2022 (2) TMI 309 - AT - Customs

Classification of imported goods - Low Aromatic White Spirit - to be classified under CTH 27101990 or under CTH 27101910? - restricted goods or not - burden to prove - Department holds that the goods are Kerosene and Super Kerosene oil classifiable CTH 27101910 which are restricted for import and allowed to be imported only through State Trading Enterprise - HELD THAT - The parameters in regard to burning point was not tested and reported. The IS specification requires that all the eight parameters have to be satisfied in the case of Kerosene. When only seven parameters have been tested and reported, the department cannot conclude that the goods conform IS 1459 2018 (kerosene) and not IS 1745 2018 LAWS. When the department does not accept the classification declared by the importer and rejects the classification stated in the suppliers analysis certificate, the burden lies upon the department to establish the correct classification. In a similar issue, the Tribunal in the case of SWARNA OIL SERVICES, SM TRADING COMPANY VERSUS COMMISSIONER OF CUSTOMS, MUNDRA 2020 (6) TMI 70 - CESTAT AHMEDABAD held that if all the eight parameters are not tested, the evidence adduced in the nature of test reports cannot be relied to conclude the classification of the goods as Kerosene. The Commissioner (Appeals) has followed and applied the said decision. The impugned order calls for no interference - Appeal dismissed - decided against Revenue.

Summary

Issues: Classification of imported goods under CTH 27101990 as LAWS vs. CTH 27101910 as Kerosene

Analysis:
1. Classification Dispute: The respondents imported goods classified as "Low Aromatic White Spirit" (LAWS) under CTH 27101990. However, after testing by CRCL and HPCL, the department contended that the goods were Kerosene, falling under CTH 27101910, restricted for import. The original authority rejected the declared classification, ordering reclassification and confiscation, which was challenged by the respondents.

2. Commissioner's Decision: The Commissioner (Appeals) overturned the original authority's decision, holding that the goods were correctly classified as LAWS under CTH 27101990, emphasizing the resemblance to LAWS standards over Kerosene. The department appealed this decision before the Tribunal.

3. Arguments Presented: The department argued that the goods were more aligned with Kerosene standards, contrary to the Commissioner's findings. They contended that the Commissioner erred in not requiring all eight parameters to match Kerosene specifications for classification. The appellants, however, supported the Commissioner's ruling, citing the comparison of test parameters in the impugned order.

4. Test Parameters Comparison: The Tribunal examined the test parameters for LAWS and Kerosene, noting discrepancies in parameters like color, boiling point, and sulfur content. The Commissioner's reliance on these differences to classify the goods as LAWS was upheld. It was highlighted that not all eight parameters were tested, and the department failed to conclusively prove the goods were Kerosene.

5. Legal Precedent: Referring to a previous case, the Tribunal emphasized that if all eight parameters are not tested, the classification cannot solely rely on incomplete test reports. The burden of proof lies on the department to establish correct classification when disputing the importer's declaration and supplier's analysis certificate.

6. Tribunal's Decision: After reviewing the records and arguments, the Tribunal found no grounds for interference with the Commissioner's order. Consequently, the impugned orders were upheld, and the department's appeals were dismissed, affirming the classification of the imported goods as LAWS under CTH 27101990.

This detailed analysis outlines the classification dispute, the Commissioner's decision, arguments presented, test parameters comparison, legal precedent, and the Tribunal's final decision, providing a comprehensive understanding of the judgment.