2013 (10) TMI 507 - AT - Customs

Classification of Imported Goods Import of Cotton seed oil - Exemption under Notification No.21/2002 - Revenue was of the view that the classification of the imported goods as claimed by the appellant is not eligible for exemption under Sr. No. 33 A of notification No. 21/2002 Held that - The issue of proper classification of the product and all the penalties imposed which are placed on record need deeper consideration - As to the what classification prima facie we find that test report of CFL Mysore has tested the samples after refining and has opined that the said goods/product is fit for human consumption. The test report also confirms that the goods which were imported in the form they would not have been fit for human consumption unless refining takes place would also mean that the serial No. 33 A of notification No. 2212002 would apply as notification does not specify last four digit - Even Central Board of Excise and Customs has held that once goods which were imported are edible after the refining they have to be held as edible grade when imported - Relying upon Cargill India Pvt. Ltd Vs. Union of India 2013 (6) TMI 40 - GUJARAT HIGH COURT - the appellants have made out a prima facie case for the waiver of pre-deposit of the amounts involved - the appellant was directed not to apply for refund deposited by them during the investigation during the pendency of appeal - Applications for waiver of pre-deposit of the amounts involved are allowed and recovery stayed till the disposal of appeals Stay granted.

Summary

Issues: Classification of imported goods under notification No. 21/2002-Cus for exemption eligibility.

Analysis:
The appellant imported cotton seed oil classified under Chapter 1512 21 00, claiming exemption under notification No. 21/2002-Cus. The adjudicating authority held the imported product as refined non-edible grade, not eligible for exemption. The appellant argued that the goods were refined for human consumption at their premises, supported by a Central Food Laboratory test report confirming fitness for human consumption. The departmental representative contended that the goods required refining, indicating non-edible grade. Various analysis reports, including one from CFL Pune, were presented. The core issue was the proper classification of the product, whether under Chapter 1512 or another heading as claimed by the Revenue.

The Tribunal found that the test report from CFL Mysore confirmed the refined product's suitability for human consumption, implying eligibility for exemption under notification No. 21/2002-Cus. It was noted that goods, when imported in their original form, were not fit for human consumption until refined. The Central Board of Excise and Customs held that once goods are edible after refining, they must be considered edible grade upon importation. Referring to the judgment in Cargill India Pvt. Ltd Vs. Union of India, which supported the appellant's view, the Tribunal concluded that the appellant made a prima facie case for waiving the pre-deposit amounts.

Consequently, the Tribunal allowed the applications for waiver of pre-deposit amounts and stayed the recovery until the appeals' disposal, directing the appellant not to seek a refund of approximately Rs. 1.62 crores deposited during the investigation.