2013 (8) TMI 688 - AT - Customs

Correct Classification of Imported Goods - What should be the correct classification of the imported goods declared as Condensate or Crude Petroleum Oil or CPO imported by the assesses - Department was of the view that the import of refined petroleum products by declaring them as Crude Petroleum Product or Crude Petroleum Oil - Revenue declared the consignment as Condensate/Crude Petroleum Oil that was imported by the assesses - Held that - In the absence of establishing the source of origin of gas condensate the classification of the goods imported by the assesses had to be under CTH 2710 and duties were required to be discharged accordingly Relying upon M/s. Pushpal Exports Pvt. Ltd. v. CC, Kandla 2011 (1) TMI 877 - CESTAT, AHEMDABAD . Condensate hydrocarbon (C4 to C20 approx.) should be obtained from wet natural gas - No documentary evidence had been produced by the assesses that the goods imported were obtained during the stabilization of wet natural gas, immediately upon its extraction Decided against assesse. Mis-declaration of goods Confiscation Of Goods Redemption Fine Penalties u/s 111(a) - Whether there was a mis-declaration on the part of the appellants inviting confiscation, redemption and imposition of penalties upon the assesses under Customs Act, 1962 Held that - The penalties imposed upon the appellants under Section 111(a) of Customs Act, 1962 shall be restricted to the differential duty sought to be evaded after re-calculating the differential duty liability - The assesses had the knowledge of imported goods being good quality petroleum oil but the same was blindly accepted to be a crude oil condensate on the basis of statements given - all the assesses had knowledge of good quality petroleum oil which they agreed to be classifiable under CTH 2710 19 90 and accordingly confiscation of imported goods and imposition of penalties had been correctly made by the adjudicating authorities When samples of imported goods were shown the same to be good quality petroleum oil and that they agree to pay differential duty - All other assesses who purchased the imported goods on high sea sale basis also admitted the wrong classification done and agreed to pay differential duty Decided against assesses. Assessable value of Goods - Whether the assessable value of the imported goods was required to be enhanced from USD 240 PMT declared to USA 327.25 PMT - There was no evidence that assesses had repatriated more value in addition to the transaction value paid to the supplier of the goods - The chemical test reports of the relied upon consignments were not made available to the assesses - In the absence of these factors, it cannot be appreciated that the relied upon imports were contemporary imports and will be sufficient to reject the transaction value Decided in favor of assesses.

Summary

Issues Involved:

1. Correct classification of the imported goods.
2. Alleged misdeclaration inviting confiscation, redemption, and imposition of penalties.
3. Enhancement of the assessable value of the imported goods.

Detailed Analysis:

Issue 1: Correct Classification of Imported Goods

The primary issue was whether the imported goods declared as 'Condensate or Crude Petroleum Oil' should be classified under CTH 2709 or CTH 2710 19 90. The appellants argued that the goods should be classified under CTH 2709 as Crude Petroleum Oil, relying on the explanatory notes to HSN and the Harmonized System Committee of the World Customs Organisation, which classify gas condensates under CTH 2709. However, the Revenue based its classification on chemical tests from various laboratories, which indicated that the goods did not qualify as crude petroleum oil. The Tribunal concluded that the imported goods could not be classified under CTH 2709 due to the lack of evidence proving that the goods were obtained during the stabilization of wet natural gas. Consequently, the classification under CTH 2710 was upheld.

Issue 2: Alleged Misdeclaration and Penalties

The Tribunal examined whether there was a misdeclaration by the appellants that warranted confiscation and penalties under the Customs Act, 1962. Statements from various individuals involved, including directors and partners of the importing companies, indicated that they were aware that the imported goods were not crude petroleum oil but high-quality petroleum oil. The Tribunal found that the appellants had knowledge of the true nature of the goods, thus justifying the confiscation and imposition of penalties. However, the penalties under Section 111(a) of the Customs Act, 1962, were to be limited to the differential duty sought to be evaded.

Issue 3: Enhancement of Assessable Value

The third issue was whether the assessable value of the imported goods should be enhanced from USD 240 PMT to USD 327.25 PMT. The appellants argued that no evidence was provided to justify the enhancement based on comparable imports. The Tribunal found that the adjudicating authority failed to provide sufficient evidence or contemporary import documents to support the enhanced value. Consequently, the Tribunal ruled in favor of the appellants on this issue, allowing the declared transaction value to stand.

Conclusion:

The appeals were largely dismissed, with the Tribunal upholding the Orders-in-Original regarding the classification of the goods under CTH 2710 and the imposition of penalties. However, the Tribunal allowed the appeals concerning the enhancement of the assessable value, ruling that the declared transaction value should be accepted. The penalties were to be recalculated based on the correct differential duty.