2017 (4) TMI 196 - AT - Customs

Classification of imported oil - whether importation is furnace oil or waste oil? - Held that - The test report which is annexed to the submission made today was analysed by Dy. Chief Chemist (Jt. Director). Dy. Chief Chemist has clearly recorded that the sample which was drawn does not conform to the requirement of fuel oil (furnace oil) as given in the literature available with them, and hence it cannot be termed as furnace oil. In the absence of any categorical finding of the Dy. Chief Chemist that the product is furnace oil, the non-confirming oil has to be treated as a waste oil - the goods imported are waste oil and needs to be absolutely confiscated - the penalty of Rs. 10 lakhs seems to be excessive considering the fact that the entire issue is misunderstanding on merits as well as on procedures. In view of the same, interest of justice will be met if the penalty is reduced from ₹ 10,00,000/- to ₹ 3,00,000/- - appeal dismissed - decided partly in favor of appellant as regards reduction of penalty.

Summary

Issues involved: Classification of goods as furnace oil or waste oil, Penalty imposition

Classification of goods as furnace oil or waste oil:
The appeal revolved around the classification of imported oil as either furnace oil or waste oil. The appellant imported oil claiming it to be freely importable furnace oil, but the Dy. Chief Chemist's analysis revealed it to be waste oil, a restricted item. The adjudicating authority confiscated the goods and imposed a penalty of Rs. 10 lakhs. The appellant argued that the sample should have been tested by the Indian Institute of Petroleum, Dehradun, but they refused to bear the testing cost. The Tribunal noted that the Dy. Chief Chemist's report did not confirm the oil as furnace oil, leading to the conclusion that it was waste oil. The Tribunal upheld the confiscation of the goods as waste oil due to the lack of a definitive finding that it was furnace oil.

Penalty imposition:
The Tribunal addressed the penalty imposed on the appellant, deeming Rs. 10 lakhs excessive given the misunderstanding on both merits and procedures. In the interest of justice, the penalty was reduced to Rs. 3 lakhs. The Tribunal rejected the appeal but modified the penalty amount accordingly.