2018 (2) TMI 1573 - AT - Customs

Classification of imported goods - Natural Calcite Powder - appellant classified it under CTH-25309030 - It appeared to Revenue that the goods imported were not Natural Calcite Powder but they were Processed Calcium Carbonate Powder and therefore, the goods were detained and samples were drawn and sent to Central Revenue Control Library, New Delhi (CRCL) - Case of appellant is that that CRCL did not have equipment to test the said samples and therefore, the test report given by CRCL was in doubt and that the appellant had right to ask retest of the samples from any other laboratory other than CRCL. Held that - in the case of M/s Rathi Enterprises, 2015 (2) TMI 81 - CESTAT NEW DELHI this Tribunal had held that CRCL did not have facility to test the samples and therefore, the test report given by CRCL is in doubt and that the appellant had right to ask retest of the samples from any other laboratory other than CRCL. The related confiscation and imposition of penalty and re-determination of value of consignments related to Bills of Entry filed on 25/09/2014 & 30/09/2014 is not sustainable - appeal allowed - decided in favor of appellant.

Issues:
1. Violation of principles of natural justice in the proceedings.
2. Classification and valuation of imported goods.
3. Confiscation, penalty, and retesting of samples.
4. Adjudication of past consignments based on test reports.
5. Sustainability of the Order-in-Original.

1. Violation of principles of natural justice:
The appellant argued that the proceedings violated principles of natural justice as they were denied the right to request retesting of samples from a laboratory other than CRCL. Referring to a previous case, the appellant contended that CRCL lacked the necessary equipment to test Natural Calcite Powder accurately. The Circular dated 16/11/2017 supported this claim by identifying National Metallurgical Laboratory (NML) as the designated laboratory for such testing. The Tribunal found merit in this argument, setting aside the confirmation of demand and related penalties amounting to &8377;6,80,859 due to the denial of retesting from a different laboratory.

2. Classification and valuation of imported goods:
The appellant challenged the classification of the imported goods as Processed Calcium Carbonate Powder instead of Natural Calcite Powder. The test report from CRCL supported this classification, leading to a proposed change in classification and valuation, along with a demand for differential customs duty. However, the Tribunal found that CRCL's test report was unreliable due to the lack of proper testing equipment, as established in a previous case. Consequently, the Tribunal deemed the classification and valuation based on the CRCL report unsustainable, leading to the rejection of the proposed penalties and re-determination of the value of the consignments.

3. Confiscation, penalty, and retesting of samples:
The Order-in-Original proposed confiscation of the imported goods, along with penalties on the importer and the company director, totaling &8377;70,00,000 each. The appellant argued that the penalties were unjustified due to the flawed test report from CRCL and the denial of retesting from a reliable laboratory. The Tribunal agreed with the appellant, setting aside the confiscation, penalties, and retesting based on the unreliable CRCL report.

4. Adjudication of past consignments based on test reports:
The Order-in-Original also addressed past consignments, proposing enhancements in value, differential duty demands, and penalties based on the same unreliable test report from CRCL. The appellant contended that applying the test report from the current consignments to past ones was improper. Citing a precedent case, the Tribunal ruled that reclassification of past consignments based on current test reports was not sustainable, leading to the dismissal of the proposed penalties and re-determination of past consignment values.

5. Sustainability of the Order-in-Original:
After considering the arguments and reviewing the facts, the Tribunal found that the Order-in-Original was unsustainable in confirming demands, reclassifications, enhancements of value, confiscations, penalties, and redemption fines on past clearances. Relying on previous decisions and the flawed CRCL test report, the Tribunal set aside the Order-in-Original in its entirety, allowing the appeals and granting the appellants consequential relief as per the law.

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