Free export allowable as minor deficiency in processing cannot make leather as not fully finished

Nabisha Leathers Vs Commissioner of Customs (CESTAT Chennai)

CESTAT Chennai held that minor deficiency in the processing may not ipso facto make the leather as not fully finished. Accordingly, satisfying the conditions contained in Public Notice No. 21/2009-14 dated 01.12.2009, the same is freely exportable.

Facts- M/s. Nabisha Leathers (appellant) filed a Shipping Bill No. 4090836 dated 16.03.2010 for export of 37 cartons of “Goat Shoe Suede Upper Leather” of four different colours. However, the Appraising Officer (Leather Expert) opined that the item declared as “Goat Shoe Suede Upper Leather” of grey colour packed in 13 cartons might not be satisfying the norms prescribed for finished leather vide DGFT Public Notice No. 21/2009-14 dated 01.12.2009.

It may be mentioned here that only finished leather of all kinds which conform to the conditions contained in the Public Notice No. 21/2009-14 dated 01.12.2009, are freely exportable and all others are restricted for export requiring a valid export license issued by DGFT authorities. As per Export Tariff (S. No. 14) of Schedule II of Customs Tariff Act, 1975, “Hides, skins and leathers, tanned or un-tanned, all sorts”, but not including manufactures of leathers, attract an export duty of 60%. Further, only finished leathers are eligible for drawback.

On the basis of the CLRI report that the exported leather was not conforming to the definition of finished leather, after due process of adjudication, the consignment was confiscated valued at Rs. 6,08,578/- (FOB) u/s. 113 (d) of the Customs Act, 1962. As the consignment was allowed for export on the basis of an undertaking bond, the exporter was allowed redemption on payment of fine of Rs. 50,000/-. Further, export duty of Rs. 3,65,149/- was demanded and a penalty of Rs.10,000/- was imposed on the exporter. The First Appellate Authority has upheld this order and hence the appellant came in appeal before us.

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