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2022 (5) TMI 588 - AT - CustomsRe-classification of imported goods - Mineral Hydrocarbon Oil - Mixed Mineral Hydrocarbon Oil - freely importable goods or not - whether the Revenue was correct in re- classifying the imported goods declared as Mineral Hydrocarbon Oil-CTH 27101988 and Mixed Mineral Hydrocarbon Oil-CTH 27101990 as diesel under CTH 27101944 and as Superior Kerosene Oil under CTH 27101932? - confiscation - redemption fine - penalty. HELD THAT - It is admitted position of law that for a product to be classified under CTH 27101944/27101932 as SKO, it has to meet with the specifications in Supplementary Note (C) under Chapter 27 - Thus, the product or material shall consist of refined petroleum distillates. It shall be free from visible water sediments and suspended material. The material shall also comply with the requirements given in Table-I, when tested according to the appropriate method prescribed under P Series of IS 1448, reference to which is given in Col.4 of the Table-I. Reliance placed in the Apex Court in HINDUSTAN FERODO LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY 1996 (12) TMI 49 - SUPREME COURT , wherein it was observed that, it is not in dispute before us as it cannot be, that onus of establishing that the said rings fell within Item No.22 lay on the Revenue. Revenue has led no evidence. The onus was not discharged, therefore, the Tribunal was right in rejecting the evidence that was produced on behalf of the appellant, the appeal should nevertheless have been allowed. It is further noticed that the appellant had sought cross examination of the persons, whose statements were relied upon by the Revenue in support of its allegations. But the cross examinations have been denied arbitrarily. Thus the impugned order is bad for violation of principles of Natural justice as well as the mandate of section 138B of the Act. The goods under import are to be classified as per CTH heading claimed/declared by the appellant in the bills of entry. Accordingly, we hold that rejection of transaction value is also bad and thus, declared value has to be accepted. Redemption fine and penalties on the appellants are also set aside - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Mis-declaration of imported goods. 2. Classification of goods under the Customs Tariff. 3. Reliability of test reports. 4. Denial of re-testing and principles of natural justice. 5. Imposition of penalties and redemption fine. Detailed Analysis: 1. Mis-declaration of Imported Goods: The appellant, M/s. Jaymco Polymers Pvt. Ltd., imported goods declared as "Mineral Hydrocarbon Oil" under CTH 27101988 and 27101990. However, the Customs Authorities suspected mis-declaration and conducted tests. Initial tests confirmed the goods as declared, but subsequent tests suggested the goods were Superior Kerosene Oil (SKO) and High-Speed Diesel (HSD), which are restricted imports. The Revenue alleged that the appellants, in connivance with the supplier and Customs Broker, mis-declared the goods to import prohibited items. 2. Classification of Goods under the Customs Tariff: The Revenue re-classified the imported goods as SKO under CTH 27101910 and HSD under CTH 27101930, which are restricted imports. The appellant argued that the goods should be classified as declared. The Tribunal noted that for a product to be classified as SKO or HSD, it must meet specific parameters under IS 1459:1974 and IS 1460:2005, respectively. The test reports did not conclusively establish that the goods met these parameters. 3. Reliability of Test Reports: The appellant challenged the reliability of the test reports, arguing that the samples were not drawn properly as per IS 1447-1, and the test reports did not cover all mandatory parameters. The Tribunal found that the test reports were inconclusive and unreliable as they did not test all required parameters and were based on improperly drawn samples. 4. Denial of Re-testing and Principles of Natural Justice: The appellant's request for re-testing was denied by the Adjudicating Authority. The Tribunal held that denying re-testing violated the principles of natural justice and the mandate of Section 138B of the Customs Act. The Tribunal emphasized that proper sampling and comprehensive testing are crucial for reliable test reports. 5. Imposition of Penalties and Redemption Fine: The Adjudicating Authority imposed penalties and a redemption fine on the appellants. The Tribunal set aside these penalties and fines, holding that the Revenue failed to conclusively prove mis-declaration or mis-classification. The Tribunal also directed the release of the seized goods and waiver of detention and demurrage charges. Conclusion: The Tribunal allowed the appeals, set aside the impugned order, and directed that the goods be classified as declared by the appellant. The Tribunal emphasized the importance of proper sampling and comprehensive testing to establish the true nature of imported goods. The penalties and redemption fines were also set aside, and the Tribunal ordered the release of the seized goods with consequential relief.
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