WALTER TRADERS Vs. COMMISSIONER OF CUSTOMS, HYDERABAD-II

JUDGEMENT

(1.) THESE appeals arises from Order -in -Original No. 3/05 dated 28 -1 -2005 passed by the Commissioner of Customs and Central Excise, Hyderabad ordering for absolute confiscation of 2874 Nos. of logs of Red Sanders Wood valued at Rs. 57,68,118/ - under Section 113(d) of the Customs Act, 1962 read with provisions of EXIM Policy 2002 -2007 treating them as prohibited goods as defined under Section 2(33) of the Customs Act, 1962. A penalty of Rs. 5,00,000/ - was imposed on the exporter under Section 114 of the Customs Act, 1962 and Rs. 2,00,000/ - on Shri K. Ravinder, Managing Partner of the exporter under the said section has been imposed. The appellants filed a Shipping Bill No. 004508 dated 15 -4 -2004 through their Custom House Agent M/s. A.H. Associates, Hyderabad for export of certain goods declared as Joint samisen musical instruments parts made out of red sanders wood in 2874 Nos. valued at US $ 129330 equivalent to Rs. 57,68,118/ -. They submitted the documents along with Export Licence dated 9 -3 -2004 issued by DGFT, Hyderabad for export of Joint Samisen Musical Instrument parts made out of Red Sanders Wood; certificate of origin vide certificate No. 1/2003 dated 25 -11 -2003 issued by the Principal Chief Conservator of Forests, Hyderabad, indicating the origin of goods, quantity and value as above and permitting them to export; stock possession certificate dated 17 -7 -2003 issued by the Divisional Forest Officer, Nalgonda, proceedings dated 8 -4 -2004 of DFO, Nalgonda; transit permit Nos. 766609 and 766610 dated 16 -4 -2004 issued by the Forest Range Officer, Choutuppal for transporting the goods from exporters warehouse at Nalgonda to ICD, Hyderabad; purchase contract dated 10 -4 -2003 entered into between M/s. Walter Traders and Radeep Services, Singapore; invoice No. EXP/SIN/001 and packing list dated 9 -4 -2004 along with the shipping bill. The officers of Customs, ICD on verification observed that the description of goods mentioned in the shipping bill did not tally with that in the transit permit and found some other discrepancy. Hence, the Dy. Commissioner of Customs, ICD addressed a letter dated 21 -4 -2004 to DFO, Nalgonda requesting him to inspect the goods at the customs premises, i.e., ICD, Sanathnagar, Hyderabad and certify the description mentioned in the shipping bill. The FRO, Choutuppal inspected the goods presented by the exporter for export on 23 -4 -2004 and certified on the shipping bill as inspected the material in container bearing Nos. PCIU 9955053 and PCIU 9954458 in the premises of ICD, Sanathnagar and found them to be rough squared trimmed, logs of Red Sanders and the same covered with transit permits bearing numbers already noted above issued by FRO, Choutuppal. Further enquiries by the Department and Special Investigation and Intelligence Branch (SIIB) revealed that Samisen instrument is a traditional Japanese instrument played by traditional music players. The Britannica Encyclopadia describes the same, as instrument with long necked fretless Japanese lute with three strings, a small square body with cat skin front and back and a curved -back peg -box with side pegs and it is not in the shape of a long. An extract from Music instruments of the world shows that Samisen is a musical instrument with three strings and blade. The examination of the goods show that they are presented for export in irregular shapes, sizes and not properly worked on them, many of them with holes and cracks and do not appear to be as a part of the samisen instrument. The transit permit issued by the Forest Department described the same as dressed material of red sanders for samisen musical parts. The Forest officer also on the back of the shipping bill certified that the goods are rough squared and trimmed logs of red sanders. On examination by SIIB, they had a reasonable belief that roughly trimmed logs of red sanders were being attempted for export in the guise of parts of musical instruments in violation of the provisions of Customs Act, 1962 read with EXIM Policy 2002 -2007 and which is liable for confiscation. Hence they seized the goods under panchnama dated 27 -4 -2004 and proceeded with the case by issue of show cause notice after due recording of the statements from the Managing Partner of the appellant and from the CHA..

(2.) THE appellants contention was that they had specific orders for supply of parts of samisen instruments. The rough logs were dressed and brought to a particular shape. These dressed logs were nothing but parts of joint samisen musical instruments in terms of the EXIM Policy, They had no intention to smuggle out red sanders wood. They have carried out the activity in the presence of the Forest Officers and they had clearly certified the same as parts of the said instruments. The activity of manufacture of polishing the logs to bring it to a particular shape was well known to the Forest Officers and they have certified the same. They contended that the description of the logs, quantities in the transit permit tallied with the descriptions in the shipping bill. They contended that there was no mala fide on their part to export prohibited items. The items had assumed the nature of a part of the said musical instrument and hence, it was in terms of the Licence. It is contended that only after the examination of the SIIB officers, the Forest Officers have changed their opinion that logs as rough squared and trimmed logs of red sanders, even though the item does not loose the characteristics of parts of the instrument. They denied that the item to be a prohibited item and hence, they contend that absolute confiscation and imposition of penalty is not justified. It is contended that the Managing Partner and the exporter had no intention to export a prohibited item but they had converted the items into the requirements of the purchaser from Japan. The purchaser from Japan is a manufacturer of the said musical instruments. The musical instruments required red sanders wood and the logs were procured by them and hence, there was no violation under Section 114 for imposition of penalty or for absolute confiscation of the goods under Section 113(d) of the Customs Act, 1962.

(3.) THE Commissioner has not agreed with their contentions. He has noted that the item has not acquired the nature of musical parts made out of red sander wood and hence, they are in the nature of rough squared and trimmed logs of red sanders wood and they are liable for absolute confiscation. He has held that K. Ravinder, Managing Partner of the exporter had actively managed the affairs of the said firm as far as the export is concerned. His involvement is also evident from the fact that he was present at the time of examination of the goods. Therefore, he was liable for penalty.