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TMI Blog2017 (5) TMI 1281X X X X Extracts X X X X X X X X Extracts X X X X ..... to residues of petroleum oils or of oils obtained from bituminous minerals. Further even as per the HSN Explanatory Notes to said chapter the correct classification would be under chapter sun heading 271390 00. The more specific tariff heading is ought to be assigned to the goods in case if two headings are equally applicable. We therefore hold that the raw RPO imported by the Appellants would merit classification under chapter heading 2713.90 and would be liable to duty accordingly. Extended period of limitation - Held that: - the issue involved is grave interpretation of Iaw that whether goods in question is hazardous or otherwise and also involved issue on classification. The outcome of the case is based on strict laboratory tests of various agencies, hence it can not be expected from the appellants that they know the nature of imported goods, accordingly, the impression of facts cannot be attributed to the appellants - extended period not invocable. The impugned goods be classifiable under chapter subheading 27139000 and the same shall be assessed accordingly - confiscation and demand set aside - appeal allowed - decided in favor of appellant. - C/86916 to 86919, 86944 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduced to 5% adv. By a Circular dt. 12.08.2011 the CBEC clarified that RPO which meets with the requirement of Note 2 of Chapter 27 would remain classified CTH 2710 i.e where the aromatic constituents does not exceed by weight the non - aromatic constituents. After the issue of the above circular the Customs department started drawing samples for testing the aromatic content. The consignments belonging to the importers including the appellants were store in one common warehouse tank. The samples were sent to the Customs own test laboratory in Mumbai, M/s Geochem who after testing reported that the aromatic content was less than 50%. Thereafter the clearance was allowed. Thereafter in December, 2012 the Customs House Laboratory at kandla issued a note that they had the facility for testing the aromatic content and the method used by M/s Geochem at Mumbai was wrong. Therefore in January, 2013 the department drew samples from the common tank where all the imported RPO were stored and the same was sent to CRCL, New Delhi for testing. The test report from CRCL stated that the sample did not meet with the requirement of Petroleum based processed oil for rubber industry as per BIS : 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll under Part A of schedule III and hence hazardous under Hazardous Wastes (Management, Handling and Trans-boundary Movement) rules, 2008. Being aggrieved the Appellants filed appeal before this Tribunal. Earlier the appeals were decided by the Tribunal vide Order dt. 27.06.2016. However the Hon ble High Court vide Order dt. 26.09.2016 has remanded the appeals back to the Tribunal. 5. Shri. D.B. Shroff, Ld. Sr. Counsel with Shri. Mihir Mehta, Ld. Advocate appearing for the Appellants has submitted that they had imported RPO which is used for finished rubber process oil. The goods were tested by the Customs approved laboratory M/s Geochem and the test results indicated that the aromatic content of less than 50%. That in view of self contained note of Kandla Custom House Laboratory the samples lying in storage tank were sent for testing to CRCL, New Delhi. The CRCL in its report dt. 12.02.2013 stated that the sample did not meet the requirement of petroleum based RPO for rubber industry as per BIS : 15078 : 2001 in respect of kinematic viscosity (KV) at 100 0 C (31.7 cst) and density at 15 0 C (1.0207). It also indicated that the aromatic content was 77.2 % and the aniline point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they had filed writ Petition before the Hon'ble High Court of Mumbai for retesting of samples by independent competent agency. Also during the proceedings before the Hon'ble High Court, it became clear from the communications addressed by the CRCL that they did not in fact possess the requisite equipment to test the PAH and that they had in fact got the testing done through another laboratory. The Hon'ble High Court vide Order dated 10.10.2014 on the basis of the Communication by the Director, Ministry of Environment Forests wherein names of 6 independent laboratories in Maharashtra and which were approved/ recognized by the Ministry of Environments Forests, directed the Customs Authorities to draw fresh samples and submit the same. Accordingly fresh samples were sent to M/s Ashwamedh Engineers Consultants C.S.L and the Assistant Commissioner, Customs Oil Unit directed them to give a report on or before 20 November 2014. The said laboratory in its report dated 20.11.2014 reported that the samples showed that the RPO was non- hazardous with respect to the PAH as per Schedule-II, Class-A of the said Rules. The Hon'ble High Court thereafter passed order permittin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are only 10 specific PAHs out of several hundred existing PAHs that have been declared to be hazardous as they are carcinogenic in nature. It is only these 10 PAHs which are all fused with aromatic rings, that together must weigh 50 mg per kilogram, and, that all the PAHs do not fall under Schedule- II of the Rules. That unless the PAH is identified individually and its individual concentrations are found and to be collectively more than 50 mg per kilogram, then only can the substances be said to be hazardous. That having not done this exercise it cannot be said that the goods are of hazardous nature. 8. He further submits that the finished RPO meets the BIS Specifications laid down in BIS : 15078 : 2001. That the goods are classifiable under chapter sub heading 271390 00 as prayed by them in their appeal. The imported RPO is not a distillation column product. The raw RPO is manufactured by lubricating oil refineries from Vacum gas Oil (VGO) derived from the refining of crude oil and this cut is just before diesel. The bottom remains are called extracts derived from the treatment of lubricating oils as with certain selective solvents. These are furfural extracts of differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the sample more than 70% by mass and therefore as per chapter Note 2 of chapter 27 the chapter sub heading 2710 is not applicable since the goods were found to be containing aromatic constituents more than the non aromatic constituents. The goods are therefore classifiable under chapter heading 2707. He has relied upon CBEC's instructions contained in letter F. No.528/96/2011 dt. 12.08.2011 regarding classification of rubber process oil wherein it is stated that Rubber Process oil (RPO) which meets the requirements stipulated in chapter 2 of chapter 27 would remain appropriately classifiable under sub heading 2710. However in case where wright of aromatic constituents exceeds non aromatic constituents, then such product would appear more appropriately classifiable under chapter sub heading 2707. That it was also clarified that if kinematic viscosity is more than the prescribed limit and aromatic content is more than 70%, such oil might be hazardous due to presence of Poly Nuclear Aromatic contents (PAH). The contention of Appellants that RPO being petroleum based oils cannot be classified under chapter sub heading 2707 which is meant for oils and other products of the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erating hazardous wastes of schedule I of Hazardous Waste (Management, handling and Transboundary Movement) Rule 2008 under column (3) at Sr. No.1 (1.6). That in view of this submission the impugned order is liable to be confirmed. That since the past and present consignments were imported from same source they are one and same. They never disclosed the actual nature of goods by producing any analysis report from the supplier or the manufacturer which shows that they had attempted to conceal the actual nature of goods. Hence the demand is not time barred. 10. The Appellant in its rejoinder apart from ground of time bar also submitted that the conclusion drawn by two independent laboratories one appointed by the High Court and another at the instances of the revenue cannot be brushed aside. That M/s Avon Food Lab Pvt. Ltd nowhere in its report has stated as to how many PAHs were tested. That as pointed out by the Appellant there are hundreds of PAH but only a few as set out in class A of Schedule II of the said rules are below detection limit. That it is to be seen that the samples when tested whether the concentration of PAH exceeds 50 mg/Kg. Both the independent laboratories ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that M/s Ashwamedh has followed wrong mode of extraction and sample preparation. The samples were again got directed to be tested by the Tribunal from any other authorized lab in accordance with the Hazardous Waste (Management Transboundary Movement) Rules, 2008. The samples were accordingly sent to M/s Skylab Analytical laboratory who also reported that the samples are non-hazardous. 12. We have gone through the test report of M/s Avon Food Labs and of CRCL, Delhi. We find that it was never brought on record by the revenue until the case before the Hon'ble High Court that the test was carried out by M/s Avon food Labs and not CRCL. From the test report dt. 08.04.2013 of M/s Avon Food Labs we find that the test method shown is USEPA - 827OC and the PAH content is shown as 356.14. There is no result of any other parameter checked by the said laboratory as regard viscosity or any other parameter. The report further says that the same cannot be used for advertising or as evidence in any court of law. Be it as the case may be, we find that when the samples were sent to a private laboratory, the test report should mention as to for what purpose the samples were tested. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H as per Schedule-II, Class A of the said rules. The said lab also checked the sample on 8 parameters as asked by the revenue and reported that the samples are non hazardous. Thus both the labs have reported that the PAH contents are less than 50 mg/kg and thus are non hazardous. We find that the test report of M/s Ashwamedh is not only comprehensive on all parameters on which they were directed to carry out the test but also compliant with the test method. The report is as follows Ref.AEC-CEO-20141120-4-HC-PZCQ7C Date 20.11.2014 To, Asst. Commissioner of Customs Oil Unit Officer of the Commissioner of Customs Import-II New Custom House, Ballard Estate, Mumbai - 400001 Sub:- Report on Rubber Processing Oil. Reference - Letter Ref no. F.No. S/7-Gen-82/2013-14 Oil dated 14.11.2014 In response to the subject mentioned above, office of the Commissioner of Customs (Import II), New Customs House, Ballard Estate, Mumbai-400001 sent a letter to Ashwamedh Engineers Consultants Co-op. Soc. Ltd., under Ref No.F. No.S/7-Gen-82/2013-14 oil dated 14.11 2014. Mr. Rajesh Paradkar, Customs Inspector, (Cell 9867353927), Mr. Aproz Siddiqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hracene, Fluoranthene, BENZO (A) pyrene, Benzo (K) fluoranthene, Indeno (1, 2, 3-cd) pyrene and Benzo (ghi) perylene with concentration limit of 50 mg/kg. As such those are analysed. Halogens were analysed as per Schedule-13, Class-B of HWMHTMR. 1. Colour of the Sample: The sample was poured into a clean test tube, observed against the Northern light and the colour was reported. 2. Ash Content: Ash Content of oil was analysed as per IS:1448 (Part 4): 1984, Reaffirmed 2007. The sample was contained in silica crucible, ignited and allowed to burn until only ash and carbon remained. This residue was reduced to an ash by heating in a muffle furnace at 775 0 C, cooled and weighed. Ash content was calculated. 3. Flash Point: The flash point was estimated by using Cleveland Open Cup method as per IS:448(Part 69):2013. In this method the test cup was filled with certified level with the sample under test. The temperature was increased gradually and at the specified interval the small test flame was passed across the test cup. The lowest temperature at which application of the test flame causes vapour above the surface of the liquid to ignite was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Method USEPA/ SW9253/5050. Sample is adjusted to pH 8.3 and titrated against Silver nitrate in presence of Potassium chromate as indicator. The end point is indicated by persistence of orange-Silver chromate colour. Summary of Parameters Limits: The parameters along with limits and specifications are summarized as below: Sr. No. Characteristic Requirements/Limits Specification/Regulation 1. Colour Greenish brown oil IS 15078.02001 (Reaffirmed 2012), Type A, Aromatic 2. Ash Content - Not specified 3. Flash Point (COC) 218 0 C, nun IS 15078:2001 (Reaffirmed 2012), Type A, Aromatic 4. Density at 15 0 C, 0.98-1.01 g/ml IS 15078:2001(Reaffirmed 2012), Type A, Aromatic 5. Kinematic Viscosity at 100 0 C 18.3-26.3 cSt IS 15078:2001 (Reaffirmed 2012), Type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industry - Specification. ** As per Schedule-II, Class-A of HWMHTMR. *** As Schedule-Il Class-B of HWMHTMR. # For determining the concentration of PAH and Halogens, the 'Toxicity Characteristics Leaching Procedure (TCLP)' as per ASTM-D5233-(v) of Schedule-II of HWMHTMR. 92 IS adopted as mentioned in fact note v 0 Schedule-II HWMHTMR. Analysis Results of Polyaromatic Hydrocarbons as per Class-A of the Schedule-II of HWMHTMR as below: S.No. Parameter Results Limits Units Method Class Class A: Poly Aromatic Hydrocarbons (PAH) 50 USEPA/ SW 846/ 8100 A12 Napthalene BDL mg/kg A13 Anthracene BDL mg/kg A14 Phenantren LDL mg/kg A15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as required by you as per point No. 7 of your letter. Sr. No Information / documents required by Customs office Information / document provided by Ashwamedh Engineers Consultants C.S.I. i. Whether percentage value of dry solid material (Sediment) of sample was determined or not? Yes, percentage value of dry solid material was determined by us as per ASTM D 5233-92 (2009) method Percentage value of Sediment was not required to be determined, as per the ASTM D 5233-92 (2009) method ii. If percentage value of dry solid material (Sediment) was determined then furnish authenticated documentary evidence of same and inform reason for non-inclusion of its value under Summary of Parameters Limits (Page 6 of Analysis Report) and under Analysis Results (Page 7 of Analysis Report) The raw data for determination percentage value of dry solid material is enclosed (Annexure-I) The percentage value of dry solid material was not included in the Analysis Report as your letter dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the letter dt. 14.11.2014 to M/s Ashwamedh. Therefore the objection at later stage for checking of said parameter is therefore void and not tenable, As regard contention of CRCL that the mode of extraction while adopting Toxicity Characteristics Leaching Procedure (TCLP) as per ASTM - D2533-92 and that analysis methodology has opted wrong mode of extraction and sample preparation procedure, we find that the contention of CRCL is incorrect as it is apparent that the said procedure was adopted by them. 14. Further whereas the test report of M/s Avon has given the PAH content only and no other parameter and the test results on basis of said report and opinion has been given by chemical examiner. It is not known as to what methodology was adopted to arrive at test result. It is not known as to the test result has been given on the basis of a single parameter of M/s Avon's test report. In contrast the report dt. 20.11.2014 of M/s Ashwamedh is a detailed report addressed to the Assistant Commissioner of Customs Oil Unit, New Customs House. The said report has given analysis of 9 parameters viz. Colour of Sample, Ash Content, Flashpoint (COC), Density, Kinematic Viscosity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l testing vis a vis 'testing of PAH contents in petroleum products by NABL. The copy of accredition certificate No. T-1188 of NABL given to M/s Ashwamedh Engineers which has been further extended by letter dt. 22.12.2014 is already part of documents before us. This clearly shows that M/s Ashwamedh Engineers is accredited for all tests. It is also observed that even the Ministry of Environment Forests has recognized M/s Ashwamedh Engineers as approved/ authorized laboratory for testing. Further at the time of sending of goods to M/s Ashwamedh Engineers no objection was raised by the revenue before Hon'ble High Court. It is found that report given by M/s Ashwamedh is not only a detailed report but also states the analysis method i.e IS:15078.2001 (Reaffirmed 2012) containing detailed note on analysis of PAH and other parameters referred to it. Obviously there is no place of any doubt on such report which has been given on the basis of the direction of the Hon'ble High Court. Thus in view of high court's above observation we find that the test report of M/s Ashwamedh engineers being fully compliant with the rules and procedures of Hazardous Waste (Management Handling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumption and the show cause notice on basis of earlier test report was set aside. Further in case of Commr. of cus. (Exports), chennai-I Vs. Texworth International 2016 (334) E.L.T. 607 (Mad.), the Hon'ble High Court held that once the Department had agreed to a second test report without reserving any right to rely upon the first test report, it is not open to the Department to contend that the second test report ought to be dumped. We find that the revenue had agreed on retest of samples by M/s Aswamedh and M/s Skylab and the tests were conducted on parameters as asked for by the revenue itself. In such case there is no reason to doubt the said test reports of both these labs. Thus in view of the two test reports i.e one of M/s Ashwamedh Eng. and second of M/s Skylab Analytical we have no hesitation in holding that the goods are non hazardous in nature and are not restricted goods. 20. In view of our above observations and findings we hold that the goods being non hazardous and the PAH being in the accepted levels are eligible for importation and the impugned order is not sustainable. 21. The next issue to be decided in the present appeals is whether the goods ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c oils (phenols, cresols, xylenols etc), pyridine, quinolone and acridine basis and creosote oils. Unless it is similar oil, the raw RPO would not merit classification under chapter subheading 27.07. Being other residues of petroleum oils or of oils obtained from bituminous materials will merit classification under chapter heading 2713. The classification of RPO under chapter heading 2713.39/2713.30 was recommended by the Deputy Chief Chemist and same was accepted by CBEC in its circular No.11/1989 dt. 13.02.1989. We also find that the CRCL in its communication dt. 23.08.2013 has also stated that RPO are mainly aromatic extracts which are produced during the refining of lubricating oil base stocks and that such aromatic extracts derived from treatment of lubricating oils with certain selected solvents are covered by heading 2713 9000. The Chapter subheading 27.13 covers Petroleum Coke, petroleum bitumen and other residues of petroleum oils or of oils obtained from bituminous minerals. The imported goods RPO cannot be classified under chapter sub heading 27.07 as it is not applicable to residues of petroleum oils or of oils obtained from bituminous minerals. Further even as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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