S.K. ENTERPRISES Vs. COMMISSIONER OF CUSTOMS (PREV.)

JUDGEMENT

(1.) THIS Appeal is filed against order -in -original passed by the Commissioner of Customs(Prev.), Shillong. Briefly stated the facts of the case are that the Appellant had filed bills of entry Nos. 10/ICD/2005, dated 12 -8 -2005 and 12/ICD/2005, dated 26 -8 -2005 declaring the imported goods as "cotton polyester fabric, died oven fabric of cotton containing 77% weight of cotton mixed with man -made fibre 310 GSM other than upholstery fabrics" claiming classification under CTH No. 521131.90. An information was received by the officers of DRI, Kolkata Zonal Unit, that the imported goods are mis -declared. Accordingly the said officers detained the imported consignments for examination which revealed that the goods imported were "blue coloured fabrics" and appeared to be 'Denim' classifiable under CTH 521142.00. Representative samples were drawn in presence of the officers of Customs and representative of CHA and sent for testing to textile committee laboratory, Mumbai. It was reported by this laboratory that there was no hazardous or prohibited dies in the said imported fabrics. The composition of the fabrics was reported to be 72.12% cotton, 26.08% polyester, 1.80% polyurithene GSM was 332.7. The representative samples were also sent to the Customs House Laboratory, Kolkata for ascertaining the composition of fabrics, its GSM and whether the fabrics were Denim. The Customs House Laboratory in their report dated 5 -10 -2005 opined, inter alia, that the tested samples had the characteristics of Denim fabrics; that the fabrics were three thread twill weave oven fabric and in the construction of the fabrics blue coloured died yams entirely made of cotton in one direction and white textured polyester filament yarn reinforced with other materials in other direction had been used. As the goods were tested to be Denim and are specifically mentioned under CTH 52i 142.00 of the first schedule to the Customs Tariff Act, 1975; it appeared that the description of the goods in the bills of entry were mis -declared. Similar mis -declaration was found in respect of consignments imported vide bill of entry No. 15/ICD/2005, dated 15 -12 -2005 and 17/ICD/2005, dated 28 -12 -2005 respectively. Shri Kamal Chand Surana, Proprietor of the Applicant company in his statement dated 7 -10 -2005 stated that there was no purchase order/agreement in writing and order was placed verbally. He submitted there was no pre -shipment certificate of the imported goods and they had declared the classification as per commercial invoice of the supplier that being his first import he requested customs for first check for the purpose of assessment of duty. In the meantime vide letter dated 29 -8 -2005 the importer i.e. Applicant company requested the Superintendent of Customs, Guwahati for release of the imported consignments provisionally and the goods were released provisionally against execution of bond for full value of the said goods with security in the form of Bank Guarantee for differential duty. He further stated that as per declaration the country of origin of the imported goods is China whereas the overseas supplier is based at Singapore. It appeared that the importer did not produce pre -shipment certificate to suppress the composition, nature and type of fabrics and that at the behest of the importer, the goods were mentioned as cotton polyester fabrics in the invoices of the overseas supplier which attracted lower rate of duty than the rate of duty applicable to Denim. It appeared from above that the goods were misdeclared with intention to evade payment of duty.

(2.) ACCORDINGLY show cause notices dated 31 -10 -2005 and 7 -2 -2006 were issued proposing the confiscation of the impugned goods, demanding differential duty on account of Denim attracting higher rate, interest at the appropriate rate and for imposition of penalty on the importer M/s. S.K. Enterprises and its proprietor Shri Kamal Chand Surana and CHA M/s. Technotib Eastern (P) Ltd. for his active assistance to the importer. Show cause notices were adjudicated by the Commissioner by a common order. The ld. Commissioner confirmed differential Customs duty of Rs. 32,57,758/ - and Rs. 49,24,108/ - pertaining bills of entry No. 10/ICD/2005 and 12/ICD/2005 respectively and duty amounting to Rs. 32,30,580/ - and Rs. 14,70,059/ - pertaining bills of entry No. 15/ICD/2005, dated 15 -12 -2005 and 17/ICD/2005, dated 28 -12 -2005 respectively in terms of Section 28(1)(b) of the Customs Act, 1962 confiscated the said imported consignments for mis -declaration and gave an option to the importer to redeem the same on payment of redemption fine of Rs. 10.00 Lakhs, imposed equal amount (equivalent to duty) on the importer, under Section 114(a) of the Customs Act, 1962 and demanded interest at the appropriate rate. Being aggrieved with this order the present Appeal is filed to this forum.

(3.) PER contra, the ld. A.R. for the Revenue has submitted that on testing, the imported consignments were found to have the characteristics of Denim, and therefore, it appeared that the imported goods were mis -declared to attract lower rate of customs duty and for evasion of duty. He submitted that on perusal of the bills of entry it is evident that the provisional assessment was not made and goods were provisionally released as the importer was pressing hard for the said release. However, while releasing the goods the interest of Revenue was protected by way of bond and bank guarantee. It is the submission that in this case, show cause notices demanded duty under Section 28 of the Customs Act, 1962. It further proposed the confiscation of goods and imposition of penalty for mis -declaration of goods. It is submitted that the ld. Commissioner dealt with both the issues and confirmed the demand under Section 28 of the Customs Act, 1962 and adjudicated the offences by the importer as provided under section 124 of the said Act. After hearing both sides we find that as per ld. Advocate the goods were assessed provisionally and if so the Appellant could not be proceeded with for confiscation of the goods imported by them and imposition of penalty. In this regard he has referred to various case laws. He has produced before the Bench a letter dated 5 -10 -2005 of the Assistant Commissioner issued from File C. No. VIII(48)1/CUS/MISC/ACG/2005 addressed to Superintendent mentioning that provisional release of the consignment pertaining to Bill of Entry No. 12/ICD/2005, dated 26 -8 -2005 may be allowed subject to realization of duty amounting to Rs. 10,83,480/ - assessed provisionally. The ld. Advocate submits that similar communications were received in case of other Bills of Entry. As against this the ld. A.R. for Revenue has submitted that there is no remark made in the bills of entry that the assessment was provisional. We find that there is no findings of the ld. Commissioner on the issue whether the assessment was provisional. We also find that the grievance of the Appellant of re -testing of the samples has not been acceded to by the adjudicating Commissioner. Ld. Commissioner in para. 14.3 of his order has merely observed that there is no need to refer the sample to any other laboratory for further testing as the test report of the departmental Chemist are to be preferred to opinion of outside agencies while classifying a product. We do not endorse this view of the ld. Commissioner, especially as the Appellant had challenged the test report of the Customs House Laboratory. Appellant has taken the plea that they had requested for assessment under "First Check" and therefore there cannot be intention to evade duty. We find that ld. Commissioner in his order has not addressed various issues as mentioned above. In these circumstances, we remit the case back to the ld. Commissioner for deciding the case afresh after considering all the issues raised by the Appellant. We make it clear that as the sample was not re -tested, the remnant sample if any should be sent to the CRCL, New Delhi after following proper procedure and a copy of the said report should be supplied to the Appellant before deciding the case. It is made clear that we have not expressed our opinion on any of the issues and all the issues are kept open. In the result the order of the ld. Commissioner is set aside and the Appeal is allowed by way of remand. It is needless to mention that reasonable opportunity of hearing be granted to the Appellant.