2015 (2) TMI 297 - AT - Customs

Demand of differential duty - Re classification of goods - import of base oil - Rejection of declared value - Held that - This means that to be classified under lubricating oil , flash point has to be below 93.3 C. The CTH of lubricating oil under 2710 19 80 simply mentions the heading as lubricating oil . Similar is the position with regard to description under tariff heading 2710 19 60 base oil which is the heading claimed by the appellant. However, there is no definition of base oil in the chapter notes. The sum and substance of the above discussion is that the only criterion considered for classification of lubricating oil is flash point. In this case, according to the report of Customs House Laboratory, the flash point of the imported product is above 94 C. Once the flash point is above 94 C, the product cannot be classified under heading lubricating oil at all, since the flash point has to be below 93.3 C. This vital aspect has not been considered by both the lower authorities. When the tariff heading and the description is based only on the flash point, the reliance on other aspects to reclassify the item, in our opinion, may not be proper at all. On this ground alone, it is seen that the reclassification cannot be justified. Once reclassification cannot be justified unless it is shown that the product is not base oil, the Revenue cannot make out a case against the appellant. In view of the above, we do not find any justification to uphold the impugned order - Decided in favour of assessee.

Summary

Issues:
Classification of imported goods as lubricating oil or base oil based on flash point.

Analysis:
The case involves the classification of imported goods as lubricating oil or base oil based on the flash point. The appellant imported base oil for clearance, and the Custom House Laboratory suggested referring the matter to the Central Revenue Control Laboratory (CRCL) in New Delhi for analysis. The CRCL report indicated that the imported item was blended with additives and should be classified as lubricating oils other than base oil. The adjudicating authority reclassified the goods as lubricating oil, rejected the declared values, and demanded differential duty with interest. The appeal against this decision was rejected by the Commissioner (A).

The Commissioner (A) upheld the reclassification and redetermination of value based on the CRCL report and the Order-in-Original. However, the Tribunal found that the original adjudicating authority misinterpreted Note (h) to Chapter 27, which defines lubricating oil as having a flash point below 93.3^0C. The flash point of the imported product was above 94^0C, indicating it cannot be classified as lubricating oil. The Tribunal emphasized that the flash point is the only criterion considered for the classification of lubricating oil. The reliance on other aspects to reclassify the item was deemed improper. As the reclassification could not be justified, the Tribunal allowed the appeal, stating that there was no justification to uphold the impugned order.

In conclusion, the Tribunal found that the reclassification of the imported goods as lubricating oil was not justified due to the flash point being above the specified threshold for lubricating oil classification. The decision was based on the interpretation of Note (h) to Chapter 27 and the reliance on the flash point as the sole criterion for classification. Therefore, the appeal was allowed, and the impugned order was not sustained.