The Hindu Business Line : One man's rag may be another man's garment

THE Vikas Shipping Agency case, reported in a recent issue of Excise Law Times is about rags that got dragged all the way to the Mumbai tribunal. The story begins with Yaseen Enterprises importing garments `misdeclaring' them as rags, filing the bills of entry, getting the goods examined, paying duty applicable to rags, loading "the precious cargo into five trucks" and in the process of leaving `Customs area'...

Just then, the CIU (Central Intelligence Unit) "got wind of it and pounced on the hapless importer, got the consignment unloaded and examined it all over again," reads the text of the tribunal order. "Much to the chagrin of the importers and to the joy of the CIU, it was found that 84 bales out of the imported goods contained garments and the rest (nine bales and 20 gunny bags), mutilated woollen rags," continues the story. The consignment was seized not only for misdeclaration but also for import without a valid licence, one learns, because "those days only pre-mutilated garments could be imported without a licence."

Investigation revealed that the importer had acted "in connivance with the CHA or Custom House Agent, and the dock examining officers" to perpetuate the fraud.

"The officers of Customs who examined the goods and gave out of charge were however spared from the proceedings under this Act as it was found possible to proceed against them under Conduct Rules. Much can be said on this," reads the order of tribunal member M. Moheb Ali, leaving things to the imagination of readers.

"A show cause notice was issued to all concerned on (minus the examining officers). Meanwhile the seized goods were lying in the CFS Mulund sheds of the CONCOR. A fortuitous fire broke out in the sheds and destroyed the seized goods. These things happen," he states in the next paragraph, quite matter-of-factly.

Yaseen filed a refund claim for duty paid by it initially, as the goods on which duty was paid got destroyed in the custody of the Customs Department. The lower authorities rejected the refund claim, yet Yaseen managed to succeed at a higher level.

Paragraph 6 of the order summarises the arguments of Manoj Sanklecha who argued for the importer. He said that duty cannot be demanded on lost or destroyed goods, and that the appellant had not misdeclared the goods but only "declared the goods as per the description given in the invoice."

The imported goods were old and soiled garments and are therefore rags only, said Sanklecha. "Exporter considered them to be rags," he added.

The meat of his contention was that the definition of rags differs from country to country.

"What are considered as garments in one country may be rags in another," stated Sanklecha, and as a corollary, what are considered rags in one country may be garments in another. It is a different story that what are paraded as haute couture apparel may well seem to be rags for a common man!

Be that as it may, the tribunal rejected the contention that there was no misdeclaration of goods on the part of the importer. As for the other argument, that no duty could be collected on the destroyed goods nor any penalty imposed thereon, Moheb Ali observed, "The act of importation of contraband goods was complete before the alleged fire occurred destroying the goods."

Right decision, the department would acclaim, though the appellant might continue to protest. For, one man's rags can be another's garments.

ExParte@TheHindu.co.in

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