LAKSHMINARAYANA MINING CO. Vs. COMMISSIONER OF CUS., MANGALORE

JUDGEMENT

(1.) THE appellant had presented a consignment for export, which was declared as Iron Ore Fines Grade 65% in Shipping Bill dated 14 -5 -2004. The quantity of the export goods was 39,650 MTs and the FOB value declared was over Rs. 5.75 crores. The exporter produced a licence which permitted export of iron ore fines containing iron (Fe) 64 - 65%. Representative samples of the consignments were drawn and sent for chemical analysis to the Chemical Examiner, who in a report dated 25 -5 -2004, reported the Fe content as 68.4%. At the request of the exporter, the samples were got retested at the Central Revenue Control Laboratory (CRCL), New Delhi. The CRCL reported the Fe content as 67.3%. The EXIM Policy 2002 - 2007 had restricted export of iron ore containing Fe above 64%. From these facts, it appeared to the assessing authority that the consignment in question was presented for export by the appellant in violation of the EXIM Policy provisions. On this basis, a show cause notice was issued on 13 -12 -2005 to the appellant under Section 124 of the Customs Act for confiscating the goods under Section 113(d) and (i) of the Act and also for imposing penalty on the exporter under Section 114 (i) of the Act. These proposals were contested. In adjudication of the dispute, the learned Commissioner passed the impugned order imposing a penalty of Rs. 25/ - lakhs on the appellant Section 114 of the Customs Act. The learned Commissioner held that the goods covered by the Shipping Bill contained more than 65% Fe and hence not covered by the export licence produced by them and consequently the goods became liable to confiscation under Section 113 of the Act. The penalty imposed under Section 114 of the Act was based on this finding of the Commissioner.

(2.) THE learned counsel for the appellant, reiterating the grounds of this appeal, submits that the adjudicating authority travelled beyond the scope of the show cause notice to impose the above penalty on the appellant. It is submitted that the learned Commissioner categorically held both the test reports (one by Chemical Examiner and the other by CRCL) to be unreliable inasmuch as the test samples were really not representative in nature on account of having been drawn by an incorrect method. According to the learned Counsel, the adjudicating authority having refused to rely on the test reports could not have held the goods liable to confiscation or the exporter liable to penalty. It is pointed out that the proposal in the show cause notice to confiscate the goods and to impose penalty was wholly based on the test reports. The learned counsel has also referred to another test report of M/s. Mitra S.K. Pvt. Ltd., which was obtained by the party on their own. It is pointed out that the Fe content reported by M/s. Mitra S.K. Pvt. Ltd. was 64.99% coming within the ambit of the export licence produced by the appellant. The counsel has also referred to para 19.4 of the Commissioners order, wherein certain amendments to the contract dated 11 -5 -2004 were discussed and certain observations were made against the exporter. It is submitted that Para 19.4 embodies a new case framed by the adjudicating authority.

(3.) WE have also heard the learned SDR, who has filed parawise comments on the grounds of the appeal. These written submissions are accompanied by a few documents including an Inspection Certificate by ENTRY EXIT INSPECTION AND QUARANTINE OF THE PEOPLES REPUBLIC OF CHINA, which shows the Fe content in the goods exported by the appellant to their Chinese buyer as 65.27%. It is pointed out that this Inspection Certificate was produced by the party at the time of final assessment of the goods and that the party themselves chose to stand by the Fe content certified by the foreign agency. Yet another document accompanying the written submissions of the SDR is a credit note dated 20 -7 -2004 issued by the Chinese buyer to the Indian exporter (appellant), which indicates payment of an amount of USD 5,287.50. It is claimed that this payment represents the differential value of the goods based on the extra Fe content of the goods, payable as per the relevant terms of the contract dated 11 -5 -2004 between the appellant and the Chinese buyer. On the basis of these documents, the learned SDR has made an endeavour to make out a case for the Revenue.