R.M. Savant, J.@mdashThe above Customs Appeal has been filed by the Commissioner of Customs being aggrieved by the Order dated 21st December 2005, passed in Appeal No. 700/04-NB(S) by the Customs Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as "CESTAT") [2006 (199) E.L.T. 181 (Tri. - Del.)]. The questions of law involved can be gainfully reproduced as follows:
(a) Whether CESTAT was correct in holding that the violation in the case was purely technical and therefore order in appeal dated 9th September 2004 is liable to be quashed and set aside and thereupon setting aside order in appeal with consequential relief.
(b) Whether Respondent contravened provisions of Section 11 of Customs Act read with Trade and Merchandise Mark Act, 1958 by giving deceptive markings on the goods for hiding the country of origin thereby rendering the goods (subject machines) liable for confiscation u/s 111(d) of Customs Act and also liable for penal action u/s 112 of Customs Act.
(c) Any other question of law on the Hon''ble High Court may formulate and decide ?
2. The facts in brief necessary for adjudication of the above Appeal and the questions of law involved can be stated thus:
The Respondents herein imported 175 Nos. of industrial sewing machines from M/s. Brother International. The declaration made on the bill of entry in respect of the said sewing machines was port of shipment as Singapore and country of origin as China. The said sewing machines were imported by the Respondents under what is known as EPCG licence No. 0330004053 dated 7th August 2003. It is the case of the department that when the goods were sought to be cleared the inspection of the goods revealed that the description on the goods found was "Brother Industries Ltd., Nagoya, Japan" and the country of origin China was not mentioned. On the ground that the goods amounted to a mis-declaration, the Respondent was directed to prove its bona fides. The Respondent requested for waiver of show cause notice and sought adjudication of the matter, upon which the adjudicating authority by its order in original dated 21st October 2003 came to a conclusion that since the intimation of the country of origin is required on the packages and, therefore, in its absence the Respondents have contravened the provisions of Section 111 of the Customs Act and hence the goods were liable for confiscation u/s 11(d) of the Customs Act, 1962 (hereinafter referred to as the said Act) and also imposed penalty on the Respondents u/s 112(a) of the said Act.
3. Aggrieved by the said order in original, the Respondent filed an Appeal. The Appellate Authority on the self same ground as mentioned in the order in original, confirmed the order of the adjudication authority and dismissed the Appeal.
Being aggrieved by the dismissal of the Appeal, the Respondents have filed a further Appeal before the CESTAT which came to be allowed by the CESTAT and the order passed by the adjudicating authority as well as the First Appellate Authority came to be set aside by the CESTAT by its order dated 13th January 2006. As mentioned herein above, it is the said order which is challenged in the instant Appeal.
4. It is required to be stated that the requirement of mentioning the country of origin on the imported goods is obligated by Section 117 of the Trade and Merchandise Act. The said provision requires that the Central Government by Notification specify the goods on which the indication of the country of origin or place in which the goods are made or produced or name or the address of the manufacturer or the person who manufactured the goods should be affixed. The said provision comes into force from the date of Notification which is prescribed by the Central Government. The Notification in question being No. SO-1272 was issued on 25th April 1962 u/s 117 of the Trade and Merchandise Act. The said Notification provided for the requirement of fixation of the country of origin on the goods which are imported in India. The said Notification also postulates under sub Clause (5) the goods which are exempted from complying with the said requirements. It would, therefore, be apposite to reproduce the said exemption clause: (relevant excerpt)
5. Exemptions. - The following classes of goods are exempted from the operation of this Notification:
(a) ....
(b) ...
(c) ...
(d) goods imported for the personal use of individuals or members of unincorporated associations and not for trade purposes.
(e) goods made or produced beyond the limits of India and imported into India, not for trade purposes other than for re-export.
5. It is undisputed that the Respondent herein against the decision of the First Appellate Authority had filed the Appeal before the CESTAT on the ground that in view of the exemption and especially Clause (e) thereof they were exempted from the application of mentioning the country of origin. Though it is required to be stated that before the adjudicating authority as well as the First Appellate Authority, the Respondent had sought to justify that the mentioning of the country of origin as China, satisfied the requirement in so far as Section 117 is concerned. It was the case of the Respondent before the adjudicating authority as well as the First Appellate Authority that since the Respondent had not brought the said sewing machines for sale in the country, the mentioning of the country of origin was, therefore, merely a technical matter and would, therefore, not make them liable for confiscation of the goods.
6. Be that as it may, since the Appellant herein did not object to the invocation of the said ground of exemption by the Respondent, before the CESTAT we would have to examine the case of the Respondent on the said basis. We have heard Shri A.S. Rao for the Appellant and Shri Prakash Shah for the Respondents. The thrust of the arguments of the Learned Counsel for the Appellant is on the interpretation on the exemption clause of the Notification dated 28th April 1962. It was sought to be contended by the Learned Counsel for the Appellant that the benefit of the exemption clause cannot enure to the Respondent as the Respondent does not qualify either under Clause (d) or (e) of the said exemption clause. The Learned Counsel for the Appellant would contend that the said exemption clause would be applicable to only individuals who propose to use the goods for their own personal use and the said exemption clause, therefore, would not enure to the benefit of the Respondent.
7. Per contra, the Learned Counsel for the Respondent would contended that the Respondent is a partnership firm and would, therefore, qualify for exemption under Clauses (d) and (e) of the said exemption clause. The Learned Counsel for the Appellant would contend that in terms of Clause (d) the members of unincorporated associations are entitled for exemption so also under Clause (e) the goods made or produced beyond the limits of India and imported into India not for trade purposes other than for re-export, are entitled to exempted. It is pertinent to note that the CESTAT on an interpretation of the exemption clause and especially by adverting to Clause (e) of the exemption clause came to a conclusion that the Respondent was exempted from complying with the provisions of Section 117 of the Trade and Merchandise Act. The CESTAT has also observed that since the goods in question which were imported by the Respondent comes in their factory for the manufacture of final product, the provisions of Section 117 would not get attracted. The Tribunal also relied upon the Judgment of a Single Member of the Tribunal in case of
8. We have considered the rival contentions as above, as also considered the exemption clause. It is not in dispute that the Respondent is a partnership firm and being as such, the partners of the Respondent would qualify for exemption under Clause (d) of the said exemption clause as they can be said to be members unincorporated associations and the Respondent would also qualify under Clause (f) as the goods which have been manufactured beyond the limits of India, have been imported into India not for trade purposes.
9. In our view, the interpretation of the CESTAT of the exemption clause can be plausible view of the matter. Though the Learned Counsel for the Appellant sought to rely upon the Judgment of Bench of Tribunal
10. We, therefore, do not find any merit in the Appeal and, therefore, answer the questions of law in the negative i.e. in favour of the assessee and accordingly dismiss the Appeal.
