2020 (1) TMI 948 - AT - Customs

Classification of imported goods - whether the Palm Kernel Acid Oil or Palm Kernel Fatty Acid - challenge to valuation adopted by the adjudicating authority for the imported consignment - re-test of sample denied - HELD THAT - There is considerable force in the submission made by the learned Advocate regarding denial of the re-test of the product imported - also, the test report has not indicated the various chemical parameters prescribed for the test of the imported goods in terms of fatty acid contents moisture and impurities and iodine and saponification value. The appellant has produced the test report from the supplier of the goods which clearly indicated that the imported consignment is having the characteristics of Palm Kernel Acid Oil and not Palm Kernel Fatty Acid, as held by the Revenue based on the CRCL report - Further, the value obtained from the Mumbai port regarding import price, which has been applied for the imported consignment is for Palm Kernel Fatty Acid distillate and cannot be applied in the present case. The impugned order is not sustainable on account of findings in the case of PUNJAB STAINLESS STEEL INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS, KANDLA 2000 (8) TMI 141 - CEGAT, NEW DELHI and M/S OC CROCHETS PVT. LTD. VERSUS CCE-DELHI-III 2019 (5) TMI 809 - CESTAT CHANDIGARH as the re-test of the sample has been denied to the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of imported goods, valuation of imported goods, confiscation and penalty under Customs Act, 1962, denial of re-test of imported goods, principles of natural justice violation.

Classification of Imported Goods:
The appeal was filed against the Order-in-Original classifying the goods as 'Palm Kernal Fatty Acid' instead of 'Palm Kernal Acid Oil' declared by the appellant. The goods were imported and valued differently by the adjudicating authority, leading to confiscation under Section 111(m) of the Customs Act, 1962. The appellant contested the classification based on a chemical test report, claiming the goods were mis-declared to evade customs duty. The Tribunal considered the nature of the imported goods and the test report, finding that the description as Palm Kernel Fatty Acid was incorrect. The value determination based on Mumbai port prices for a different product was also deemed inapplicable.

Valuation of Imported Goods:
The valuation of the imported goods was reassessed by the adjudicating authority, leading to a significant difference from the declared value by the appellant. The differential duty recoverable was calculated based on the re-determined value, which the appellant contested. The Tribunal noted discrepancies in the valuation process, especially regarding the test parameters and the supplier's test report indicating the goods as Palm Kernel Acid Oil. The valuation based on Mumbai port prices was found to be improper for the case at hand.

Confiscation and Penalty under Customs Act, 1962:
The imported goods were provisionally released to the appellant, and confiscation was ordered but allowed to be released on payment of a redemption fine. Additionally, a penalty was imposed for mis-declaration of value and description of the goods. The Tribunal reviewed the confiscation and penalty aspects in light of the classification and valuation issues, ultimately setting aside the impugned order and allowing the appeal with consequential benefits.

Denial of Re-test of Imported Goods:
The appellant raised concerns regarding the denial of a re-test of the imported goods by the adjudicating authority, citing a violation of natural justice principles. The Tribunal considered the denial of re-testing as a crucial issue, highlighting the appellant's right to challenge the initial test report and request a re-test. The denial of re-testing was viewed as a violation of natural justice, as per relevant case laws and CBEC guidelines, leading to the impugned order being deemed unsustainable.

Principles of Natural Justice Violation:
The denial of the re-test of the imported goods was a focal point in the appeal, with the appellant arguing a complete denial of natural justice. The Tribunal referenced previous judgments emphasizing the importance of allowing re-testing when requested by the concerned party. The violation of natural justice principles due to the denial of re-testing was a key factor in setting aside the impugned order and granting relief to the appellant based on the established legal precedents and procedural fairness considerations.