TMI Blog1994 (10) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... providing for Duty Exemption Entitlement Scheme by which raw material etc., can be imported without payment of customs duty on the condition of its use in the resultant end-product for export, the appellants obtained advance licence dated 10-8-1988 under DEEC Book No. 004685 dated 3-8-1988 for the import of 1,25,000 kgs. of polyester fibre prime commercial quality and an identical quality of synthetic waste polyester. The appellants manufactured synthetic sliver/top out of the imported fibre and waste and filed shipping bill No. 907 dated 12-6-1989 declaring that the material used for resultant product consisted of 50% polyester fibre prime commercial quality and 50% synthetic waste polyester. The consignment was examined, samples were drawn on 13-6-1989 and sent for chemical analysis. According to the test report from the Chemical Examiner, CRCL Laboratory, the sample is in the form of a white strand of staple fibre without twist containing cut bits of short fibres. It is composed wholly of synthetic polyester fibres . The consignment was sent to Bombay for further export where the shipment was detained and subsequently allowed for export pending test of samples. As per the test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed to be produced in terms of Rule 23 of the CEGAT (Procedure) Rules. Learned DR objects to the covering letter and affidavit being brought on record, but, however, has no objection to the raw materials register being taken on record being an additional document. 4. Arguing on the appeal, Shri L.P. Asthana, learned Counsel commenced his argument by denying the charge of mis-declaration in the shipping bill. He submits that there is no evidence to establish that the composition of the export goods is not 50% polyester fibre and 50% waste except the report of BTRA, while on the other hand, the appellant s raw material register would clearly show that the export goods comprised 50% polyester fibre and 50% waste. He draws our attention to the import licence and to the description of the resultant products in the DEEC pass-book which reads as synthetic sliver/tops made out of synthetic waste/polyester waste/polyester fibre, etc. and submits that the DEEC scheme does not require that the export goods should consist of prime quality fibre and waste in an equal ratio. He contends further that the import entitlement cannot be reduced even if there is misdeclaration. Lastly he subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 11-8-1989 of Deputy Chief Chemist, New Customs House, Bombay - 38 : Please refer to your letter No. SG-INF-49/AJ/89 SIIB dated 26-7-1989 forwarding four samples bearing Container Nos. CIIU 488838, OSCX4-653/6501, CIIU-444494 and SCX4-451841-4 respectively to this office for testing. All the four samples have been registered here under Dy. No. 452/28-7-1989 and analysed the results as follows : Each of the four samples is in the form of running rope containing cut bits of yarns and fibres. Each is made of polyester. It is not possible to say whether it is manufactured out of virgin or waste material. However, presence of waste materials could be seen in each sample. It is not possible to give percentage of polyester synthetic waste and polyester fibres of prime commercial quality. Sealed remnant samples are returned." (ii) Test report dated 29-8-1989 of the Silk and Art Silk Mills Research Association (SASMIRA), the sample appears to be of not prime quality. (iii) Test Report dated 27-10-1989 of CRCL, Delhi : The sample is in the form of a white strand of staple fibre without twist containing cut bits of short fibres. It is comprising wholly of synthetic polyester fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort. Subsequently, in response to your telephonic request we had sent you the letter TH/1816/89, dated 27-9-1989. We trust the above details would help you in the particular case." 8. From an analysis of the test reports we find that the common thread running through all of them is that the export goods were not of prime quality i.e. they were a mixture of prime polyester fibre and synthetic waste. However, this does not assume any importance in view of the admitted fact that the resultant product under the DEEC scheme was to compose of polyester fibre commercial quality and synthetic polyester waste. A product which is composed of prime polyester fibre and synthetic waste can never be of prime quality. The test report dated 11-8-1989 of the Chemical Examiner of the office of the Deputy Chief Chemist, Bombay Customs only confirms the presence of waste materials in the sample tested without determining the percentage of prime quality fibre and of waste and does not support the case of the Department that the goods were not made out of equal proportions of prime quality fibre and polyester waste. The SASMIRA report also does not in any way controvert the declaration made in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the fibres. They had expressed inability to exactly quantify the amount of prime quality fibre used in their letter TH/1380/89, dated 28-7-1989 which is referred to in the letter dated 26-6-1990. 10. A cumulative reading of the letters appears to support the argument of the learned Counsel for the appellants that they have been procured by the Customs Department and are, therefore, of dubious nature and hence cannot be relied upon for forming the sole plank of the Department s case and are required to be discarded. Once this plank is removed, the case of the Department falls to the ground, the finding on the contravention of the conditions of import under the DEEC Scheme read with the relevant notifications the charge of misdeclaration and consequent liability of the goods to confiscation and imposition of penalty cannot be sustained. In view of our finding on the merits, we do not consider it necessary to go into the submission regarding non-applicability of Section 113(i) of the Customs Act, 1962 to the goods in question. 11. In the result the impugned order is set aside in toto and the appeal allowed with consequential relief, if any, due to the appellants. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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