2022 (1) TMI 172 - AT - Customs

Mis-declaration and mis-classification of goods - machinery oil - machinery lubricating oil - to be classified under CTH 27101950 and CTH 27101980 respectively or not - intelligence indicated that the average price of base oil is about US 900-1100 per MT whereas the importer in this case has declared a price of US 490-500 per MT - appellant sought cross-examination of the chemical examiners which was denied - violation of principles of natural justice - HELD THAT - It is found from the impugned order that there is no recording of any cross-examination of the chemical examiners for the test reports. The allegation in the show cause notice as confirmed in the impugned order is that the appellant has misdeclared the nature of goods. The appellant imported base oil and declared it as machinery oil and also claimed wrong classification in this bill of entry.Since the description of the goods was held to be not correct, the declared assessable value was rejected under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Goods, 2007 and redetermined under Rule 5. Accordingly, the assessment of the bills of entry which were provisionally assessed was ordered to be finalized and the differential duty was ordered to be recovered. It is unfair to allege that the appellants have mis-declared the goods without any categorical finding of an expert that the imported goods were NOT machinery oil and then allowing cross examination of such expert(s) by the appellant to prove its case and contest the expert opinion. In this case, while the test reports that have been relied upon as recorded in the impugned order only suggested that the goods may be base oil and NOT that they are base oil . Further, the reports also do not say that the goods are not machinery oil as described by the importer. Thus, there is an ambiguity in the test reports - there is a need to allow the appellant to cross-examine all the chemical examiners whose test reports were relied upon in the impugned order so that a categorical, authentic finding may be recorded as to whether the imported goods were base oil or machinery oil or whether they can be described as both. Matter remanded back to the Commissioner of Customs with a direction to allow cross-examination of all the experts whose reports were relied upon and after giving the reasonable opportunity of being heard, pass an order - appeal allowed by way of remand.

Summary

Issues:
1. Appeal against order-in-original passed by the Commissioner of Customs.
2. Mis-declaration of imported goods to evade duty.
3. Provisional assessment of imported goods.
4. Confiscation of goods and re-determination of value.
5. Imposition of penalties under the Customs Act.
6. Cross-examination of chemical examiners for test reports.
7. Ambiguity in expert reports regarding the nature of imported goods.

Analysis:

1. Appeal against order-in-original:
The appeal was filed by the importer and the proprietor of the importer firm against the order-in-original passed by the Commissioner of Customs, challenging the decision to reject the declared assessable value of the imported goods and order for confiscation, re-determination of value, change in classification, payment of differential duty, redemption fine, and imposition of penalties.

2. Mis-declaration of imported goods:
The Directorate of Revenue Intelligence received intelligence that the importer mis-declared base oil as machinery oil to evade duty. The investigation revealed discrepancies in the declared value of the imported goods compared to their actual value, leading to the issuance of a show cause notice and the subsequent impugned order by the Commissioner.

3. Provisional assessment of imported goods:
All bills of entry were provisionally assessed after drawing samples for testing, which ultimately led to the discovery of mis-declaration by the importer. The provisional assessment was finalized based on the investigation findings and expert reports.

4. Confiscation of goods and re-determination of value:
The impugned order included the rejection of the declared assessable value, confiscation of goods, re-determination of value, change in classification, payment of differential duty, and an option for redemption of goods for home consumption on payment of a redemption fine.

5. Imposition of penalties under the Customs Act:
Penalties were imposed on the importer firm and the proprietor under relevant sections of the Customs Act for acts of omission and commission that rendered the goods liable to confiscation, along with the imposition of penalties for non-compliance.

6. Cross-examination of chemical examiners for test reports:
The appellants sought cross-examination of the chemical examiners whose reports were relied upon by the Commissioner, but this request was denied. The absence of cross-examination raised concerns regarding the authenticity and conclusiveness of the expert reports.

7. Ambiguity in expert reports regarding the nature of imported goods:
The impugned order was challenged on the grounds of ambiguity in the expert reports, which suggested that the imported goods "may be base oil" but did not definitively confirm this categorization. The need for cross-examination to clarify the nature of the imported goods was emphasized to ensure a fair and accurate assessment.

In conclusion, the Tribunal remanded the matter back to the Commissioner with directions to allow cross-examination of the experts, providing the appellants with a reasonable opportunity to contest the expert opinions. The appeals were allowed by way of remand, leaving all issues open for further examination and clarification.