Vijaya Ratite Farms (P) Ltd. Versus Commissioner of Customs, Chennai>2008(08)LCX0029

2008(08)LCX0029

In the Customs, Excise & Service Tax Appellate Tribunal, Chennai

Shri P.G. Chacko, Member (Judicial) and Shri P. Karthikeyan, Member (Technical)

Vijaya Ratite Farms (P) Ltd.

Versus

Commissioner of Customs, Chennai

Final Order No. 851/2008 dt. 6.8.2008 certified on 8.8.2008 in Appeal No. C/237/2001

Advocated By -

Shri S. Murugappan, Adv. for Appellants
Shri M.K.A.K. Mohiddin, JDR for Respondent

Per P.G. Chacko :

The appellants had imported Emu chicks and eggs from USA claiming the benefit of Customs Notification No. 23/98 dated 2.6.98 in terms of Sl.No. 1 thereof, which prescribed 'Nil' rate of duty for 'cows, heifers, bulls, goats, sheep, pigs, angora rabbits, ducklings and pureline poultry stock', all covered by Chapter 1 of the CTA Schedule. These imports were not under any specific import licence. In adjudication of a show-cause notice issued to the importer, the Commissioner of Customs classified the Emu birds under Heading 01.06 and demanded duty of over Rs. 15 lakhs from the party by denying them exemption under Sl.No. 1 of the Table annexed to the Notification. Further, having found that specific licence was required to import the above birds but no such licence was produced by the importer, the learned Commissioner also ordered confiscation of the birds under Section 111 (d) of the Customs Act. However, an option was given to redeem the goods against payment of a fine of Rs. 3 lakhs. A penalty of Rs. 2 lakhs was also imposed on the importer under Section 112 (a) of the Act.

2. In the present appeal, it is submitted by the importer that the Emu birds imported by them were 'poultry stock' and that this fact was supported by certificates from the National Poultry Improvement Plan of the United States, Department of Agriculture, as also a certificate issued by Dr. N. Ramamurthy, Professor, Poultry Research Station, Chennai. The birds were imported as primary breeding stock, which purpose was certified by the authorities at the place of export. On this basis, it is contended that the benefit of the Notification ought to have been extended to the imported birds. The learned counsel for the appellants has argued that the classification of the birds by the Commissioner under Heading 01.06 would not affect the benefit claimed by the appellants under Sl.No. 1 of the Table annexed to the Notification inasmuch as that entry did not specify any Heading of Chapter 1. According to the learned counsel, it was enough for the birds to be classified under Chapter 1 of the CTA Schedule and to be recognized as 'poultry stock', for the purpose of the benefit of the Notification. As regards confiscation of the goods, it is submitted that the redemption fine imposed by the Commissioner is disproportionately high. Though no valid import licence could be produced by the appellants, they were able to show that their application for such licence was pending with the licensing authority. The Ministry of Agriculture, Department of Animal Husbandry and Dairying had recommended issuance of licence. Further, the Chairman of the Indian Investment Centre (a Govt. of India organization), Department of Economic Affairs, Ministry of Finance, had also recommended to the DGFT to issue import licence to the appellants for import of live Emu chicks from USA. These circumstances should have been taken into account in determining the quanta of fine and penalty. We have heard the learned JDR also, who submits that there is no evidence in support of the claim that the Emu birds constituted 'pureline poultry stock' for the purpose of exemption under Sl.No. 1 of the Notification. 'Poultry stock' consisted of the birds specified under Heading 01.05 of the Tariff. Emu was not one of them. It is argued that the exemption notification has to be strictly interpreted. Only if Emu could be brought within the ambit of the expression 'live poultry' appearing at Heading 01.05, the benefit could be claimed by the importer.

3. After giving careful consideration to the submissions, we find that the benefit of the Notification as claimed by the appellants could be extended only to cows, heifers, bulls, goats, sheep, pigs, angora rabbits, ducklings and pureline poultry stock. The question now to be considered is whether the Emu birds imported by the appellants could be brought within the ambit of the expression 'pureline poultry stock'. The Revenue has refused to recognize the birds as 'live poultry' inasmuch as this expression as used under Heading 01.05 comprises certain specified birds and species thereof. This list is exhaustive and does not include Emu. Heading 01.06, an entry residual to all other entries in Chapter 1, covers "other live animals". This Tariff entry does not specify any particular animal, nor does it contain sub-headings. However, HSN Heading 01.06 provides a long list of animals, one of which reads "other birds not specified in Heading 01.05". Obviously, Emu could be classified under Heading 01.06 as rightly done by the Commissioner. The question remains as to whether the benefit of the Notification could be extended to these birds. There is no quarrel about the proposition that exemption notifications have to be strictly construed. The expression 'Pureline Poultry Stock' used in the above Notification has therefore to be strictly construed. In this manner of interpretation, the classification specified for the goods in the Notification must also have a say. In other words, the question to be considered is in the nature of whether Emu birds classifiable under Chapter 1 of the Tariff Schedule could be recognized as 'Pureline Poultry Stock'. We have come across a sub-heading for 'Pureline Stock' under Heading 01.06 of the new Tariff, which throws light on the fact that domesticated birds (like Emu) covered by 'other birds not specified in Heading 01.05', one of the sub-divisions under HSN Heading 01.06, can very well be brought within the ambit of "pureline stock", subject, of course, to evidence. In the present case, it is not in dispute that the appellants were engaged in activities including farming of Emu's. Evidence to this effect was adduced by them before the lower authorities. They also brought in evidence in support of 'poultry' status of Emu birds. However, it appears, the appellants are yet to establish that the Emu birds imported by them belonged to the finer class, 'pureline poultry stock'. We are told that the expression 'pureline' refers to pedigree. We are of the view that the appellants should be given one more opportunity to establish this aspect in support of their claim for the benefit of exemption under Sl.No. 1 in the Table annexed to the Customs Notification.

4. There can be no challenge to the confiscation of the birds inasmuch as the appellants had, admittedly, no licence for importing the same. Any number of recommendations for issue of such licence would not be a substitute for the licence. The confiscation under Section 111 (d) of the Act is perfectly in order. The learned Commissioner imposed a fine of Rs. 3 lakhs in lieu of confiscation of the Emu chicks and eggs totally valued at nearly Rs. 28 lakhs. He has also imposed a penalty of Rs. 2 lakhs on the importer. We have found a valid point in the counsel's argument that certain mitigating circumstances existed in this case. The appellants had, in fact, applied to the DGFT for licence for import of the birds & eggs and their case was recommended by Governmental agencies. These are supported by documentary evidence, which would indicate that the appellants had no intention to import the goods unauthorizedly. This aspect ought to have entered into reckoning whenHhe learned Commissioner took up the case for determination of quanta of fine and penalty. We are of the considered view that, in the aforesaid circumstances, there shall not be any fine in excess of Rs. 1,00,000/- (Rupees one lakh only) and, for that matter, there shall not be any penalty in excess of Rs. 50,000/- (Rupees fifty thousand only).

5. In the result, the classification of birds ordered by the Commissioner and his confiscation of the birds are upheld, but the fine and penalty are reduced as above. The question whether the benefit of the Notification is admissible to the birds has to be examined afresh, after giving the party a reasonable opportunity of adducing evidence and of being personally heard. For this limited purpose, the matter is remanded to the learned Commissioner, who shall, having regard to the findings recorded in this order, proceed to pass a speaking order in accordance with law as early as possible.

6. The appeal stands disposed of in the above terms.

Dictated and pronounced in open Court.

Equivalent 2008 (088) RLT 0756 (CESTAT-Che.)

Equivalent 2008 (232) ELT 0515 (Tri. - Chennai)