjudication on merits and writ petitions were closed, by stating that, interim orders have been complied with, pending appeals, though filed with a delay, we are of the view that such interim orders passed in writ petitions, cannot be treated as a precedent. 22. Though the said issue has been addressed at the time of hearing of the interim applications, there is no final verdict. Therefore, we are of the view that department can seek for an adjudication on that issue, in the ....
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....earned Judge ought to have seen that though the first test report was in favour of the respondent, which seemed to have been obtained by manipulation of samples, but the second test report which was based on the samples drawn in the presence of two independent witness, representative of the concern custom broker prove that the goods in question is not 'finished leather' but 'semi finished leather'. (c) that the learned Judge ought to have seen that the respondent by misdeclaring the description had not only attempted to evade export duty of 60% leviable on export of semi finished leather as pr Sl.No.26 of the Export Tariff, but also availed drawback of 6% (applicable drawback for finished leather as per Drawback Schedule) and MEIS incentive of 2% on FOB value of export goods. (d) that the learned Judge ought to have seen that as the matter is under investigation and prima facie, there is a case against the respondents for mis-declaration and attempt to avail the benefit of export, which is not eligible for subject goods. Hence the respondent should have been directed to comply the provisional release order dated 06.04.2017. (e) the learned Judge ought to have see....
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.... offer bank guarantee for fine and penalty, the said order was challenged by the exporters in W.P.Nos.1620 to 1628 of 2017. She further submitted that insofar as the orders made in W.P.Nos.43062 to 43070 of 2016 dated 22.12.2016, department has complied with the same and therefore, it is not open to pursue the instant appeals, in respect of some other shipping bills. 28. Inviting the attention of this Court to the CBEC Circular No.01/2011 dated 04.01.2011, learned counsel for the respondents/exporters further contended that the order of provisional release dated 23.11.2016, directing the exporters to offer bank guarantee for fine and penalty, is contrary to the very policy of the Government, which the writ Court, has taken note of. For the abovesaid reasons, she prayed to dismiss the appeals. 29. By way of reply, Mr.Pramod Kumar Chopda, learned counsel for the appellants/department submitted that when the writ Court, in a batch of writ petitions viz., W.P.Nos.43062 to 43070 of 2016 dated 22.12.2016, categorically held that all other conditions contained in paragraphs 6, 7 and 8 shall remain unaltered, there is absolutely no necessity for the department to prefer any appeal. In th....
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....y the CLRI to the Docks and the subsequent reports furnished by CLRI to SIIB pertaining to these ten consignments are contradictory, further investigation is in process. However, the CLRI has certified that the goods meant for export pertaining to the ten consignments does not satisfies the norms and conditions as per the DGFT Public Notice No.21/2009-14 dated 01.12.2009 for the type of Finished Leather as declared vide their reports dated 09/10.11.2016 and 11.11.2016 for the samples drawn by SIIB. Further as per Sl.No.176 of Chapter 41 of Export Policy of ITC (HS) classification Unfinished leathers are not freely exportable. As per this provision, only leathers that conform to the definition of Finished Leathers given in Note 1 of Chapter 41 of Export Policy are freely exportable. Hence it is seen that these ten exporters have misdeclared the description and attempted to export and thereby to evade export duty of 60% [i.e for Semifinished Leathers - as per Export Tariff CTH 41, 43 (Hides and Skins and leathers, tanned and untanned, all sorts but not including manufactures of leather)]. Further these exporters have claimed undue drawback at 6% [i.e applicable drawback for Finished ....
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....: (a) In case the export goods are found to be mis-declared in terms of quantity, value and description and are seized for being liable to confiscation under the Customs Act, 1962, the same may be ordered to be released provisionally on execution of a Bond of an amount equivalent to the value of goods along with furnishing an appropriate security in order to cover the redemption, fine and penalty. (b) In case the export goods are either suspected to be prohibited or found to be prohibited in terms of the Customs Act, 1962 or ITC (HS), the same should be seized and appropriate action for confiscation and penalty initiated. (c) In case the export goods are suspected of mis-declaration or where declaration is to be confirmed and further enquiry/confirmatory test or expert opinion is required (as in case of chemicals or textiles materials), the goods should be allowed exportation provisionally. The exporters in these cases are required to execute a Bond of an amount equal to the value of goods and furnish appropriate security in order to cover the redemption fine and penalty in case goods are found to be liable to confiscation. In case exports are made under any Export Promotion / R....
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....ishing appropriate security, in order to cover the redemption, fine and penalty. 38. When the circular dated 04.01.2011 empowers the department to insist for appropriate security in order to cover redemption, fine and penalty, there is no manifest illegality in imposing a condition in the communication dated 10.01.2017 of the department, requiring the exporter to offer bank guarantee. What should be the form of security, is the discretion of the department and in the case on hand the department has sought for Indemnity Bond for value of goods and bank guarantee towards redemption, fine and penalty. The petitioner has been given the option to seek for release of the goods by furnishing bank guarantee from a nationalised bank equivalent to 30% of the export duty 39. It is the case of the department, that there is misdeclaration and attempt to evade duty. On the facts and circumstances of the case, discretion exercised by the department, directing the exporters to submit bank guarantee, towards redemption, fine and penalty, cannot be said to be erroneous or contrary to the orders of this Court, in W.P.Nos.43062 to 43070 of 2016 dated 22.12.2016. 40. In the light of the expression, ....