TMI Blog1998 (11) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... tation was made under 59 Bills of Entries during the period 9-5-1994 to 22-4-1995. The export of the garbage bags took place under the cover of 10 shipping bills between 28-3-1994 to 16-5-1994 with the one consignment having been exported to Singapore and the remaining to U.A.E. The product quantity exported was 22,000 Kgs and valued at ₹ 1,68,85,800/-. The foreign exchange in question came to be repatriated between 23-5-1994 to 6-3-1995. On enquiries, the authorities felt that the plastic garbage bags exported had been grossly over-valued while the imported materials i.e. LDPE and polypropylene and acrylic scraps had been undervalued. The Consignment which arrived during May, 1994 therefore were taken up for examination and the material was found to be acrylic sheets, acrylic plastic sheets and 53,000 pieces of acrylic photoframes and 28,000 MT acrylic scrap. Some acrylic scrap thereof on search of the appellants factory premises was also seized. Along with this scrap plastic garbage bags which were found in the factory were also seized. After enquiry, the charge framed against appellant were that the plastic garbage bags as exported did not have any component of acrylic pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to answer the charge in respect of the following :- (a) The exporters have exported plastic garbage bags using only LDPE materials and have not used any Acrylic plastic scrap or PP scrap in the manufacture of such plastic garbage bags exported by them under the aforesaid DEEC advance licence. Acrylic and PP scrap are not allowed as per the Import and Export Policy, 1992-97 read with Customs Notification No. 203/92, dated 19-5-1992 as amended. (b) The exporters have disposed of the goods even before completion of the export obligation, as admitted by them, and before the realisation of the export proceeds, as such, the exporters have violated Condition No. (vi) of the Customs Notification No. 203/92, dated 19-5-1992 as amended and therefore, the exporters are not eligible for DEEC benefits and the goods are liable for confiscation under the provisions of Section 111(o) of the Customs Act, 1962. (c) The exporters are also liable to pay duty on the past clearances which have been already cleared duty free, by suppression of facts and materials, under the provisions of Section 28 of the Customs Act, 1962. (d) The exporters have over invoiced the exported p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in the policy and these could be imported only up to the limits prescribed. He has pleaded that in terms of Para 47 of Import Export Policy as above while LDPE and Polypropylene have been shown to be sensitive items, acrylic plastic material was not mentioned as one of the sensitive items. He pointed out in the case of appellants licence even in respect of LDPE and Polypropylene no limits as such had been prescribed. He has pleaded that in terms of Para 110 of the Hand Book of Procedure, flexibility has been provided for importation of any one of the items allowed for import except for the sensitive items which had been mentioned in the policy. He has pleaded that the Circular No. 8/94, dated 20-7-1994 applicable to advance licences and also PL Circular No. 63/95 clearly provided for flexibility to import anyone of the raw materials specified in the import licences, subject to the condition regarding the sensitive items. He has pleaded once the licensing policy and also ALC licence flexibility was allowed, customs authorities could not impose restrictions on their own as to the quantum of the acrylic scrap which could be imported against the exportation of the plastic garbag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be said that this import had contravened any of the provisions of the Customs Act, 1962. Reliance was also placed on a decision of the Bombay High Court reported in 1990 (49) E.L.T. 190. At Page 193 the Hon ble High Court held as follows :- ........In my view, the Customs authorities have no jurisdiction whatsoever to sit in appeal over the certificates which have been granted by the Director General of Technical Development or the Director of Industries, as the case my be, and come to their own conclusion. These certificates are binding and conclusive upon the Customs authorities, save and except, when it can be contended that these certificates have been obtained by fraud or under some mistake. In the present case, it is not the case of the Respondents that the certificates which have been obtained by the Petitioners and copies of which are annexed to the Petition and to the affidavit in rejoinder, have been obtained by fraud or under a mistake. 35. It is thus clear that the Supreme Court held that if a Bench of two Judges wanted to differ from earlier view of a Bench of two Judges, they should have referred the matter to a Larger Bench and in that view their Lordships ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacture of goods or execution of the export order. The learned Collector held that the CRCA sheets in question could not have been used for manufacture of the bicycle parts which were exported by the appellants. But in the declaration what is stated is that the goods covered by the invoice are imported for the purpose of manufacturing goods/replenishment of the materials used in the manufacture of goods. It is, therefore, clear that the declaration is to the effect that these goods are replenishment of the materials used in the manufacture of goods which are already exported by the appellants. In this case, since the appellants had already exported the bicycle parts in question their using these materials for manufacture for cycle parts does not arise. They have already fulfilled their obligation by exporting the materials and have already earned foreign exchange to the Government. The whole scheme of the Notification No. 116/88-Cus., dated 30-3-1988 is that the Central Government being satisfied that it is necessary in the public interest to do so exempted these goods against advance licence issued under the Import Control Order which are required to be imported for the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t laying any basis has held that the acrylic plastic bags which are exported are made out of LDPE and no acrylic material as such had been used. He has pleaded that this position was contrary to the facts inasmuch as in respect of one shipping bill samples had been drawn and the Chemical Examiner as could be seen from the Chemical Examiner s report filed in the Paper Book at page 292 (Vol. II) vide report dated 2-6-1995 has clearly stated so in answer to the queries raised in the test memo. After analysing the material of which the plastic garbage bag had been made he has clearly stated that the said bag is composed of Low Density Polyethylene, the upper portion is made of acrylic strip which is used as support for the bag and it is provided with thin polypropylene yarn. He has pleaded that another test report of the Chemical Examiner dated 30-5-1995 filed at page 294 of the paper book bearing No. S/9/95 ICD which is in respect of shipping bill Nos. 2630, 2631, 2632, 2633 and 2634 in which the queries were (i) whether it is made of Acrylic Plastic Scrap, (ii) composition of the Bag, i.e. materials used in the manufacture of Bag; and (iii) whether it is made of PP/LDPE scrap. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export sample and not the one weighing around 75.0 gms. Further, they have also clarified that the plastic garbage bags seen by them at the time of export did not contain any handles. Shri Rajesh Jain of M/s. Shree Thirumala Udyog, in his statement dated 6-11-1995 had admitted that the average weight of the bags exported was 11.00 gms. and all were of uniform shape and size; that they measured 16 x 24 in size and of 80 micron gauge in thickness. But he claimed that he had put acrylic strip of rectangular shape approx. 4 inches in length and 2 inches in width and thickness ranging from 1.5 to 3 mm. If the weight of this acrylic strip is added to the weight of the plastic garbage bags, then, the weight of the plastic garbage bags will not be certainly 11.00 gms. and it will be much heavier. But the shipping documents and the examination report suggest that there was no discrepancy with regard to the weight and quantity declared in the shipping bills. This has been further corroborated by the statements of the concerned Customs Appraiser dated 6-11-1995, Inspector vide statement dated 6-11-1995 and the Agent vide statement dated 7-11-1995 and the exporter himself. Therefore, the wei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot discard the result of the Chemical Examiner who has clearly come on record as to the use of the acrylic material and this was in respect of the samples which were drawn from the consignments exported as per the endorsement on the test memo. He has pleaded that the learned lower authority had not taken the appellants into confidence while drawing the samples and had done this exercise on their own. Therefore, in the proper procedure for drawal of sample as prescribed by the department and in respect of which he has filed before us a write-up and the department not having followed this procedure, the results of these test reports could not have been relied upon by the learned lower authority. He has pleaded that in respect of the sample which were sent to the CIPET requirements of Section 144 of the Customs Act were not complied with. He has pleaded that the appellants have taken objections in this regard at Paras 16 and 22 which are reproduced below but the ld. lower authority has not adverted to the same :- The Noticees would like to point out and wish to emphasize the fact that these three sets of samples were not drawn in their presence either at the time of import or at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us to the extract from the book which he himself had authored which is present before us and the procedure which is prescribed for testing the remnant samples. He has pleaded no such prescribed procedure had been followed the test of the samples which were sent to CIPET. In this connection, he was asked to refer to the shipping bill under which the exports had been made to ascertain what happened at the time the exports were made. One of the consignments which was shipped to Singapore under Shipping Bill No. 001676 which is filed at Page 131 (Vol. I) of the Paper Book shows the endorsement by the authorities wherein certain bags have been opened for examination and these were found to contain plastic bags of black colour and the stuffing supervised by the authorities. Again in the case of Shipping Bill No. 2727 for export to UAE the goods were examined and 5% of the cargo was opened and these have been, on examination, found to contain garbage plastic bags and the stuffing supervised by the authorities. Same is the position in respect of Shipping Bill No. 2728 and S.B. Nos. 2729 and 2730. His plea is that the appellants have not held back any information and the cargo was examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the sale of the goods having been made before fulfilling the export obligation no facts in that regards were elicited from him. On going by the actual imports made, on a query from the bench, he clarified that about 44.99 MT of the acrylic scrap had been imported prior to 16-5-1994, the date on which the last consignment, with regard to export obligation, was exported. He further pointed out that so far as the realisation of the sale proceeds are concerned, the same in terms of conditions (vi) should not be read simultaneously with the obligation for full export. His plea is that if the exports are made it takes some time for the sale proceeds to be realised depending on the terms of export i.e. whether the export has been made against the L/C or on credit basis or based on the time allowed for credit which could be anything up to 120 days or so. He has pleaded while the imported goods in terms of condition (vi) could not be so sold till the full export obligation had been fulfilled, the benefit could not be denied when the appellants ultimately repatriated the full foreign exchange and had in the meantime sold the goods pending receipt of the sale proceeds in foreign ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was some manipulation by the importer in U.A.E. and the invoice is not the one which was issued by them even though at the bottom in the photocopy the signature appeared to be tallying with that of the authorised signatory of the appellants. He has pleaded that they had raised a plea before the adjudicating authority to get copies of the invoices under which documents were sent through the Canara Bank to verify the position and it has not been done. He has pleaded that the photocopy of the invoice which was produced is a manipulated document and the importer at the other end might have resorted to the use of a manipulated document to save duty in U.A.E. He has pleaded that the enquiries made by the department through their officers with the importers at the UAE clearly show that he has received the goods exported and thereafter paid the full export value for the same. In this connection, he referred us to the documents which have been filed at Page Nos. 372 and 375 in Volume II of the paper book wherein the Indian Council (Economic) has addressed a letter to M/s. Caliper Trading Inc. at Dubai who have imported the goods from the appellants asking them to confirm that clearance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted without payment of duty. He has pleaded that the appellants had done no suppression of facts in regard to any one of the elements under the DEEC scheme and had imported the goods based on the licence produced after coming on record as to the exportation of the goods made by them. He has pleaded in this background the longer period of limitation could not have been invoked for the purpose of demanding the duty. 15. In regard to valuation of the imported goods, he has pleaded that while the scrap had been invoiced at US $ 150 per MT the off cuts had been invoiced at US $ 240 per MT. He has pleaded that the learned lower authority has raised the value of the scrap from US $ 150 to US $ 240 per MT. So far as the revision of the value for the scrap from US $ 150 to US $ 240 is concerned, the appellants have accepted the same and they are contesting only on the enhancement of the value from US $ 240 to US $ 450 per MT in respect of Off cuts and the frames. He has pleaded what the appellants had imported was only strips in the length of 8 cms to 132 cms. The learned lower authority adopted the prices in respect of off cuts which had been imported through the customs by others and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us to the Board s Circular No. 1/94 reproduced in 1994 (72) E.L.T. T44 and 45 (Page No. 296 of Vol. II of the paper book). He has pleaded, before the goods could be allowed for importation it is to be established that the goods imported were capable of being used for export product and also that the same had been used so. In this connection, he referred us to the decision of the Tribunal in the case of Zenith Tin Works v. CC, Bombay reported in 1995 (75) E.L.T. 865 (T). He has pleaded in that case, it has been held that the Tin plates which could be imported could be only those which were used in the manufacture of the export product. He, however, fairly concedes that in the present case, in case it was established that the garbage bags exported had a rib of acrylic material attached to it, the material of acrylic plastic scrap would be permissible and in case this rib was not found to have been used the material could not be allowed to be imported. This, he pleaded, after taking into account the flexibility for import allowed in respect of materials covered by the description of the licence in terms of various paragraphs of the Import Export Policy and Hand Book of Procedures f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he concerned Customs Appraiser dated 6-11-1995. Inspector vide statement dated 6-11-1995 and the Agent vide statement dated 7-11-1995 and the exporter himself. Therefore, the weight of the plastic garbage bags exported must be around 11.00 gms. and this is in conformity with the sample recovered from the factory of the Exporter and tested. The supporting manufacturer, during his statement had admitted that the samples weighing around 11.00 gms. recovered from the factory of the exporter to be representative samples of the plastic garbage bags exported by the exporter. It is argued by the exporter that the plastic garbage bags seized from the factory were manufactured for local market and that reliance need not be placed on the statement of Shri P.V.K. Saikumar. This, I am unable to accept as it is clear afterthought considering the circumstances of the case. In this case, the circumstances clearly indicate to the samples recovered from the factory to be the representative samples of the exported plastic garbage bags. (e) The above sample weighing around 11.0 gms recovered from the factory and tested by CIPET tested positive only to LDPE and not to Acrylic. As per the Import-Expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants. He has pleaded that for demand of duty longer period of limitation has been rightly invoked against the appellants, as they had suppressed the fact regarding the sale of the goods before the repatriation of the foreign exchange relatable to the exports which had been made. He has pleaded that the show cause notice was issued on 11-11-1995 in respect of imports which were made from 9-5-1994 to 22-4-1995. In this connection, he referred us to the findings in para (j) of the learned lower authority s orders which is reproduced below for convenience of records :- (j) It is contended by the Exporter that he had complied with the conditions of Customs Notification 203/92, dated 19-5-1992 as amended, but I find from the Bank realisation certificate and the statement of Shri Rajesh Jain, that the exporter had sold the duty free imported goods in the local market even before completing the full export obligation and realisation of the foreign exchange. The exporter has not produced any evidence to discard the allegations made in the show cause notice in this regard and, therefore it is well established that the Exporter has violated the conditions of the said Customs notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Garbage Bags, it is observed that the Garbage bags have been valued at US $ 0.01 per piece for which customs duty have been paid by the importer M/s. Calipar Trading Inc., UAE to the Dubai Customs. The invoice produced is that of M/s. Shree Tirumala Udyog, Bangalore and the same has been signed by Sri. Kiran Jain, one of the partners of the said firm, raised on M/s. Calipar Trading Inc., UAE. For export of Garbage Bags under the said advance licence, as per the value declared, it works out to US $ 20,000 for the entire 20 lakhs garbage bags exported by the exporter under the said advance licence. Further, as per the number of bags declared and the weight of the total consignment, declared in the ship ping bills and the invoice/packing list, the average weight of the Garbage Plastic bags exported by the exporter works out to 11.4 gms per bag and similarly the average price of the Garbage Plastic Bags exported works out to ₹ 8.44 per bag. If the price of the Garbage Bags exported and considering the weight of the bags, the price of.........Kg of the exported Garbage Plastic Bags works out to ₹ 740.35 per Kg. Whereas, the Exporter has so far imported 986.37 MTs of Acrylic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the raw materials to a large extent and value and by this mis-representation of fact and misdeclaration of the particulars, the Exporter has tried to defraud the Government its legitimate import revenue on import of such duty free raw materials to that extent which is otherwise not allowed duty free. The exporter has also not fulfilled the export obligation as per the licence conditions and the Conditions of the Customs Notification No. 203/92, dated 19-5-1992 and they have inflated the export products value in order to achieve the requisite value addition. Therefore, it also appears that the exporter has over-invoiced the export product in order to complete the export obligation and has realised the export proceeds through other means. In view of the position discussed above, it appears that the endorsement made in the DEEC Part II with regard to Export Values are not correct and are to be corrected as per the Invoice value of US $ 0.01 per piece of Garbage Bags exported and also the import entitlement allowed duty free under the DEEC Part I also appears to be wrong and duty to be demanded on such imports, as the duty free import on the relevant plastic scrap used in the Export p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. If the invoices produced by the Exporter at the time of Exports are analysed, it is seen that average weight of the plastic garbage bags is around 11.4 gms and valued at ₹ 8.44 per piece. Therefore, value per kg. of the material works out to ₹ 740.35. Considering the total quantity of raw materials imported by the Exporter and the value thereof, the average cost of the raw material works out to ₹ 5.13 kg. and the job work charges per kg. is ₹ 15/-. Even after allowing huge margin of overheads and profit margin, the value declared at ₹ 740.35 per kg. at the time of Export is grossly over-valued and hence the cor rect value which is to be adopted per piece of plastic garbage bags could be taken as ₹ 0.32 as the per kg. value of the finished goods works out to ₹ 28/-. Therefore, based on the analysis of the 2 sets of invoices, I place reliance on the value declared in the invoices submitted by the importer at Dubai, for the reasons mentioned above. I am unable to accept the contention of the Exporter that Customs Officers had examined the goods at the Export time and the endorsement had been made after verifying the consignments, in as muc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of the test report, the acrylic material had been used on the plastic bags and in terms of Advance Licence Circular Nos. 8/94, dated 27-4-1994 and ALC No. 3/95, dated 6-3-1995, the appellants were at liberty to import any one of the plastic scrap which had been used in the export product without restriction unless the item was shown to be a sen sitive item. He has pleaded that acrylic plastic scrap was not notified as one of the sensitive items for import in the Import Policy. 19. The learned SDR at this stage intervened to say that if the appellants were able to establish that they had used the acrylic plastic material in the plastic bags exported the import of the goods in question could be allowed against the DEEC licence. 20. In this connection, the learned Advocate referred us to the circular issued by the licensing authorities and Para 21 of the Export Import Policy and also Para 49 of the said policy and Para 110 of the Handbook of Procedures issued by the Import Export Policy. 21. In regard to the judgment of the tribunal cited by the SDR, reported in 1995 (75) E.L.T. 865 (T), the learned Advocate pleaded the statement regarding predecessor Notification N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as misdirected himself in fixing the value taking into consideration the value of the goods based on the cost of the same to the appellants. He has pleaded that the law applicable for valuation of the export goods would be the one as set out under Section 14 of the Customs Act. He has pleaded the learned lower authority should have gone by the parameters of this section rather than having resorted to the cost construction method. The methodology for valuation as set out under Section 14 had not been followed and therefore the charge of over-valuation as held against the appellants was not sustainable. He has further pleaded that the learned lower authority has gone by the invoice copy which was obtained from U.A.E. and has not taken note of the invoices under which the goods were exported. He has pleaded that the invoice copy at the importer s end in U.A.E. was typed in a different typewriter and there was tampering in the documentation there. He has pleaded the appellants has sought for the enquiry to be done with reference to the invoices which were sent through the Canara Bank, the bank through which the export documents were despatched and the learned lower authority has not ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the evidence of the test results without doubting the veracity of the sample which was sent to the Chemical Examiner. 23. Shri Victor Thiagarajan, SDR pleaded so far as the consignment sent to Singapore was concerned it was not taken-up for examination as the consignment was small. 24. We have considered the pleas made by both the sides. The following points arise for determination :- (1) Whether the licence produced is valid for the import of Acrylic Scrap Material. (2) Whether the appellants had exported the goods using the Acrylic Material. (3) Whether the appellants had correctly availed of the benefit of Notification No. 203/92. (4) Whether the goods exported were over-valued. (5) Whether the imported goods viz. Acrylic Plastic Scrap offer sale were under-valued. 24.1 In regard to first point, we observe that the appellants hold a licence bearing No. 2026451, dated 17-2-1994 with the face value of ₹ 1,05,63,750/- valid for 12 months period with the description of the goods as under :- Relevant Plastic Scrap Materials as per the conditions attached to the licence. This licence issued was the advance licence subject to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Procedures. Under this para, the following inter alia has been set out :- Once the CIF value of all imports is determined the applicant exporter will have the flexibility to import any one or more items listed in the licence within the average value of the value based advance licence regardless of the quantity indicated against each item in the DEEC book excluding the value of sensitive items. 24.3 There is no dispute so far as the acrylic plastic scrap is concerned, it is not listed in the Import Export Policy or in the Handbook of Procedures as a sensitive item. The appellants therefore in terms of flexibility provided under the Import Export Policy and the procedures as set out under the Handbook of Procedures issued by the Dy. General of Foreign Trade (DGFT), could have imported the acrylic plastic scrap without limit subject to the other conditions of the DEEC scheme and the conditions as incorporated in the licence. The goods allowable under the policy are relevant plastic scrap. There is no dispute that the acrylic material imported answers to the description of Plastic Scrap. 25. The learned SDR for the department on a specific query accepted this position. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation no sample of the goods exported could be obtained by the Consul, as requested by the Customs Authorities at Bangalore. The authorities further had taken some samples of the garbage bags as were available in the appellants factory and the same were also sent for chemical test. The same were sent to the Chemical test as well as to an independent agency viz. CIPET. Statements were also recorded from the Customs Officers to ascertain as to the nature and material of the bags as were exported. During the course of the hearing, we had also examined the endorsement on the shipping bill made at the time of exports by the examining officers before the export of the goods was allowed. It is the totality of this evidence on record which has to be considered for the purpose of determination as to whether the acrylic material as such was used by the appellants in the goods exported. The learned lower authority in Para (c), which is reproduced earlier, has taken note of the samples which were picked-up during the investigation to come to conclusions that no acrylic plastic material had been used on the garbage bags which are exported. He has gone by the average weight of the bags based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Shipping Bill No. 1676 which covered the shipment to Singapore of the garbage plastic bags as part of the export obligation at the same rate as U.A.E. The report as seen from the copy of the shipping bill reads as under :- Sir, Verified the marks and numbers on the Gunny bags. Opened and examined the cargo in Bag Nos. 12, 27, 48, 51 and 86 and found to contain Plastic Bags coloured black - 2000 pieces in one gunny bag. There were 100 gunny bags in all. Supervised the stuffing into to the Cont. No. TEXU-286474-sealed with OTL No. 319245. LCL cargo. Samples drawn for test. This is signed by Mr. J. Darshan on 29-3-1994. Then we have another shipping bill No. 2727 figuring at Page 158 where the examination report reads as under :- Sir, Verified the marks and numbers on the cartons. Opened and examined 5% of the cargo and found to contain Garbage Plastic Bags supervised the stuffing into Cont. No. ITLU-519325-8. Sealed with OTL. Again the above report is signed by the same officer who had signed in earlier shipping bill. Likewise, the endorsement by the same officer is respect of Shipping Bill No. 2729 at Page 168 and also i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they had used LDPE material as against HDPE, which was found used by the Chemical Examiner on test. We observe that in the case of one test report the use of LDPE has been ascertained by the Chemical Exam iner and there is no mention of the HDPE in the test report dated 2-6-1995. Further, reliance was sought to be placed from the statement of Shri J. Darshan and the one Shri Saikumar. Shri J. Darshan, departmental officer, who examined the goods and he has stated that the bags in question which had been found from the factory which did not contain plastic strip in question were the ones which were exported. 29. We observe that the learned lower authority has not referred in detail the information that was elicited from both Shri J.S.A. Julius, appraiser concerned and the inspecting officer Shri J. Darshan who examined the goods. Statements were recorded from both of them under Section 108 of Customs Act in the question answer form. Shri Darshan in his statement has stated that he had examined the export consignment and the samples were also taken, whenever he was asked to do so either in writing or orally and the samples were submitted to the officers for further action. In repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sample which was drawn from the export consignment could have contained acrylic handle. This question obviously was put and which is reproduced below to verify which was the sample picked-up from the factory and contained any handle. : Q. 21 If it is a group sample, it has to be a representative of the export con signment? Do you agree? A. 21 Yes. Q. 22 If so it could not have contained any acrylic handle? A.22 Yes. Thereafter further questions were put with a view to describe the samples which was sent to the Madras Custom House Laboratory and this comes out clearly in question and answer No. 23. However, the officer has stated that he had not known which was the sample sent to Madras Customs. Both question and answer 23 are reproduced below :- Q. 23 Therefore it appears that the sample tested at Madras is not the sample drawn from the export consignment? Do you agree? A. 23 As I do not know what sample was sent to Madras for test, I am not in a position to answer this question. Again, a leading question was put and the officer has replied as under :- Q. 24 From the group sample drawn, it is seen that it weighs around 75 grams, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the bags exported had acrylic handles what they have stated which has been maintained by them is there was a strip of acrylic which was attached to the top of the opening of the bag through which the handle made of other material was put. In reply to more than one question the officer has stated that the bags which was drawn and sent by him had resemblance to the one which was exported and he had drawn the sample from one of the consignments while the others were examined by him by examining the goods before stuffing when he was shown the samples which was sent by the ICD Customs to AC (P). He fairly stated that he could not state whether this sample which was handed over to AC (P) was the one which was examined by him and it bore resemblance to the same. While recording the statement, the concerned officer was being asked to recall from memory as to the nature of the bags which were exported. He himself has stated that he was non-technical person and could not be absolutely sure of the constituents of the (bags) which were exported. It is to be observed that in the shipping bill which has been filed the description of the goods has been shown to be as under : GARBAGE PLASTIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICD sent by mistake as pertaining to the export. Again an information has been elicited from him to a query that whether acrylic bag weighed 11 gms which is recovered from the appellants factory on 5-7-1995 it was similar to the export bags and he has confirmed that the exported garbage bags did not have any handle. It is seen from the above that the drawal of sample had not been denied but the appraiser at the time when the sample was drawn treated it as non-representative sample for reason of absence of the signature of the appellants and he accepts that the sample which is found in the ICD, was not the correct one and the samples which are recovered from the factory were similar to the one which was exported. 32. We observe that the appellants has squarely come on record as to the material which they had used for the manufacture of the bags and the appraiser accepts this position but has stated that while passing the shipping bills one after the other, he by mistake, understood that the bags could be made out of any one of the three materials. It is rather naive on the part of the appraiser to have said so, as acrylic material though it is a plastic material like PP or HDPE, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not contain any handle. He has clearly stated about his not being sure of what was examined and whether it correspond to the sample which was being shown to him. While at the same time the appellants was made subsequently in answer to a question after repeated questions in this regard confirmed that the bags which are exported did not have any handle. 35. Taking into consideration the totality of the statement of Shri Julius and Shri Darshan the least that can be said is that the statements could not be relied upon as these were based on the memory of events which took place one year back and when they have stated in answer a number of questions, during the questioning, that they were not sure about the other specifications of the bags which was exported and examined by them except the colour and shape. When a sample had been drawn in respect of the goods covered by the Shipping Bill No. 1676, the examiner would have been in the best position to bring out with the tested sample as to what were the goods actually exported i.e. with the plastic scrap or without the plastic scrap used. The relevance on the memory of lapse of one year would not be a proper thing to do. Again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sample bags the HDPE might have used is not the issue and even if the appellants had used of HDPE would not take away the effect of the test results so far as the acrylic material is concerned. There may have been some manipulation so far as the HDPE vis-a-vis LDPE but for the purpose of proceedings before us what has to be ascertained is whether the acrylic material had been used. The learned lower authority has stated that the average weight of the bags imported varying from 11 to 11.4 grams and in case of acrylic material had been used the average weight of the bag would have been much more. We observe that the learned lower authority has not done the exercise taking into consideration the weight of all the materials which had gone into the manufacture of the plastic bags and has merely on assumption stated that the average of the bag would have been much more. This, in our view, is a wrong way to give any conclusion as to the use of particular material in the manufacture of the garbage bag exported and his presumption has been made without laying any basis in regard to that. As it is the test results of the Chemical Examiner cannot be discarded lightly unless it could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the above discussion, we are of the view that when there is Chemical Examiner report on the samples pertaining to the consignments were drawn and tested, there is no reason why the test results of those samples should be discarded and reliance should be placed on the memory of the Examining Officer after one year of the examination of the goods and on the vague statement of others. In view of the above evidence placed before us therefore we are of the view that the appellants plea that they had used the acrylic plastic material has to be accepted. 38. In regard to benefit of Notification No. 203/92, which has been held by the learned lower authority that would not be available, the ld. Advocate for the appellants pleaded that the appellants have been ruled out for the reason that Condition No. (vi) of the notification had not been fulfilled by the appellants. He has pleaded that the conditions of the notification should be interpreted in a practical manner. His plea is that this condition No. (vi) carries two elements. (1) regarding full export to be made and (2) regarding realisation of the foreign exchange. According to the revenue condition envisages that unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exported goods had been repatriated and once that is done, the condition of notification can be taken to have been satisfied even though the goods could have been sold prior to the receipt of the foreign exchange. The Revenue interest he pleaded, is protected by the Bond or the Guarantee which the appellants had executed with the licensing authorities in terms of condition (ii) of the notification which is reproduced below for convenience of reference :- (ii) that the importer at the time of clearance of the imported materials - (a) produces proof of having executed a bond or a legal undertaking before the Licensing Authority concerned, for complying with the conditions of this notification; and (b) makes a declaration before the Assistant Collector of Customs binding himself to pay on demand an amount equal to the duty leviable but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with : Provided that a bond or legal undertaking and the declaration shall not be necessary in respect of imports made after discharge of export obligation in full, as evidenced by endorsement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transferability shall not be permissible to the duty free licence on which import of Acetic Anhydride is allowed. Similarly the facility of sale/transferability of Acetic Anhydride imported against a duty free licence shall also be prohibited. 44. We have considered the submissions. We observe that the DEEC scheme and the Customs Exemption Notification are complimentary pieces of legislation with a view to effectuate the purposes of export promotion. The facilities given under the scheme is to ensure that the exporters have the benefit of the duty free import of the raw materials to facilitate the export of the goods without duty burden on the raw materials. The substantive requirements of the scheme is that the export obligation as envisaged in the advance licence issued is fulfilled and the foreign exchange is repatriated. For this purpose, various conditions have been envisaged under the Import and Export Policy as also under the Exemption Notification No. 203/92. These conditions as set out are to be so interpreted that the subserve basic purpose for which the scheme has been formulated and the duty free import is allowed only in the event of all the purposes of the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BC 10023, dated 28-5-1994 for US$ 34,560.00 paid on 30-7-1994. 6. FIDBC 10024, dated 28-5-1994 for US$ 34,560.00 paid on 26-9-1994. A copy of our Purchase Order No. CTI/IMP/004/94, dated 11-4-1994 is enclosed. We regret that we do not have any samples of this shipment. Please let us know if you require any further clarifications. Thanks andRegards. Sd/- Mahesh Chainani 46. To ensure the compliance with the requirements of the condition (vi), it is seen among others, as per condition (ii) of the notification before the first clearance of the goods could be allowed, a bond or a legal undertaking was required to be executed before the licensing authorities for compliance with the conditions of the notification and the appellants were also required to make a declaration before the Asstt. Commissioner binding to pay the demand equivalent to the amount of duty lent for the exemption, in case any condition of the notification was not complied with. This execution of the bond as per this condition would not be necessary, if the export obligation stood discharged before the importation. In the present case, the appellants had started i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us that in the normal trading practice may not always be simultaneous with the export of the goods. There could be credit terms for the payment which would go up to various periods. The interest of the Revenue is safeguarded by the legal undertaking as envisaged in condition (ii) of the notfn. and also an undertaking before the A.C. for payment of duty in case of violation of any conditions of the notification. The DEEC scheme is a beneficient piece of legislation and it has to be interpreted liberally so long as the conditions of Export Import Policy and realisation of the sale proceeds are satisfied, so long as revenue interest stands safeguarded. While the condition of non-sale of goods till the full export has taken place as per the licensing condition i.e. export obligation, is made is quite understandable as physical export of the goods for the purpose of physical manufacture of the goods in question and the exports thereof as there is a nexus between the imported goods and the physical export of the goods. But so far as the realisation of the foreign exchange is concerned, so long as the Revenue interest is protected by a Bond and a Legal undertaking as per conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the goods and there could be no bar for sale of the goods so long as the export proceeds are shown to have been ultimately realised. It would be invidious burden on the importer and the user of DEEC scheme, if the sale proceeds of exported goods are not realised in full as per the licence, in view of some dispute or hitch for remittance of the amount from abroad and, sale proceeds take some time to come, to ask the party to hold on the goods when he has exported the goods, in full and revenue interest also stands protected by the execution of Bond and LUT. 49. Looking from another angle, it is seen that condition (vi) envisages that the same material shall be disposed of to utilise in any manner, except for utilisation in the discharge of the export obligation. It is seen that the flexibility clause allows the import of any one of the material covered under the licence without limit except in the case of sensitive items. As it is the duty free import of materials as imported in terms of licence therefore may not be all needed for utilisation i.e. utilisation in the export of the goods as mentioned in the licence. 50. In our view, legally, no bar can be placed regarding sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e imported large quantity of Acrylic Plastic materials during the course of Export of Garbage Plastic Bags and also after completion of Export obligation. What have you done with that? A. 34 Partly we have in Export of Plastic Garbage Bags and Balance mate rial other than what has been detained by Customs we have sold. The questions and answers Nos. 35, 36 and 37 also are reproduced as follows :- Q. 35 Whether you have sold the Acrylic/other plastic material imported duty free for the manufacture of plastic garbage bags under the DEEC licence 118301, dated 11-2-1994 after completion of the Export Obligation and realisation of the Export proceeds? A. 35 We have sold the Acrylic/other plastic material imported duty free for the manufacture of plastic garbage bags under DEEC No. 118301, dated 17-2-1994 before completion of Export obligation and realisation of Export proceeds. Q. 36 Do you know the conditions of DEEC scheme with regard to sale/disposal of duty free imported goods? A. 36 I am not aware of the conditions of DEEC scheme with regard to sale/disposal of Duty Free imported goods. Q. 37 Do you know the conditions of customs notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants in the export documents. 53. The contention of the ld. Advocate is that the ld. Lower authority should have not resorted to the method of cost construction for value of the Export goods and he should have resorted to the provisions of Section 14 of the Customs Act read with Valuation Rules. He has pleaded that ld. Lower authority has not proceeded according to law and therefore the value as adopted by him for the export goods was not sustainable in law. He has pleaded that he has no objection to the matter being re-considered in terms of section 14 and has prayed for remand of the matter so far as this aspect is concerned. 54. We have considered the pleas. We observe that the ld. Lower authority s finding is based on two aspects i.e. while before the Customs Authorities in India the appellants had at the time of export declared the value of each bag as US $ 0.27 per piece which works out to approx. ₹ 8.44, the value declared by the importer i.e. appellants customer abroad before Customs authorities there as per the invoice submitted by him as US $ 0.01 and which works out to ₹ 0.32 per piece approx. 55. At this stage, the ld. Advocate in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its genuineness. 59. The Section 14 of the Customs Act which is reproduced below for convenience of reference :- Section 14. Valuation of goods for purposes of assessment. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale : Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50; (1A) Subject to the provisions of sub-section (1) or sub-section (1A), the price referred to in that sub-section in respect of imported goods shall be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensing angle and the exemption from payment of duty. 62. In regard to the value of the imported Acrylic Scrap, we find that so far as the scraps are concerned, the ld. Lower Authority has taken into consideration the value of the contemporaneously imported goods and increased the value from US $ 150 to US $ 240 per M.T. and the appellants have not contested the same. The appellants have not been able to show as to how they were able to obtain the goods at US $ 150 when similar goods had been imported by them at US $ 240 per M.T. Therefore the charge of misdeclaration must be taken to have been established and the charge of under-valuation as alleged to have been brought home. 63. So far as Off cuts and Photoframes are concerned, the off cuts as description suggests are obtained by cutting off from the Sheets during the course of manufacturing. The same in our view, can be considered as Scrap. So far as Photoframes are concerned the ld. lower authority has stated that they are ready for use and therefore these are articles of plastic. No specific plea in this regard has been made before us by the ld. Lower Authority. So far as the findings of the ld. Lower Authority in regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er evidence that may be available and also that may be produced by the appellants in this regard. The pre-deposit already made shall abide by the outcome of the final proceedings. 68. The appellants in the course of arguments pleaded that they have suffered double jeopardy inasmuch as their licence which had outstanding balance amount over and above had been seized and they could not operate the same by the reason of seizure. It is open to the appellants to approach the licensing authorities for revalidation of the licence by explaining the circumstances under which they could not operate the same. Sd/- (V.P. Gulati) Vice President 69. [Order per : T.P. Nambiar, Member (J)]. - I have perused the orders recorded by the ld. Vice President which is placed before me on 10-11-1997. In the above said order from Paras 1 to 9 the facts of the case as well as the arguments of both the sides were narrated. The following points are set out for determination :- (1) Whether the licence produced is valid for the import of Acrylic Material. (2) Whether the appellants had exported the goods using the Acrylic Material. (3) Whether the appellants had correctly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of import. He further stated that prior to export, they were manufacturing the bags. He also stated that they did not have any documents to show about the manufacture of Garbage Plastic Bags which are exported. He also answered that he has not maintained any raw material accounts for use in the manufacture of the Garbage Bags. He has also not maintained any Production Register for manufacture of Garbage Bags and there is also no document or proof to show the utilisation of the raw materials which they have indicated for the manufacture of Garbage Bags. They have packed the Garbage Bags in packets of 100 each and such 20 packets were packed in one carton. He also stated that he is not aware of any export sample drawn at the time of export. He also stated that they have imported large quantities of Acrylic Plastics and partly they used it in the export of garbage bags and rest of the same were sold by them. 74. To Question Nos. 16 and 17, he has answered as follows :- Q. 16 From whom did you take the technology for manufacture of Garbage Bags exported by you. A. 16 We were knowing the technology for the manufacture of Garbage Bags as process of manufacturing is very si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under DEEC No. 118301, dated 17-2-1994 before completion of Export obligation and realisation of export proceeds. Q. 39 Earlier you have indicated that you have used Acrylic handles for the manufacture of garbage bags. Have you manufactured any Acrylic Handles for use in the manufacture of Garbage Bags. ? A. 39 We have not manufactured any Acrylic Handles nor do we have any machinery to manufacture such Acrylic Handles. As we have taken strips out of Acrylic Scrap what we have imported from and cut into small rectangular sizes as indicated earlier ? Q. 41 Whereas from your above answers it is evident that you have violated the conditions of Customs Notification No. 203/92, dated 19-5-1992 as amended and therefore you are not eligible for duty free benefits of inputs of plastic raw materials under said DEEC licence and as such duty has not been paid on such inputs you are liable to pay interest on the duty that was payable from the date of duty forgery/challan of import consignments. As you have not brought this to the notice of customs authorities what you got to say ? A. 41 I am ready to pay duty and interest due payable. However, as soon as adjudication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with 2/3 labourers used to sort out the garbage bags which came out of the machine. The bags were used to be packed in garbage bags before packing the same into the corrugated boxes. 100 Nos. of garbage bags were put into a plastic bag and 20 of such plastic bags each containing 100 numbers of bags were put into the corrugated box and the corrugated box was sealed with adhesive tape. He also stated that no handle was put to these bags before they were packed. Therefore his statement negatives the version of Shri Jain that after the manufacture of plastic bags he was putting the acrylic handle to the same. It is therefore seen that this statement of Shri Sathya Narayana clearly goes to show that the plastic bags were not manufactured with acrylic strips. The statement of Shri Sathya Narayana corroborates the statement of Shri Giridhar Das that the plastic bags of the appellants were not manufactured from acrylic material. 79. This is further corroborated by the statement of Shri Ramanna who is also a worker in the appellants factory. He also stated that these bags are manufactured from plastic materials and no handle was attached to the same. He fully corroborates the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported by the deposition of the Customs Appraiser Inspector and the Agent for the Export. The Exporter has produced a letter issued by the JDGFT, Bangalore dated 9-8-1995. In the said letter, the JDGFT, Bangalore have clarified that as per the copies of the Shipping Bills furnished by you, the export product garbage plastic bags are made out of plastic scrap of LDPE, PP and Acrylic and as per the condition sheet attached to Licence No. 2026451, dated 17-2-1994, the relevant scrap can be imported and the relevant plastic scrap in this case is of LDPE, PP and Acrylic. The above clarification has been issued based on the contention of the Exporter and not based on physical verification of the exported goods and this is nothing but a clarification of the Policy in its general sense and it cannot be applied directly in the subject case unless the relevant plastic scraps declared by the exporter were used in the manufacture of exported plastic garbage bags. Therefore, I do not place reliance on this clarification, as Acrylic and PP scrap have not been used in the manufacture of exported plastic garbage bags. Further, the Exporter has contended that Customs authorities cannot sit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch circumstances, their statement establishes that no acrylic material was used in the manufacture of these bags and the ld. Lower Authority has rightly discarded the test result. The statement of Shri Julius and Shri Darshan also corroborates the above statements and in the background of the above evidences available in this case, the only conclusion is that the appellants have not used the acrylic material in the manufacture of these Garbage Bags. In such circumstances, as per Point No. 2, I hold that the appellants had exported the goods without using the acrylic material. 83. The next point for determination is whether the appellants had correctly availed of the benefit of Notification No. 203/92. The condition VI of the Notification No. 203/92 states that the exempt materials shall not be disposed of or utilised in any manner except for utilisation in discharge of export obligation, before the export obligation under the said licence has been discharged in full and export proceeds realised. It is therefore seen that on plain reading of the above said clause, it is very clear that the exempt materials should not have been disposed of before the export obligation under the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grammatical meaning unless that leads to some absurdity or unless there is something in the context or in the object of the statute to suggest the contrary. It has been often held that the intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence a construction which requires for its support addition or substitution of words or which results in rejection of words as meaningless has to be avoided. Obviously the aforesaid rules of construction is subject to exceptions. Just as it is not permissible to add words or to fill in a gap or lacuna, similarly it is of universal application that effort should be made to give meaning to each and every word used by the legislature. In J.K. Cotton Spg. and Wvg. Mills Co. Ltd. v. State of U.P., it was observed by this Court : .... the Courts always presume that the legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should have effect. 7. In case of taxing statute it has been held by this Court in several cases that one must have regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above cited case, in case of taxing statute one must have regard to the strict letter of the law and if the Revenue shows that the case of the appellants is hit by the above condition, the benefit should be denied to the appellants. Hence, a fair reading of the above said clause, would reveal that it is only after the export proceeds are realised, the appellants could dispose of the exempted materials. If the plea of the ld. Advocate is accepted that all that is required to show is that foreign exchange was ultimately realised, then the words, used in the above said condition (vi), that realisation of the export proceeds is a condition for disposing of the exempted materials becomes redundant and the words in the above said notification will not have their play. In this view of the matter, it is seen that these conditions as set out are to be incorporated in the meaning attached to that and that cannot be interpreted in any way so as to make those words redundant. 89. The Hon ble Supreme Court in the case of J.K. Cotton Spg. and Wvg. Mills Co. Ltd. v. State of U.P., reported in AIR 1961 SC 1170 has held as follows :- the Courts always presume that the legislature insert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted duty free for the manufacture of plastic garbage bags under DEEC No. 118301, dated 17-2-1994 before completion of export obligation and realisation of export proceeds. Q. 36 Do you know the condition of DEEC scheme with regard to sale/disposal of Duty Free imported goods? A. 36 I am not aware of the conditions of DEEC scheme with regard to sale/disposal of Duty Free Imported goods. Q. 37 Do you know the conditions of Customs Notification 203/92, dated, 19-5-1992 as amended? A. 37 I am not aware. These answers of Shri Jain goes to show that he had sold the imported duty free materials even before the completion of export obligation realisation of export proceeds. Therefore, there is evidence in this case, coming from the statement of Shri Jain himself that even before the completion of export obligation and realisation of export proceeds he has sold the plastic material imported duty free. The mere fact that these are only the questions put to the Power-of-Attorney holder is not sufficient to disbelieve them. The Power-of- Attorney holder is a person who looks after the affairs of the appellants and is authorised to answer to the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remand proceedings and the penal action also will have to be taken in regard to the same from the point of view of licensing angle and the exemption from payment of duty. For this purpose, the matter requires to be remanded. 95. In regard to value of the imported acrylic scrap the charge of misdeclaration is established and I agree with the above said view of the ld. Vice President as mentioned in Para 39 of his order. So also, so far as the findings of the ld. lower authority in regard to Photoframes are concerned, I agree with the findings of the ld. Vice President that the department establishes the same as mentioned in Para 40 of the order of the ld. Vice President. 96. I also agree with the findings of the ld. Vice President as mentioned in Para 41 of the order that the goods are rightly confiscated under Section 111(m) of the Customs Act. 97. I also agree with the observations of the ld. Vice President in Para 42 that the final determination of the redemption fine in respect of imported goods, will have to be determined up to the extent of over-valuation of the exported goods, if any, which may be ultimately found and the claim of duty free importation and penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 103.1 The Department has established a well defined system for drawal of samples from export/import consignments, the safe transport and custody thereof to and with the Chemical Laboratory at the Custom House and the testing thereof by duly trained and experienced technical personnel who have been doing this work for years together, supervised directly by the Deputy Chief Chemist and indirectly by the Chief Chemist. The legal authority under which this system operates stems out of Section 144 of Customs Act, 1962 which reads as follows : 144. Power to take samples (1) The proper officer may, on the entry or clearance of any goods or at any time while such goods are being passed through the customs area, take samples of such goods in the presence of the owner thereof, for examination or testing, or for ascertaining the value thereof, or for any other purposes of this Act. (2) After the purpose for which a sample was taken is carried out, such sample shall, if practicable, be restored to the owner, but if the owner fails to take delivery of the sample within three months of the date on which the sample was taken, it may be disposed of in such manner as the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bills that indigenous material is used is that of the clearing agent, who has wrongly declared so. It appears that there is no evidence led to contradict this explanation. His answer to Q. 35 is that Acrylic material has been sold under DEEC No. 118301, dated 17-2-1994 before completion of export obligation, only shows that imported material was sold, but by itself cannot go to prove that no acrylic was used in the bags. His answer to Q. 39 is the most important one to the issue of handles. He clearly says that these bags do not have any handles (emphasis mine). The top of the bag is fixed with strips made of acrylic scrap (by merely cutting strips of required size). I find that there is no contradiction between this and his answers to Questions 16 and 17 as in each he has held that acrylic strips were not used to act as handles but only as supports to the upper open end of the bag and that PP rope (presumably thick cordage) was fixed through holes on these strip to act as loop for carrying the bags when filled-up. Therefore, it is clear that there were no handles in the design of the bag at all. Instead strips of acrylic were affixed to the brim of the bags by folding over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra is at S. No. 11 and reads as under : 11. Was there any Acrylic material supplied as raw material? Ans : It may be that acrylic was mixed with Polypropylene and HDPE. But I am not able to quantify in terms of percentage as HDPE and PP were similar to acrylic. Now, it is difficult for me to conclude by this answer that no acrylic was used in the bags or even than no acrylic was supplied as R.M. The witness at best expresses a doubt. Furthermore, as against this, his answer to Q. 8 clearly states that it is possible technically to manufacturing bags out of a mix of acrylic and other plastics. Also, his answers to Q. 3 is very significant. It reads as under : 3. What are the material you have used to manufacture garbage bags supplied to Tirumala Udyog? Ans : I have used HDPE, PP and Plastic Square supplied by the party to manufacture garbage bags without handle. (emphasis mine). This answer clarifies all doubts. Firstly, HDPE granules are used for the main bag cavity walls of sheeting. Secondly, PP is used to extrude the cordage for affixing as loops. And thirdly, what is this plastic square he talks of? It is obviously the acrylic off-cut (scrap) out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Custom House is discarded as worthless. When such test results exist and have not been shown to be squarely inaccurate or fraudulent (upon good evidence), then a subsequent sample dawn (many months after the export is over) from a factory premises where the exporter or his agent does not sign on the sample so drawn, and its test in a non-customs laboratory (contrary to provisions of Section 144 Customs Act, 1962) cannot be allowed to override the Department s test reports. This is a path fraught with danger - the danger of no proper officer verifying the authenticity of the sample, the danger of the exporter or his agent not agreeing to its authenticity as there is no counter-signature from them and also the danger of sitting on judgment over both the technical competence and the integrity of the Customs House Lab without adequate evidence. 104. In view of the foregoing discussions, I find that there is no preponderance of probability in the facts of this case of acrylic not having been contained in the garbage bags exported. 105. The second issue under reference is whether the appellants are entitled for the benefit of Notification No. 203/92 or not? I have considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not entitled for the benefit of Notification No. 203/92. 109. The appellants have not been able to show as to how they were able to obtain the goods at US $ 150 when same had been imported by them at US $ 240 per MT. Therefore the charge of misdeclaration is established and the charge of under-valuation has also been brought home. 110. So far as Offcuts and Photoframes are concerned, the off cuts as description suggests is considered as scrap. 111. So far as the finding of the ld. Lower authority in regard to Photoframes are concerned same is upheld. The value as fixed by the ld. Lower authority at US $ 450 based on contemporaneous imports of Off cuts is hereby confirmed. Therefore, the misdeclaration of value in regard to these are also confirmed. Hence, the imported goods for this reason have been rightly confiscated under Section 111(m) of the Customs Act. 112. The final determination of the redemption in respect of imported goods would depend upon the extent of the over-valuation of the exported goods, if any, which may be ultimately found and also the penalty imposed on the appellants would also be determined accordingly in the remand proceedings. Therefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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