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2019 (10) TMI 458
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....since 2006-07 as discussed in foregoing paras. iii. I order recovery of the differential drawback amount of Rs. 10,33,516/- claimed in excess by the exporter M/s Rolex Textiles Ltd by claiming drawback under serial no 551202A of the drawback schedule instead of serial no 551502A in terms of provisions of Rule 16 of the Customs, Central Excise and Service Tax Drawback Rules, 1995. iv. I order appropriation of the differential drawback amount of Rs. 9,92,544/- deposited by M/s Rolex Textiles during the investigation. v. I order recovery of interest on the differential drawback amount from M/s Rolex Textiles, Ltd under the provisions of Section 75A of the Customs Act, 1962. vi. I order confiscation of polyester viscose blended woven fabrics total amounting to Rs. 9,74,45,269?- cleared in past under claim of drawback under serial no 551202A of the drawback schedule under Section 113(h)(i) of the Customs Act, 196. However, I give an option to M/s Rolex Textiles Ltd to redeem the goods on payment of Redemption Fine of Rs. 1,00,000/- (Rupees One Lakh only). vii. I impose a penalty of Rs. 1,00,000/- (Rupees One Lakh only) on M/s Rolex Textiles L....
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....e Tax Drawback Rules, 1995; • Amount of Rs. 9,92,544/- deposited by them be not appropriated against the amounts demanded in term of Rule 16; • Interest at appropriate rate should not be demanded under Section 75A of Customs Act, 1962; • The goods against which the drawback has been claimed in excess of admissible drawback be not held liable for confiscation under Section 113(h)(i) of the Customs Act, 1962; • Penalty should not be imposed on the Appellants under Section 114 of the Customs Act, 1962. 2.3 The show cause notice has been adjudicated by the Commissioner as per the impugned order referred in para 1, supra. Aggrieved by the order of Commissioner, Appellants have filed this appeal. 3.1 We have heard Shri N D George, Advocate for the Appellants and Shri Dharmender Singh, Superintendent, Authorized Representative for the revenue. 3.2 Arguing for the appellants learned Advocate submitted that - • As per the decision of Madras High Court in case of Sainul Abideen Neelam [2014 (300) ELT 342 (Mad)], any statement recorded under section 108 of Customs Act, 1962 is acceptable in evidence, however the same sh....
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....ffenders. Hence the delays in imposition of penalties etc cannot be ground for setting aside the penalties. In this case there has been not much delay as was in the case before the Punjab and Haryana High Court. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of argument of appeals. 4.2 The first issue for determination is whether the goods exported by the appellant will fall under Sl No 551202A of the Drawback Schedule or under 551502A. The two entries are reproduced below: 551202A: Dyed Woven fabrics of synthetic staple fibres, containing 85% or more by weight of synthetic staple fibres; 551502A: Other woven fabrics of synthetic staple fibres, containing 85% or more by weight of manmade staple fibre and/ or manmade filament yarn (grey). From the plain reading of the above two entries it is quite evident that for the goods to fall under heading No 551202A, they should contain by weight 85% or more of synthetic staple fibres, and for classification under 551502A they should contain 85% or more of manmade staple fibre. Chapter Note 1 to Chapter 54 of the Schedule to Customs Tariff Act, 1975, reads as follows....
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.... ordinary sense. The words used declare the intention of the Legislature. In Kanai Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907, it was held that if the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. 20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose [Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is....
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.... and then extruded through spinnerets (jets) into air or into a suitable coagulating bath where they solidify on cooling or evaporation of the solvent, or they may be precipitated from their solution in the form of filaments. At this stage their properties are normally inadequate for direct use in subsequent textile processes, and they must then undergo a drawing process which orientates the molecules in the direction of the filament, thus considerably improving certain technical characteristics (e.g. strength). The main synthetic fibres are: (i) Acrylic (ii) Modacrylic (iii) Polypropylene (iv) Nylon or other polyamides (v) Polyester (vi) Polyurethane (vii) Polyurethane Other synthetic fibres include: chlorofibre, flurofibre, polycarbamide, trivinyl and vinylal." 04.1 In the HSN the Artificial Fibres have been explained at page no. 826 as under: "The basic materials for the manufacture of these fibres are organic polymers extracted from natural raw materials by processes which may involve chemical modification." 04.2 The main artificial fibres are: (A) Cellulosic fibres, namely: (i) Viscose rayon (ii) Cuprammonium rayon (iii) Cellu....
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.... Chapter Note 1 of Chapter 54 of the Customs Tariff Act, 1975, two distinctive separately identifiable terms having different technical characteristics i.e. 'synthetic' and 'artificial' emerges. In view of Chapter notes of Chapter 54 Polyester falls under the category of 'synthetic' whereas 'Viscose rayon' falls under the category of 'artificial'. It is also mentioned in the chapter notes that these notes are applicable to the goods falling under chapter 55 also as the same definition extends to throughout the schedule when used in relation to 'textile materials'. 06. Above discussed technical parameters are further reinforced by definition of the Fibre and its classification as per the book 'Basics of Textile & Visual Inspection Systems' published by the Textile Committee and the same is reproduced below: "A textile raw material generally characterized by flexibility, fineness and high ratio of length to thickness is called a fibre. Fabric or garment is usually identified by the fibre used for its manufacturing. Thus the cotton cloth is the product made out of the cotton fibre, the woollen cloth from the wool fibre and son on. However, we also find the fabrics manufactured f....
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....contained 85% or more by weight of synthetic staple fibre in as much as texturise yearn is nothing but filament yarn and weight of above yarn cannot be added while calculating the weight of yarn of synthetic staple fibre. 8. Further, the General Note 1 of the drawback schedule [Inserted vide Notification no. 81/2006-Cus. dt. 13/7/2006 as amended and superseded time to time vide Notification no. 68/2007-Cus. (NT) dt. 16/7/2007 & 103/2008-Cus. (NT) dt. 29/8/2008] states that the tariff items and description of goods in the said schedule are aligned with the tariff items and description of goods in the First Schedule to the Customs Tariff Act, 1975 to the four digit level and General Note 2 stipulates that the General Rules of Interpretation of the First Schedule to the said Customs Tariff Act, 1975 shall mutatis mutandis apply for classifying the export goods listed in the said schedule. Therefore, classification of the impugned item under Customs Tariff Act, 1975 would be applicable to the drawback schedule at four digit level. 9. Therefore, to find out the correct tariff item number of the drawback schedule pertained to blended woven fabrics of Polyester and Viscose in the ra....
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....te Drawback cap per unit in Rs. 1 2 3 4 5 6 7 5515 Other woven fabrics of synthetic staple fibres 551501 Containing 85% or more by weight of Man-made Staple Fibre and/or Manmade Filament Yarn (Grey) KG 9.2% 27 2.2% 6.5 551502 Containing 85% or more by weight of Man-made Staple Fibre and/or Manmade Filament Yarn (Dyed) KG 10.3% 30 2.6% 2.6% 551503 Containing less than 85% by weight of Manmade Staple Fibre and/or Man-made Filament Yarn (Grey) KG 7.5% 24 2.2% 7 551504 Containing less than 85% by weight of Manmade Staple Fibre and/or Man-made Filament Yarn (Dyed) KG 8.6% 26 2.6% 7.9 From the above drawback schedule, the appropriate tariff item number of the drawback schedule pertaining to impugned item appears to be 551502 which pertains to "other woven fabrics of synthetic staple fibre containing 85% or more by weight of Man-made staple fibre and/or Man made ....
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....e blended woven fabrics manufactured by the exported by them under claim of drawback under tariff item no. 551202A could not satisfy the description of the item eligible for drawback schedule as in the blended woven fabrics, polyester staple fiber is the only synthetic staple fiber. Accordingly, the exporter had wrongly claimed the drawback under the serial no. 551202A on the polyester ciscoes blended woven fabrics exported by them. 34. I find that the texturise yarn is nothing but a filament yarn manufactured by applying certain process on synthetic filament yarn and such yarn falls under chapter 54 to the Customs Tariff Act, 1985. Therefore, if 100% polyester texturise yarn is used in the manufacture of blended woven fabrics along with PV yarn, then in such case also synthetic stale remained less than 85% as polyester contained in the PV yarn is the only synthetic staple fiber and polyester contained in texturised yarn is the filament yarn. The weight of polyester filament / texturise yarn cannot be added while calculating weight of polyester staple fiber. As such, in case where PV yarn is mixed with polyester texturise / filament yarn, resultant blended fabrics could not have....
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.... Show Cause Notice should be taken as a fresh Show Cause Notice and if computed from last addendum dated 2-5-2002 the issued Show Cause Notice is "Time barred". Here, Government does not find any legal backing or rationale behind this plea of the applicant. If any further letter/communication is treated as having made all the previous notices as redundant, then the very nomenclature/Identity/purpose and status of existence of the term "Addendum"/"Corrigendum" would stand as extinct/deleted from all the judicial/semi-judicial forums. Therefore such a proposition can neither be taken as logical nor proper. Government, therefore takes up the very initial Show Cause Notice or issued date as the relevant date and rest of addendums/corrigendum letter as precise details clearly pointing out the relevant data/limits/scopes of this case proceedings which have already stood commenced. The Show Cause Notice dated 18-7-2001 was issued within extended time of 5 years and as such Show Cause Notice cannot be treated as time barred. ......" Affirming this decision of GOI, Hon'ble Karnataka High Court [2014 (304) ELT 51 (Kar)] has held as follows: "27.From the above decisions, it is clear, if....
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....incorrectly mentioned 'woven fabrics of synthetic staple fiver containing 85% or more by weight of synthetic staple fiber' to defraud the EDI system in as much as he was aware of the fact that by mentioning the RTIC number as 5512, drawback serial number as 551202 and description of the goods in the above manner , EDI system would generate the shipping bill with classification of the goods under chapter heading 5512 as well as drawback under DBK heading g 551201A. If the exporters had declared the RITC as 5510, drawback serial no. 551502A and description as ' other wove fabrics of synthetic staple fiber containing 85% or more by weight of man made staple fiber', the EDI system would have been classified the above goods under heading 5510 and drawback under item serial number 551052A. 41. I find that M/s. Rolex Textiles Ltd mentioned P/V suitings in all the invoices raised by them for export of blended woven fabrics. This clearly suggested that the exporter had not exported woven fabrics manufactured out of 100% spun yarn. This fact was admitted by Shri Sunil Kumar Gilra in his statement dated 31.03.2010 42. Therefore, the drawback availed by the exporter under serial no....
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.... evident from the opening part of sub-section (1) of Section 11, which runs thus : "Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, who is liable to pay duty as determined under sub-section (2) or has paid the duty under sub-section (2B) of Section 11A, shall in addition to the duty be liable to pay interest at such rate ........" The terminal part in the quotation above, which is couched with the words "shall" and "be liable" clearly indicates that there is no option. As discussed earlier, this is a civil liability of the assessee, who has retained the amount of public exchequer with himself and which ought to have gone in the pockets of the Central Government much earlier. Upon reading Section 11AB together with Sections 11A and 11AA, we are of firm view that interest on the duty evaded is payable and the same is compulsory and even though the evasion of duty is not mala fide or intentional." Thus we uphold the demand of interest under Section 75 of the Customs Act, 1962. For upholding the demand of interest we also rely on the following decisions i. Kanhai Ram Thakedar [2005 (185) ....
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....ce the goods were released on a bond the position is as if the goods were available. The ratio of the above decision cannot be understood that in all cases the goods were permitted to be cleared initially and later proceedings were taken for under-valuation or other irregularity, even then redemption fine could be imposed. We are, therefore, not inclined to accept the contention raised by the appellant on this issue and set aside the redemption fine. 13 The reliance of learned counsel for the revenue upon the provisions of Section 125 of the Act is also misconceived. Section 125 of the Act is applicable only in those cases which have been cleared by the concerned authorities subject to furnishing undertaking/bond etc. However, in the present case, admittedly, the goods were cleared by the respondent-authorities without execution of any bond/undertaking by the assessee. Thus, in view of the fact and circumstances of the case, we find no error in the impugned orders. No substantial question of law arises for our determination in the present appeal and the same is hereby dismissed." (emphasis supplied.) 10. We have also particularly noted a decision of the Tribunal (cited by the....