2009 (1) TMI 285 - HC - Customs

Testing of samples - petitioner sought for re-testing of the goods - Held that - The most appropriate order would be to direct the respondents to draw the fresh samples and forward them to a third Institution, for testing. Learned counsel agree that the third Institution can be Northern India Textiles Research Association (N.I.T.R.A.), another Centrally sponsored body. The respondents shall forward five (5) samples of the goods imported by the petitioner and seek opinion from the N.I.T.R.A. as to the characteristics of the same to assist in their proper classification for the adjudication proceedings. In view of the divergent opinion expressed by the expert bodies and the fact that even according to the Sriram Institute for Industrial Research, the duty would be ₹ 56,76,841/-, the Court is of opinion that if the petitioner desires to have the goods released on provisional basis, the said entire amount should be deposited. Additionally to cover the differential, if any, which may be the result of an adjudication order after considering all relevant materials, ends of justice would be served if the bank guarantee furnished for ₹ 11,73,710/- is retained till the issuance of the final adjudicating order.

Issues:
1. Request for re-testing of imported goods and release on provisional basis.
2. Disagreement between expert bodies on classification of goods.
3. Validity of conditions imposed for release of goods on provisional basis.

Analysis:

Issue 1: Request for re-testing of imported goods and release on provisional basis
The petitioner, engaged in the trade of textile fabric, imported polyester fabric from China and sought directions for re-testing of the goods and release on provisional basis. The goods were stopped by the Customs for examination, leading to a demand for a substantial amount based on provisional assessment due to mis-description and wrong classification concerns. The petitioner contended that the conditions for release were onerous and harsh, emphasizing the seasonal nature of the goods. Two expert bodies, Sriram Institute for Industrial Research and Textile Committee, provided conflicting opinions on the classification of the goods, leading to a significant disparity in the duty payable.

Issue 2: Disagreement between expert bodies on classification of goods
The petitioner highlighted the conflicting opinions of the Sriram Institute for Industrial Research and the Textile Committee regarding the classification of the goods. While the former suggested a lower duty amount, the latter's assessment resulted in a higher liability. The respondent justified the higher demand based on the Textile Committee's report being derived from a larger sample size, which they argued made it more representative and reliable. The Court acknowledged the divergent opinions and emphasized the need for an impartial assessment to determine the correct classification.

Issue 3: Validity of conditions imposed for release of goods on provisional basis
The respondent defended the conditions imposed for the release of goods on a provisional basis, asserting that they were not arbitrary or mala fide. The Court, after considering the contentions of both parties, directed the respondents to draw fresh samples of the goods for testing by a third institution, the Northern India Textiles Research Association (N.I.T.R.A.), to assist in the proper classification. The Court also ordered the petitioner to deposit the entire amount demanded for provisional release and retain a bank guarantee to cover any differential amount resulting from the final adjudication order.

In conclusion, the Court disposed of the Writ Petition by providing detailed directions to address the issues raised, emphasizing the need for a fair and thorough assessment of the goods' classification before reaching a final decision on the duty payable.

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