2018 (12) TMI 1541 - AT - Customs

Import of prohibited goods - squalene - eligibility to import against the advance authorization - Held that - Learned Counsel has not been able to sustain their contention that the goods are not of marine origin. The failure on the part of Revenue to conclusively establish coverage under the heading proposed by them would have sufficed to allow the claim of importer even if that not be on especially firm ground. The special circumstances are that the samples and/or the imported goods are available, that the goods are yet to be cleared for home consumption or that normal period of limitation has not elapsed since and that, most important of all, it behoves the administration of India, as a responsible constituent of the polity of nations comprising of responsible humanity, not to be a willing accessory in the reprehensible slaughter of endangered species. Hence, it is necessary to make good the inadequacy of analysis in the earlier test reports and thus eliminate the possibility of any taint in the imported goods. Matter remanded back to the assessing authority for having an appropriate test undertaken at such institution that has expertise in oceanography - appeal allowed by way of remand.

Summary

Issues: Classification of imported goods under Customs Tariff Act, 1975; eligibility to import under 'advance authorization'; confiscation under Customs Act, 1962.

In the judgment by the Appellate Tribunal CESTAT Bangalore, the primary issue revolved around the classification of imported goods under the Customs Tariff Act, 1975. The dispute stemmed from two separate orders of the Commissioner of Customs, Kochi, concerning the classification of 'squalane oil' imports. The appellants argued that the goods should be classified under the heading of 'acyclic hydrocarbon,' while the customs authorities contended they should be classified as 'fish body oil.' The appellants sought acceptance of their eligibility to import against the 'advance authorization' and discharge from the consequences of importing prohibited goods.

The appellants claimed that the imported goods were intended for the extraction of fatty acids before export for use in the cosmetic and pharmaceutical industry. They argued that the goods were chemically defined as 'squalane,' which should be classified under a specific heading precluding coverage in any other category. The appellants challenged the test results presented by customs authorities, alleging bias and misinterpretation, and emphasized the accuracy of describing the goods as 'acyclic hydrocarbons.'

The Special Counsel for Revenue highlighted the obligation of importers to declare goods accurately, emphasizing that the correct description determines duty liability and clearance eligibility. Revenue contended that the test reports supported the classification of the goods as potentially of marine origin, which is prohibited for import under the Customs Tariff Act, 1975.

The Tribunal analyzed the conflicting classifications proposed by the appellants and Revenue, considering the dominance principle in classification of mixtures. The judgment emphasized the need for accurate classification to avoid controversy, citing a Supreme Court case. The Tribunal scrutinized the test reports on the imported goods, acknowledging the dominance of 'squalane' but questioning its source. The judgment highlighted the importance of preventing the import of goods of marine origin to protect endangered species.

Ultimately, the Tribunal set aside the impugned order and remanded the matter for further testing by an institution with expertise in oceanography. The importer was directed to seek clarification on the eligibility to import 'squalane oil,' even of marine origin, within the 'advance authorization' issued to them. The appeals were disposed of accordingly, emphasizing the responsibility to prevent the importation of goods harmful to endangered species.