1994(07)LCX0105

IN THE CEGAT, SPECIAL BENCH `D’, NEW DELHI

S/Shri K.S. Venkataramani, Member (T), K. Sankararaman, Member (T) and G.A. Brahma Deva, Member (J)

KIBRO ELBERT GLOVE CO.

Versus

COLLECTOR OF CUSTOMS, MADRAS

Final Order No. 6/343/94-D and Misc. Order No. M-123/94-D, dated 27-7-1994 in Appeal No. C/2989/90-D with E/Misc 120/93-D

Advocated By : Shri M.S. Kumaraswamy, Consultant, for the Appellant.

Shri M.K. Jain, SDR, for the Respondents.

[Order per : K.S.Venkataramani, Member (T)]. - This is an appeal against the order dated 1-8-1990 passed by the Additional Collector (Customs), Madras. The facts are that the appellants imported a consignment of stamping machines for which they filed a Bill of Entry at the time of importation. Along with the machines, 253 bags of leather/leather split of Glove Parts were also found. These goods were not declared in the Bill of Entry. After investigation, the case was adjudicated by the Deputy Collector of Customs, who ordered the confiscation of the goods with an option to the importer to redeem the same on payment of a fine of Rs. 20,000/-. A penalty of Rs. 5,000/- was also imposed. The goods were assessed as leather glove parts (articles of leather) under Heading No. 42.01/06 of the erstwhile Tariff. This order of the Deputy Collector of Customs was challenged by the importer without success before the Collector of Customs (Appeals). The importer filed an appeal to the Customs, Excise & Gold (Control) Appellate Tribunal. The Hon`ble Tribunal vide their Order No. C/2448/86-D, dt. 30-3-1990 held that the confiscation of the goods and imposition of penalty was justified. However, the Tribunal gave some relief by way of reduction in fine and penalty. The Hon’ble Tribunal further held that before the Collector (Appeals), the importer had also contended that the goods in question were liable for full exemption from Customs duty in terms of Notification 60/85-Cus., dt. 17-3-1985 and this plea was not dealt with by the Collector (Appeals) on the ground that this did not form part of the Order-in-Original. The Tribunal held that the question of applicability of the said notification to the goods in question should be decided by the Deputy Collector of Customs after compliance of principles of natural justice and accordingly remanded the matter for de novo consideration.

2.  In the de novo adjudication by the Additional Collector, after considering the written and oral submissions of the appellants, the Additional Collector held that according to the BTN Explanatory Notes, pieces of leather cut to special shapes are regarded as articles falling outside Chapter 41 which covers only raw hides and skins. He also held that the term `splits’ and `sides’ would not cover pieces of leather cut to special shape which is what has been imported and concluded exemption under Notification 60/85 which applicable only to goods falling under Chapter 41 would not be available to the imported goods which are correctly classifiable under Chapter 42.

3. Arguing for the appellants, ld. Consultant, Shri M.S. Kumaraswamy, referred to the Misc. Application filed by them to call for sample of the goods and from the side of the Department, ld. S.D.R., Shri M.K. Jain, submitted that the case records are not available as reported by the Collector and in the circumstances it was prayed that the appeal may be heard on the basis of available evidence. Shri Kumaraswamy, ld. Consultant, showed certain leather pieces as samples of the goods imported and argued that the appellants had imported stamping machines and leather splits which are, according to the appellants, nothing but waste leather that had been used in order to provide a buffer to the machines when packed in the containers. The ld. Consultant submitted that these are in the nature of parings and waste of leather and are covered by Sl. No. 2 of the Notification 60/85 which exempts crust leather including splits and sides thereof from the whole of the customs duty, basic and additional. The ld. Consultant submitted that the department has not proved his case with evidence that the goods imported when sewn together could form complete gloves. The ld. Consultant relied upon the Explanatory Notes to CCCN under Heading 41.09 to urge that parings and waste of leather would fall under that heading under Chapter 41. It was, further, argued by the ld. Consultant that goods should be assessed to duty in the form in which they are imported and in the present case, the goods are nothing but parings in the nature of waste and would correctly fall under Chapter 41 and is, therefore, eligible for exemption under Notification 60/85.

4.  Shri M.K. Jain, ld. S.D.R. submitted that in this case the department had searched the premises of the appellants and had obtained evidence in the shape of telex of July, 1985 which clearly indicates that what has been supplied were parts of gloves. They were also in considerable quantity of 253 bags which is not a normal way of packing of machinery in containers. The ld. S.D.R. referred to the textual authority `Wealth of India’ Vol. V at page 212 that gloves are made out of light leather after tanning process. The ld. S.D.R. drew attention to the statement of the Managing Director of the appellants which goes to support the department’s case.

5. The submissions made by both the sides have been carefully considered. The question is whether the goods imported are `parings and other waste of leather’ falling under Heading 41.02/10 CTA and exempt under Notification 60/85, as claimed by the appellants, or, whether the goods are classifiable under Heading 42.01/06 as `other articles of leather’ which is the case of the Department. Examining the rival contentions, it is seen that the suppliers themselves have not described the goods as parings or splits. In their telex No. 3127-35-07-03 sent to the appellants, they have described the goods as pairs of backs/cuffs for style M 80 and similar gloves. The figures drawn of the goods in the examination report on the reverse of the Bill of the Entry show these are rectangular cut pieces and finger-shaped pieces of leather. In this context, it is noted that in the CCCN Compendium of Classification Opinion, Second Edition (1976) at p. 64 it has been clarified, “pieces of leather cut to rectangular shape, imported in sets consisting of pieces required for making up a particular article (a handbag, a shopping bag, a pair of gloves, etc.)" are classifiable under Heading 42.05 CCCN. This would go to strengthen the Department’s reliance on BTN Explanatory Notes to Chapter 41 which says that pieces of leather cut to special shapes are regarded as articles falling within Chapter 42 or 64. It is also well settled that these Explanatory Notes have a persuasive value. There is the further evidence of statement of the Managing Director, Shri Ananda Rao to the effect that they had asked for these goods to be invoiced which obviously need not have been done if the goods had been kept in the container only as cushioning and packing material for the stamping machines imported. Nor does the supplier’s telex support this contention of the appellants. In these circumstances, therefore, there is no reason to interfere with the impugned order classifying the goods imported under Heading 42.01/06 CTA and consequently holding that the goods are ineligible for exemption under Notification 60/85. The appeal is rejected. In the view taken as above, the Misc. Application calling for samples of the imported goods also stands disposed of accordingly.

_______

Equivalent 1994 (73) ELT 893 (Tribunal)