2016 (11) TMI 848 - AT - Customs

Benefit of exemption notification no. 26/03-Cus dated 1st March 2003 - caroteniod content in the imported crude palm oil - benefit of concessional rate of duty in terms of sl. no. 34. of customs notification no. 26/03-Cus dated 1st March 2003 - Held that - Crude palm oil does not find ready use and must be subject to an eponymous process of refining, bleaching and deodorizing as a pre-requirement. This process also eliminates the carotenoid presence in the crude oil. It would appear that the concessional rate is intended to be accorded to the crude form to incentivise value addition in the domestic territory. The caroteniod content is, therefore, a reasonable test for ascertaining the form in which palm oil is imported. No evidence has been brought on record to show that it was, indeed, refined bleached deodorized palm oil that was imported. The reduction of carotenoid content, such as it is, owing to efflux of time has not altered the form of imported palm oil to refined and the process of refining, bleaching and deoderizing after import is unavoidable. To the extent that there is no evidence that appellant did not have to carry out the refining process before using it in the manufacture of their baked products, we see no reason for denial of the concessional rate of duty - Benefit of doubt is accorded to the test results at load port owing to lack of credibility attributable to the report of the Customs laboratory and, accepting that the imports were of crude palm oil , we allow the benefit of exemption notification no. 26/03-Cus dated 1st March 2003 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of imported goods under customs tariff
2. Benefit of concessional rate of duty claimed
3. Dispute regarding carotenoid content in imported crude palm oil
4. Compliance with testing protocols and procedures
5. Retroactive application of amendments to notification
6. Credibility of test reports from different laboratories
7. Eligibility for concessional rate of duty based on carotenoid content
8. Proper application of exemption notification

Issue 1: Classification of imported goods under customs tariff
The appellant imported crude palm oil and classified it under heading 15111000 of the Customs Tariff Act, 1975, claiming a concessional rate of duty as per customs notification no. 26/03-Cus dated 1st March 2003.

Issue 2: Benefit of concessional rate of duty claimed
The appellant claimed the benefit of a concessional rate of duty for imported crude palm oil with specific characteristics, as per the provisions of the customs notification.

Issue 3: Dispute regarding carotenoid content in imported crude palm oil
A dispute arose regarding the carotenoid content in the imported crude palm oil, with the appellant contesting the test results provided by the Customs laboratory and presenting an alternative test report from another laboratory.

Issue 4: Compliance with testing protocols and procedures
The appellant raised concerns about the testing procedures followed by customs authorities, including the manner in which samples were drawn, stored, and tested. They questioned the validity of the test report due to alleged procedural lapses.

Issue 5: Retroactive application of amendments to notification
The appellant argued for the retroactive application of an amending notification reducing the carotenoid threshold, citing a Supreme Court decision. However, the Tribunal held that the amendment had prospective applicability only.

Issue 6: Credibility of test reports from different laboratories
The credibility of test reports from different laboratories, specifically those from the Customs laboratory and M/s Saybolt, was questioned by the appellant. The Tribunal considered the reliability of these reports in determining the carotenoid content.

Issue 7: Eligibility for concessional rate of duty based on carotenoid content
The Tribunal analyzed the carotenoid content in the imported crude palm oil and its compliance with the prescribed threshold for eligibility for the concessional rate of duty.

Issue 8: Proper application of exemption notification
The Tribunal examined the proper application of the exemption notification in light of the carotenoid content issue and the appellant's compliance with the prescribed conditions for concessional duty.

In conclusion, the Tribunal found in favor of the appellant, granting the benefit of the exemption notification and setting aside the impugned order, emphasizing the importance of credible testing procedures and evidence in such customs disputes.