MRK AROMA Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The appellant is aggrieved with the Order -in -Appeal No. C.Cus. 491/2000, dated 24 -7 -2000 passed by the Commissioner by which he has confirmed the Order -in -Original No. 107/2000, dated 6 -6 -2000 passed by the Joint Commissioner of Customs, Air Cargo Complex, Chennai rejecting the prayer for export of odd shaped objects blocks of Sandalwood which are in the nature of unfinished products and the importers' claiming the same to be as "Machine finished Sandalwood Products" has been rejected. The original authority ordered for confiscation of the goods meant for export under Section 113(d) of Customs Act, 1962 and allowed the goods to be redeemed under Section 125 of the Customs Act on payment of fine of Rs. 1,35,000/ - and on imposition of penalty of Rs. 25,000/ - under Section 114(1) of the Customs Act, 1962. The exporters had relied on the certificate issued by the Asstt. Director of Handicrafts, Office of the Development Commissioner to state that the item is machine -made but not handicraft. The customs department took further information from four other independent authorities and their communication are as follows : -

(2.) The department took the view that the terms "Export", "Export Goods", "Exporter" and "Prohibited Goods" are defined under Section 2 of the Customs Act, 1962. It was alleged that the exporter had misdeclared the goods of quantity of 1,000 Kgs as "Machine Finished Sandalwood Products" with further amplification as "Table Weights" in the invoice covering the FOB value of Rs. 5,29,221/ - (US 13,090) submitted along with the Shipping Bill for the goods under subject export with a view to circumvent the prohibition by way of taking coverage under the exclusion clause provided in the prohibitory list either under Sub -Sl. No. (II) or under Sub -Sl. No. (V) of Sl. No. 9 of Chapter 16 of prohibited goods falling under the Negative List of Exports. It was alleged that as per Chapter II of FTDR Act [Foreign Trade (Development and Regulation) Act, 1992] the Central Government has the powers to make orders and announce Export -Import Policy. In terms of Section 5 of the said Act, the Central Government may from time to time formulate and announce by notification in the Official Gazette the Export -Import Policy and may also, in like manner, amend the policy. It was alleged that in the subject case, the Exim Policy AM 2000, prohibits the export of sandalwood in any form other than "Finished Handicraft Products of sandalwood and Machine finished sandalwood products". It was alleged that as the goods cannot be considered as a "Machine finished Sandalwood Product" or any other product of the exclusion clauses as provided in the Negative List of Exports and whereas the same can be considered only as an "Odd shaped object" which does not qualify under any of the provisions of the exclusion clauses. It can be called only as "Sandalwood in any other form" requiring a valid export licence for its exports and in the absence of which the exporter had contravened the provision of Section 3(3) of the FT (D and R) Act read with Section 11(2)(u) of Customs Act, 1962. Hence it was alleged that the goods were liable for confiscation under Section 113(d) and (i) of Customs Act, 1962 and also liable for penalty under Section 114(1) of Customs Act, 1962.

(3.) After due hearing, the Order -in -Original confirmed the confiscation however, granting redemption on payment of fine of Rs. 1,35,000/ -. The Order -in -Original has noted that the goods sought for export are blocks of sandalwood obtained by sawing the linear logs of sandalwood tree cross sectionally with further splitting up of sawn block into cut pieces probably along with the internally ramified cracks. It was held that these cannot be considered as "Finished Products" which had to be further reworked to attain a finished form. The Order -in -Original had relied on the above noted expert opinions obtained from various State and Central Government organisations to confirm the department's view that the items sought for export do not qualify the description as a finished product but are only in the rough form and not a final product to be called as "Table Weights". The letter issued by the Asstt. Director (TEX) Office of the Development Commissioner (Handicraft), Chennai submitted by the exporter was also rejected as it clearly identified as "non -handicrafts". It was noted that the report is silent in respect of whether the samples can be identified as "Machine finished products" and that the samples were not drawn officially and cannot be considered as a true representative of the said consignment. The Order -in -Original noted that the exclusion Clause (ii) under Sl. No. 9 of sub -heading 16.1 under Chapter 16 of Negative List of Exports permits the exports of sandalwood in the form of "Machine finished sandalwood products" only. Since the goods under reference do not attain the quality of "Machine Finished Products" the export was held to be not permissible. It was held that the exporters had misdeclared the goods as "Machine Finished Products - Table Weights" so as to circumvent the prohibition laid down in the EXIM Policy and as such the goods were held to be liable for confiscation and for imposition of penalty.