Re-export of imported goods mis-declared by importer – two contrary findings given by the Tribunal on the same issue involved in 2 appeals

PJ/Case Laws/2011-12/1262

Case: Changzhou Yongfa Corduroy Co. Ltd. V/s Commr. Of Cus., Bangalore

Citation: 2011(269) E.L.T. 218 (Kar.)

Issue:- Re-export of imported goods mis-declared by importer – two contrary findings given by the Tribunal on the same issue involved in 2 appeals – impugned order set aside – matter remanded.

Brief Facts:- The importer, M/s. Vimalachal Fashions, Bangalore filed four bills of entry for clearance of "Textile pieces of goods or Dyed cotton processed fabrics" classified under sub-heading 5208 32 90 of Customs Tariff. They were claiming benefit of duty free import under Duty free replenishment (DFRC) Scheme. On examination of the consignments, it transpired that the description of the goods was misdeclared and that the goods under import were 'cotton corduroy fabrics'. DFRC benefit was available to "Textile pieces of goods or Dyed cotton processed fabrics".

During the course of investigation, the appellant-exporter sent a communication addressed to the Commissioner of Customs intimating that their staff had discharged a wrong consignment and sought permission to re-export all the goods. In the alternative, it was proposed to sell the goods under import under the four bills of entry to the importer at a discount. This message was received by the Commissioner of Customs on 6-8-2007.

The Commissioner refused the permission sought by the appellant-exporter. Aggrieved by the same, the appellant preferred an appeal in the Tribunal.

Meanwhile, in the proceedings initiated against the importer, the Commissioner found that the importer had mis-declared the quantity imported and contravened provisions relating to import under Customs Act. The confiscation of goods was ordered which were imported under the said 4 bill of entries as well as under earlier Bill of Entries. Demand was confirmed against the importer wand fine imposed. Penalties were also imposed. A warning was issued to the Exporter.

Importer also preferred an appeal before the Tribunal.

The Tribunal in the case of importer gave finding that in case of earlier imports, the goods cannot be confiscated as the Authorities themselves had examined and were satisfied about the correctness of the description of goods confiscated and allowed the clearance of the same. In case of 4 Bill of entries, it was held that the importer was liable to pay penalty. However, considering the fact that the goods were in the custody of the department, the waiver of duty was ordered and stay was granted.

On the other hand, in the case of exporter, the Tribunal after a day of giving the above order held that the goods were liable to be confiscated under Section 11 of the Act. They could not be re-exported as held in the case of Commissioner of Custms, Kolkatta v/s Grand Prime Limited [2003 (155) ELT 417 (SC)] wherein it was held that re-export was not legally permitted. It was held by the Tribunal that there was no provision for re-export in the facts of the case. It was taken into consideration that the Commissioner had held that appellant had colluded with the importer in facilitating evasion of customs duty. And this was held fortified by the fact there were several imports in the past and they had falsely claimed DFRC benefit resorting to same modus operandi with collusion of the supplier. No penalty was imposed by the Commissioner but warning was given by the Commissioner. Accordingly, the Tribunal rejected the request of appellant to re-export.

Against the same, appellant-exporter is in appeal before the High Court.

Appellant’s Contention: - Appellant submitted that there is a specific provision providing for re-export of rejected goods. The appeal Bench of the same Tribunal has held that such a course is permissible. The same has not been considered by the Tribunal. Therefore it is also to be noticed that the appeal filed by the importer is still pending consideration.

Reasoning of Judgement:- The High Court held that it is a classic case of Court dealing with same subject matter on two different dates without knowing what it held on previous dates. It is difficult to sustain such inconsistent finding recorded on the same material on record, particularly when the order is passed, within a gap of 24 hours. On this very ground, the impugned order requires to be set aside. Also, the appeal filed by the importer was still pending and the stay order was passed on the fact that there was no collusion between the importer and exporter.

Considering the submission of the appellant regarding provisions of re-export, the High Court held that it would be appropriate that the Tribunal hears both the appeals together, take note of the Full Bench judgment of the Tribunal, as well as judgments of the Apex Court which is relied on in the impugned judgment and then pass appropriate orders on merits and in accordance with law. The impugned order passed by the Tribunal is set-aside. Appeal remanded to be heard along with the Customs appeal of the importer. No finding given on merits.

Decision:- Appeal allowed.

Comment: - This is very good decision. There cannot be two different decisions on same type of cases and High Court has rightly struck down the decision.

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PJ/Case Laws/2011-12/1262

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