2012 (8) TMI 604 - AT - Customs

Levy of CVD on Gum Arabic waste imported Held that - Gum arabic is a natural gum and not liable for CVD as it is extracted from the tree itself by making hole on the tree and some part of the gum which drops on the soil, that becomes gum arabic waste/rejects and this is the only product they have imported which does not have purity as natural gum arabic is having purity. Therefore, the gum arabic waste/reject is only a natural gum and as per the Board s clarification dated 28/06/2007 CVD is not leviable on gum arabic in raw form. Therefore, they are not liable to pay CVD on the imported goods appeal allowed

Summary

Issues:
Levy of CVD on imported Gum Arabic waste.

Analysis:
The appellant appealed against the order confirming the levy of Countervailing Duty (CVD) on Gum Arabic waste they imported. The appellant imported Gum Arabic Waste/Rejects and classified them under Chapter Heading 1301 2000. The Customs department assessed the goods and held that CVD was payable on the imported waste. The appellant challenged this decision before the Commissioner (Appeals) who upheld the levy. The appellant argued that Gum Arabic waste is a natural gum extracted from trees and should not be subject to CVD. They cited a Board clarification dated 28/06/2007 stating that CVD is not applicable to raw Gum Arabic. The appellant also pointed out a case where a similar decision was reversed by the Calcutta High Court. The Revenue contended that the appellant failed to prove that the imported goods were natural gum and did not provide necessary documentation like test reports or country of origin certificates.

The Tribunal examined the contentions of both parties and found that the Bills of Entry described the goods as Gum Arabic Waste/Rejects under Chapter Heading 1301 2000. No samples were taken during assessment, and the basis for imposing CVD was not communicated to the appellant. The Tribunal agreed with the appellant's argument that Gum Arabic waste is obtained naturally by making holes in trees, and the waste/rejects are part of the natural extraction process. Without any test reports, the Tribunal concluded that Gum Arabic Waste/Rejects are essentially Gum Arabic obtained by a natural process. Referring to the CBEC clarification, the Tribunal ruled that CVD is not applicable to the imported goods. The Tribunal also noted that the case law relied upon by the Commissioner (Appeals) had been overruled by the Calcutta High Court, emphasizing that the previous decision could not be relied upon.

In light of these findings, the Tribunal set aside the impugned orders and allowed the appeals filed by the appellant, granting consequential relief as necessary.