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TMI Blog2021 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... gned goods has been derived from chemical processing of wood. The certification evincing the origin of the goods, and based on production process intimated by the manufacturer, is the threshold qualification for preferential rate of duty. The rules of origin stipulate ascertainment of the source, and extent, of content in a manufactured. The partial acceptance of origin in the certificate while casting aspersions on the classification therein is not consistent with treaty mandate of presumption of authenticity unless expressly established otherwise - The first appellate authority did not consider it necessary to ascertain the methodology of that determination even though the report was bereft of any explanation. Nor is there any submission that standard tests for determination of the pulp as having been extracted by chemical process was available in the laboratory. Such unqualified reliance on a single sentence in the test report which abdicates the statutorily empowered determination in favour of the laboratory certification is not dissimilar to the abdication of empowerment to assess in favour of the investigation agency as both remain in the lee of statutory accountabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocumented the celebrations and controversies, as well as the ideas and incidents, of civilization is so indispensable to daily living as to offer little room for contentious distinguishment. And so it was until treaty negotiators of the Indo-Japanese Comprehensive Economic Partnership Agreement (CEPA), 2011 excepted paper that had been manufactured from pulp obtained by chemical processing or, when mixed with other pulp, containing no more than a tenth of the fibre content obtained by mechanical or chemi-mechanical process from concessional rate of duty extended to other varieties of coated paper enumerated within heading 4810 of the First Schedule to Customs Tariff Act, 1975. 2. Though the circumstances in which this appeal has surfaced before us, impugning order-in-appeal no. 72 (SM) CUS/JPR/2020 dated 27th November 2020 of Commissioner of Central Excise CGST (Appeals), Jaipur, is no less significant than the factual matrix narrated therein, it is of no harm to take note of the facts first. Of the consignments of coated paper imported by M/s PLG Impex, a proprietary concern of Shri Giriraj Gupta, against bills of entry no. 6932911/18.02.2020, 7146553/07.03.2020 and 71583 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion corresponding to heading 4810 of the First Schedule to Customs Tariff Act, 1975 is uncontroverted. The reclassification has been built upon the alleged absence of pulp produced by mechanical or chemi-mechanical process in the impugned consignments of paper with consequent denial of preferential duty of 1.8% from April 2019 onwards and of 2.7% during 2018-19 for levy at the standard rate of 10% instead. 5. It would appear that the availing of exemption afforded by notification no. 69/2011-Cus dated 29th July 2011, for implementation of the Comprehensive Economic Partnership Agreement (CEPA) with Japan, alarmed the investigating agency sufficiently for assessing authorities to resort to provisional assessment under section 18 of Customs Act, 1962 on furnishing of appropriate security for the differential duty in several instances of similar imports. The appellant herein, instead of being amenable to such tentative determination of levy, preferred to discharge the duty liability at the standard rate of duty in the tariff. The import of 18.86 tons of coated paper gloss , valued at ₹12,25,792.43 in bill of entry no. 6932911/18.02.2020, was cleared on payment of duty of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of paper in roils/ reels coated on one side or both sides, imported from Japan, accordingly, the goods imported under this BE are not in dispute and correctly classified, thus, the same has been cleared by allowing exemption under CEPA under Notification NO. 69/2011 - Customs dated 29.07.2011. The goods imported vide BE No. 6932311 dated 18.02.Z020 and 7146553 dated 07.03.2020 importing from M/s. Mitsubishi Japan, and M/s, Hokeutsu Corp., Japan Through M/s. SAPP trading , UK have been declared as coated paper gloss and coated paper matt in Reels/ rolls and classified under tariff heading 4S109900 48102300 and claimed exemption under CEPA under notification No. 69/2011 - Customs dated 29,07.2011, whereas an investigation in respect of import of said goods by the importer M/s. PLG Impex is pending before Directorate of Revenue Intelligence (DRI), Delhi Zonal Unit (DZU), New Delhi regarding mis-declaration and mis-classification of the said goods under Tariff heading 48102900 or 48101390 instead of correct classification 481013S0 under which the importer was earlier classifying, with an intent to evade customs duty by wrongly availing CEPA benefit under Notification No. 69/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the classification bearing higher burden of levy, and an inculpatory admission to the investigating agency by the proprietor of the importing entity. While there is no estoppel on seeking the privilege of concessional rate of duty, the importer had not been placed on notice that the purported admission was to be used to its detriment and the explanations offered by, and documents tendered on behalf of, the manufacturers appear to have been kept out of consideration in the speaking order , mandated by section 17(5) of Customs Act, 1962 upon clearance of goods without the benefit of concessional duty, that was challenged in the first appeal. The lack of success before the Commissioner of Central Excise CGST (Appeals), Jaipur has brought the impugned order-in-appeal no. 72(SM)CUS/JPR/2020 dated 27th November 2020 before us. 7. In the face of disregard of the specific averments and several documents for controverting the assertion that the impugned goods had been manufactured entirely from chemically extracted wood pulp, of the lack of scrutiny of the rival descriptions in the tariff or of any ascertainment of the composition of the imported paper , it fell to the first appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the importer, and the competent authority issuing the certification of origin to claim coverage under subheading other than 4810 13 of the First Schedule to Customs Tariff Act, 1975 to infer deliberate concealment with intent to avail concession for which they were not eligible. It also noted that, while the importer did not appear to be coy about admitting that coated paper in sheet form , in which the pulp composition was immaterial to classification, was entirely composed of chemical pulp, similar alacrity was distinguishably absent when it pertained to coated paper in rolls obtained from the same manufacturer in which the proportion of chemical pulp made all the difference between entitlement and non-entitlement to concessional rate of duty. 11. In the course of proceedings before the first appellate authority, it was informed by the importer that the article information sheet report dated 23rd July 2019 detailing the composition of coated paper as inclusive of wood pulp, calcium carbonate, aluminum silicate, starch and latex, the letter of declaration dated 29th November 2019 reporting the classification as 4810 99 in view of use for pouches and flexible packing wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of chemical processing that was interpolated without validation through opportunity to controvert. He claimed that the conclusion in the test report incomplete for not having responded to the specific query that was within their remit and unsubstantiated by suppression of the method for determination of pulp content - had been contrived by the first appellate authority to press the denial of the entitlement to concessional duties at the instance of the investigative agency evident in irresponsible procrastination to conceal lack of concrete evidence and informed inquiry for ensuring their unconcealed objective. 14. He further contended that the several documents, submitted to and emanating from the authority nominated under the Agreement for certifying the origin, had categorically placed the goods within the six digit level subheading of the Harmonized Code of Commodity Description System declared in the bill of entry and that the customs authorities, by selective validation of contents to suit their convenience, had eroded their own credibility as administrators of the law. This, he further pointed out, was evident in appropriation, and discarding, of the descriptions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence. The onus was not discharged. Assuming therefore, that the Tribunal was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless, have been allowed. xxxx 7. Learned Counsel for the Revenue submitted that the matter be remanded to the Tribunal so that the evidence on record may be reappreciated. As we have stated, no evidence was led on behalf of the Revenue. There is, therefore, no good reason to remand the matter. 15. According to Learned Authorized Representative, the order of assessment could not be faulted for not foreclosing an investigation that was prompted, and justifiably so, by the abrupt departure from the past practice of clearance under a sub-heading that turned out to be the solitary exception among coated paper otherwise entitled to preferential rate of duty in furtherance of the bilateral trade agreement with Japan and for having relied upon the purported admission by the proprietor during investigation that the coated paper imported by them had been manufactured out of pulp extracted entirely from chemical processing of wood. In support of the confirmation of the revision in classification b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the imported paper proceeds from the juxtaposing of coated paper of headings 4810.13, 4810.14, 4810.19, 4810.22 and 4810.29 with the uncoated paper of heading 48.02 in the Explanatory Notes to Harmonised System of (HS) Nomenclature as the authority to rely upon the parameters in note 5 of chapter 48 of the First Schedule to Customs Tariff Act, 1975 is, for several reasons, not acceptable. To begin with, that line of argument, not even hinted at in the findings of the lower authorities, had not been offered to the appellant at any stage hitherto. To permit that to influence the proceedings at during the second appeal stage is tantamount to acknowledging the propriety of the trend that has marked the progress of this dispute: interpolation of alternative submissions to shore up the denial initiated at the instance of the investigating agency. We are also not convinced that the said Explanatory Note is intended for application of the technical parameters of uncoated paper when it could as well be intended to offer a distinction for grafting a national policy into the tariff by enumeration of items or in assigning of tax rates. Intuitively too, the ash content generated by comb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the pulp used for manufacture of the impugned goods has been derived from chemical processing of wood. 19. The emphasis placed by the original authority on the inculpatory statement of the proprietor of the importing entity has been dwelt upon in the impugned order to validate the test result thus 18 The test report corroborates the statement given the proprietor of M/s. PLG Impex before the Directorate of Revenue intelligence (DZ) wherein he had admitted that said goods have been manufactured from chemical pulp only. Thus it is quite evidence that the consignments being imported by the appellant under the above referred Bill of Entry are appropriately classifiable under Customs Tariff Heading 481013 and not under 481029 or 481099 even without placing the importer on notice that it was intended to be used to their detriment in the proceedings. The context of the purported admission is, thus, not apparent on record and, with denial opportunity of defence, the extent of corroboration remains undeterminable. Consequently, the test report and the said admission, posited by the first appellate authority as mutually validating the conclusion that pulp was derived from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to submit the required fibre analysis reports deliberately since the onus to prove that the declaration submitted by the importer is correct is on the importer so the appellant has to prove that the coated paper imported by the appellant has fibres more than 10% obtained from mechanical or chemi-mechanical process which the appellant has failed to prove . , blurring the line separating investigation and appellate jurisdiction, is also contrary to the mandate in HPL Chemicals Ltd and in Hindustan Ferodo Ltd. 21. The certification evincing the origin of the goods, and based on production process intimated by the manufacturer, is the threshold qualification for preferential rate of duty. The rules of origin stipulate ascertainment of the source, and extent, of content in a manufactured. The partial acceptance of origin in the certificate while casting aspersions on the classification therein is not consistent with treaty mandate of presumption of authenticity unless expressly established otherwise. 22. The order of assessment revised the classification without the assistance of the samples and, in the light of our observations on the reliability of the admission statement as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, New Delhi clearly specifies that The sample in the form of cut piece of white paper having glossy surface on one side. It is composed wholly of chemical pulp and is coated on one side with inorganic substances (Kaolin and calcium carbonate) : in respect of sample drawn from the consignment covered under Bill of Entry No.7146553 dated 07.03.2020 (Lab No.CL-578 1/24.9.2020) it clearly stated that The sample in the form of cut piece of white paper. It is composed wholly of chemical pulp and is coated on both sides with inorganic substances (Kaolin and calcium carbonate) ; in respect of sample drawn from the consignment covered under Bill of Entry No.7146553 dated 07.03.2020 (Lab No.CL-579 I/24.9.2020) it clearly stated that The sample in the form of cut piece of white paper having glossy surface on both sides. It is composed wholly of chemical pulp and is coated on both sides with inorganic substances (Kaolin- and calcium carbonate) ; and in respect of sample drawn from the consignment covered under Bill of Entry No.7146553 dated 07,03.2020 (Lab No.CL-580 I/24.9.2020) it clearly stated that The sample in the form of cut piece of white paper having glossy surface on both sides. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h submission has been made on behalf of Revenue or has been elaborated upon in proceedings before the lower authorities. The absence of any submission, and reference in the submitted material, on this technical aspect suggests that, after transformation into paper, lignin content of pulp is not ascertainable. Had it been otherwise, that would have been the priority in any investigation and the passing of time since November 2019 does not appear to have sufficed for this fundamental ascertainment. The unqualified, and unexplained, inclusion of chemical in the test report does not find acceptance as indicative of lignin , or its absence, in the paper imported by the appellant. 25. Yet, the universal customs classification code did segregate paper produced from pulp of chemical or, substantially of chemical processing , and paper produced from pulp of mechanical or chemi-mechanical processing and the possibility of distinguishing the two is implicit thereby. It was, probably, owing to the uniformity of rates of duty for the articles covered within heading 4810 of the First Schedule to Customs Tariff Act, 1975 that such disputation did not arise to bring the mechanism for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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