1994 (9) TMI 191 - AT - Customs

Summary

Issues Involved:
1. Classification of imported soybean oil.
2. Eligibility for duty-free clearance under DEEC scheme.
3. Alleged misdeclaration and penal consequences.
4. Application of ISI specifications and test reports.
5. Validity of past clearances and their relevance.

Detailed Analysis:

1. Classification of Imported Soybean Oil:
The primary issue was whether the imported soybean oil was of "industrial non-edible grade" or "other than industrial grade." The adjudicating authority concluded that "refined, bleached, and deodorized (RBD) soybean oil cannot be treated as industrial non-edible grade." This conclusion was based on ISI specification IS: 4276-1977, which classifies soybean oil into five grades, with refined grade suitable for direct edible consumption and raw grade 2 intended for industrial uses other than Vanaspati and refined oil manufacture.

2. Eligibility for Duty-Free Clearance Under DEEC Scheme:
The appellant claimed duty-free clearance under the DEEC scheme against two advance licenses. The adjudicating authority found that one of the licenses permitted the import of soybean oil industrial non-edible grade, which did not cover RBD soybean oil. Consequently, the goods valued at Rs. 17,13,563/- CIF were not entitled to duty-free clearance. However, goods valued at Rs. 4,43,841/- were allowed clearance against another license but were subject to appropriate customs duties as they were not eligible for duty exemption under Notification No. 159/90-Cus.

3. Alleged Misdeclaration and Penal Consequences:
The adjudicating authority held that the importers knowingly misdeclared the description of the goods to fit the advance license and DEEC book. This misdeclaration rendered the goods liable for confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962. The importers were also liable for a penalty under Section 112(a)(i) of the Customs Act, 1962. The authority imposed a penalty of Rs. 4,00,000/- on the importers.

4. Application of ISI Specifications and Test Reports:
Two test reports were considered. The first report dated 3rd December 1992 indicated that the sample had characteristics of refined soybean oil. The second report dated 30th March 1993 stated that the sample was neutralized, bleached, and conformed to soybean specifications, but it was other than Raw Grade 2 and intended for industrial use. The adjudicating authority found discrepancies between the two reports and emphasized the need for fresh samples to be drawn and tested to determine the exact nature of the oil.

5. Validity of Past Clearances and Their Relevance:
The appellant argued that past imports of similar grades of soybean oil had been cleared without objection, and therefore, the current consignment should also be cleared. However, the adjudicating authority did not find this argument sufficient to override the current findings and the need for accurate classification and compliance with import regulations.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for re-adjudication. Fresh samples of the imported goods were to be drawn and tested to determine their classification accurately. The adjudicating authority was directed to pass a fresh order in accordance with the law, considering the new evidence and test reports. The appeal was allowed by way of remand.