2023 (5) TMI 1202 - HC - Customs

Violation of import conditions - goods (Raw Petroleum Coke) imported by the respondent admittedly having sulphur content in excess of 7% conform to Indian Standard 17049 or not - prohibited/restricted goods - order for provisional release when the import conditions prescribed for the Raw Petroleum Coke (RPC) under ITC HS 27131100 are required to be complied with by the importer in respect of the goods they are importing (i.e. RPC) and not for the goods they are manufacturing (CPC) by using imported RPC - HELD THAT - According to the respondent the product imported by them being used in the Calcination Plant, the restriction on the sulphur content in terms of the BIS standard, will not be applicable. The learned Tribunal while considering the correctness of the order passed by the Commissioner after setting out the arguments placed before it by both sides has recorded the submissions of the revenue that the goods should not be provisionally released as admittedly the sulphur content is more than four per cent and the same cannot be used by Aluminium Manufacturing Industry. The learned Tribunal has not rendered a specific finding on this submission, takes note of the fact that the respondent importer is a calciner and they would use the imported product as feed stock for making CPC from RDC for their customer with sulphur content ranging 0.8% to 3.5%. Whether there was a violation of the license condition can be examined by taking note that the product that will be manufactured by the respondent importer or should the importer satisfy that the import effected by them is in accordance with license condition? - HELD THAT - Since the product is a prohibited item the test would be to examine whether the imported product satisfy the license condition rather to examine whether the import was justified based on the end product that would be produced. The Commissioner of Customs, (Appeals) as well as the learned Tribunal has proceeded based upon the ultimate end product which is being manufactured by the respondent. Thus in our view, it would be an incorrect manner of examining as to whether the import was provided and whether it satisfies the conditions of licence. Furthermore, the Tribunal opined that no harm will be caused by provisionally releasing the goods - such a finding cannot be accepted as the question would be as to whether when admittedly the sulphur content is in excess of 7% will it conform to ISI 7049 as mentioned in the licence and if it does not conform to the said standard, is there a violation of the conditions of import? Furthermore, the goods being prohibited item, there is a mandatory requirement to comply with the policy condition and the Tribunal was required to examine as to whether there has been any violation of the stipulations under the policy. Before considering as to whether the goods have to be provisionally released when admittedly the sulphur content is more than 7%. Therefore, this question, which is a mixed question of fact and law is required to be decided by the Tribunal before approving the order passed by the Commissioner of Customs (Appeals) granting provisional release. The matter requires to be reconsidered by the Tribunal - Appeal allowed by way of remand.

Summary

Issues Involved:
The judgment involves the following Issues:
A) Dismissal of appeal due to non-conformity of imported goods with Indian Standard 17049 and violation of import condition.
B) Provisional release of Raw Petroleum Coke with sulphur content exceeding 7% and compliance with import conditions.
C) Permissibility of provisional release of goods for manufacturing use despite non-compliance with import conditions.
D) Sustainability of provisional release order contrary to policy conditions and Indian Standard 17049.

Issue A:
The appeal by revenue under Section 130 of the Customs Act, 1962 challenges the dismissal of the appeal by the Customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkata. The imported Raw Petroleum Coke (RPC) had sulphur content exceeding 7% and did not conform to Indian Standard 17049, raising questions on the justification of the Tribunal's decision.

Issue B:
The controversy arises from the mandatory compliance required for the import of Raw Petroleum Coke under CTH 27131100, especially concerning policy conditions and restrictions on sulphur content. The Tribunal's direction for provisional release of RPC with sulphur content above 7% is questioned for its compliance with import conditions and potential violation thereof.

Issue C:
The Tribunal's decision to release the goods provisionally is scrutinized for being deemed perverse and contrary to law, particularly in the context of import conditions specified for RPC under ITC HS 27131100. The distinction between imported RPC and manufactured CPC by the importer is pivotal in determining the applicability of import conditions.

Issue D:
The sustainability of the Tribunal's order for the provisional release of RPC is challenged based on its alleged non-conformity with policy conditions and Indian Standard 17049. The contention is that the release of goods with sulphur content exceeding 7% may not align with the relevant criteria, warranting a reevaluation by the Tribunal.

The judgment emphasizes the necessity to reconsider the aforementioned questions, highlighting the importance of compliance with import conditions and policy stipulations. The matter is remanded to the Tribunal for a fresh decision, urging the parties to present their arguments and ensuring a prompt hearing to address the concerns regarding the provisional release of goods.