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2024 (5) TMI 855 - AT - CustomsExemption from Customs Duty - Import of HDPE Granules - mixing of minor quantity of Hexane - Notification 21/2002 and subsequently Notifications denied by the revenue, only on the ground that the HDPE imported by the appellant is chemically modified and the exemption is available only for the compounded HDPE - HELD THAT - Following the order of Tribunal in Vikram Plasticizers 2023 (7) TMI 1068 - CESTAT AHMEDABAD , it can be seen that the very identical issue has been considered by this Tribunal and came to conclusion that by mere addition of small quantity of other chemical in the HDPE, the characteristic of HDPE does not get altered and the same remained as HDPE only. Once the product is HDPE even though the modified with miniscule quantity of other chemical it clearly falls under the exemption entry provided under Notification No. 12/2012-Cus dated 17.03.2012, therefore, in our considered view, the appellants import of HDPE even though modified clearly covered under the exemption notification No. 12/2012-Cus dated 17.03.2012 and other analogous notifications. Therefore, the impugned orders are set aside and appeals are allowed.
Issues:
1. Classification of HDPE granules for customs duty rate 2. Consideration of HDPE granules as chemically modified/compounded 3. Sustainability of extended period of limitation and penal provisions Analysis: Issue 1: Classification of HDPE granules for customs duty rate The primary issue in the present appeals was whether the HDPE Granules imported by the Appellants should be charged at a concessional rate of basic customs duty at 5% or a higher rate of 7.5%. The Appellants claimed the concessional rate under specific notifications, while the Principal Commissioner held that a higher rate was applicable. The Appellants argued that even with minor modifications like the addition of Hexane, the product remained predominantly HDPE, making it eligible for the exemption. This argument was supported by various judgments, including Ratnamani Metal and PSL Ltd. The Tribunal, after considering the submissions and test reports, concluded that the characteristics of HDPE were not altered significantly by the modifications, and hence, the Appellants were entitled to the concessional rate under the relevant notifications. Issue 2: Consideration of HDPE granules as chemically modified/compounded The question of whether the HDPE granules imported could be considered chemically modified or compounded was crucial in determining their eligibility for the concessional rate of duty. The Customs department contended that the goods were chemically modified and, therefore, did not qualify as HDPE for the exemption. However, test reports indicated that while the goods were chemically modified, they predominantly remained HDPE. The Tribunal, relying on previous decisions and test reports, held that even with minor chemical additives, the essential character of HDPE was maintained, making the goods eligible for the exemption under the relevant notification. Issue 3: Sustainability of extended period of limitation and penal provisions Another aspect of the case was the sustainability of the extended period of limitation and penal provisions in the absence of suppression or mis-declaration. The Tribunal did not find evidence of suppression or mis-declaration, and given the settled nature of the issue regarding the classification of the imported goods, it set aside the impugned orders and allowed the appeals in favor of the Appellants. In conclusion, the Tribunal's decision in this case clarified the classification of HDPE granules for customs duty rates, emphasizing that even with minor modifications, the essential character of HDPE remained unchanged. This judgment provides a significant precedent for similar cases involving the classification of chemically modified goods for customs duty exemptions.
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