2013 (9) TMI 379 - AT - Customs

Import of Crude Palm Stearin - Concessional Rate of Duty - Notification No. 21/2002-Cus Rule 4 of Customs Rules 1996 - The appellant were registered for import of crude palm stearin oil at concessional rate of customs duty for its use in the manufacture of industrial fatty acids - Revenue cancelled the bond executed and directed the appellant not to import crude palm stearin under Rule 4 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 Held that - The appellant-assessee was prima facie entitled for the benefit of concessional rate of duty under serial No. 30(A) of Notification No. 21/2002 - the bond executed by the appellant before the Assistant Commissioner was valid and it cannot be cancelled without any rationale basis. Following Superintendent of Central Excise and Others v. VAC Met Corpn. Pvt. Ltd. 1985 (8) TMI 71 - SUPREME COURT OF INDIA - It was evident that crude palm stearin used in the manufacture of soaps/fatty acids and fatty alcohols was eligible for a concessional rate of duty at 10% ad valorem subject to the condition that the importer follows the procedure set out in Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - Stearic acid manufactured by the appellant was also a fatty acid even though it may be more appropriately classifiable as an industrial fatty acid - Entry 30(C) related to all goods except crude palm oil which was used in the manufacture of soaps, industrial fatty acids and fatty alcohol - The entry was more general and applied to all variety of goods including that of crude palm stearin. Waiver of Pre-deposit - Prima facie the appellant had made out a strong case in their favour - the stay application preferred by the appellant was allowed and direct the lower authorities to continue to allow the appellant to import crude palm stearin for manufacture of industrial fatty acids in terms of serial No. 30(A) of the table annexed to Notification No. 21/2002-Cus., under the bond dated Decided in favour of Assessee.

Summary

Issues:
Interpretation of Notification No. 21/2002-Cus regarding the classification of imported goods for concessional rate of duty under Customs rules.

Analysis:
The case involves a dispute over the classification of imported crude palm stearin oil under Notification No. 21/2002-Cus for concessional customs duty. The appellant, a registered entity, imported the oil under specific conditions but faced cancellation of the bond by authorities due to a discrepancy in the applicable duty rate. The Commissioner (Appeals) upheld the cancellation based on a different interpretation of the notification, leading to the appeal before the tribunal.

The key contention raised by the appellant was that their imported crude palm stearin falls under the category specified in serial No. 30(A) of the notification, allowing for a concessional rate of basic customs duty at 10% ad valorem. They argued that their manufacturing process aligns with the intended use of the goods, which should be considered for classification under the specific entry provided in the notification. The appellant relied on legal precedents emphasizing the importance of specific classification over general entries when determining the applicable duty rate.

In contrast, the Revenue authorities maintained their stance, supporting the decisions made at lower levels regarding the cancellation of the bond and the duty rate applicable to the imported goods. The tribunal carefully analyzed the competing entries under the notification, specifically focusing on the descriptions and conditions outlined for concessional duty rates. The tribunal recognized the distinction between the categories of goods specified in serial No. 30(A) and 30(C), emphasizing the relevance of the specific entry for crude palm stearin used in the manufacturing process.

After thorough consideration of the arguments presented by both parties and a detailed examination of the notification provisions, the tribunal concluded that the appellant had a strong case in their favor. The tribunal found that the appellant's interpretation aligns with the intended scope of the concessional duty provisions under serial No. 30(A) for the imported crude palm stearin. Consequently, the tribunal allowed the stay application filed by the appellant, directing the lower authorities to permit the continued import of crude palm stearin for the manufacturing process under the specific entry of the notification.

In the final disposition, the tribunal pronounced its decision in favor of the appellant, highlighting the importance of adhering to the specific classification criteria outlined in the notification for determining the applicable concessional rate of duty. The judgment serves as a significant clarification on the interpretation of customs duty provisions under specific entries, emphasizing the need for a precise classification approach in line with the intended use of imported goods.