ORDER
Jyoti Balasundaram, Member (J)
1. The above appeal arises out of the order-in-original dated 27-6-1990 passed by the Additional Collector of Customs (Appraising), Calcutta.
2. The brief outline of the case is that the appellants herein, who are manufacturers-cum-exporters of leather goods of various types, Imported 3 consignments of stamping foils and filed 3 Bills of Entry all dated 17-1-1989 for clearance of the goods for home consumption, claiming the benefit of Notification 224/85-Cus., dated 9-7-1985 which prescribes a concessional rate of duty for goods for use in the leather industry. They were asked to explain with reference to the manufacturers’ literature/catalogue as to how the imported goods are to be used in leather industry and to substantiate their claim for concessional rate of duty under the said Notification. They failed to produce any such evidence and the goods were allowed to be warehoused under Section 49-of the Customs Act, 1962 as per their request. On scrutiny of the invoice annexed to the Bills of Entry, it was found that the following grades of stamping foils have been imported viz. (i) Luxor Special PVC Grade with colour shade Nos. 220, 338, 369, 304, 303, 223, 308 and 355 (ii) Alufin Special PVC Grade and (iii) Colorit V 938,920,911 and 912. Since the appellants failed to produce any catalogue /literature, the Customs House obtained the relevant catalogue of M/s. Leonard Kurz GHBH & Co., manufacturer/supplier of the goods in question, and noticed that on the basis of the information contained in the said manufacturers’ catalogue, the appellants were not eligible for the benefit of the concessional rate of duty and consequently they were not eligible Jot OGL benefit under Appendix 6 List 8 Part 1 of the Import Policy in force. A show cause notice dated 2-3-1990 was issued to the importers asking them to show cause against confiscation of the subject goods for unauthorised importation and against imposition of penalty. Contesting the notice, the appellants had stated that stamping foils imported by them were intended to be used for production of leather goods and further stated that such foils are used for labelling on the leather products, for embossing and to give decorative appearance. They had also stated that similar goods had been cleared in the past by the Customs authorities without reference to any manufacturers’ catalogues. During the personal hearing before the adjudicating authority, in response to a specific question that the manufacturers’ catalogue does not indicate the grade imported by them to be capable of use in leather industry, it was stated that the manufacturer/supplier has stated separately in the invoice that the goods will be used in leather industry. The Additional Collector of Customs adjudicated the show cause notice and held that stamping foils imported are not for use in the leather industry and, therefore, the import of the same is unauthorised in terms of Section 3 of the Imports and Exports Control Act, 1947 read with Section 11 of Customs Act, 1962 and accordingly liable to be confiscated under Section lll(d) and for the same reasons were not eligible for concessional rate of duty under Notification 224/85. The importers were given option to redeem the goods on payment of a fine of Rs. 75,000/- for each consignment. Hence this appeal.
3. We have heard Shri Rana Mukherjee, learned Advocate for the appellants and Shri J.M. Sharma, learned DR for the Revenue and perused the records.
4. We find that the matter had come up earlier before the Tribunal which by its detailed Miscellaneous Order No. 103/93-C, dated 12-5-1993, set out the rival contentions and referred to the judgments of the Calcutta High Court in the case of Shawkat Katnal v. Collector of Customs reported in 1989 (44) E.L.T. 409, dated 28-8-1989 and 1992 (57) E.L.T. 276, decided on 12-4-1991. In the concluding paragraph of the above miscellaneous order, the Bench, in the light of the ratio of the judgment in the case of Shawkat Kamal, to put a lid on the controversy, felt it expedient in the interests of justice to extend an opportunity to the appellants to prove to the satisfaction of the Customs authorities that they have actually consumed the imported stamping foils in their leather industry and accordingly granted 4 months time to the appellants to produce evidence regarding the actual consumption of the imported stamping foils in their leather industry. The Bench observed that on receipt of such evidence, the concerned Additional Collector of Customs would proceed to satisfy himself regarding the actual consumption of the imported stamping foils in their leather industry by the appellants and submit his findings to the Tribunal at the earliest. The case was listed to be heard on receipt of the said findings.
5. After the passing of the above miscellaneous application the appellants addressed a letter to the Additional Collector of Customs, Calcutta (received on 5-10-1993) forwarding zerox copies of relevant invoices, Bills of Entry, order dated 15-10-1990 of the Calcutta High Court (in terms of which the imported goods were released to the appellants), end-use bond executed on 31-10-1990, extract from Register of maintenance and consumption and stock of imported materials/components by actual users, maintained under para 238 of the Handbook of Procedure on Import and Export, showing that all 3 pallets covered by the 3 invoices were used in the manufacture of leather bags during the period 13-12-1990 to 7-2-1991 leaving 118 inches of stamping foils as loss on account of handling/calculation/measurement/consumption, and certificate issued by Shri R.S. Poddar & Co., Chartered Accountants, etc. evidencing consumption of imported goods in their leather industry and export of .their final products in full. After examining the above documents, the Dy. Collector has furnished his report dated 9-2-1994 to the Tribunal, relevant extract of the report is reproduced below:
In compliance of the said order, the appellant submitted the extract of register of “Maintenance of consumption and stock of imported raw materials components by the actual user”. The said register only contains the entry of the subject item. There are no other entries for any other items. No other registers are maintained with regard to receipt and issue of raw materials and component parts. Hence it appears that the appellant did not maintain the said register in a routine manner.
In view of above, I consider that the said register does not reflect the actual stock and consumption of the imported items and therefore, cannot be considered as genuine. Accordingly I am of the view that the subject imported goods were not actually consumed in the leather industry of the appellant.
6. We have perused the original register produced by the appellants. The first thing that strikes us is that in Col. 7 providing for Bill of Entry No. etc. what is shown is “Bill of Entry No. 924, 925 and 929 of dated 21-3-1990, while the goods in question in the present case have been imported under Bill of Entry dated 21-3-1989. The learned Counsel is not able to explain the glaring discrepancy. Secondly, the register nowhere indicates as to who is the author of the entries therein and even before us, the appellants are not able to state as to who made the entries in the register. Thirdly, the register nowhere reflects the loss of 118 inches of stamping foils referred to by the appellants in their letter addressed to the Additional Collector. Fourthly, as rightly pointed out by the learned DR, the register does not appear to have been maintained in the regular normal course of business and the entries do not appear to have been made over a period of time, (the appellants contend that the stamping foils were consumed from 15-12-1990 to 7-2-1991) and all the entries appear to be identical without any variation which would normally occur in the case of any record or register being maintained over a period of time. For the above reasons, this register cannot be relied upon to substantiate the contention of the appellants that they had actually consumed stamping foils imported by them in their leather industry. The other document heavily relied upon by the appellants is the Chartered Accountant’s certificate which is a valid piece of evidence and is recognised as an acceptable evidence for ITC purposes. We note that this certificate has been issued by Shri Anil Kumar Poddar, Partner of R.S. Poddar & Co., Chartered Accountants, who are not the regular CAs of the appellant Company, as evident from the balance sheet for the year ending 31-3-1993 audited by Shri Daud Ahmed, Partner of A.W. Guha & Ahmed, CAs. Secondly, the Chartered Accountant has nowhere set out what records had been verified by him before issue of the certificate of consumption of stamping foils in leather bags and Wallets manufactured by the appellants. Further, the quantity imported and utilised has only been referred to as 3 pallets without any indication of quantity of damage/wastage shown to be nil while the appellants themselves stated that 118 inches of stamping foils was left as lost on account of handling/calculation/measurement. Therefore, for these reasons, the CA’s certificate is also not acceptable as proof of utilisation of the imported stamping foils in the appellants leather industry.
7. In the light of the above discussion, we hold that the imported stamping foils are not entitled to the benefit of concessional rate of duty at the rate of 40% in terms of Notification 224/85-Cus., dated 9-7-1985 and that the appellants are not Actual User (Industrial) of the imported material and hence the import is unauthorised and not covered by OGL and the goods liable to confiscation.
8. In the result, we uphold the impugned order of the Additional Collector of Customs and reject the appeal.
S.K. Bhatnagar, Vice President
9. It is observed that when the matter had come up on board earlier, it had been heard and examined at length by the Tribunal and a Miscellaneous Order No. 103/93-C was passed. I consider that it will be advisable to reproduce the observations of the Bench made at that stage :
“7. We have considered the submissions. The relevant part of the Notification No. 224/85-Cus., dated 9-7-1985 is set out below:
“Exemption to specified goods imported for use in leather industry. – In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in column (2) of the Table hereto annexed, when imported into India for use in the leather industry, from (a) so much of that portion of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), as is in excess of the amount calculated at the rate of forty per cent ad valorem; and (b) the whole of the additional duty leviable thereon under Section 3 of the second mentioned Act.
TABLE
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Sl. No. Description of goods
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1. Penetrators.
2. Felt sleeves.
3. Stamping foils."
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[Emphasis supplied]
8. From the pharaseology used in the said notification it is clear that it grants exemption to the goods specified in column 2 of the Table annexed thereto when imported into India “for use” in the leather industry from so much of the duty as specified therein. On a plain reading of this relevant clause it is clear that the expression “for use” must mean “intended for use”. All through it was the case of the appellants that they are the manufacturer-cum-exporter of leather goods of various types and registered as a Small Scale Industry. They are recognised as an Export House and are registered Member of the Council for Leather Exports as a manufacturer-cum-exporters of the leather goods and they are actual users and importing stamping foils for labelling/embossing/stamping the brand names etc. in different colours in leather products. From the impugned order we find that the Additional Collector of Customs has rejected the claim of the appellants for importation of the subject goods under O.G.L. as well as for the exemption under the said Notification No. 224/85-Cus., only on the ground that as per the manufacturer’s catalogue the subject imported goods namely, Luxor special PVC grade, Alufin Special PVC grade and Colorft Stamping Foils are not used in the leather industry and the certificate of the supplier manufacturer to the effect that the subject goods are most suitable for stamping of leather/leather products in the invoice is of non consequence as it might have incorporated at the request of the Importers with a view to satisfy the Customs Authorities. In the case of Shawkat Kamal v. Collector of Customs decided on 28-8-1989 and reported in 1989 (44) E.L.T. 409 it was held by the Calcutta High Court that the production of the manufacturer’s catalogue/literature is not relevant at the time of the release of the goods and the end use bond will clearly meet the purpose, as to whether the stamping foils as imported in that case is used in the leather industry or not. By another order dated 12-4-1991 the Court on the writ petition of Shawkat Kamal further directed that the Customs Authorities at the time of the release of the imported goods will not insist on the condition for production of the manufacturer’s catalogue/literature regarding the use of the stamping foils in the leather industry, to the satisfaction of the Customs Authorities and he will also produce certificate of the consumption of the imported stamping foils in the leather industry to be verified by the Central Excise Authorities and/or other Authorities concerned. In the Memorandum of Appeal filed before us the appellants have stated in paragraph ll(8)(a) & (b) as follows :
“ll(8)(a) Necessary safeguards have, however, been provided against any possible misuse of those imported inputs in the Hand Book of Procedure on Import Export Promotion of the relevant period. Para 234 therein provides for maintenance of accounts of Imported material in prescribed register by the Actual Users who are “to satisfy the sponsoring authority as well as the Chief Controller of Import and Export or other Licensing Authority of any misuse etc., para 239 provides for “verification on random or selective or Comprehensive basis of the extent and manner in which an actual user has utilised the imported goods” with the help of the State Directorate of Industries.
(b) In case of any contravention of the condition subject to which goods were allowed for import both the licensing authority and the sponsoring authority are empowered to take action.”
9. Besides, we also find on our record that there is a certificate of the suppliers to the effect that they have shipped subject stamping foils to the appellants and confirm that the goods supplied against the invoices in question are suitable for stamping on leather or products of leather. Import of stamping foils is covered by OGL as one of the raw materials components, consumables and tools allowed on Actual Users (Industrial) condition by the Export House/Trading House being Sl. No. 8 of Appendix-6 of the Import & Export Policy for the year April 1988 to March 1991. It does not define stamping foils. Notification No. 224/85-Cus. grants partial exemption to the stamping foils when these are imported into India for use in the leather industry. From the record we find that in the writ petition filed by the appellants, as aforesaid, the Hon’ble Calcutta High Court on 15-10-1990 while ordering for the release of the goods pending adjudication directed the appellants (petitioner therein) to give undertaking to the concerned Collector that in the event of their failure to use subject goods in the leather industry, they shall on demand pay to the concerned Collector the amount equal to the difference between duties leviable on the subject goods but for the exemption notification mentioned in the writ petition and the duties that has been paid. Accordingly the goods were released after furnishing the necessary bonds by the appellants as is evident from the order dated 9-1-1991 of the Calcutta High Court extracted as above. We are now in 1993. But now the goods imported must have been consumed after its release as claimed by the appellants. Under these circumstances, we in the light of the ratio of the judgment dated 12-4-1991 delivered in the case of Shawkat Katnal v. Collector of Customs, 1992 (57) E.L.T. 276 and to put a lid on the controversy finally feel it expedient in the interest of justice that an opportunity be given to the appellants to prove to the satisfaction of the customs authorities that they have actually consumed the imported stamping foils in their leather industry. We order accordingly and give four months time to the appellants from the date of the receipt of this order to produce the evidence regarding the actual consumption of the subject imported stamping foils in their leather industry. On receipt of such evidence the concerned Additional Collector of Customs would proceed to satisfy himself regarding the actual consumption of the imported stamping foils in their leather industry by the appellants and submit his findings to this Tribunal at the earliest.
10. On receipt of the said findings of the Additional Collector of Customs, Registry would list the case for hearing.”
10. I also observe that in the adjudication order of the Collector, it has been noted that at the time of clearance that the appellants were asked to explain their claim for the benefit of Notification No. 224/85-Cus., dated 9-7-1985 which prescribes a concessional rate of duty for goods used in the leather industry. They were asked to explain with manufacturer’s literature/catalogue as to how the imported goods are to be used in leather industry and to substantiate their claim for concessional rate of duty under the said notification. However, they failed to produce any such evidence and the goods were allowed to be stored under Section 49 of the Customs Act, 1962 as their clearing agent requested for warehousing of the same. On scrutiny of the invoice annexed to the Bill of Entry, it was found that the appellants had imported the following grades of Stamping Foils, namely – (i) Luxor Special PVC Grade with colour shade Nos. 220,338,369,304,303,381,233, 308, 355; (ii) Alufin Special PVC Grade; and (iii) Colorft V 938,920,911 and 912.
11. The Tribunal had in the aforesaid miscellaneous order directed the Department to give them one more opportunity to produce evidence regarding the actual use of the above items in the leather industry. The Dy. Collector had done so and submitted his report after perusing appellants’ records produced before him and found that the imported goods were actually not so consumed by the appellants.
12. We have also heard the appellants; And, the learned Counsel has even shown us one of the registers of 1990-91 titled as ‘Register of Maintenance of Consumption and Stocks of Imported Raw Materials/Components by the Actual Users’, on the very face of which it has been written ‘1990-91’ and the entries therein have been made with reference to the importations from 13-12-1990 to 16-2-1991.
13. In view of the Report of the Dy. Collector given after enquiry in the light of Tribunal’s directions, the appellants have not been able to produce sufficient evidence to show that the goods had been actually utilised in leather industry and even the documents produced before us during the course of hearing do not inspire confidence for the reasons already indicated in para 6 of this order and even the C.A.’s certificate does not indicate as to how he had verified that the goods were actually utilised in the appellants’ leather industry and what records they had verified.
14. In view of the above discussion, it is not established that the appellants were the actual users of the imported material and utilised imported material for specified purposes. Therefore, I agree with the conclusion of my learned Colleague that in the circumstances, the order of the Addl. Collector was required to be upheld and the appeal was required to be rejected, as already announced in the Open Court.