TMI Blog2019 (10) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... stinction between the synthetic and artificial fibres. Confiscation - redemption fine - HELD THAT:- Since the goods have been held liable for confiscation under Section 113(h)(i) of the Customs Act, 1962, penalty under Section 114 of the Customs Act, 1962 is justifiable. From plain reading of the section 114 reproduced below, it is evident that penalty under the said section is impossible in respect of the goods held liable for confiscation and it has nothing to do with the actual confiscation of the goods. The goods have been misdeclared by describing them in a manner to avail excess drawback, the goods were liable for confiscation and hence the appellants who were responsible for making such incorrect declaration liable to penalty. Confiscation and redemption fine set aside - other parts upheld - appeal allowed in part. - Customs Appeal No. 85150-85151 of 2013 - A/86789-86790/2019 - Dated:- 10-10-2019 - Mr. S.K. Mohanty, Member (Judicial) and Mr. Sanjiv Srivastava, Member (Technical) Shri N.D. George, Advocate, for the Appellant Shri Dharmender Singh, Authorised Representative for the Respondent ORDER Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by weight of synthetic staple fibre . However on the basis of investigations undertaken, it was found that the goods exported by the appellants were having polyester and viscose in blend viz 65/35, 69/31 70/30, hence the drawback in respect of the said goods could have been claimed under S No 551502A of Drawback Schedule. The rate of drawback as per the drawback schedule for the said two headings are as indicated below: Period Notfn No Sl No 551202A Sl No 551502A Rate % Cap Rs Rate % Cap Rs 22.11.06 to 31.03.07 116/2006-Cus (NT) dtd 22.11.06 10.5 31 10 23 1.04.07 to 31.08.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants and Shri Dharmender Singh, Superintendent, Authorized Representative for the revenue. 3.2 Arguing for the appellants learned Advocate submitted that - As per the decision of Madras High Court in case of Sainul Abideen Neelam [2014 (300) ELT 342 (Mad)], any statement recorded under section 108 of Customs Act, 1962 is acceptable in evidence, however the same should be supported by material facts and other evidences. In case of Hindustan Ferodo Ltd [1997 (89) ELT 16 (SC)] and Garware Nylons Ltd [1996 (87) ELT 12 (SC)] it has been held by the Apex Court that the onus for determining the classification of goods is on the revenue and not the assessee. Hence in the present case it needs to be first determined whether the goods were correctly classifiable under S No 551202A or 551502A of the Drawback Schedule. Revenue has failed to adduce evidences to that effect. Though Rule 16 of the Customs Central Excise Service Tax Drawback Rules, 1995 do not provide for any time limit for recovery of the wrongly allowed drawback, but in view of the decision of Hon ble Supreme Court in case of Citadel Fine Pharmaceuticals [1989 (42) ELT 51 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of manmade staple fibre and/ or manmade filament yarn (grey). From the plain reading of the above two entries it is quite evident that for the goods to fall under heading No 551202A, they should contain by weight 85% or more of synthetic staple fibres, and for classification under 551502A they should contain 85% or more of manmade staple fibre. Chapter Note 1 to Chapter 54 of the Schedule to Customs Tariff Act, 1975, reads as follows: 1. Throughout this Schedule, the term man made fibres means staple fibres and filaments of organic polymers produced by manufacturing processes either: (a) by polymerisation of organic monomers to produce polymers such as polyamides, polyesters, polyolefins or polyurethanes, or by chemical modification of polymers produced by this process (for example, poly(vinyl alcohol)prepared by the hydrolysis of poly(vinyl acetate) ); or (b) by dissolution or chemical treatment of natural organic polymers (for example, cellulose) to produce polymers such as cuprammonium rayon (cupro) or viscose rayon, or by chemical modification of natural organic polymers (for example, cellulose, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose [Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation. 4.3 There is no dispute in respect of the principles of law laid down by the Hon ble Apex Court in case of Hindustan Ferodo Ltd and Garware Nylons. Plain reading of para 3 to para 11 of the Show Cause Notice reproduced below will make it clear that the revenue has discharged the onus cast on them to establish that the goods under dispute were correctly classifiable under Sl No 551502A of the Drawback Schedule. 03. The matter was intensely examined with reference to Customs Tariff, Duty Drawback Schedule, Harmonized Syste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (e.g. strength). The main synthetic fibres are: (i) Acrylic (ii) Modacrylic (iii) Polypropylene (iv) Nylon or other polyamides (v) Polyester (vi) Polyurethane (vii) Polyurethane Other synthetic fibres include: chlorofibre, flurofibre, polycarbamide, trivinyl and vinylal. 04.1 In the HSN the Artificial Fibres have been explained at page no. 826 as under: The basic materials for the manufacture of these fibres are organic polymers extracted from natural raw materials by processes which may involve chemical modification. 04.2 The main artificial fibres are: (A) Cellulosic fibres, namely: (i) Viscose rayon (ii) Cuprammonium rayon (iii) Cellulose acetate (B) Protein fibres of animal or vegetable origin, including (1) Those produced by dissolving mil casein in an alkali. (2) Other fibres produced in similar manner from the proteins of ground nuts, soya beans, maize (zein), etc. (C) Algina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teristics i.e. synthetic and artificial emerges. In view of Chapter notes of Chapter 54 Polyester falls under the category of synthetic whereas Viscose rayon falls under the category of artificial . It is also mentioned in the chapter notes that these notes are applicable to the goods falling under chapter 55 also as the same definition extends to throughout the schedule when used in relation to textile materials . 06. Above discussed technical parameters are further reinforced by definition of the Fibre and its classification as per the book Basics of Textile Visual Inspection Systems published by the Textile Committee and the same is reproduced below: A textile raw material generally characterized by flexibility, fineness and high ratio of length to thickness is called a fibre. Fabric or garment is usually identified by the fibre used for its manufacturing. Thus the cotton cloth is the product made out of the cotton fibre, the woollen cloth from the wool fibre and son on. However, we also find the fabrics manufactured from two or more different types of fibres, which are normally called as blended or mixed fabrics. Besides we also come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the exported woven fabrics contained 85% or more by weight of synthetic staple fibre in as much as texturise yearn is nothing but filament yarn and weight of above yarn cannot be added while calculating the weight of yarn of synthetic staple fibre. 8. Further, the General Note 1 of the drawback schedule [Inserted vide Notification no. 81/2006-Cus. dt. 13/7/2006 as amended and superseded time to time vide Notification no. 68/2007-Cus. (NT) dt. 16/7/2007 103/2008-Cus. (NT) dt. 29/8/2008] states that the tariff items and description of goods in the said schedule are aligned with the tariff items and description of goods in the First Schedule to the Customs Tariff Act, 1975 to the four digit level and General Note 2 stipulates that the General Rules of Interpretation of the First Schedule to the said Customs Tariff Act, 1975 shall mutatis mutandis apply for classifying the export goods listed in the said schedule. Therefore, classification of the impugned item under Customs Tariff Act, 1975 would be applicable to the drawback schedule at four digit level. 9. Therefore, to find out the correct tariff item number of the drawback schedule pertained to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Description of the goods Unit Drawback when Cenvat facility has not been availed Drawback when Cenvat facility has been availed Drawback Rate Drawback Rate per unit in Rs. Drawback Rate Drawback cap per unit in Rs. 1 2 3 4 5 6 7 5515 Other woven fabrics of synthetic staple fibres 551501 Containing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of yarn purchased during the year from 2006-07 onwards proved that the exporter had purchase polyester viscose yarn in which polyester and viscose contents were in the ratio of 65%35%only. I further find that the above blend of yarn was further used in the manufacture of grey fabrics and after processing of the same, resultant finished woven fabrics was exported under claim of drawback under tariff item no. 551020A if the drawback schedule. I find that besides above, the exporter had also purchased 100% polyester texturised yarn. 31. I find that the scrutiny of loon cards provided by the exporter, containing the details regarding type of yarn used in warp weft pattern for manufacture of exported woven fabrics, proved that the polyester content in the exported woven fabrics was less than 85% by weight of synthetic staple fibers(dyed). 32. the material evidence on record proved that the exporter had procured yarn of polyester and viscose viz, 65/35 wherein polyester staple fiber contained in blended yarn is less than 85% and the said yarn was further used in the manufacture of grey fabrics and after processing of the same, finished woven fabrics wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn(dyed) in as much as polyester and viscose both are man made fibre and polyester predominant over the viscose in the blended fabrics exported by the exporter. I find that drawback rates under serial number 551202A is lower than the drawback rates under serial number 551202A. Therefore, the exporters had availed drawback in excess of that they actually were entitled. Hence we do not find any merits in the submissions made by the appellants challenging the classification made by the revenue under Drawback Schedule. 4.4 From the above it is quite evident that the classification determined by the revenue is not solely based upon the statement of Shri Sunil Kumar Gilra , but is based on material evidences and facts. Hence we do not find any merits in the submissions made by the appellants relying on the decision of Hon ble Madras High Court in case of Sainul Abideen Neelam. 4.5 Rule 16 of the Customs Central Excise Service Tax Drawback Rules, 1995 read as follows: 16. Repayment of erroneous or excess payment of drawback and interest. - Where an amount of drawback and interest, if any, has been paid erroneously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice has been issued to the petitioners along with others on 18-7-2001. In the show cause notice all facts have been mentioned. The petitioners have been called upon to show cause as to why penalty should not be imposed on them under Section 114(iii) of the Customs Act, 1962. In the original show cause notice, the petitioners were not asked to show cause as to why the duty drawbacks should not be recovered.However, in the addendum dated 2-5-2002, the petitioners have been asked to show cause as to why the duty drawbacks drawn by them should not be recovered. A careful reading of the addendum shows that the changes to the original show cause notice do not structurally alter the show cause notice. Whatever is alleged in the show cause notice is virtually repeated in the addendum except calling upon the petitioners to show cause as to why the duty drawbacks should not be recovered. Therefore, it cannot be said that the addendum structurally alters the nature of the show cause notice and it is barred by limitation. In fact no limitation has been prescribed for recovery of duty drawbacks. Therefore, I do not find any merit in the contention that the addendum structurally a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95 as the drawback is admissible under serial no 551502A on the impugned item as enumerated above. Since the drawback admissible under serial no. 551502A is lower than the drawback availed under serial no. 551502A, the excess drawback availed by the exporter is recoverable from them under Rule 16 of the Customer ,Center Excise and Service Tax Drawback Rules, 1995. 43. It is clear from the above that exporter had deliberately not mentioned the full and correct description of the goods in the invoices issued for export of woven fabrics in as much as the exporter was aware of the fact that the impugned item did not contain synthetic staple fiber more than 85%. The deliberate suppression of the correct description of the exported goods showed exporter s intention to avail the higher amount of inadmissible drawback. 4.7 Since appellants have claimed the inadmissible drawback and the same was disbursed to them, hence the demand of interest in respect of the inadmissible amount of drawback from the date of disbursement to the date of payment is justified.. In case of P V Vikhe Patil SSK [2007 (215) ELT 23 (Bom)] Hon ble Bombay High Court has stated as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv. Ballarpur Industries Limited [2007 (5) STR 197 (TMum)] 4.8 Though for the act of misdeclaration the goods were liable for confiscation under Section 113(h)(i) of the Customs Act, 1962, but since they were not available for confiscation or released against any bond or security they could not have been confiscated by the Commissioner. Hence we set aside the order of confiscation and redemption fine imposed, relying on the decision of larger bench of Tribunal in case of Shiv Kripa Ispat Pvt Ltd [2009 (235) ELT 623 (T-LB)] wherein following has been held- 9. We have given careful consideration to the submissions. As rightly pointed by the learned counsel, the Hon ble High Court of Punjab Haryana, in Raja Impex case (supra), has rendered decision on identical issue. One of the substantial questions of law placed before the High Court by the department was whether redemption fine under Section 125 of the Customs Act could be imposed where the goods were neither available for confiscation nor cleared under bond/undertaking. The Hon ble High Court followed the ratio of the Apex Court s judgment in Weston Components case and held that, as the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u Exports case, the Tribunal had held the redemption-fine-related issue against the Revenue in para (10) of its order, reproduced below : 10. In view of the aforesaid findings and analysis, we are of the considered opinion that none of these charges upheld in the order impugned are in fact sustained by our analysis. In this connection we are also surprised to find that the redemption fine of ₹ 2.89 lakhs has been imposed when the goods were not available for confiscation, the same having been exported many years ago. Neither was any bond with a security in any format available with the Department to be enforced. In view of this it is clear that the redemption fine imposed was totally outside the purview of legal provisions in this regard. Therefore, we set aside the order impugned and allow the appeal with consequential relief as per law. (emphasis supplied). Dismissing the department s Civil Appeal filed against the above order of the Tribunal, the Apex Court ordered vide 2005 (184) E.L.T. A36 (S.C.) as under: We see no reason to interfere with the impugned order. The appeal is dismissed. (emphasis supplied) In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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