ORDER
Lajja Ram, Member (T)
1. This is an appeal filed by M/s. Deepak Woollen Pvt. Ltd., Dewas (M.P.), being aggrieved with the Order-in-Original dated 23-6-1994 passed by the Collector of Customs, Bombay.
2. The matter relates to the import of prime acrylic tow in the garb of synthetic waste. The goods were imported during March, 1993 under the duty exemption entitlement certificate (DEEC) scheme. From the method of packing, physical and expert examination, chemical tests, etc. by reputed laboratories/Chief Chemist of the Deptt. of Revenue, it was seen that the goods imported were prime virgin fresh goods and not synthetic waste, acrylic and entangled filaments as declared. In the show cause notice dated 6-7-1.993, it was alleged that the goods had been mis-declared and undervalued. On the basis of the general trend of prices in respect of contemporary imports, the unit price of 1.90 US $ per kg was adopted for assessment, as against the declared unit price of US $ 1.35 per kg. The goods were also not found to be covered under the advance licence and the DEEC book. The matter was adjudicated by the Collector of Customs, Bombay who under his Order-in-Original dated 23-6-1994 came to a finding of fact that the goods under consideration were not synthetic waste as declared by the importers and were assessable to duty under Heading No. 5501.30 of the Schedule to the Customs Tariff Act. For the reasons detailed in para-17 of his Order-in-Original the adjudicating authority held that CIF value of the goods shall be determined at the rate of US $ 1.76 per kg. He had mentioned that “the importers had not raised any specific arguments regarding the value before me”. A redemption fine of Rs. 2 lakh and a penalty of Rs. 1 lakh was imposed. The benefit under DEEC Scheme was denied.
3. The matter was posted for hearing on 7-8-1995 when Shri N.V. Raghavan Iyer, Id. Advocate appeared for the appellant. Shri Mohan Lai, Id. JDR represented the respondent.
4. Shri N.V. Raghavan Iyer, Id. Advocate raised the question of jurisdiction of the officers of the Directorate of Revenue Intelligence (DRI), in drawing samples and seizing the goods. It was submitted that no cross-examination of the Chief Chemist and other officers as demanded by them had been allowed. On merits, it was stated that the goods were machine packed and were substandard tow. Reference was made to the Delhi High Court’s decision in the case of Duncan Agro Industries Ltd. v. Union of India -1989 (39) E.L.T. 211 (Delhi) para-26, and it was pleaded that the DRI officers were not proper officers for the purpose of the seizure in the present case.
5. Shri Mohan Lai, Id. JDR replied that the samples had been sent to the Chief Chemist as per request of the appellant and that the test results were confirmed by the different authorities. He referred to the report of the Bombay Textile Research Association at page 80 of the Paper Book, wherein it has been reported that the given samples was a continuous filament tow without any entanglement. No defect like undrawn, fused filaments, etc. were observed in the sample and it was reported that the goocis could not be considered as waste, and were a fresh virgin tow. It was not material as how the goods were packed. On jurisdiction of the DRI Officers, the Id. JDR referred to page 234 of Customs Manual to say that the DRI officers were proper officers for the purpose of the Customs Act, 1962. Attention was also invited to Public Notice No. 19/90. With regard to DEEC Scheme and advance licence, reliance was placed on the Tribunal’s decision in the case of Collector of Customs, Kandla v. Dimple Overseas Ltd. -1995 (76) E.L.T. 48 (Tribunal).
6. We have carefully considered the matter. The goods imported were described as synthetic waste acrylic entangled filaments tow. On physical examination, the goods imported were found to be prime quality acrylic, and not waste. The Director of the appellant company, Shri Surendra Goel had admitted that on visual inspection the goods appeared to be prime. They were sub-standard tow and there was no entanglement of tows in the bales (refer para 5 of the show cause notice dated 7-7-1993). The goods were subjected to test four times and all the test results indicated that the goods imported were not tow waste and they were acrylic tow of prime quality (refer para 15 of the Order-in-Original dated 23-6-1994). All the reports were categorical that the goods in question could not be considered as ‘waste’. The test report received from the Chief Chemist of the Revenue Deptt. was detailed and was made available to the appellant company (refer page 94 of the paper book).
7. The suppliers had described the goods under their letter dated 1-4-1993 as ‘sub-standard tow’. In reply dated 16-11-1993 to the show cause notice, the appellant had stated in para-2 as under : (Para-2 from page 55 Annex.-XIV).
“2. My clients deny that the goods are in fact of prime quality and have been intentionally declared as waste. Though the goods are alleged on the basis of physical examination looked to be fresh and prime, the goods in fact are not of prime quality and are correctly supplied by the foreign suppliers as acrylic waste, and on closer scrutiny and examination it will be apparent that filaments are entangled and are waste material. Merely because the goods are machine packed being tows of long length, it is not permissible to draw the conclusion that they are of prime quality. On physical examination it may not appear that there is any defect and there is no entanglement in the filament tow, but in fact they are acrylic tow waste. The goods are not liable to be confiscated under the provisions of the Customs Act”.
In the written submissions dated 18-6-1994 filed with regard to the personal hearing held on 16-6-1994 before the Collector of Customs, Bombay, the appellant had submitted as :-
“The Asstt. Director has also proceeded to treat sub-standard tow as tow whereas it is recognised position that either tow is prime quality or it is rejectable as tow waste though superficially it may resemble tow”.
Sub-standard tow could not be considered as tow waste. In the case of Tata Iron & Steel Co. Ltd. v. Collector of Central Excise -1995 (75) E.L.T. 3 (SC), the Hon’ble Supreme Court had observed that a sub-standard article is not a scrap as understood in commercial parlance or trade circle, and that a sub-standard bloom or billet is steel bloom or billet. The Hon’ble Supreme Court had added that in commercial parlance ‘scrap’ is normally understood as ‘waste’.
8. The charge of undervaluation is substantiated by the statement of Shri Surendra Goyel, Director of the appellant company recorded under Section-108 of the Customs Act, 1962, on 23-3-1993. While giving the details of the negotiations with his indentors Mr. Aggarwal of M/s. Shakti International, Ludhiana, he has stated that Mr. Aggarwal had suggested him to import by declaring unit price as 0.70 $ CIF, Bombay and a difference of US $ 0.65 on account of US $ 1.35 minus $ 0.70 should be paid to him in advance before placing indent. He was told by Mr. Aggarwal that this was a normal practice of the trade and the consignments will be cleared without any doubt by the Customs Authorities as most of the importers were importing by adopting the same method of adjustment.
9. The appellant had stated in their letter dated 27-5-1994 that they wanted to cross-examine the Chief Chemist, the Chemical Examiner, the Dy. Chief Chemist and the Dy. Director, DRI. It is seen from the submissions made before the adjudicating authority at the time of the personal hearing that no such request was made and the only thrust of the arguments was with regard to the test of the samples. On conclusion of the personal hearing held on 16-6-1994, they have summarised the submissions made by them before the adjudicating authority in their communication dated 18th June, 1994 and these submissions are placed at pages from 100 to 110 of the Paper Book. No such specific request for cross-examination was made during the course of the personal hearing as is seen from these submissions. Their prayers were as under :-
“1.0 The proceedings may kindly be set aside as without basis in law or on facts.
2.0 The Collector may kindly arrange to return the remnant samples if practicable and in sealed condition.
3.0 In case he considers the evidence on record as weighty and adverse to the interest of the Importer, atleast wait till the Importer has the opportunity to inspect/test the remnant samples by an independent agency for making final Written Submissions.
4.0 The Collector may kindly permit release of the goods without payment of duty under the licence/ DEEC book subject to mutilation so that futile controversy is not continued to the detriment of the Importer.
5.0 Taking into account the heavy demurrage charges, permit release of the goods without payment of duty, fine or penalty”.
10. The request of the appellant for mutilation has been discussed by the Collector of Customs in para 21 of his Order. In the circumstances of the case, we agree that there is no ground for ordering mutilation.
11. On the question of jurisdiction also, the adjudicating authority had discussed the matter in para 12 of his order. We agree with him that the seizure of the goods as well as issue of the show cause notice by the DRI could not be said to be without jurisdiction.
12. The Collector of Customs had ordered that the impugned goods should be assessed to duty as acrylic tow of prime quality under Tariff Heading No. 5501.30 and the assessable value of the goods should be determined on the basis of CIF value of US $ 1.76 per kg. We confirm this part of the Order.
13. However, keeping in view the overall circumstances of the case we reduce the amount of fine from Rs. 2 lakh to Rs. 1 lakh (Rupees One lakh only) and the amount of penalty from Rs. 1 lakh to Rs. 50,000/- (Rupees Fifty thousand only). Subject to above modifications, the impugned order is confirmed and we order accordingly.