2015 (9) TMI 817 - AT - Customs

Import of crude palm oil of edible grade - Classification of goods - Classification under Chapter 15119090 or under Chapter Heading 15111000 - Benefit of exemption notification at Sl.No.29 of Notification No.21/2002-Cus. dt.1.3.2002 - Held that - Classification of imported goods should strictly be made as per the chapter note, section note and the description of specific sub headings read with HSN Explanatory Notes. Main Chapter heading 1511 covers palm oil and fractions whether or not refined but not chemically modified. Chapter 15111000 covers crude oil and chapter 151190 covers Others. On perusal of records, and test reports, we find there is no dispute on the fact that the goods imported are Crude Palmolein (Edible Grade). It is also not disputed in the impugned order that the appellant is a manufacturer of refined oil and the imported crude palmolein is further refined after clearance and sold for human consumption. When the imported goods conform to the specific description under Ch 15111000 as crude Oil and there is no specific chapter note or HSN Explanation specifying criteria of acid value or carotenoid content for classifying the crude oil, therefore the goods imported are appropriately classifiable under Chapter 15111000 of CTH and any specific description given under Sl.No.34 of notification 21/2002 for the purpose of exemption cannot be taken as criteria for classification of the product under Chapter Heading 15119090 as Others. Following the Tribunal s decision 2009 (6) TMI 662 - CESTAT, AHMEDABAD , we hold that imported crude palm oil is rightly classifiable under chapter heading 15111000 of CTH and rightly eligible for exemption under Sl.No.29 of Notfn 21/.2002 and not under Sl.No.434 of the notification. The impugned order to the extent of classification of goods under chapter 15119090 is liable to be set aside. Vessel has not discharged imported crude oil to shore tank directly but which are transferred to the barges and loaded into the tankers. The actual weighment of the tankers is done at the port and it is the quantity which should be taken for assessment - The Hon ble Supreme Court in the case of Garden Silk Mills Ltd. (1999 (9) TMI 88 - SUPREME COURT OF INDIA) held that import is complete only when the goods are delivered. This plea is reiterated by the Tribunal in the case of Nilkhil Refineries Ltd. (2011 (7) TMI 843 - CESTAT, BANGALORE) where if there is a case of shortage and the goods not discharged, only the master of vessel is liable for action for short-landing of the goods. Therefore, we find that there is no infirmity in the impugned order in so far as the quantity taken for assessment as per the actual quantity loaded on the tankers in the port. The impugned order in so far as the quantity issue as discussed above is liable to be upheld. - Decided in favour of assessee.

Summary

Issues Involved:
1. Classification of imported crude palm oil.
2. Determination of the quantity of crude palm oil for duty assessment.

Detailed Analysis:

Issue 1: Classification of Imported Crude Palm Oil

The central issue was whether the imported crude palm oil should be classified under Chapter Heading 15111000 as claimed by the assessee or under Chapter Heading 15119090 as per the Revenue's contention. The assessee argued that the goods should fall under entry No. 29 classifiable under 15111000, relying on the test report of the Chemical Examiner and the Certificate of Analysis issued by the Port Health Officer, both confirming that the imported goods were crude palm oil of edible grade. The assessee also referred to the HSN Explanatory Notes, which support the classification under 15111000, and argued that the department wrongly classified the goods based on the description given in entry 34 of the exemption notification 21/02, which specifies various acid values and carotenoid content for exemption purposes.

The Revenue, on the other hand, argued that the classification should be as per the CODEX Standard for vegetable oil and the Prevention of Food Adulteration Rules, which specify standards for edible palm oil. They contended that the description in the notification read with the Board's circular should be applicable for classification.

The Tribunal held that for classification of imported goods, the General Interpretative Rules for classification should be followed, and the description in the chapter subheading, chapter notes, and section notes should be the criteria. The Tribunal referred to its earlier decision in Gujarat Ambuja Exports Vs CC Kandla, which dealt with a similar issue and held that the imported goods should be classified under CTH 15111000 and not under CTH 15119090. The Tribunal concluded that the imported crude palm oil should be classified under Chapter Heading 15111000 and eligible for exemption under Sl.No.29 of Notification No.21/2002-Cus.

Issue 2: Determination of Quantity for Duty Assessment

The second issue was whether the quantity of crude palm oil should be determined based on the ship's ullage report or the physical weighment done at the time of discharge at the port. The assessee argued that the actual quantity loaded in the tankers, which was weighed at the port in the presence of customs officers, should be considered. They contended that the Board's circular No.96/2002-Cus., which specifies that the ullage report should be taken for quantity determination, is not applicable in their case as the goods were not discharged directly to shore tanks.

The Revenue argued that the quantity declared in the Bill of Lading or the ullage quantity as per the master of the vessel should be considered. They relied on the Board's circular and the Tribunal's decisions in Mangalore Refinery & Petrochem Ltd. Vs CC Mangalore and CCE Vs Nikhil Refineries Ltd., which supported their contention.

The Tribunal found that the Board's circular pertains to cases where the liquid cargo is discharged directly to shore tanks, which was not the case here. The imported crude palm oil was transferred to barges and then loaded into tankers, which were weighed at the port. The Tribunal concluded that the actual quantity loaded on the tankers at the port should be taken for assessment for payment of customs duty.

Conclusion:

1. The imported crude palm oil is rightly classifiable under Chapter Heading 15111000 and is eligible for exemption under Sl.No.29 of Notification No.21/2002-Cus.
2. The actual quantity loaded on the tankers at the port should be taken for assessment for payment of customs duty.

The Tribunal allowed the assessee's appeal and rejected the Revenue's appeal. The cross-objections filed by the Revenue were disposed of accordingly.