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2014 (1) TMI 382 - AT - CustomsDemand of duty - Import/re-import of HSD - the ship which sailed had to be called back on report of independent agency, that the ship tank No. 1C, 3C and 7C was having diesel which was contaminated and not acceptable to the purchaser; the goods were unloaded from these 3 tanks and taken to the refinery for purification - whether the appellant is liable to pay additional customs duty of ₹ 2 per ltr which is levied on imported HSD by the Finance Act 1996. Held that - marketing of goods which do not conform to standards; are to be considered as not goods; marketing of the same is in violation of laws - if the chemical analysis does not establish that the impugned products were as is sought to be; the adjudicating authority/first appellate authority can not introduce his own theory to categorize it as the same, is being done - The products which were re-imported have the specifications of flash point of 34.5 C as against the minimum requirement of 35 C, such a difference can not be considered as minor variation and the demand for additional customs duty of ₹ 2 per ltr is not sustainable - Decided in favour of assessee.
Issues Involved:
Demand of duty on re-imported goods, classification of imported goods as HSD, applicability of Notification No. 94/96-Cus, imposition of additional customs duty, conformity to Indian Standards for Diesel Fuel specifications. Analysis: Issue 1: Demand of duty on re-imported goods The appellant re-imported High Speed Diesel (HSD) which did not meet quality specifications, leading to rejection by the buyer. The Revenue demanded additional customs duty of Rs 2 per liter on the re-imported HSD. The appellate authority rejected the appeal, stating that the appellant cannot claim the re-imported goods as other than HSD when they were initially declared as HSD. The flash point difference of 34.5^0C versus the required 35^0C was considered marginal. However, the Tribunal disagreed, emphasizing the need to establish whether the imported goods meet the Indian Standards Specifications of Bureau of Indian Standards IS: 1460:2000 for HSD. Issue 2: Classification of imported goods as HSD The laboratory report on the re-imported goods indicated that the flash point was 34.5^0C, below the required 35^0C. The Tribunal highlighted that the imported goods must conform to IS: 1460:2000 specifications for diesel fuel to be classified as HSD. As the sample did not meet the flash point and density parameters, the Tribunal concluded that the goods could not be considered as HSD, hence rejecting the imposition of additional customs duty. Issue 3: Applicability of Notification No. 94/96-Cus The appellant claimed the benefit of Notification No. 94/96-Cus to avoid paying customs duty on the re-imported goods. However, the Revenue argued that the appellant cannot simultaneously claim the goods were not HSD while seeking exemption under the notification. The Tribunal emphasized the need for the imported goods to meet the specifications for HSD to qualify for the exemption under the notification. Issue 4: Imposition of additional customs duty The Finance Act 1999 levied additional customs duty on imported HSD. The Tribunal stressed the importance of the goods meeting the standards specified in IS: 1460:2000 to be classified as HSD. As the re-imported goods did not conform to these specifications, the Tribunal ruled that the imposition of additional customs duty was not justified. In conclusion, the Tribunal set aside the impugned order, allowing the appeal based on the non-conformity of the re-imported goods to the required standards for HSD, thereby rejecting the imposition of additional customs duty.
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