2023 (8) TMI 750 - AT - Customs

Classification of imported goods - Industrial Composite Mixture - classifiable under tariff heading 27101290 or under CTH 27101990 - department failed to appreciate that on examination it was found that the goods were declared as Industrial Composite Mixture , however, on the basis of test report, the goods was found to be light oil - HELD THAT - It is a clear finding that the product was light oil has been arrived at, by the department. The learned Commissioner (Appeals), after detailed discussion upheld the classification proposed by the Department. As can be seen the report sought to be relied upon by the appellant was drawn behind the back of the department and in another country and therefore cannot be given precedence over the report relied upon by the Department, which has much higher credence, in the factual matrix of the matter, as the party s report does not even match on the parameters tested by the department. Further even by relying upon this report, the appellants despite advice of suppliers for second opinion and the sample re-test did not opt for same foregoing their right of SCN or personal hearing or even re-test in the matter and just pleading for minimum fine and penalty. After having got the goods cleared by waiving Show Cause Notice or personal hearing and requesting for imposition of minimum fine, which were clearly brought in violation of EXIM policy relating to light oil at the relevant time as the same was a canalised item and was allowed to be imported only through State Trading Enterprises, as per the policy condition 5 of chapter 27. An after thought of the appellants cannot be allowed to help their cause. Reliance in this regard is placed on PINE CHEMICAL SUPPLIERS VERSUS COLLECTOR OF CUSTOMS 1992 (9) TMI 111 - SUPREME COURT to emphasize that when violation in relation to goods are accepted, penalties get attracted. Party had all the opportunity to seek re-test or even cross examination of Chemical analyst, if it found it to be erroneous, but it chose not to do the same. Having acquiesced with so termed erroneous report, it cannot now be allowed to resist it. Error, qui non resistitur. (An error not resisted is approved) will therefore, in any case apply in the facts and circumstances of the matter. Having accepted the classification and the nature of goods without seeking any re-test of the sample, it is found that the present appeal is devoid of merits both on classification issue as well as violation of ITC policy and penalties imposed - there are no merits in the present appeal - appeal dismissed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Confiscation and penalties under the Customs Act, 1962.
3. Compliance with Foreign Trade Policy.

Summary:

1. Classification of Imported Goods:
The appellant filed a Bill of Entry for clearance of "Industrial Composite Mixture" under CTH 27101990. The Customs Laboratory, Kandla, tested the goods and found them to be "Light Oil," classifiable under tariff heading 27101290. The appellant contended that the classification under CTH 27101290 was without basis as the goods did not conform to the parameters of light oil. They argued that only four out of nine necessary tests were conducted, and the goods should be classified as "Industrial Composite Mixture."

2. Confiscation and Penalties under the Customs Act, 1962:
The adjudicating authority rejected the appellant's classification and ordered the goods to be classified under CTH 27101290, resulting in the confiscation of the goods under Section 111(d) and 111(m) of the Customs Act, 1962. A redemption fine of Rs. 13,00,000/- and a penalty of Rs. 2,00,000/- were imposed. The appellant argued that the goods were freely importable under CTH 27101290 and that there was no case for confiscation or penalties as there was no duty difference. The appellant relied on previous judgments to support their claim.

3. Compliance with Foreign Trade Policy:
The adjudicating authority found that goods falling under tariff heading 27101290 are allowed to be imported only through State Trading Enterprises (STE) as per Policy condition-5 of Chapter-27 of ITC (HS), Schedule-1. The appellant, not being an STE nor having submitted any documents showing grant of such rights, violated the policy conditions of the Foreign Trade Policy. The appellant contended that the policy condition-5 did not apply as the goods were used in the paint and varnish industry and not as transportation fuel.

Tribunal's Findings:
The Tribunal upheld the classification of the goods under CTH 27101290 based on the test report from CRCL, Kandla. It noted that the appellant had waived the right to a show cause notice and personal hearing and did not seek a re-test of the sample. The Tribunal found that the goods were imported in violation of the Foreign Trade Policy as they were not imported through an STE. The Tribunal dismissed the appeal, affirming the confiscation, redemption fine, and penalties imposed by the adjudicating authority.

Conclusion:
The appeal was dismissed, and the order of the Commissioner (Appeals) was upheld, confirming the classification under CTH 27101290, confiscation of goods, and imposition of redemption fine and penalties for violation of the Foreign Trade Policy.