By TIOL News Service

MUMBAI, FEBRUARY 02, 2019: ORDER of confiscation of 537 number of teak wood blocks valued at Rs.21,02,287/- in 2008 under section 113(d) & (h) of the Customs Act (CA) with option for back to town on payment of redemption fine of 5 lakhs under Section 125 of the CA along with penalty of 2 lakhs under section 114(1) of the CA on deceased Bernard Maurice Gerard Kuhne is assailed in this appeal.

The facts are that the deceased Bernard Maurice Gerard Kuhne, a national of the Netherlands, purchased 575 numbers of old & used Burma teak wood of an old building from one M/s Manav Impex of Chennai after the same was refurbished, transported from Chennai to Mumbai as advised by CHA M/s Daroowala Bros & Company, from where it was to be exported.

The CHA filed a manual shipping bill on behalf of the appellant for export of 533 numbers of blocks having total FOB value Rs.21,02,287/- as personal baggage export to the Netherlands but in the description of goods, it has wrongly put "All mixed size Indian Reclaimed Teak Wood" and 'no commercial value for customs purpose' was put as the said goods were for personal use only.

The goods were subjected to examination by the Customs officer who pointed out that the said huge quantity goods cannot be sent as baggage and teak wood is restricted for export. It was also pointed by him that wrong HS code and description were given by the CHA.

A SCN dated 18.12.2008 came to be issued and the Commissioner of Customs (General) ordered confiscation of goods with option for payment of redemption fine of Rs.5,00,000/- and also imposed penalties on the CHA/partner as well.

Appeals came to be filed against this order. The Tribunal had taken up the appeal of the CHA/partner separately and by order dated 16.02.2018 absolved them from the liability of penalty.

Ms. Klaver J. Edith, wife and legal representative of deceased appellant had succeeded to the appeal in place of the appellant upon furnishing of his death certificate issued on 30.10.2009 indicating death of appellant on 21.10.2009 and sole legal heir certificate issued by the Netherlands Authorities.

Accordingly, the Tribunal observed that Penalty being punitive in nature admittedly gets abated on the death of the person and in view of such legal position, penalty of Rs.2,00,000/- imposed on deceased Bernard Maurice Gerard Kuhne is abated on his death.

The issue which, therefore, remained was the issue of confiscation of goods.

After considering the submissions made by both sides, the CESTAT observed thus -

+ On perusal of case records, it is found that transit clearance was given by the Forest Department of Maharashtra State (Annexure-2) for 575 numbers of wood having 90,500 kgs. weight to M/s Manav Impex from where the appellant had purchased the articles.

+ Gmail communication (Annexure-3) to one Mr. Bharat of Customs made by deceased appellant on 26 May, 2008 indicates that Mr. Bharat had sought information from Customs Department and replied to the deceased appellant that wood items are allowed to be exported subject to NOC from the local Forest Department but the same should not be more than 100 years old.

+ Shipping bill vide Annexure-4 indicates the description of wood of Indian reclaimed teakwood but the same description of Indian teakwood is found absent in the transit permit issued by the Forest Department, though the Forest Department has indicated the wood as old wood of the old building.

+ The deceased appellant claims the same to be imported Burmese teak wood while the show-cause notice indicates that the baggage consist of blocks of wooden blocks of 537 numbers having total weight 10,652 Kgs. against declared number of 533 and weight of 11,230 kgs.

+ Even if the contention of the Commissioner of Customs is accepted that CHA partner admitted that the tariff item HS code should be 44011000, since item description covered under prohibited wood does not cover blocks that too made exclusively out of imported logs/timber, I have got no hesitation to conclude that the goods under confiscation, which the Assistant Commissioner of Customs, ICD Mulund (Export) informed to have been kept in container number TR2311935, are not prohibited goods that can be subjected to confiscation.

+ It is common knowledge that due to climatic condition including rain and sun, weight of wood item varies and approximately 10% variation on both sides is not that fatal when weight is not a consideration for determination of duty liability, since the same duty liability for the goods is NIL.

+ Further, there is a variation of 4 pieces of counting of blocks which deceased appellant is stated to have declared at 533 blocks and physical counting by the Department brought the figure to 537 and such variation could be unintentional arithmetical error since in so doing by the deceased appellant, there is no revenue loss for the respondent-department or financial gain for the deceased appellant.

+ But when the goods being exported are not liable for duty, there is no point in discussing on clearance of baggage from originating place.

Conclusion:

++ The confiscation order is held as not in conformity to law and substituted appellant is here by permitted to export the goods to her home country the Netherlands.

++ Since the goods are confiscated and kept in the warehouse on the strength of order passed by the Commissioner which is set aside, no warehouse fees etc. is to be collected from the substituted appellant.

The appeal was allowed.

(See 2019-TIOL-369-CESTAT-MUM)