1983 (11) TMI 300 - AT - Customs

Summary

Issues Involved:
1. Liability of tapioca chips to export duty as "animal feed" under Item 21 of the Export Tariff Schedule.
2. Interpretation of the Export Tariff Schedule.
3. Assessment of tapioca chips' intended use and conformity to Indian Standard Specifications.
4. Distinction between the present case and the case of M/s Ramnath & Co.
5. Onus of proof for classification under a specific tariff item.

Issue-wise Detailed Analysis:

1. Liability of Tapioca Chips to Export Duty as "Animal Feed":
The primary issue in this appeal was whether the tapioca chips exported by the appellants were subject to export duty as "animal feed" under Item 21 of the Export Tariff Schedule. The initial orders from the Assistant Collector of Customs and the Collector of Customs (Appeals) had confirmed the duty demand. However, the appellants argued that the tapioca chips were intended for industrial use, not as animal feed, and thus should not be classified under Item 21.

2. Interpretation of the Export Tariff Schedule:
The Tribunal emphasized that the Export Tariff Schedule is selective and not comprehensive, lacking a "not elsewhere specified" item. Therefore, goods can only be charged to export duty if they fall within one of the specific entries. The exemption notification dated 18-5-1978 exempted tapioca chips classified as "animal feed," but the Tribunal noted that if the tapioca chips were not liable to be treated as animal feed, they should not be charged to duty irrespective of the notification.

3. Assessment of Tapioca Chips' Intended Use and Conformity to Indian Standard Specifications:
The appellants presented evidence, including test reports and authoritative publications, to show that tapioca chips have established uses other than as animal feed. The test reports from the Customs laboratory indicated that the chips did not conform to the Indian Standard Specification for tapioca as livestock feed (IS-1509/1972). Additionally, a letter from the State Trading Corporation of India confirmed that the tapioca chips were intended for industrial use by the foreign buyer in West Germany.

4. Distinction Between the Present Case and the Case of M/s Ramnath & Co.:
The Tribunal distinguished the present case from the earlier case of M/s Ramnath & Co., where the levy of duty on tapioca chips as animal feed was upheld. Key differences included:
- The test report in the present case specifically mentioned the size of the chips, which exceeded the thickness specified for livestock feed.
- The appellants provided specifications for edible tapioca chips and evidence of alternative uses, unlike in the case of M/s Ramnath & Co.
- There was authoritative evidence from the foreign buyer regarding the intended industrial use of the tapioca chips.

5. Onus of Proof for Classification Under a Specific Tariff Item:
The Tribunal reiterated that the onus is on the Department to show that goods fall within the scope of a specific tariff item. The show cause notice and the Order-in-Original lacked specific grounds and reasoning for classifying the tapioca chips under Item 21. The Tribunal found that the Department had not substantiated its claim that the tapioca chips were "animal feed."

Conclusion:
The Tribunal concluded that the tapioca chips in question could not be appropriately termed as "animal feed" under Item 21 of the Export Tariff Schedule. The appeal was allowed, and the demands for export duty confirmed by the Assistant Collector and upheld by the Collector (Appeals) were set aside.