1981 (5) TMI 25 - CGOVT - Customs

Issues Involved:
1. Validity of Import Licences for 'Brandy Concentrate'
2. Misclassification of Imported Goods
3. Applicability of ISI Specifications
4. Economic Viability and Nature of Imported Goods
5. Technical and Chemical Composition of Imported Goods
6. Classification under Customs Co-operation Council Nomenclature

Detailed Analysis:

1. Validity of Import Licences for 'Brandy Concentrate':
The primary issue was whether the import licences produced by the importers, M/s. Tata Exports Ltd. and M/s. Polychem Ltd., which permitted the importation of 'Brandy Concentrate', could be accepted for the clearance of the goods or if the importation should be deemed unauthorized, thereby attracting penal provisions under the Customs Act, 1962. The Government of India noted that the importers had bona fide considered their licences valid for the importation of the goods. Given the lack of conclusive evidence against them, the Government extended the benefit of doubt to the applicants, setting aside the impugned order and allowing the Revision Application with consequential relief to the petitioners.

2. Misclassification of Imported Goods:
The goods were initially declared as 'Brandy Concentrate' and assessed to duty accordingly. However, subsequent information suggested that the goods were 'Brandy' and not 'Brandy Concentrate'. The Collector of Customs seized the goods and issued Show Cause Notices, arguing that the goods should be confiscated and penalties imposed under Section 112 of the Customs Act, 1962. The Government found that the high percentage of solid content in the goods indicated they were more in the nature of 'Brandy Concentrate', thus entitling the importers to the benefit of doubt.

3. Applicability of ISI Specifications:
The petitioners argued that the imported brandy was not potable as its strength was 50 over proof, whereas the maximum strength for potable brandy as per ISI specifications was 250 under proof. The Collector of Customs observed that ISI specifications would not apply to imported brandy. However, the Government noted that the high percentage of solid content in the imported goods (more than 5%) compared to the ISI specification for potable brandy (within 1%) supported the petitioners' contention that the goods were not potable brandy.

4. Economic Viability and Nature of Imported Goods:
The petitioners contended that if the goods were merely over-proof brandy, their importation would not be economically viable. They argued that the goods were capable of producing 16 times their volume when processed with water and alcohol, indicating a complex processing requirement. The Government found this argument plausible, noting that the high cost of producing potable brandy from the imported goods supported the claim that they were 'Brandy Concentrate'.

5. Technical and Chemical Composition of Imported Goods:
The petitioners provided a certificate from the suppliers stating that the goods were a mixture of distillates, alcoholates, and natural essences, prepared for the local manufacture of compounded brandy. The Government observed that the goods contained caramel and a high percentage of solid content, which could not be reduced by maturation. This supported the petitioners' claim that the goods were 'Brandy Concentrate' rather than beverage brandy.

6. Classification under Customs Co-operation Council Nomenclature:
The petitioners referred to the Customs Co-operation Council Nomenclature, which describes 'Concentrate Brandy' as a strongly flavored brandy used in confectionery and classifiable under heading 22.09. The Government noted that the goods were tested and found to contain a high proof strength and solid content, aligning with the description of 'Concentrate Brandy' under the Customs Co-operation Council Nomenclature.

Conclusion:
The Government of India, after careful consideration of the facts and records, concluded that the goods imported were more in the nature of 'Brandy Concentrate'. The benefit of doubt was extended to the petitioners, and the impugned order was set aside, allowing the Revision Application with consequential relief to the petitioners.

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