2024 (1) TMI 200 - AT - Customs

Change of classification of goods imported by the appellant - GTL Light Paraffin - SCN issued to the appellant alleging that the appellant had imported light diesel oil in the garb of light paraffin in the vessel MT Hanyu Camellia and also in the vessel MT Eva Hongkong - HELD THAT - The appellant had made imports and declared the goods as liquid paraffin. The investigation were started in respect of imports made by the appellant in vessel MT Hanyu Camellia and MT Eva Hongkong In both the cases, the goods were tested by CRCL Kandla where no discrepancy was found. In both the cases, the samples were retested at the behest of DRI by CRCL Vadodara. It was found that CRCL Vadodara report was different from the report of CRCL Kandla. The report of CRCL Vadodara came to the conclusion that the imported goods were LDO. The only difference between the imports made by the appellant vide vessel MT Hanyu Camellia and MT Eva Hongkong is that in the case of MT Hanyu Camellia retest report was available whereas in the case of appellants made by MT Eva Hongkong, the retesting request was ignored by Revenue despite repeated requests made by the appellants - it is apparent that the goods were not tested against the parameter DIN EN 15940 2019 by CRCL Vadodara. The test against the standard of DIN EN 15940 2019 by the CRCL was useful for determination of the actual character of the goods as per the CRCL New Delhi. It appears that the said standard for testing was ignored by the CRCL Vadodara and therefore the reports of CRCL Vadodara were at odds with the report of CRCL New Delhi. It is seen that the failure to allow retest of samples creates a serious doubt in the original test reports - It is also found that original test reports of CRCL have not factor in the standards required DIN EN 15940 2019 as per the test report of CRCL New Delhi. In these circumstances, the test report of CRCL Vadodara cannot be relied for initiating action against the appellant. There is no mis-declaration established by Revenue and therefore, there can be no question of rejection of declared value and revaluation of goods. The impugned order cannot be sustained - The impugned order is set aside - Consequently the penalties on co-noticees also cannot be sustained and are therefore, set aside - Appeals are allowed.

Summary

Issues Involved:
1. Change of classification of goods.
2. Confiscation and imposition of redemption fine.
3. Imposition of penalties under various sections of the Customs Act.
4. Denial of retesting of samples.
5. Rejection and enhancement of declared value of goods.

Summary:

Change of Classification of Goods:
The appellant, M/s Alka Petrol Global Private Limited, imported "GTL Light Paraffin" which was reclassified by the Department of Revenue Intelligence (DRI) as Light Diesel Oil (LDO). The initial classification was supported by reports from CRCL Kandla, but subsequent tests by CRCL Vadodara contradicted these findings, suggesting the goods were LDO.

Confiscation and Imposition of Redemption Fine:
The goods imported by the appellant were seized based on the CRCL Vadodara report. The appellant requested re-export and retesting of the goods, but only the re-export was permitted, and the retest requests were ignored.

Imposition of Penalties:
Penalties were imposed on the appellant and other co-noticees under Sections 112A(1), 112B(1), 114AA, 117 & 114III of the Customs Act. The penalties were based on the assumption of mis-declaration of goods as LDO instead of GTL Light Paraffin.

Denial of Retesting of Samples:
The appellant's request for retesting was not given due attention by the Revenue. The Hon'ble High Court of Gujarat had directed retesting for other importers with comingled cargo. The retest by CRCL New Delhi confirmed the goods as liquid paraffin, not LDO. The denial of retest was against natural justice, as highlighted in the Tribunal decisions of York Exports and Garg Industries.

Rejection and Enhancement of Declared Value:
The declared value of the goods was rejected and enhanced based on a report by Shri Bhaskar G Bhat, a government-approved valuer. The appellant contested this enhancement, arguing that the valuation was based on incorrect classification.

Tribunal's Findings:
The Tribunal found that:
- The initial investigation and subsequent retests confirmed the goods as liquid paraffin.
- The denial of retesting requests by the Revenue was unjustified.
- The CRCL Vadodara report did not test against the standard DIN EN 15940:2019, unlike CRCL New Delhi.
- There was no mis-declaration of goods by the appellant.
- The penalties and confiscation based on the assumption of mis-declaration were unsustainable.

Conclusion:
The impugned order was set aside, and the appeals were allowed. The penalties on the co-noticees were also set aside. The Tribunal emphasized the importance of retesting and adherence to natural justice principles.