2024 (9) TMI 9 - AT - Customs

Classification of imported goods - Calcium Carbonate - classifiable under CTH 28365000 as claimed by the revenue or as calcite powder falling under CTH 25369030 as declared by the appellant - HELD THAT - It is found that the department s claim of classification of the imported goods i.e. calcite powder as calcium carbonate under CTH 28365000 is based on Customs Laboratory report of Kandla which only opined that the goods is calcium carbonate. Firstly even if goods are calcium carbonate only because of this it is not classifiable under CTH 28365000. In order to classify under the said tariff item, the goods should be in confirmation to IS standard and must meet with the parameters provided in the IS specification. However, in the present case no such test was done. Secondly, as per Board Circular No. 03/2007-Cus dated 16.11.2017 and Board Circular No. 15/2019-Cus dated 07.06.2019. The board itself has endorsed that the Customs Laboratory, Kandla did not have the facility to test the imported goods in question. Therefore, in such case any report given by the said laboratory which is not equipped with the facility of testing such product, the test report cannot be accepted as correct and on that basis classification cannot be decided. In the decision of M/S. ASIAN GRANITO INDIA LIMITED VERSUS C.C. -MUNDRA 2020 (8) TMI 615 - CESTAT AHMEDABAD , it can be seen that since laboratory were not equipped at the relevant time, it was held that the test report of such laboratory cannot be accepted. The department s claim of change of classification also will not sustain. Thus, the finding the claim of the revenue to classify the calcite powder imported by the appellant being based only on Chemical Examiner Report of Customs Laboratory, Kandla which is not equipped for testing the goods in question has no legs to stand. The impugned order is set aside - appeal is allowed.

Issues Involved:
1. Classification of imported goods (calcium carbonate vs. calcite powder).
2. Validity of the Customs Laboratory report.
3. Applicability of Board Circulars.
4. Precedent cases and their relevance.
5. Proper sampling procedures.
6. Burden of proof on revenue authorities.
7. Estoppel against the law.

Detailed Analysis:

1. Classification of Imported Goods:
The primary issue was whether the appellant's imported goods, calcium carbonate, should be classified under CTH 28365000 as claimed by the revenue or as calcite powder under CTH 25369030 as declared by the appellant. The Tribunal found that even if the goods were calcium carbonate, they could not be classified under CTH 28365000 without meeting IS standards and parameters, which were not tested in this case.

2. Validity of the Customs Laboratory Report:
The appellant argued that the Customs Laboratory in Kandla was not equipped to test the imported goods during the relevant period, as clarified by Board Circular No. 43/2017-Cus. and Board Circular No. 15/2009-Cus. The Tribunal agreed, stating that any report from an unequipped laboratory could not be accepted as correct for classification purposes.

3. Applicability of Board Circulars:
The Tribunal referenced Board Circular No. 43/2017-Cus. and Circular No. 15/2019-Cus., which admitted that Customs Laboratories, including Kandla, were not equipped to test calcite powder until 2019. This lack of capability rendered the laboratory's test reports unreliable for classification decisions.

4. Precedent Cases and Their Relevance:
The appellant cited the case of ASIAN GRANITO INDIA LTD VS. COMMISSIONER OF CUSTOMS, MUNDRA, where similar issues were resolved in favor of the appellant. The Tribunal found this precedent applicable, noting that the decision in Meghraj Chemicals And Agencies was distinguishable since it was ex-parte and did not consider the Division Bench decision or the relevant Board Circulars.

5. Proper Sampling Procedures:
The appellant argued that the samples were not drawn properly, citing the judgment of the Hon'ble Apex Court in Tata Chemicals Ltd., which required that improperly drawn samples be discarded. The Tribunal did not find it necessary to examine the sampling procedure due to the unreliability of the laboratory reports.

6. Burden of Proof on Revenue Authorities:
The Tribunal emphasized that the burden of proof lies with the revenue authorities to dislodge the classification assessed under the Bills of Entry filed by the appellant. The revenue failed to provide independent cogent evidence to support their classification claim.

7. Estoppel Against the Law:
The Tribunal agreed with the appellant that there is no estoppel against the law. The fact that other importers classified similar goods under CTH 28365000 did not bind the appellant, especially when the classification was based on unreliable test reports.

Conclusion:
The Tribunal concluded that the differential duty demand, interest, fine, and penal action were not sustainable. The impugned order was set aside, and the appeal was allowed with consequential reliefs. The decision in the case of Meghraj Chemicals And Agencies was deemed per incuriam and distinguishable due to its ex-parte nature and lack of consideration of relevant precedents and Board Circulars.

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