TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 494
X X X X Extracts X X X X
X X X X Extracts X X X X
....s observed that the goods Cotton Sweaters (knitted) were only with certain incisions. It was found that the description of the said clothes were not in conformity with the condition as prescribed in terms of Circular no. 36/2000-Customs dated 08.05.2000 read with instruction no. 1/2011-12 dated 14th July, 2011 issued by the Deputy Commissioner of Customs, KASEZ to the extent that the old and used clothes are required to be cleared for home consumption only after complete mutilation rendering the same unserviceable and beyond repair. 3. In view of above mentioned violations Show Cause Notice dated 18th July, 2013 was issued to the appellant no. 1. It was asked to show cause why:- (a) "Cotton Sweaters (Knitted)" weighing 52750 kgs cleared by them under Bill of Entry no. 378 dated 18.01.2013 seized under Panchnama dated 12.02.2013 and presently lying at Shed no. 405, N-II, New Area KASEZ should not be classified under CTH 6309 0000 and should not be confiscated under the provisions of Section 111(d) & (m) of the Customs Act, 1962; (b) Customs duty amounting to Rs. 2,06,837/- as per duty calculation sheet at Annexure-I should not be demanded and recovered from them under Section 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the goods under 63109010 and are appropriately classifiable under CTH 63090000. He ordered for confiscation of the said goods valued at Rs.8,74,595/- under Section 111(d)&(m) of the Customs Act, 1962. However, he gave an option to the appellant to redeem the goods on the payment of fine of Rs.4,00,000/- under Section 125(1) of the Customs Act, 1962. He confirmed the demand of differential duty of Rs.2,06,837/-under Section 28(4) of the Customs Act, 1962 read with provisions of Section 30 of the SEZ Act,2005 and Rules 25&34 of the SEZ Rules, 2006 made there under. He also ordered for recovery of interest on the differential Customs duty amount from them under Section 28AA of the Customs Act, 1962 and imposed penalty of Rs.2,06,837/- on the appellant Jindal Fibres under Sections 114A of the Customs act, 1962. He also imposed penalty of Rs.20,000/- under section 112(a) of the Customs Act, 1962 and Rs.1,00,000/- under section 114(AA) of the Customs act, 1962 on the appellant Shri Vikas Mittal and ordered for confiscation of the vehicles valued at Rs.3,50,000/- each (Total Rs.7,00,000/- only) which were utilized for transportation of the said seized goods. However, he gave an option ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....im Pvt Limited, despite holding that the present case is of similar nature. The Additional Commissioner being bound by the decisions rendered by the Hon'ble Tribunal could not have taken a contrary view. 8. The learned counsel for the appellant also argued that the Commissioner (Appeals) has committed error in confirming the demand of duty against the appellant despite the fact that the importer of the material in question was the Domestic Tariff Area unit and not the appellant. In the present case, the appellant has cleared the consignment to M/s. Jindal Woolen Industries and in terms of Rule 47 read with Rule 48 of the SEZ Rules, SEZ unit was permitted to file a Bill of entry for and on behalf of the DTA buyer. In the present case, the appellant has filed the Bill of entry for and on behalf of the DTA unit whose name was also clearly reflected on the copy of the Bill of entry. Therefore, it is evident that M/s. Jindal Woolen Industries was the importer who was responsible for the liabilities arising out of the goods in question and the filing of Bill of entry for and on behalf of the importer would not shift such liability on the appellants. Section 28 of the Customs Act provide....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e are no contrary decisions on this issue, the decisions of Hon'ble CESTAT Ahmedabad in the case of M/s. Tulip Exim Pvt Ltd and M/s. Anita Exports may be followed in the interest of justice. Therefore, the clear legal position emerges that the SEZ unit cannot be considered as the importer in the present case and consequently, the duty demand or redemption fine and penalties cannot be imposed against the SEZ unit and the impugned order-in-appeal is against law. 10. The learned counsel for the appellant also argued that it is evident from not only the Panchnama recorded in the present proceedings but also the report dated 4th February, 2013 given by the appraiser. The used and mutilated clothing sold by the appellant to the DTA unit had incisions on both the sleeves 8 to 13 cm far from the shoulder seams. Moreover, another incision about 7 to 10 inches was also on the back side of the sweater and 2 to 4 inches below the neck. Thus, even on visual inspection of such material, it was evident that such used clothing was unserviceable and irreparable. Even the note prepared by the appraiser of KASEZ, has confirmed that such incisions made were in consonance with the circular and the ins....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the appellant has not violated any provisions of law or rules made thereunder. Therefore, the Commissioner (Appeals) has committed error in imposing penalty on the appellant on the ground that the appellant unauthorisedly cleared such goods. When such goods have been mutilated by the appellant according to the requirement of the circular and the instruction and such mutilation has been scrutinized and verified by the assessing officer at the time of the assessment of the Bill of entry, penalty could not have been imposed on the appellant and the order of confiscation of the goods is also without any justification whatsoever. The impugned order about penalty on the appellant and confiscation, therefore, deserves to be set aside. He also argued that before clearance from the zone, the goods were examined by the preventing officer/ appraiser and his report confirmed that the goods were as declared and properly mutilated and the report of preventive officer / appraiser has not been rejected by the department. 12. The learned counsel for the appellant also argued that the appellant has not done nor failed to do anything which would render the imported goods liable for confiscation. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase Shri Vikas Mittal has not dealt with the goods, with knowledge or reason to believe that they were liable for confiscation. Department has not shown as to how Shri Vikas Mittal, the Authorised Signatory of the Company, was indulging in carrying, harbouring, keeping, concealing, selling or purchasing any goods, which he knew or had reason to believe were liable to confiscation. No evidence has been adduced in support of the allegations. It has not been made clear in the notice whether he was engaged in carrying or in removing or in depositing or in keeping or in selling the dutiable goods which he knew or had reason to believe were liable for confiscation. Therefore, the penalty imposed upon the appellant the Authorised Signatory of the appellant Company, is illegal and liable to be set aside. 16. The learned counsel for the appellant also argued that the penalty imposed upon the appellant, under section 114AA of the Act, is unsustainable in the eye of law. Section 114AA of the Customs Act provide for penalty if a person knowingly or intentionally makes, sign or uses any declaration, statement or documents, which is false or incorrect in material particular in the transaction o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eal is illegal, without jurisdiction, devoid of any merit and is liable to be set aside. 21. The learned Authorised Representative for the department reiterated the impugned order passed by the learned Commissioner and argued that the impugned order has been passed in accordance with the provisions of Customs Act and relevant circular and rules. Therefore, the impugned order is liable to be confirmed and appeal may be rejected. 22. I have heard the learned counsel for the appellant and the learned Authorised Representative for the department and perused the record. 23. The learned Counsel for the appellant mainly raised three issues before this Tribunal which have to be decided by it. The first issue is whether the Commissioner (Appeals) has committed error by holding that Appellant M/s. Jindal Fibres is the main importer and the key player in the import of the goods and he is liable for differential Customs duty, fine, penalty etc. under Customs Act, 1962 and SEZ Act, 2005 read with SEZ Rules, 2006, whereas the Bill of Entry No. 378 was filed in the name of M/s. Jindal Woolen Industries Limited, Haryana for the clearance of worn out clothing from SEZ to DTA. The second issue is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t or elsewhere in India. Thus, from the definition of "importer" as defined under Section 2 (26) of the Customs Act, 1962, it is very clear that the Appellant Jindal Fibres is the importer of the said goods as the same were imported into Kandla Special Economic Zone by them by sea from outside India and also when the goods were cleared into DTA, the said goods were in the custody of the appellant Jindal Fibres till the seizure of the same. Thus, the adjudicating authority has strongly hed that the appellant no. 1 (Jindal Fibres) is the main importer and key player of all the acts of omission and commission and are liable for differential customs duty, fine, penalty etc. under Customs Act, 1962 and SEZ Act, 2005 read with SEZ Rules, 2006. The learned Commissioner (Appeals) agreed with the findings of the adjudicating authority as mentioned above and found no merits in the contentions raised by the Appellant Jindal Fibres and Appellant Shri Vikas Mittal. 23.2 I am of the view that the conclusion arrived at by the first Adjudicating Authority and by the learned Commissioner (Appeals) are based on correct interpretation of the word 'importer' as defined under Section 2(26) of the Cust....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... four cuts, but not in the manner specified in the guidelines outlined in the Circular No. 36/2000-Customs dated 08.05.2000. Besides, it is found that the said three or four cuts are very near to the seams in specific sizes explained at para 3.1.5 above which does not make the said old and used clothes completely mutilated and can be serviceable. The language and spirit of the Circular No. 36/2000-Cus. dated 08.05.2000 is clear, explicit and without any space of ambiguity, therefore, not subject to vague and prejudiced interpretation. Circular No.36/2000-Cus.dated 08.05.2000 clearly says that the old and used worn cloths must be subjected to three or more cuts through the entire length of the garment, in a crisscross manner, not along the seams for import into India. Then only the Rags are to be considered completely mutilated and totally unserviceable and beyond repair. Here the basic bone of contention of the said unit is heavily relying upon the word "this can be ensured" in para 3 of the said Circular No.36/2000-Customs dated 08.05.2000. Here the word is "can" and has to be construed accordingly because this shows the intention of the circular whereas the unit or his authorized....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted rags, as imported, should be allowed clearance without license. Clearance subject to post importation mutilation must not be allowed. (v) In case it is found that garments are not completely mutilated rags i.e. garments having less than 3 cuts, the same should be allowed clearance only on such fine and penalty which not only wipes out the MOP but also acts as a deterrent against future imports. From perusal of the provisions in the above circular, it is clear that attempt has been made through the circular to allow bonafide importers to import totally unserviceable and beyond repair garments which cannot be reused by undertaking minor repairs and can only be used for making fibres and Attempt has also been made to prevent misuse of this arrangement by imposing penalty and fine on import of such goods/ clothes which can be sold after minor repairs. In para (v) of the circular it has been mentioned that clearance be allowed only on such fine and penalty which not only wipes out the margin of profit (MoP) but also acts as a deterrent against future imports. The learned Commissioner (Appeals) has rightly mentioned in the Order-in-Appeal at page 8 that it has been amply clarified....