TaxTMI 
TaxTMI 
2025 (10) TMI 685
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....24 Parganas (South), West Bengal were engaged in export of silk fabrics through Kolkata. Intelligence gathered by the officers indicated that ESIL has been exporting the goods by mis-declaring its description and value to avail higher duty drawback by the DTA supplier, i.e. M/s Lucky Goldstar Co. Ltd. (hereinafter referred to as the "appellant"/ "company") which belongs to the same group of companies. The information further indicated that twenty one (21) shipping bills for export of such fabrics were filed by M/s Eastern Silk Industries Ltd. and the goods were stuffed in three containers having Numbers SIKU 2973668, CRXU 3339803 and RFCU 2009614 for export through N.S. Dock, Kolkata. The Custom House Agent for the export consignments of the said 21 shipping bills was M/s Continental Carriers Pvt. Ltd. The details of the impugned consignments are as under: Shipping Bill No. Date Declared item Declared price per mtr. Container No. 6004909 to 6004916 (SEA) FSEZ 10-02-2011 Natural Silk Fabrics US$ 29.65 Rs.1,335.00 CRXU - 3339803 6004917 to 6004924 (SEA) FSEZ 10-02-2011 Natural Silk Fabrics US$ 27.75, Rs.1,250.14 RFCU - 209614 6004961....
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....s Act, 1962 wherein he inter alia stated that he was working as an executive in M/s Eastern Silk Industries Ltd.; that he was looking after direct tax, Income Tax matters. He was asked to provide details of the procurement made by the DTA supplier along with the payment particulars for the said procurement in respect of the export consignments intercepted by DRI to which he replied that the same would be in 2-3 days Subsequently, on 24.02.2011 he submitted copies of the bills of export along with the relevant invoices issued by M/s Lucky Goldstar Co. Ltd. in respect of supply of the goods to M/s Eastern Silk Industries Ltd. at Falta SEZ which were attempted to be exported through NS. Dock, Kolkata under the cover of Shipping Bills No.6004909) (SEA) FSEZ 5004921 (SEA) FSEZ all dated 10-02-11 and 6004961 (SEA) FSEZ to 6004965 (SEA) FSEZ all dated 11-02-11. He also submitted the statement showing the goods attempted to be exported to Hong Kong and Canada by M/s Eastern Silk Industries Ltd. along with the copies of the shipping bills and the relevant invoices. He further submitted names and address of the Directors both M/s Eastern Silk Industries Ltd. and M/s Lucky Goldstar Company Lt....
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....f India at Bangalore under the cover of letter under DRI F No.10/KOL/APP/2011/1221 dated 06.04.2011 for similar test. The Central Silk Technological Research Institute, Bangalore vide letter No. CSB/CSTRI/Report/Custom/TTL/10-11 dated 05.05.2011 forwarded the result of which was found to be similar to that received from the Central Silk board, Kolkata vide letter no. CSB/RO/KOL/4/2010-2011/EPS Vol-III dated 11.03.2011. 1.9. On the basis of the Test Reports received, it is alleged by the Revenue that the fabrics attempted to be exported by M/s Eastern Silk Industries Ltd. (ESIL) from Special Economic Zone at Falta under the cover of Shipping Bills No.6004961 (SEA) FSEZ to 6004965 (SEA) FSEZ all dated 11.02.2011 and stuffed in container No. SIKU 273668 which were obtained from the DTA supplier, i.e. M/s Lucky Goldstar Co. Ltd. under the cover of Bills of Export No.3869 DTA(Claim) FSEZ and 3870 DTA(Claim)FSEZ both dated 05.07.2011 contained 100% 'Noil Silk Yarn' by weight. The fabrics stuffed in other two containers i.e., CRXU 3339803 and RFCU 2009614 contained 100% 'Mulberry Silk yarn' by weight as per the test reports. 2. M/s. Ben St Industries Ltd. vide letter dated 1....
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....ause Notice, asking the appellants to show cause as to why:- "i) The consignments attempted to be exported under the cover of five (5) Shipping Bills) through N. S. Dock, Kolkata by M/s Eastern Silk Industries Ltd, as mentioned in Annexure A which were supplied in FSEZ by M/s Lucky Goldstar Co. Ltd. under the cover of two (2) Bills of Export as mentioned in Annexure-B under duty drawback declared value being collectively Rs.2,14,11,423.00 and Rs.1,64,65,608.80 respectively detained and presently in the custody of M/s Eastern Silk Industries Ltd. at Falta SEZ should not be held liable to confiscation under section 113 (d) & 113 (i)(ii) of the Customs Act, 1962 and consequently duty drawback claim of Rs. 15,60,966.00 in respect of the supply of silk fabrics in FSEZ vide Bills of Export No.3869 DTA (Claim) FSEZO and 3870 DTA (Claim) FSEZ both dated 05-02-2011 by M/s Lucky Goldstar Co. Ltd. should not be disallowed on the grounds us discussed hereinbefore; ii) The goods attempted to be exported under the cover of five (5) Shipping Bills through N. S. Dock, Kolkata by M/s Eastern Silk Industries Ltd. as mentioned in Annexure- A which were supplied in FSEZ by M/s Lucky ....
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....ules, 2007 and re-determined under Rule 6 of the said Rules. Separate penalties under Section 114 of the Customs Act, 1962 were also imposed on M/s. Lucky Goldstar Co. Ltd. as well as their Director, Shri Manoranjan Mondal, amongst others. 4.1. The appellants challenged the above adjudication order before the Ld. Commissioner of Customs (Appeals), 3rd Floor, Custom House, 15/1, Strand Road, Kolkata - 700 001, who vide the impugned order dated 11.04.2025 has rejected the appeals filed before him. 4.2. Aggrieved, the appellants have filed the instant appeals before this Tribunal. 5. The Ld. Counsel appearing on behalf of the appellant(s) has inter alia made the following submissions: - (i) It is established from the case records that M/s Lucky Goldstar Co. Ltd (LGCL) supplied the imported natural silk, i.e., Mulberry Silk yarn to different weavers, at Bangalore who after processing the said yarn into fabrics against processing charges returned the same to M/s LGCL. After receiving the said Silk Fabrics M/s. LGCL supplied 79356.9 metre of Natural Silk Fabrics to M/s. Eastern Silk Industries Ltd. (SEZ Unit) against the Bills of Exports. The whole operation of procurem....
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....r no SIKU 2973668 only goods of 1 Shipping Bill were examined and samples were drawn for test. Therefore, it is a matter of doubt whether all the goods stuffed in the container SIKU 2973668 were Noil Silk as stated in the Show Cause Notice as well as the Order-in-Original. (v) In any case, it is clear that the appellant, Shri Manoranjan Mondal had no knowledge and no role to play in this matter and Department also could not make out any case against the said appellant with some corroborative evidence. Hence, the adjudicating authority cannot penalize the appellant, Shri Manoranjan Mondal under Sec. 114 of Customs Act, 1962 as it is ordered in the impugned Order-in-Original. (vi) There is no dispute to the fact that M/s. Lucky Goldstar Co. Ltd. accepted the entire goods returned by the weavers after processing on good faith and the said goods were supplied to M/s. Eastern Silk Industries Ltd. as DTA Supply. Thus, even assuming but not admitting that such goods were actually the same which were supplied vide referred 2 Bills of Export, the appellant had no role in mis-declaring the said goods. The investigating authority has unnecessarily dragged the appellant witho....
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....ariff headings as mentioned in the Customs Tariff are reproduced below: 5007 Woven fabrics of silk or of silk waste 5007 10 00 - Fabrics of noil silk 5007 20 - Other fabrics, containing 85% or more by weight of silk or of silk waste other than noil silk: 5007 20 10 --- Sarees 5007 20 90 --- Other 8.1. From the above, we observe that the impugned goods are classifiable under the CTH 5007 1000 only if they are made of fabrics of 'Noil Silk' only. In this regard, we have verified the Test Reports received by the Department from the Central Silk Board, Kolkata and the Central Silk Technological Research Institute, Bangalore. For ready reference, the said reports have been extracted below: Test Report by Central Silk Board, Kolkata: Shipping Bill No. & Date Constituent Yarns & % by weight Percentage of Constituents Weight per Sq. metre (GSM) Warp Weft 6004965 (SEA)/FSEZ date 11.02.11 Noil (51.8 %) Noil (48.2%) Noil Silk: 100% Natural Silk: 100 % 157.03 gms. 6004917 (SEA)/FSEZ date 10.02.11 MRS (34.9%) MRS (65.1%) MRS: ....
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....ng "Constituent Yarn & % by weight" of 51.8% and 48.2% of Noil for the Warp and Weft yarns respectively. A perusal of the Test Report received from Central Silk Technological Research Institute, Bangalore however indicates that only said goods, as per the samples drawn from Shipping Bill No. 6004965, is made up of 100% Noil fabrics "by weight". As this report differs totally from the test report received from Central Silk Board, we cannot conclude that the goods attempted to be exported in the said container is made up of 100% of Noil Yarn based on the said reports. We note the impugned goods would be classifiable under the CTH 5007 1000 only if they are made of fabrics of Noil Silk only i.e., 100% Noil Silk Yarn, as also admitted by the adjudicating authority under paragraph 21(i) of the Order-in-Original. It is evident from the Test report received from Central Silk Board, Kolkata that none of the fabrics attempted to be exported under the impugned consignment are made of 100% Noil fabrics 'by weight'. In view of contradictory Test Reports as to percentage of yarn 'by weight', it cannot be presumed that the presence of Noil Silk by weight is '100%' for the goods in question so as....
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....ely. In this regard, we observe that the mis-declaration of value is related to classification of the goods. If it is established that the goods are actually made of 100% Noil Fabrics, only then can there be a valid ground for rejection of the declared value. As it is not established that the fabrics in question were made of 100% of Noil fabrics, we agree with the submission made by the appellant that there is no valid ground for rejection of the declared value. Further, we observe that the value declared is material only for the purpose of sanction drawback, if any, to the appellant. Thus, it is required to examine, under the facts and circumstances of this case, whether the appellant is eligible for the drawback claimed by them or not. 12. Regarding the claim of drawback, it is observed that the appellant has claimed duty drawback @ Rs.330.00 per Kg. as 'Silk fabrics containing 85% or more by weight of silk or of silk waste other than Noil silk', under Tariff item 500701 of the drawback schedule and had also claimed classification of the said goods under Chapter Sub-heading No. 5007 2090 of Export Tariff i.e., Schedule - II to the Customs Tariff Act, 1975.We find that the ....
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....s Eastern Silk Industries Ltd. for export. We do not find any evidence on record that the appellant has connived with the job workers to manufacture low grade silk fabrics by using Noil silks. The appellant has supplied the silk fabrics they got manufactured through the job workers to M/s. ESIL. In the absence of any evidence to substantiate the allegation that the appellant has manufactured silk fabrics using Noil silk, we are of the opinion that the allegation of mis-declaration or over valuation against the appellants cannot be sustained. As the allegations of mis-declaration and over valuation cannot be sustained, we hold that the impugned goods are not liable for confiscation. Accordingly, we set aside the order of confiscation of the goods in the impugned order. 14. We also find that penalties have been imposed under Section 114 of the Customs Act, 1962 on M/s Lucky Goldstar Co. Ltd. and Shri Manoranjan Mondal for their alleged omission and commission which rendered the goods liable to confiscation under Section 113 (d) & 113 (l)(ii) of the Customs Act, 1962. In this regard, we note that the allegations of mis-declaration and over-valuation against the appellants have not ....