2018 (9) TMI 325 - AT - Customs

Classification of Imported Bitumen - whether petroleum bitumen or natural bitumen ? - two test reports were in conflict with each other. Held that - The two test reports namely, that of the Deputy Chief Chemist and of the Central Revenue Control Laboratory being in conflict with each other, will not suffice for deciding upon the classification. However, the primacy accorded to certain reports of M/s Geochem Laboratories Pvt Ltd as well as that of the National Iranian Oil Refining Company which are neither authenticated nor certified for expertise is improper. It is clear that asphaltite (natural bitumen) is available in many countries and, that too, in conjunction with existence of other hydrocarbons. Undoubtedly Pitch Lake in the Republic of Trinidad and Tobago with contents of over 10 million tonnes is the largest single source. At the same time, bitumen occurs naturally in Canada, Venezuela, Russia, Indonesia and a number of other locations including the Kermanshah province of Iran - It is therefore, strange that a chemical laboratory arrogating to itself the expertise of denying Iran as a source of natural bitumen has been accorded such credence in the adjudication order and with no support to substantiate the contents thereof. The demand for differential duty and the penal provisions stand on foundations that are shaky, or do not exist - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported bitumen as natural or petroleum bitumen under the Customs Tariff Act, 1975.
Validity of differential duty demand, confiscation, and penalties imposed under the Customs Act, 1962.
Reliability of test reports from Deputy Chief Chemist and Central Revenue Control Laboratory.
Credibility of reports from Geochem Laboratories Pvt Ltd and National Iranian Oil Refining Company.
Authenticity of evidence regarding the source of imported bitumen.
Analysis:
The case involved the classification of imported bitumen by M/s Ashoka Buildcon Limited under the Customs Tariff Act, 1975. Initially declared as natural bitumen under 2714 90, a demand for duty of &8377; 39,35,661 was made based on the assertion that it was petroleum bitumen under 2713.20, attracting a higher duty of 30%. The subsequent investigation included test reports from the Deputy Chief Chemist and Central Revenue Control Laboratory, with conflicting conclusions. The appellant contested the differential duty demand, confiscation, and penalties imposed under the Customs Act, 1962, seeking redemption on payment of fines and challenging the credibility of the reports.

The appellant's counsel argued against the rejection of the Deputy Chief Chemist's report and the Central Revenue Control Laboratory's report, citing discrepancies and lack of credibility. They also questioned the reliance on correspondence from Geochem Laboratories Pvt Ltd and a certificate from the National Iranian Oil Refining Company, highlighting the absence of authentication and expertise certification. The import documents indicated the bitumen was sourced from Iran, and the appellant provided supplier names sourced from the internet, disputing the claim of non-production of natural bitumen in Iran.

The Authorized Representative contended that none of the documents submitted with the bill of entry supported the classification of the imported bitumen as natural. The Technical Officer of the appellant reportedly agreed with the investigation findings, further challenging the classification.

The Tribunal found flaws in the conflicting test reports and criticized the reliance on reports from Geochem Laboratories Pvt Ltd and the National Iranian Oil Refining Company, questioning their authenticity and expertise. The Tribunal noted the natural occurrence of bitumen in various countries, including Iran, and historical references to bitumen, undermining the credibility of the chemical laboratory's denial of Iran as a source of natural bitumen. Ultimately, the Tribunal concluded that the foundation for the demand of differential duty and penalties was weak or non-existent, leading to the setting aside of the impugned order and allowing the appeals.