2024 (10) TMI 841 - AT - Customs

Classification of imported goods - Roasted Cashew Kernel - to be classified under Customs Tariff Item 20081910 or under Customs Tariff item 08013210? - entitlement for benefit of exemption under Customs Notification No. 96/2008-CUS dated 13.08.2008 - lack of cross-examination and provision of test reports - violation of principles of natural justice - HELD THAT - It is noted that there is no reference to the letter dated 24.07.2019 in the Order-in-Original of the Original Authority though there is a reference to letter dated 04.09.2019 whereby the appellant had asked for copies of the test report in respect of 11 consignments. No observations have been made by the Adjudicating Authority as to whether it was provided or not required to be provided. What is also observed that while the appellants have given various submissions for negating the parameters adopted by CEPCI, as also relevant documents like certification by M/s Intertek, a global and reputed quality assurance certification agency etc., the procedure for mild dry roasting adopted by appellant and certified by M/s Intertek has not been examined in detail. Adjudicating Authority has also not examined whether dry roasting method of roasting is same as moderate heat treatment or otherwise in view of appellant s submissions in this regard. Further, specifications given by their buyer, which clearly places order for Roasted Cashew , nuts with moisture content of Max 5% and of plain ivory white colors has not been duly examined and considered. Original Authority has dealt with these defence in para 5.1 to 5.3 of Order-in-Original but it has not been effectively dealt with in the absence of any opportunity to the appellant to cross examine the authorised representative of CEPCI as also the fact that appellant never got chance to ask for Re-Test or question the method or parameters adopted by CEPCI. It is also interesting to note that as per scope of accredition for CEPCI, different test methods and parameters and specifications are available for dried roasted cashew, deep roasted cashew etc. Also Purchase Order of Unilever provides for tolerance of moisture in respect of dark roast (5%), deep roast (2%) etc. Thus, it is obvious that they would have rejected if the roasted cashew did not confirm to such tolerance. Admittedly, no such rejection has been brought on record. It is also an admitted position that impugned nuts were not subjected to any further processes by the appellant before supplying to their buyer. Thus, what was desirable for the sake of natural justice was that request for copies of all test reports should have been provided and cross examination of CEPCI should have been allowed, more so, when that is the main basis for denying the classification clause by the appellant. Similarly, in view of some of the documents like certificate of origin, Test Report of reputed testing organisation for impugned goods, purchaser s specifications, etc., the onus is on Revenue to establish claimed classification if there is any grey area open to divergent interpretation. The matter is remanded back to Original Adjudicating Authority with the direction to give them opportunity for cross examination of CEPCI representatives as also provide copies of documents not already provided - Appeal allowed by way of remand.

Summary

Issues Involved:

1. Classification of imported goods under the appropriate Customs Tariff Heading.
2. Validity and reliability of the CEPCI Laboratory test reports used for classification.
3. Alleged violation of principles of natural justice due to lack of cross-examination and provision of test reports.
4. Interpretation of the term "roasted" in the context of customs classification.
5. Determination of whether the impugned goods are "raw" or "roasted" cashew kernels.

Detailed Analysis:

1. Classification of Imported Goods:

The core issue was whether the imported "Roasted Cashew Kernel (Pieces)" should be classified under Customs Tariff Item 20081910, which would allow for a Basic Customs Duty exemption, or under Item 08013210, which would impose a higher duty rate. The Adjudicating Authority and Commissioner (Appeals) concluded that the goods were "raw cashew kernel pieces" and classified them under Heading 08013210, leading to a demand for differential duty of Rs. 8,80,16,885/-.

2. Validity and Reliability of CEPCI Laboratory Test Reports:

The appellants challenged the reliability of the CEPCI Laboratory test reports, which were pivotal in determining the classification of the goods. They argued that the reports were not shared with them before the issuance of the show cause notice, depriving them of the opportunity to cross-verify the findings. Additionally, they pointed out inconsistencies in the CEPCI reports regarding moisture content and other parameters, which differed from international standards and other authoritative sources.

3. Alleged Violation of Principles of Natural Justice:

The appellants contended that they were denied the opportunity to cross-examine the CEPCI representatives and were not provided with duplicate copies of several test reports, which they had requested. The Tribunal noted that these procedural lapses indicated a violation of the principles of natural justice, as the appellants were not given a fair chance to contest the findings that formed the basis for the classification decision.

4. Interpretation of the Term "Roasted":

The Commissioner (Appeals) attempted to interpret the term "roasted" using common parlance, suggesting that roasted cashews are typically ready for direct human consumption. The appellants argued that the goods were mildly roasted and used as ingredients in products by companies like Hindustan Unilever and Cadbury, indicating a different level of roasting than what was considered by the authorities. The Tribunal highlighted the lack of a statutory definition for "roasted" and the necessity to consider technical parameters and international benchmarks in this context.

5. Determination of Whether Goods are "Raw" or "Roasted":

The Tribunal acknowledged the absence of standard parameters for distinguishing between raw and roasted cashews in the statute. The CEPCI report, which classified the goods as raw based on moisture content and other characteristics, was questioned by the appellants. They provided evidence, including purchase orders and certificates of origin, to support their claim that the goods were roasted. The Tribunal found that the reliance on the CEPCI report without considering these additional factors and without allowing cross-examination was insufficient to conclusively determine the classification.

Conclusion:

The Tribunal set aside the impugned order and remanded the matter back to the Original Adjudicating Authority. It directed that the appellants be given the opportunity to cross-examine the CEPCI representatives and be provided with all relevant documents. The Tribunal emphasized the need for a thorough re-examination of the classification issue, considering all evidence and following the principles of natural justice. The appeal was allowed by way of remand, with no observations made on the merits of the case, leaving the Adjudicating Authority to pass a fresh order after due consideration.