2022 (11) TMI 1364 - HC - Customs

Classification of imported goods - base oil or machinery oil - non-grant of cross examination of Chemical Examiner when the Chemical Expert(s) whose reports were relied upon - principles of natural justice - HELD THAT - The Tribunal has not rendered a finding as to whether the test reports would support the case of the revenue nor there is a finding that the test reports support the classification adopted by the respondent/assessee. The experts of the laboratory are Government Officials, who discharge their statutory obligation, cast upon them and there was nothing personal in exercising their powers. That apart, the experts who had examined the sample of the products imported are not party to the proceedings. Therefore, the question of directing cross-examination of those officials/experts does not arise. Thus the Tribunal is left with only one task that is the examine the experts report and then come to a conclusion as to whether the case as projected by the respondent/importer was acceptable and justified. Since the learned Tribunal is last fact finding authority it is fully empowered to re-appreciate the evidence which is on record and this is required to be done by the learned Tribunal which was the issue before it with regard to classification of the products so imported. The question of examination of the experts does not arise and is impermissible and the learned Tribunal should decide the matter on merits with the available materials i.e test reports. The order passed by the learned Tribunal is set aside. The matter is remanded back to the learned Tribunal for fresh consideration to give a decision on merits and in accordance with law on the available materials - Appeal allowed by way of remand.

Summary

Issues:
1. Delay in filing the appeal.
2. Remand of the matter for cross-examination of Chemical Examiner.
3. Violation of natural justice.
4. Classification of imported products as base oil or machinery oil.
5. Examination of experts' reports and conclusion by the Tribunal.
6. Interference with the order passed by the Tribunal.

Delay in filing the appeal:
The High Court noted a delay of 47 days in filing the appeal but condoned it after being satisfied with the reasons provided in the affidavit supporting the application.

Remand of the matter for cross-examination of Chemical Examiner:
The appeal by the revenue under Section 130 of the Customs Act, 1962, challenged the Tribunal's order remanding the matter for cross-examination of the Chemical Examiner. The Tribunal directed cross-examination of all experts whose reports were relied upon, but the High Court opined that the classification issue required consideration based on the experts' reports without the need for cross-examination. The Court emphasized that the experts were government officials fulfilling statutory duties, and their personal testimony was unnecessary. The Tribunal was tasked with re-evaluating the evidence on record, specifically the test reports, to make a conclusive decision on the classification of the imported products.

Violation of natural justice:
The High Court addressed concerns regarding the violation of natural justice due to the non-consideration of the respondent's prayer for cross-examination of the Chemical Examiner. However, the Court determined that the Tribunal's focus should be on analyzing the experts' reports to ascertain the appropriate classification of the imported goods, rendering the need for cross-examination unnecessary.

Classification of imported products as base oil or machinery oil:
The central issue revolved around the classification of the imported products as either base oil or machinery oil. The test reports from different laboratories indicated nil ash content, suggesting the products were base oil. The Tribunal had not conclusively determined if the reports supported the revenue's case or the importer's classification. The High Court emphasized the importance of the Tribunal examining the experts' reports to make a well-founded decision based on the available evidence.

Examination of experts' reports and conclusion by the Tribunal:
The High Court clarified that the Tribunal, being the final fact-finding authority, had the responsibility to re-evaluate the evidence, particularly the experts' reports, to reach a definitive conclusion on the classification issue. The Court highlighted that the Tribunal should base its decision on the available materials, specifically the test reports, without the necessity of cross-examining the experts.

Interference with the order passed by the Tribunal:
The High Court allowed the appeal, setting aside the Tribunal's order and remanding the matter back to the Tribunal for fresh consideration. The Court emphasized that its decision did not reflect any opinion on the merits of the case, granting both parties the opportunity to present their arguments before the Tribunal without influence from the High Court's observations. The appeal was disposed of, and the stay application was also resolved.