2023 (6) TMI 1014 - AT - Customs

Classification of imported goods - Low Aromatic White Spirit - to be classified under the CTH 2710 1990 or under the CTH 27101239 as Solvent 145/205 as per IS 1745 2018. HELD THAT - As per the Test Report details furnished, the IBP of the impugned goods is 162 degree Celsius and FBP is 194 degree Celsius, whereas as per the IS standard 1745 the minimum IFB should be 145 degree Celsius (IBP) and maximum FBP should be 205 degree Celsius respectively. The Appellant stated that the IFB 162 of the impugned goods is much higher than the minimum IFB requirement of 145 as per the IS 1745 standard. The Appellant 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 Appellant. 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 CTH 27101239 as per the comparison between the Test reports received from CRCL and its comparison with the IS Standard 1745 parameters required. The condition as prescribed in the 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 2712. From the said Note, it is evident that for purpose of sub heading 2710.12, 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 194, which means 100% of the goods evaporate at 194 degree Celsius itself whereas for classification of the goods as solvent 145/205 under CTH 27101239, the requirement as per Note 4 is that only a maximum of 90% should evaporate at 205 degree celsius. Since the entire 100% of the goods evaporate at 194 degree celsius itself, the goods are not meeting the requirements as specified under Chapter Note 4 of Chapter 27, accordingly we hold that the impugned goods cannot be classified under CTH 27101239 as claimed by the Revenue. When the goods do not satisfy the criteria fixed under Note 4 of Chapter 27, the goods cannot be classified under CTH 27101239. The remaining option available in the Tariff is to classify the same under CTH 27101990 which is the only residuary entry available for classification - the Test Reports of CRCL Kolkata does not provide any material evidence for classification of the said goods under CTH 27101239. Since the said goods are rightly classifiable under the CTH 27101990, the classification adopted by the Appellant is in order and hence the goods are not liable for confiscation. Appeal allowed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Validity of the reclassification by the Department.
3. Compliance with the Petroleum Act, 1934.
4. Appropriateness of the remand by the Commissioner (Appeals).
5. Legality of the seizure and confiscation of goods.

Summary:

1. Classification of Imported Goods:
The Appellant imported "Low Aromatic White Spirit" and classified it under CTH 2710 1990. The Department, based on an Alert Circular and CRCL Test Reports, proposed reclassification under CTH 27101239 as 'Solvent 145/205 as per IS 1745:2018'.

2. Validity of the Reclassification by the Department:
The Joint Commissioner issued a Show Cause Notice proposing reclassification, which was upheld by the adjudicating authority. However, the Commissioner (Appeals) found the classification under CTH 27101239 erroneous and remitted the matter for proper assessment. The Appellate Tribunal examined the Test Reports and found that the impugned goods did not meet the criteria for 'Solvent 145/205' under IS 1745:2018, thus rejecting the Department's reclassification.

3. Compliance with the Petroleum Act, 1934:
The CRCL Test Report confirmed the goods were of Petroleum Class B. The Tribunal noted that the Test Report did not verify the primary condition required for classification under sub-heading 2710.12, specifically that 90% or more by volume should distil at 210°C. Since the entire 100% evaporated at 194°C, the goods did not meet the requirements of Chapter Note 4 of Chapter 27.

4. Appropriateness of the Remand by the Commissioner (Appeals):
The Tribunal found merit in the Appellant's argument that the Commissioner (Appeals) should have classified the goods under CTH 27101990 after rejecting classification under CTH 27101239. The remand for assessment was deemed unnecessary and bad in law.

5. Legality of the Seizure and Confiscation of Goods:
The Tribunal held that since the goods were correctly classifiable under CTH 27101990, they were not liable for confiscation. The Appellant's past consignments were also classified under CTH 27101990 without dispute, supporting their argument.

Conclusion:
The Tribunal allowed the appeal, holding that the impugned goods should be classified under CTH 27101990 and were not liable for confiscation. The reclassification by the Department under CTH 27101239 was found to be improper.