2023 (6) TMI 325 - AT - Customs

Classification of imported goods - Low Aromatic While Spirit/Hydro Carbon Solvent and other Petroleum Class A,B and C grades - classifiable under sub-heading 27101920 or under the sub heading 27101990? - violation of provisions of Import Policy - Revenue has reclassified the goods mainly on the basis of the Test Report received from CRCL, Kolkata - whether the Test report findings indicate that the impugned goods meets the specifications required for categorizing it as solvent 125/240, as per IS 1745 2018? HELD THAT - The Respondent stated that when the Test Reports differs from the standards prescribed, the goods cannot be held to satisfy the requirements under IS 1745 standards meant for CTH 2710. Hence the impugned goods cannot be categorized as Light Oils and Preparations as per the CRCL Test report - there are merit in the argument of the Respondent. None of the above said parameters are matching with the minimum or maximum standards fixed as per IS 1745 standards. There is a vast difference between the minimum IFB and maximum FBP fixed as per IS standard 1745 and the result received for the impugned goods. Hence, the impugned goods cannot be classified under chapter sub heading 27101920, on the basis of the parameters available in the CRCL, Test Report dated 26.11.2020. Revenue has relied upon the Note 4 to Chapter 27 for classifying the impugned goods under the CTH 27101920 - the condition as prescribed in Note 4 has not been verified in the CRCL report. It is the primary condition required to be tested for classifying any goods under CTH 27101920. From the said Note, it is evident that for the purpose of sub heading 27101920, the light oils and preparations are those of which 90% or more by volume (including losses) distil at 210 degree Celsius, but the test report is silent about it. As per the Test Report, the FBP is 218, which means 100% of the goods will evaporate at 218 degree Celsius itself whereas for classification of the goods as solvent 125/240 under CTH 27101920, the requirement as per Note 4 is that only a maximum of 90% should evaporate at 240 degree celsius. Since the entire 100% of the goods evaporate at 218 degree celsius itself, the goods are not meeting the requirements as specified under Chapter Note 4 of Chapter 27, accordingly the impugned goods cannot be classified under CTH 27101920as claimed by the Revenue. Violation against PESO Licence - HELD THAT - It is observed that the PESO License No.P/HQ/WB/15/2530(p-206171) dated 22.11.2019 available with the Respondent valid up to 31.12.2024, allows them to import 84,000 litres of Class B of the Petroleum Product. The impugned import constitutes of 97,280 Kgs (1,19,611 Litres , when worked out based on the density of 0.8133) . However, the Respondents submitted that they have applied for enhancement of the quantity which has since been approved. Therefore, section 111(d) of the Customs Act, 1962 is not applicable as far as the impugned goods are concerned and confiscation is not warranted on this count. The impugned order upheld - appeal filed by the Department (Appellant) rejected.

Summary

Issues Involved:
1. Classification of imported goods.
2. Confiscation and penalties imposed.
3. Violation against PESO Licence.

Summary:

1. Classification of Imported Goods:
The primary issue to be decided is the classification of the goods 'Low Aromatic White Spirit' imported by the Respondent. The Respondent classified the goods under CTH 27101990, while the Revenue reclassified them under CTH 27101920 based on the CRCL, Kolkata Test Report. The Tribunal observed that the Test Report did not meet the specifications required for categorizing the goods as 'Solvent 125/240' as per IS 1745:2018. The IBP and FBP of the goods were 148°C and 218°C respectively, which did not align with the IS standard of 125°C (IBP) and 240°C (FBP). Therefore, the Tribunal held that the goods could not be classified under CTH 27101920.

2. Confiscation and Penalties Imposed:
The adjudicating authority initially confiscated the goods imported under Bill of Entry No. 9391372 dated 31.10.2020, allowing re-export on payment of a redemption fine of Rs 2,00,000 and imposed a penalty of Rs 3,00,000. For past imports, a redemption fine of Rs 2,00,000 and a penalty of Rs 5,00,000 were imposed. The Commissioner (Appeals) modified this order, setting aside the confiscation and penalties for past imports and allowing the goods imported under Bill of Entry No. 9391372 to be redeemed for home consumption on payment of a redemption fine of Rs 2,00,000. The penalty of Rs 3,00,000 was upheld. The Tribunal found merit in the Respondent's argument that the goods were Mineral Turpentine Oil and not 'Solvent 125/240', thus supporting the classification under CTH 27101990.

3. Violation Against PESO Licence:
The Respondent's PESO Licence allowed the import of 84,000 liters of Class B Petroleum Product, while the impugned import constituted 97,280 Kgs (1,19,611 Litres). The Respondent submitted that they had applied for and received approval for the enhanced quantity. Therefore, Section 111(d) of the Customs Act, 1962, was deemed not applicable, and confiscation was not warranted on this count.

Conclusion:
The Tribunal upheld the impugned order, rejecting the appeal filed by the Department and confirming that the goods imported by the Respondent were correctly classified under CTH 27101990. The stay application was also disposed of.