2008 (5) TMI 223 - AT - Customs

Refined vegetable oil import - whether classifiable under heading 15.16 or heading 15.11 - revenue is unable to show that no hydrogenation was undertaken at foreign supplier s end revenue s submission that goods imported contains noleic acid , hence goods are not partially hydrogenated, is rejected presence of nickel, sesame oil & Vitamin A , prove that goods is Hydrogenated Vegetable Oil (HVO), not Refined palm oil (RPO) - classification under heading 15.16 is justified

Summary

Issues Involved:
1. Correct classification of the imported goods: Hydrogenated Vegetable Oil (HVO) vs. Refined Palm Oil (RPO).
2. Reliability and interpretation of various test reports.
3. Burden of proof regarding the classification of the goods.
4. Admissibility and relevance of emails and other documentary evidence.

Detailed Analysis:

1. Correct Classification of the Imported Goods:
The primary dispute revolves around whether the imported goods should be classified as Hydrogenated Vegetable Oil (HVO) under heading 15.16 or Refined Palm Oil (RPO) under heading 15.11 of the Customs Tariff Act. The appellants claimed the goods as HVO, while the Commissioner classified them as RPO based on test reports and other evidence.

2. Reliability and Interpretation of Various Test Reports:
Appellants' Arguments:
- The goods were certified by multiple laboratories, including the Chief Medical Officer and Public Food & Test Laboratory, as HVO.
- The presence of nickel, sesame oil, and Vitamin A in the samples supports the classification as HVO.
- The appellants presented reports from Geochem Laboratories and other government-recognized labs, which confirmed the goods as HVO.
- The test reports by Dr. Rao and CSIR were challenged for being inconsistent and not supported by technical literature.

Revenue's Arguments:
- Test reports from the Chemical Examiner, Visakhapatnam, and CSIR indicated the goods were RPO due to the presence of linoleic acid and the absence of measurable trans-fatty acids (TFA).
- The consistency of the test results from these laboratories was emphasized.

Tribunal's Findings:
- The test reports from Dr. Rao and CSIR were found unreliable due to inconsistencies and lack of support from technical literature.
- The presence of nickel, sesame oil, and Vitamin A, along with conformity to PFA standards, indicated the goods were HVO.
- The affidavit from the manufacturer stating the goods were hydrogenated was not contested by the Revenue.

3. Burden of Proof Regarding the Classification of the Goods:
Appellants' Position:
- The burden of proof lies with the Revenue to conclusively establish that the goods are RPO.
- The appellants argued that the evidence provided by the Revenue, including test reports and emails, was insufficient to prove the goods were RPO.

Revenue's Position:
- The Revenue relied on the test reports and emails to argue that the goods were RPO.
- They contended that the presence of linoleic acid and the absence of TFA indicated the goods were not hydrogenated.

Tribunal's Findings:
- The Tribunal concluded that the Revenue failed to discharge the burden of proof to show the goods were RPO.
- The evidence provided by the appellants, including test reports and the manufacturer's affidavit, was sufficient to establish the goods as HVO.

4. Admissibility and Relevance of Emails and Other Documentary Evidence:
Appellants' Arguments:
- Emails exchanged between the appellants and the suppliers did not conclusively prove the goods were RPO.
- The emails discussed the composition and blending of the goods but did not negate the process of hydrogenation.

Revenue's Arguments:
- The emails suggested that the goods contained 85% RPO and 11% HVO, indicating they were not fully hydrogenated.
- The emails were used to support the classification of the goods as RPO.

Tribunal's Findings:
- The Tribunal found the emails did not conclusively prove the goods were RPO.
- The emails were considered in the context of other evidence, which supported the classification of the goods as HVO.

Conclusion:
The Tribunal, by majority decision, concluded that the imported goods were correctly classifiable as Hydrogenated Vegetable Oil (HVO) under heading 15.16 of the Customs Tariff Act. The impugned order classifying the goods as Refined Palm Oil (RPO) was set aside, and the appeals were allowed with consequential relief to the appellants.