SHAW AND BROTHERS v. COMMISSIONER OF CUSTOMS-NEW DELHI

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Present order disposes of two appeals arising out same Order-in-Appeal and that the goods exported also been same for both these appeals. Details of both the appeals are as follows:

Both the appeals have been filed to assail the Order-in-Appeal

No. 303-304/2022-23 dated 29.06.2022 vide which the Order-in-

Original No. 83-84/2022-23 dated 26.04.2022 has been set aside.

Commissioner (Appeals) has remanded the matter with directions

for retesting of impugned goods and for fresh decision based on

results of retesting after following the principles of natural justice.

The facts in brief relevant for the present adjudication are as

follows:

1.1 Appellants are registered with Goods and Service Tax Department. Appellants through their CHA, M/s. Phenomenal Logistics, filed the shipping bills as mentioned above along with the requisite annexures, for export of Pashmina Shawls of such number with such FOB value as is mentioned in the table above. The Wildlife Inspector, WildLife Crime Control Bureau examined the

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goods on 22.11.2018 in Appeal No. C/50615/2024 and on 30.01.2019 in Appeal No. 50614/2024. The Wildlife Inspector suspected shahtoosh shawls in the above consignments. Hence, the goods were put on hold.

1.2 The samples were drawn vide Panchnama dated 28.12.2018 in Appeal No. C/50615/2024 and Panchnama dated 19.02.2019 in Appeal No. C/50614/2024, in presence of representatives of appellants, of their CHA and the independent witnesses and were sent for testing to Wildlife Institute of India, Dehradun, Uttarakhand on 29.01.2019 in Appeal No. C/50614/2024. The report dated 30.12.2019 has confirmed that the sample contains guard hair of Tibetan Antelope which is listed in Schedule-I of Wildlife (Protection) Act, 1972 and is also listed on Appendix-I of Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and as such is prohibited goods. The other pieces of shawls were allegedly used to conceal the sample shawls found to prohibited. Based on the said test report and the said observation about concealment of sample shawls/prohibited goods that the show cause notices as mentioned above were served upon the appellant proposing the confiscation of the entire consignment under Section 113(d) read with Section 113(e), 113(i), Section 118 and 119 of Customs, Act 1962. Penalty under Section 114(i) read with Section 114 (iii) and Section 114 AA of Customs Act, 1962 was also proposed to be imposed. The said proposal was confirmed on the basis of test reports received from wildlife Institute of India, Dehradun vide respective Order-in- Original as mentioned above. Both the said orders have been set

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aside vide the impugned Order-in-Appeal. The appeals have been remanded back for fresh testing of samples and fresh adjudication thereafter based on the fresh reports. Still being aggrieved, the appellant/exporter is before this Tribunal.

2. We have heard Shri Ashish Batra, learned Advocate for the appellant and Shri Kuldeep Rawat learned Authorized Representative for the department.

3. Learned counsel for the appellant has mentioned that the shawls which were sought to be exported by the appellant are Pashmina shawls. One/two pieces of shawls out of the export consignment are wrongly held to be Shahtoosh shawls (the shawls from guard hair of Tibetan Antelope). There is no cogent and conclusive material in possession of department to prove that the impugned shawls are made up of Shahtoosh. Hence, instead of remanding back the matter, Commissioner (Appeals) should have allowed the appeal in toto. It is further mentioned that the price of Shahtoosh shawl is much higher than that of pashmina shawls. However, in the present case the show cause notice nowhere alleges or even doubts the valuation of siezed shawls. Once the price of Pashmina shawls has been accepted by the department, allegations that one or two thereof are made up of Shahtoosh, is absolutely irrelevant. The department has nowhere alleged any conspiracy between the appellant, domestic supplier and/or the foreign buyer. The appellant is not the manufacturer itself. The department has failed to investigate the manufacturer and even the recipients of the shawls exported. None of them have been made party to the impugned show cause notice. In absence thereof, the

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order remanding back the matter is erroneous. Even the directions of retesting of impugned goods are redundant. Commissioner (Appeals) has failed to appreciate that there is no evidence against the appellant.

3.1 Learned counsel for the appellant has also impressed upon that while directing the retesting, Commissioner (Appeals) has not given any specific direction about the methodology to be adopted at the time of retesting. It is impressed upon that sufficient literature was provided to the Commissioner (Appeals) to impress upon, firstly that the presence of guard hair of Tibetan Antelope in Pashmina shawls can be due to adulteration at the time of manufacturing process including stages of pre-spinning, spinning, weaving and finishing of shawls by the artisans. The process is such that possibility of 100% absence of Shahtoosh here is difficult. Secondly, that the methodology for testing the wool from Tibetan Antelope is either modern scanning electron microscopic technology or by DNA analysis-Polymerase Chain Reaction (DNA-PCR method). There is no specific direction to that effect in the order under challenge. Learned counsel has relied upon the Bureau of Indian Standards identification labeling and marking of Pashmina products literature. It is impressed upon that as per Centre for Cellular and Molecular Biology (CCMP) morphological examination through electron microscopy is not reliable. It is only DNA-PCR method which can ascertain the vital parameters including percentage comparison of subject seized shawls. The order under challenge is silent about specifying DNA-PCR technology to be adopted for retesting. Test results by any other methodology other than DNA-

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PCR method will make no value addition as far as comparison between Pashmina and Shahtoosh is concerned.

3.2 Learned counsel has also brought to the notice that no intimation about any retesting as directed in Order-in-Appeal was ever given to the appellant nor any report has been conveyed to them. Department rather filed a complaint to CBI on 24.01.2023 i.e. after the passing of the impugned Order-in-Appeal. For purpose of retesting samples have been sent to Kolkata where also DNA-PCR methodology is not available. These acts on part of department are prejudicial to the claim of the appellants. With these submissions, learned counsel has prayed for the order under challenge to be set aside and appeal to be allowed.

4. While rebutting these submissions, learned Departmental Representative has impressed upon that Wildlife Institute of India, Dehradun is a renowned governmental authority. The test reports in question against the appellant have been prepared by the said institute. The possibility of not adopting the proper methodology is not there, irrespective, the methodology is not described in the report. The report dated 29.01.2019 clarifies the presence of the guard hair of endangered species (Tibetan Antelope), hence, the samples have rightly been confiscated. There was no infirmity in the order of original adjudicating authority confiscating the entire consignment as well as imposing penalty upon the appellants. The authority had given an option to the exporter to redeen the goods/shawls. It is impressed upon that retesting of samples as ordered vide Order-in-Appeal would not have been to the prejudice of the appellant.

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4.1 Learned Departmental Representative has further placed on record the letter received from the concerned commissionerate bearing No. 1721 dated 30.05.2024 vide which it has been communicated that the DNA analysis of the sample shawls is not feasible in the present capacity of the laboratory of Zoological Survey of India. It is impressed upon that there is no possibility of complying with the directions of Commissioner (Appeals) in the impugned order. Appeal is accordingly prayed to be dismissed. While rebutting these submissions, learned counsel has brought to the notice that the original adjudicating authority is already in process of de novo adjudication pursuant to the directions of the impugned Order-in-Appeal despite that there is no fresh retesting report as was directed to be the basis for de novo adjudication.

5. Having heard the rival contentions and perusing the entire records. It is observed and held as follows.

5.1 The adjudication authorities vide the respective orders, as mentioned above, based on the lab analysis report dated 29.01.2019 as given by the Wildlife Institute of India, Dehradun, Uttarakhand have held the seized pieces of the consignment (one and two) of Pashmina shawls to be that of Shahtoosh shawls. The test report analysis is perused as below:

"Based on the morphological features and standard microscopic hair characteristics (Cuticular and Medullary patterns) as per protocols and comparison with the reference material, it is concluded that shawl marked by us as F- 3761/1-2 and F-3761/2-2 (Total 02 shawls), sent vide above reference, contains hair of Tibetan antelope (Panthelops hodgsonii)"

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5.2 Apparently and admittedly, there is no methodology mentioned in the test report except that the microscopic hair characteristics have been observed. From the perusal of the literature from Bureau of Indian Standards as produced by the appellant reveals that identification of Pashmina fibers has to be done by using following two months:

(i) Scanning Electron microscopic method.

(ii) DNA analysis, Polymerase Chain Reaction method(DNA-PCR)

5.3 The literature prescribes a detailed procedure for both these techniques. It is judicially noticed from the said literature that the Pashminas examined through such procedures only can have BIS mark. The said literature is opined sufficient to hold that the microscopic hair characteristic examination is actually insufficient to decide as to whether the Pashmina shawl is actually a Shahtooosh shawl. Apparently and admittedly none of the two methodologies has been adopted by Wildlife Institute of India, Dehradun while testing the impugned samples of shawls. These submissions of appellant have duly been considered by Commissioner (Appeals) in Para 5.4 as follows:

"I further note that the Appellant is strongly contesting that their goods do not contain guard hair of Tibetian Antelope and they had produced test reports from Craft Development Institute, Srinagar (established by Development Commissioner (Handicrafts), Ministry of Textiles, Government of India) in this regard before the Adjudicating Authority and in this appeal also. Thus, they have a strong case for re-testing of impugned goods. Further, they have also made a strong case for testing by alternative technique such as DNA-PCR by

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producing expert opinions and technical literature regarding testing for presence of hairs of Tibetian Antelope. I also note that office of the Commissioner of Customs (Exports) had allowed re-testing in several other cases and there is no justification in denying re-testing in present case. The Adjudicating Authority has not given any reasons for denying request of re-testing."

Based thereupon it has been held that to meet the ends of justice, the impugned goods should be retested using specified alternative techniques such as DNA-PCR etc. and that change of methodology while testing samples cannot be prejudiced to the interest of department, in any manner and the matter should be decided afresh after reports of retesting.

5.4 It is also judicially noticed from the literature on interest that to distinguish Pashmina and Shahtoosh shawls following Para meters need to examined:

1. Mean fiber diameter of Pashmina

2. Percentage of Pashmina fibre

3. Percentage of guard hair of pashmina fibre

4. Presence of Shahtoosh fibre

5. Percentage of Shahtoosh fibre

6. Percentage of other fibres, if any Such examinations are possible only through DNA-PCR method. Since the commissioner (Appeals) has accepted the appellant's request about adopting DNA-PCR method for retesting of sample, the absence of specific directions to that effect in the order under challenge is sufficient to order modification of the said order to that extent.

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5.5 I also observe, from the facts on record, that there is no denial that appellant himself is not the manufacturer of shawls. As per appellants, they have purchased the Pashmina shawls from domestic suppliers to be sold to foreign buyers. Apparently, neither the domestic supplies nor the foreign buyer have been examined by the department. The another undisputed fact is that all shawls are purchased at similar price despite the fact that Shahtoosh shawls are much costlier than Pashmina shawls. Admittedly, appellants were never earlier alleged for committing the impugned alleged act despite they are in the business since long. The FIR by CBI is observed to have been filed after delay of almost 4-5 years from the date of filing of Bills of Entry. These facts and circumstances and in light of the explanation about manufacturing process of Pashmina shawls where possibility of some adulteration of Tibetan Antelope hairs cannot be ruled out, I hold that if retesting is not got done by adopting the most conclusive technique of DNA-PCR method, it shall be highly prejudicial to the appellant where as department is not going to suffer any prejudice by whatever method the samples may get retested, as already been appreciated by Commissioner (Appeals).

5.6 At the time of argument a letter is placed on record by the department about non feasibility of retesting by Zoological Survey of India Laboratories, but in the light of above discussed facts it is held that retesting of the samples by DNA-PCR is crucial for fair decision. Also for the reason that in absence of retesting there is only previous report available for readjudication which should not be relied upon due to the noticed lacunae by Commissioner

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(Appeals) in the impugned order. Hence, I hold that the said letter is insufficient to not to comply with the directions of Commissioner (Appeals) to get the samples retested As per the literature provided by the appellant, several such laboratories have already been established or are in the process of being established. A laboratory at University of Srinagar having a test facility for Pashmina products for exporter is already functional. The appellant themselves had produced a test report from Craft Development Institute, Srinagar (as has also been appreciated by Commissioner (Appeals). Keeping in view the process of manufacture of Pashmina shawls and the elaborative methodology for their testing, I am of the opinion that the present controversy cannot be adjudicated in the absence of any fresh test report as has already been directed by Commissioner (Appeals). In absence of any such report the de novo adjudication by Original Adjudicating Authority based on the previous report only is opined to be a futile exercise with no cogent conclusion. Resultantly, it is hereby directed that department shall get the retesting of the samples in question done from any other government lab if available with DNA-PCR methodology of testing. In absence thereof, retesting should be got done from any other accredited lab other than the lab of Craft Development Institute, Srinagar and Wildlife Institute of India, Dehradun and even Zoological Survey of India. The Ministry of Home Affairs in terms of Section 293 of Code of Criminal Procedure, 1973 has mentioned four government scientific experts as follows:

(i) Wildlife Institute of India, Dehradun.

(ii) Zoological Survey of India, Kolkata

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(iii) Botanical Survey of India, Kolkata

(iv) Forest Research Institute, Dehradun

5.7 Ministry of Textiles has already established Sheep and Wool Research Institute at Avikanagar, Gurgaon, Kashmir, Mumbai and a lab named Intertek which is approved by Cashmere and Camel Hair Manufacturers Institute, USA and the reports issued by it are accepted globally. Department is required to get the samples retested from any possible but accredited laboratory, equipped with DNA-PCR methods of testing, whether government or private but with mutual consent of the appellant. As requested by learned Departmental Representative, the appellant is directed to incur the cost of retesting in case a private laboratory is opted mutually for getting the impugned samples retested. The Original Adjudicating Authority is directed to wait for the retesting reports and is hereby restrained from passing any order based on the previous test report results.

6. With these observations, the order under challenge is set aside. The impugned samples are ordered to be retested by DNA- PCR methodology. Samples must be sent to the lab concerned within one month of receiving this order. The original adjudicating authority shall decide the matter afresh/denovo within two months of obtaining the fresh results of said retesting of the impugned samples. Resultantly, both the appeals are allowed by way of remand.

[Dictated and pronounced in the open Court]

(DR. RACHNA GUPTA)

MEMBER (JUDICIAL)

HK