2008 (10) TMI 558 - AT - Central Excise

Summary

Issues:
Classification of imported palm oil as edible or non-edible grade, duty liability, pre-deposit requirement, applicability of exemption notifications, compliance with food adulteration rules.

Classification of Imported Palm Oil:
The appellant imported Crude Palm Oil but declared it as Palmolein of Edible Grade. However, the Port Health Officer reported it as adulterated with an Acid Value of 10.74, exceeding the standard of 6.0 for edible grade as per Appendix B to the Prevention of Food Adulteration Rules. The Commissioner (Appeals) upheld this classification based on the test report. The appellant argued that the item was refined for human consumption and referred to exemption notifications. The Tribunal noted the Acid Value discrepancy, directing a pre-deposit of Rs. 50,00,000.

Duty Liability and Pre-Deposit Requirement:
The Commissioner (Appeals) confirmed a duty of Rs. 1,33,97,727 on the imported palm oil due to its classification as non-edible grade. The appellant sought a full waiver of pre-deposit, emphasizing their distribution through the Public Distribution System for edible purposes. The Tribunal, considering the facts and circumstances, directed a partial pre-deposit of Rs. 50,00,000, waiving the balance amount pending appeal disposal.

Applicability of Exemption Notifications:
The appellant relied on Notification Nos. 29/97 and 40/2001, claiming exemption for the imported item distributed through the Public Distribution System. However, the Commissioner (Appeals) and the Tribunal emphasized the non-edible grade classification based on the Acid Value exceeding the prescribed limit, denying the applicability of exemptions.

Compliance with Food Adulteration Rules:
Both the Commissioner (Appeals) and the Tribunal referred to Chapter Supplementary Note No. 1 of Chapter 15 and Appendix B to the Prevention of Food Adulteration Rules, specifying the Acid Value criteria for edible grade palm oil. The Chemical Examiner's Test Report indicated values ranging from 7.20 to 8.89, leading to the conclusion of adulteration. The Tribunal directed compliance with the pre-deposit order within three months to avoid appeal dismissal.

In conclusion, the judgment focused on the accurate classification of imported palm oil based on Acid Value criteria, duty liability determination, pre-deposit requirements, exemption notifications' applicability, and compliance with food adulteration rules. The Tribunal upheld the non-edible grade classification due to the Acid Value discrepancy, directing a partial pre-deposit and emphasizing compliance within the specified timeline to maintain the appeal's validity.