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TMI Blog2015 (1) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... han petroleum crude and in the same breath he further asks for the literature on the claim of the appellant. When the literature is supplied by the Superintendent, Vadinar Chemical Examiner promptly confirm that samples are of crude Petroleum and are classifiable under SH 2709 of HSN. A chemical analyst dealing with physico chemical testing of petroleum products impulsively could not have said in report dated 29.01.2010. that the goods are other than Petroleum Oil and simultaneously asking for the literature/ related documents when internationally it is accepted that it is difficult to distinguish Gas Condensates of CTH 27.09 and similar synthetic products of CTH 27.10. There could be a situation where report of the Chemical Examiner is palpably wrong. Chemical examiner has given conflicting opinions, therefore, the same can be questioned. chemical examiner can give opinion on the chemical nature of the goods tested but can not suggest whether a Gas Condensate imported by the appellant will be classifiable under 2709 or 2710. The international authorities on classification of Crude Gas Condensate has expressed concern and confusion over the difficulty in distinguishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring finished goods such as Motor Spirit, Diesel, Kerosene, Aviation Turbine Fuel etc. Main appellant entered into an agreement dated 11.12.2009 with Vitol Asia Pte. Limited, Singapore for purchase of 5,00,000 Barrels 1 5% of Qatar Low Sulphur Condensate (QLSC). The contracted goods were shipped from Ras Laffan Port, Qatar by the Qatar International Petroleum Market Company Limited, (Tasweeq), which is wholly owned by the Govt. of State of Qatar. A Bill of Entry No. F-91 dated 28.12.2009 was filed by the main appellant by claiming the classification of the imported goods under Chapter heading 27090000 and the description of the imported goods was given as Petroleum Crude Oil/ Qatar LSC (crude oil). Appellant also claimed Nil rate of duty under Notification No. 21/2002-Cus dated 01.3.2002 read with Notification No. 74/2008-Cus dated 04.6.2008. The said notification unconditionally exempts all goods falling under CTH 27090000. All the custom documents like Bill of Lading, Insurance Policy, Certificate of Origin, Certificate of quantity, Certificate of quality, Cargo Manifest, duty payment challan, discharge Inspection report etc. were showing the imported goods as Qatar Low Sulphur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oil. However, both the products are covering in the definition of SH 2709 of HSN. From the aforementioned facts, it is concluded that the samples are the Crude Petroleum Condensate covering under the definition of oil obtained from bituminous material, crude, covered under SH 2709 of HSN. The above opinion given by the chemical examiner was taken up for investigation/ interrogation by the office of DRI, Jamnagar vide letter dated 2.7.2010 written to chemical examiner Kandla to take up the matter seriously and to give a specific, conclusive and reasoned reports. Chemical Examiner, Kandla vide letter dated 05.8.2010 given the following clarifications:- In this context, it is to inform that Petroleum Crude Condensate are basically obtained from the petroleum oil fields in their natural form. But the profile of their hydrocarbon constituents present in their composition are different in respect of propositions of different hydrocarbons e.g. lighter hydrocarbon (C6-C9) are much more abundant in the petroleum condensate as compared to Crude Petroleum Oil. There is no thin line of demarcation of physico-chemical parameters between Crude Petroleum Oil and Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er CTH 2710. In the instant case, wherever, we mentioned processed product , it means that the goods cannot be covered under CTH 2709 but are covered under CTH 2710. Further I want to add that the possibility of predominance of a aromatic contents of the subject products is ruled out by their distillation characteristics and hence cannot be classified under CTH 2707. Under above said circumstances, I may state that in spite of the overlapping of parameters of the said goods, the Test Report under the Bill of Entry No. 63/23.10.2009, 91/ 28.12.2009 and 100/ 09.1.2010 are exactly matching with the findings/ Test Results/ Petroleum Products covered under CTH 27101990. Regarding the Sulfur contents observed in the above said goods, the magnitude of the Sulfur was very low and even less than quantity found in many processed products of Crude Petroleum Oil. Therefore, the goods covered under the above said Bills of Entry 63/ 23.10.2009, 91/ 28.12.2009 and 100/ 09.1.2010 can be considered as processed products of Petroleum Crude Oil. This report in respect of goods covered under these three Bills of Entry is being issued only on the basis of the tests conducted and not on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the samples. That a chemical examiner can not be asked to give any opinion on the classification of the imported goods. That chemical examiner in his answer to Q.No.1 in his statement dated 29.6.2010 has clearly said that composition and properties of Crude oil/ condensate oil and products of CTH 27101990 are overlapping as also recognised by world customs Organisation on this subject. Learned Advocate also points out to answer of the Chemical Examiner to Q.No.3 of his statement dated 06.7.2010 that import documents are the only basis for determining whether the product will fall under CTH 2709 or 2710. It was strongly argued by the learned Advocate that main appellant has used the imported goods for refining which was pale yellow and represented Crude only. It was his case that why a refinery will not bring finished products of CTH 2710 and then again re-refine it. That it is nowhere the case of the Revenue that importer has sold the imported goods as such without any refining. Learned Advocate made the bench go through HSN explanatory note to CTH 27.09 to drive home the point that some processes can even be done to the gas condensates and that it is not established by the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 453 (Tri. LB)] 6. Heard both sides and perused the case records. The issue involved is as to what should be the correct classification of the imported goods described as Qatar Low Sulphur Condensate (Qatar LSC) in the Bill of Entry No. F-91 dated 28.12.2009. Main appellant is claiming the classification under CTH 27090000 as a natural gas condensate whereas the Adjudicating authority has held the classification of the goods under CTH 27101990 based on the test reports and written opinions given by the Chemical Examiner, Kandla. If the goods are classifiable under CTH 27090000 then all the goods get exempted under Notification No. No. 21/2002-Cus dated 01.3.2002 read with Notification No. No. 74/2008-Cus dated 04.6.2008. 6.1 Both the above competing entries as per Custom Tariff Act are as follows:- Tariff Items Description of goods 27090000 Petroleum oils and oils obtained from bituminous minerals, Crude. 2710 Petroleum oils and oils obtained from bituminous minerals, other than crude; ------------ 27101990 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the processes like De-calcination, De-salting, Dehydration, Stabilisation, Elimination of very light fractions, cooling and de-pressurization etc. for obtaining condensable hydrocarbons (C4 to C20) from the wet natural gas does not take the end gas condensates out of CTH 2709. On the other hand CTH 27.10 contained petroleum oils and oils obtained from bituminous minerals which are other than crude. The logical interpretation of the above HSN explanatory will be whether the goods imported by the main appellant have only undergone the processes specified in HSN explanatory notes under CTH 27.09 or have undergone any other process which is so major that it change the essential charter of the natural product. Learned advocate appearing on behalf of the appellant argued that Qatar LSC is a mixture of natural Hydrocarbons on which no process other than those specified in HSN explanatory notes under CTH 27.09 has been undertaken. That similar composition of products of CTH 2910 could overlap for some mixtures of CTH 2710. That internationally it is not possible to distinguish between the two categories of products of 27.09 and 27101990. It is observed from the report dated 08.10.1996 of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from similar products of heading 27.10 could not be satisfactorily produced, the Review Sub-Committee at its 19th Session agreed that the proposal for a new subheading in heading 27.09 to cover gas condensates should not be further examined during the review cycle for the HAS 2002 version. 13. It is also felt that the classification of gas condensates should be submitted to the Harmonized System Committee together with the information obtained so far from Chinese EC, the United States and Canada; administrations were invited to provide further information regarding the chemical composition, physical characteristics and definition of the gas condensates under consideration. 7. In the light of above factual matrix, it is apparent that there are overlapping in the nature and properties of Natural Gas Condensates of CTH 2709 and some the synthetic products of CTH 2710. This dispute/ confusion has been internationally accepted by the World Customs Organization, Brussels as per report dated 08.10.1996 of Harmonised Systems Committee on classification of Gas Condensates Chemical Examiner, Kandla in its very first report dated 29.1.2010 certified that the sample tested is pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to Q.No. 3 in the statement dated 06.7.2010 and answer to Q.No.1 of statement dated 29.6.2010 that Chemical Examiner was aware of the overlapping and similar nature of Crude Gas Condensate of CTH 2709 and similar synthetic products of CTH 2710. In the event of conflicting opinions appellant was clearly justified in asking for the cross-examination of the Chemical Examiner which was rejected by the adjudicating authority. It is observed from the judgments relied upon by the adjudicating authority to reject the cross-examination, as discussed in Para 33.2 of the OIO dated 28.2.2013, that none of them says that cross examination in all cases should be denied. In the relied upon case law of Jagdish Shankar Trivedi vs. CCE, Kanpur [2006 (194) ELT 290 (Tri. Del.)] the person mentioned in Supreme Court s extracted passage, whose cross-examination was asked for, was an informer. In case of anti-smuggling/ anti-evasion cases name/ identification of informer is always protected. In other relied upon case, it was never said by any court that cross examination should be invariably rejected. Rather most of the judgments relied upon by the adjudicating authority say that request of cross-exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hysico. Chemical analysis made by the Chemical Examiner but is aggrieved with the opinions given by him in the classification of the imported goods. It is now a settled proposition of law that a chemical examiner can give opinion on the chemical nature of the goods tested but can not suggest whether a Gas Condensate imported by the appellant will be classifiable under 2709 or 2710. The international authorities on classification of Crude Gas Condensate has expressed concern and confusion over the difficulty in distinguishing these products of CTH 2709 from similar synthetic products of CTH 2710. When products of CTH 2709 and 2710 have similar characteristics/ compositions then the only way to entertain a contrary classification adopted by the appellant, was to extend the investigation to the place of origin of the goods. No such enquiry seems to have been made with the supplier which is owned by Govt. of Qatar. It is also not the case of the Revenue that customs documents provided by the appellant at the time of clearance are fake or forged by deliberately given a wrong description. Appellant has argued that the price at which the Gas Condensate is imported tallies with the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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