2004 (9) TMI 233 - AT - Customs

Summary

Issues Involved:
1. Eligibility of Refined Coconut Oil for clearance under DFRC Licences.
2. Validity and consideration of evidence submitted by the appellants.
3. Interpretation and reliance on the Deputy Chief Chemist's (Dy. CC) report.
4. Classification of Coconut Oil as a chemical.
5. Compliance with Exim Policy and ITC (HS) Policy.

Detailed Analysis:

1. Eligibility of Refined Coconut Oil for clearance under DFRC Licences:
The Appellants imported two consignments of "Refined Coconut Oil" and sought clearance under DFRC Licences, which cover "Antifoaming Agents" and "Viscosity Reducing Agents" used in the manufacture of White Sugar. The Assistant Commissioner of Customs refused clearance, stating that the goods did not possess the properties required under the DFRC Licences. The Appellate Tribunal found that this decision was made without proper consideration of the substantial evidence provided by the appellants, which conclusively established that Refined Coconut Oil is used as an Antifoaming and Viscosity Reducing Agent in the sugar industry.

2. Validity and consideration of evidence submitted by the appellants:
The appellants submitted multiple pieces of evidence, including certificates and letters from reputable institutions like the University Department of Chemical Technology, Mumbai, National Sugar Institute, Government of India, IIT Bombay, and others. The Commissioner (Appeals) erred by ignoring this evidence, labeling it as fresh material, despite it being previously submitted to the Assistant Commissioner. The Tribunal emphasized that this evidence was not new and should have been considered, as it clearly established the properties of Refined Coconut Oil relevant to the DFRC Licences.

3. Interpretation and reliance on the Deputy Chief Chemist's (Dy. CC) report:
The Dy. CC's report was found to be inconclusive, merely stating the absence of literature in their possession to confirm the use of Coconut Oil as an Antifoaming or Viscosity Reducing Agent. The Tribunal criticized the lower authorities for relying on this insufficient report and failing to recognize the comprehensive evidence provided by the appellants. The Tribunal highlighted that the Dy. CC's role is to provide test results, not to offer binding opinions on classification, as established in previous rulings (e.g., CC v. East West Exporters).

4. Classification of Coconut Oil as a chemical:
The Tribunal found that the Commissioner (Appeals) made an error in concluding that Coconut Oil is not a chemical because it is classified under Chapter 15 of the Customs Tariff rather than Chapter 29. The Tribunal clarified that the DFRC Licence does not require the goods to be separate chemically defined compounds but only to be antifoaming or viscosity reducing chemicals. The evidence, including listings in standard chemical dictionaries and expert reports, sufficiently established that Coconut Oil is a chemical.

5. Compliance with Exim Policy and ITC (HS) Policy:
The Tribunal referred to Paragraphs 2.11 & 4.31, 4.31A of the Exim Policy Hand Book and ITC (HS) Policy Heading 15.13, concluding that the import of Coconut Oil under the DFRC Licence is valid. The Tribunal noted that while Coconut Oil is typically canalized through the State Trading Enterprise, it can also be imported under a licence granted by the DGFT, which the appellants possessed.

Conclusion:
The Tribunal set aside the orders of the Commissioner (Appeals) and directed the Dy. Commissioner to assess the Bills of Entry as per the DFRC Licence produced by the appellants. The appeal was disposed of accordingly, with instructions to grant clearance to the imported goods under the DFRC Licences.