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TMI Blog2022 (5) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1996 (12) TMI 49 - SUPREME COURT] , wherein it was observed that, it is not in dispute before us as it cannot be, that onus of establishing that the said rings fell within Item No.22 lay on the Revenue. Revenue has led no evidence. The onus was not discharged, therefore, the Tribunal was right in rejecting the evidence that was produced on behalf of the appellant, the appeal should nevertheless have been allowed. It is further noticed that the appellant had sought cross examination of the persons, whose statements were relied upon by the Revenue in support of its allegations. But the cross examinations have been denied arbitrarily. Thus the impugned order is bad for violation of principles of Natural justice as well as the mandate of section 138B of the Act. The goods under import are to be classified as per CTH heading claimed/declared by the appellant in the bills of entry. Accordingly, we hold that rejection of transaction value is also bad and thus, declared value has to be accepted. Redemption fine and penalties on the appellants are also set aside - appeal allowed - decided in favor of appellant. - Customs Appeal No. 86184 - 86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, it appeared that the import made by the appellant in absence of specific authorisation by DGFT, is prohibited and as such, the same is in contravention of FTP, violating the provisions of Section 111 (d) (m) of the Customs Act and thus, liable to confiscation. Show cause notice dated 14.10.2020 was issued and the goods were seized. The details Bill of entry wise are as follows:- Table- A Importer M/s.Jaymco Polymers Pvt.Ltd. IEC 0310057744 Bill of Entry 6356219 dated 04.01.2020 IGM No. 2243189 dated 2.1.2020 Country of Origin Kuwait Description of Goods CTH Mixed Mineral Hydrocarbon Oil- CTH27101988 Quantity 85370 Kgs. Invoice No. Date MEDUKW032040 dated 04.12.2019 Declared Invoice Value (C F) 50365.35 USD Exchange Rate 1.00 USD = 72.15 INR Supplier M/s. Babji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... USD Exchange Rate 1.00 USD = 72.40 INR Supplier M/s. Babji International Co. Kuwait. Container No. MEDU5654814, MEDU5861745, MEDU6929217 and TGHU0968761 Goods as classified by Revenue Diesel CTH 27101944 Declared Assessable Value 31,24,128.44 Re-determined Value @ Rs.43.14/Ltr. 37,83,723.12 Table- D Importer M/s. Jaymco Polymers Pvt.Ltd. IEC 0310057744 Bill of Entry 6024354 dated 10.12.2019 IGM No. 2241215 dated 10.12.2019 Country of Origin Qatar Description of Goods Mineral Hydrocarbon Oil-CTH27101990 Quantity 160300 Kgs. Invoice No. and Date QT-SMB-INV-100 dated 02.12.2019 Declared Invoice Value (C F) 953 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he, inter alia, stated that he had never visited any customs House or Bombay Test House and all the documents were handled by the Customers Broker/ IOCC Shipping Company including the managing of the documents from Bombay Test House. He further stated that Shri Taranjeet Singh Rathore is the person in the Customs broker firm, handling all the customs clearances. 5. It appeared to Revenue that the appellants have been importing Kerosene /diesel by mis-declaring the same as MHO/MMHO and IMRO in connivance with the supplier and the Customs Broker. It further appeared that the appellants have admitted to the import of prohibited goods by way of mis-declaration and to get the same cleared for home consumption. 6. As the provisional release was not being given, the appellant had also approached the Hon ble Bombay High Court for directions to allow proper storage of the consignment being inflammable and had also prayed for provisional release to be allowed by the Revenue. Thereafter, Revenue passed order dated 31.08.2020 for provisional release, subject to the conditions:- (i) Execution of bond of Rs. 2,90,36,082/-; (ii) Security deposit of Rs.3,77,32,753/- on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the said Notice was scheduled on 22.10.2020 and duly attended by the Appellant s authorized representative. Pursuant to the hearing, the Appellant under cover of his email dated 23.10.20, filed its defence reply dated 22.10.2020 wherein categorically rebutted all the allegations and insinuations levelled against it in the Notice, as also adduced cogent reasons and submissions alongwith binding precedents to show and establish that the product in question was not kerosene / High speed diesel. Meanwhile the Hon ble Tribunal was pleased to allow the early hearing application and the matter was ultimately scheduled for final hearing on 01.12.2020 on its specific prayers with regard to harsh and unreasonable conditions imposed by the Commissioner of Customs, NS(V) while permitting the provisional release of the consignment in question. The Appellant was shocked and surprised by the Adjudication Order dated 23.11.2020 passed by the Adjudicating Authority and thereafter apprised this Tribunal about the same, and withdrew its appeal filed before the Tribunal against the Order dated 31.08.2020 (prov. release). 9. In the Order-in-Original No. 427/2020/ADC/NS-I/Gr. I IA/JNCH da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t imported vide Bill of Entry No. 6024354 dated 10.12.2019, 6025517 dated 10.12.2019 and 6227454 dated 25.12.2019 is alleged to be Kerosene. The Appellant urged that the DYCC, JNCH has failed to test material parameters such as burning Quality and Colour, which are otherwise mandated under IS:1459, to be satisfied for conforming whether a product is kerosene or not. The Appellant has relied upon settled law laid down by the Hon ble Apex Court in the case of CCE vs Sushma Textiles Ltd 2004 (167) ELT 487 (S.C.) C. The samples have not been drawn in accordance with the methodology in the prescribed containers as required under the BIS Specification IS 1447-1 rendering the Test Reports, a complete nullity. D. Non-specification of method of testing in the Test Reports renders the same completely unreliable. E. Case laws relied by court below in the impugned order are irrelevant. i. Reliance Cellulose Products Ltd. Vs CCE 1997 (93) ELT 646 (SC) ii. Anand Mohata Agro Indus P. Ltd. Vs C.C. Import 2019 (370) ELT 1656 iii. Collector of Customs, Madras and ors Vs D. Bhoormull 1983 (13) ELT 1546 (SC) F. The issue in dispute is no longer res-integra and stands deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement unless the same is corroborated with some reliable and independent evidence. C. There was no connivance between the overseas supplier and the Appellant. The COO, Certificate of Analysis and other documents are prepared by the overseas supplier and admittedly no proceedings have been initiated against them. D. The findings of the Adj. Authority that the Appellant had connived with the CHA in order to import prohibited goods is completely bereft of any merits and not supported by any evidence. No reliance ought to have been placed on the Statement of Shri Tarachand Rathod, staff of CHA as Shri Rathod had retracted from his statement dated 21.08.2020 under cover of his letter dated 24.08.2020. Shri Rathod has also filed an affidavit before the Hon ble Bombay High Court during the course of proceeding with regard to provisional release of the goods, citing that his statement was recorded under-force and duress. The said affidavit and letter of retraction was duly filed before the OA. E. Further the Cross examination of Shri Rathod was denied by the OA. In this regard, the Appellant has relied upon the judgment of the Hon ble Madras High Court in the case of Thilagarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or materials. D. The importer has violated the policy condition for import of SKO/Diesel and therefore is liable for confiscation under Rule 17(1) of the Foreign Trade (Regulation Rules, 1993). As per Rule 17(2) of the said Rules, the Adjudicating Authority was required to impose redemption fine equivalent to the market value of the goods. 13. The Commissioner (Appeals) was pleased to uphold the order-in- original dated 23.11.2020, and dismissed all the 3 cross appeals by these appellants and Revenue. 14. Being aggrieved, the appellant is before this Tribunal, inter alia, on the grounds urged before the Court below. 15. Ld. Counsel for the appellant further urges that the test reports issued by the DYCC/JNCH are not reliable for the reasons that firstly, the samples were not drawn properly, as prescribed in IS 1447-1 and secondly, the test reports are not conclusive as the DYCC/JNCH have not tested all the parameters suggested in Indian Standards for petroleum products. It is urged that test of all parameters prescribed is mandatory to conclusively establish the identity of the alleged petroleum products (Diesel/Kerosene). Since the test reports of the so called rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int = 248.9oC 16.1.2. The Appellant submits that the aforesaid reliance placed by the Respondent on the Test Report and the consequent conclusions drawn in the impugned order, to hold the product in question is kerosene, are completely untenable. The Appellant submits that the Respondent has erroneously assumed that the parameter of acidity (inorganic) has been tested and reported in the Test Report. The Test Report is, in fact, completely silent and has not reported the said parameter, clearly evidencing the callous approach of the Respondent. In view thereof, the Respondent has erred in holding that 10 parameters have been tested and reported in the Test Report as per the Specification IS 1459. 16.1.3 What the Respondent has failed to appreciate is that there are 8 parameters/properties under the IS 1459: 1974 which are required to be tested and reported for confirming whether a product is kerosene or not and not 10, as otherwise held by him. What the Respondent has further failed to appreciate, that though the Test Report has reported 9 parameters, however, in effect these are only 6 parameters which have been tested and reported in the Test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Test Reports No. 231 SIIB (I) dated 17.12.2019. Insofar as the Bill of Entry No. 6024354 dated 10.12.2019 is concerned, reliance has been placed on the Test Reports No. 231dated 17.12.2019 by the Respondent to hold that the consignment imported is Kerosene is bad and untenable for same reasons and errors, as enumerated in para 16.1.1 to 16.1.7. 16.3 Bills of Entry No.6025517 dated 10.12.2019 and corresponding Test Report No. 232 SIIB (I) dated 17.12.2019 16.3.1 Insofar as the Bill of Entry No. 6025517dated 10.12.2019 is concerned, reliance has been placed on the Test Reports No. 232 dated 17.12.2019 by the Respondent to hold that the consignment imported is Kerosene. In addition, the Respondent has, after tabulating the parameters tested and reported in the said Test Report dated 17.12.2019 held that As per above Test Reports, I find that tests have been carried out as per specification mentioned in IS 1459/1460 and tested all 10 parameters and confirms to Superior Kerosene Oil/Diesel. In this regards, the Appellant submits that the said reliance placed by the Respondent on the Test Report and the conclusions drawn thereon is completely untenable to say the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Quality test is not considered, still the Respondent has failed to show and establish the satisfaction of the other two mandatory parameters rendering the Test Report completely inconclusive and thereby unreliable. The impugned order, thus, deserves to be quashed and set aside. 16.3.6 The Appellant had categorically urged that the said 4 mandatory parameters having not been tested, reported and satisfied, the Respondent has erred in ignoring the same, rendering the impugned order completely untenable. 17. It is further urged that the Revenue have mis-directed itself by presuming that the product imported is kerosene and thereafter, proceeded to refer and relied upon some literature to discuss the properties, which determine the quality of kerosene. It is further urged that that the parameters of burning quality in IS 1459, has clearly stipulated the true characteristics, which are required to be tested and satisfied i.e. CHAR value bloom on glass chimney. Instead of testing these prescribed particulars, the test report reports Flash Point, which is completely illogical, unintelligible and devoid of any merit. 18. Although the adjudicating authority have referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 19.2 It was submitted that even after obtaining the said Test Report, the Customs, without assigning any reasons thereto, had forwarded fresh samples once again to DYCC, JNCH for testing and ascertaining the nature of the consignment in question. It is submitted that the DYCC, JNCH thereafter, for the same consignment, issued another Test Report No18 dated 07.01.2020, which forms the basis of the impugned order, wherein it, after testing similar parameters to that of its earlier Test Report dated 21.12.2019 and finding almost identical values, opined that the above tested parameters are in the range of diesel oil. It is other than light oil preparation, solvent (125/240), kerosene and vacuum gas oil . 19.3 In view of the aforesaid, it was submitted that inasmuch as the same Lab, on testing similar parameters and arriving at almost identical values, has arrived at two different conclusions, no reliance whatsoever is to be placed on the Test Report dated 07.01.2020 to draw any adverse conclusion or inference against the appellant. The Respondent ought to have appreciated the aforesaid submissions made by the Appellant, which goes to the root of the matter, however, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s much as the Test Report has not tested and reported the aforesaid 16 mandatory parameters/ properties, the said Test Report is inconclusive to hold that the consignment is one of diesel oil. Thus the said Test Report, by no stretch of imagination, could have been used as a reliable piece of evidence for drawing any adverse inference/ conclusion against the Appellant. 20. Bill of Entry No. 6356219 dated 04.01.2020 and Test Report No. 30 SIIB (I) dated 10.01.2020. 20.1 Insofar as the consignment/ product imported under cover of Bill of Entry No. 6356219 dated 04.01.2020 is concerned, reliance has been placed by the Respondent on the Test Report No.30 dated 10.01.2020 to hold the consignment in question is one of diesel oil. In this regards, the Appellant submits that the reliance placed by the Respondent is untenable. 20.2 The Appellant submits that what the Respondent has failed to appreciate is the fact that there are 21 parameters/properties under the IS 1460 (as amended) which are required to be tested and reported for confirming whether a product is diesel oil or not. On a perusal of the Test Report dated 10.01.2020,it is observed that though the Test Report ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly categorically urged that no reliance whatsoever ought to be placed on the letter dated 11.02.2020 issued by the Jt. Director (NFSG), JNCH, NhavaShava in respect of the Test Report dated 10.01.2020. The Appellant had submitted that the Test Report and the conclusion drawn thereon are completely comprehensible and that there is no confusion as to the fact that the DYCC, JNCH in its Report had concluded that it may be diesel oil. In view thereof, the Appellant had submitted that since the conclusion is not specifically stating it is diesel oil, no adverse inference ought to be drawn against the Appellant. It is submitted that the Customs, on the other hand, has arbitrarily tried to impinge onto such conclusion and has therefore referred to and relied upon the letter dated 11.02.2020 to allege that the product imported is diesel oil. 20.7 It was therefore submitted that inasmuch as the said letter dated 11.02.2020 is at complete divergence to the conclusions drawn by the Chemical Examiner, DYCC, JNCH in its Test Report dated 10.01.2020, on identical parameters and values, no reliance whatsoever ought to have been placed on the said letter dated 11.02.2020. Accordingly, the Test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for gasoline, aviation jet fuel , kerosene , crude oil, white spirit, medicinal white oil and special boiling point products unless testing indicates there is no problem with solubility, contamination, or loss of light ends. NOTES 1 In no circumstances shall non-linear (conventional)polyethylene containers be used to store samples of liquid hydrocarbons . This is to avoid sample contamination or sample bottle failure. 22. In support of his contentions, ld. Counsel relies on the ruling of the Apex Court in the case of Tata Chemicals Vs. CCE reported in 2015 (320) ELT 45. It is further urged, that the observations in the impugned order by the Court Below- that samples were drawn in presence of the CHA, who are the authorised representative of the appellant and The said representative did not object to at the time of drawing the samples, is of no avail to Revenue. The Revenue cannot take advantage of its wrong. Further, such wrong committed goes to root of the matter, vitiating the Test reports. Thus, the very basis for the allegation of Revenue being un-reliable, the impugned order is vitiated and fit to be set aside. It is further urged that when law prescribes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with customs brokers were getting manipulated test reports issued from the office of the DYCC-JNCH by braving the officers therein. It is further urged that in the retraction made by Mr. J. Roda, Director of the appellant company is of no avail and has been done only on legal advice by way of afterthought. 26.2 Similarly, Mr. Taranjeet Singh, G-Card Holder of the Customs Broker has also admitted such facts and has affirmed the statement of the Director, Mr. J. Roda. It is further urged that HSD and SKO are the restricted goods and importable only by State Trading Enterprises. Thus, the said goods are prohibited for the appellants, as per definition in Section 2 (33) of the Actof the Prohibited Goods. It is further urged that Revenue has rightly relied on the principle of preponderance of the probability in absence of comprehensive test report. It is further urged that reliance placed by the appellant on the ruling of the Apex Court in the case of Sushma Textiles (supra) is misplaced as the said ruling is in relation to textiles. 26.3 It is further urged that admittedly, all tests mentioned in IS Standard 1459 1460 have not been carried out, but submits that whatever tests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establish that the said two parameters are met with. Thus, Revenue has failed to demonstrate how the other two said parameters were also met. 32. It is also not in dispute that for a product to be classified as diesel under CTH 27101944, it has to meet the specifications as per Supplementary Note (e) to Chapter 27, which reads as under:- High Speed Diesel (HSD) means any Hydrocarbon Oil conforming to the Indian specification/standard of BIS, IS:1460:2005. 33. It is further evident that as per aforementioned IS 1460:2005, the product has to meet the prescribed 21 parameters, wherein in the present case, only six parameters have been tested. The Acidity, Ash%, Copper Strip Corrosion for 3 h at 50% C, total sulphur contents, etc. have not been tested so as to verify the product can be classified as diesel-HSD. 34. The law with respect to the burden of proof or classification is on the Revenue, is well settled by the Hon ble Supreme Court as held in HPL Chemicals Vs. CCE 2006 (197) ELT 324, wherein the Hon ble Supreme Court has observed as follows:- 29 . This apart, classification of goods is a matter relating to chargeability and the burden of proof is square ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the requirement given in Table I, when tested according to the appropriate methods prescribed under P series of IS: 1448*, reference to which is given in column 4 of the table. TABLE 1 REQUIREMENT FOR KEROSENE Sl. No. Characteristic Requirement Method of Test (Ref.to P Of IS:1448 1. Acidity, inorganic Nil P:2 2. Burning Quality Char value, mg/kg of oil consumed, Max. Bloom on glass chimney not darker than grey. 3. Colour (Saybolt)+ Min+10 P:14 4. Copper strip corrosion For 3h at 50 o C P:15 5. Distillation: P:18 a) Percent recovered below 20 Min.200 o C b) Final boiling point, 0C, Min.300 o C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances and the evidences on record, we find that in absence of evidences that the imported goods meet all the specifications as laid down in Supplementary Note (c ) to Chapter 27 for classification of a product as Kerosene and Supplementary Note ( e ) so as to classify a product as diesel, the case made out by the Revenue cannot be sustained. 39. We also find that the test reports are vitiated and not reliable as sampling has been done improperly and not in conformity to the prescribed specifications. We further find that there is miscarriage of justice by denying the prayer for retest. We further hold that in the facts of the present case there is no scope for applying preponderance of probability or the principle of probability, as there are explicit rules and or instructions laid down for classification. We also hold that the Test reports relied upon by Revenue are inconclusive. 40. In view of our findings we allow the appeals and set aside the impugned order. The goods under import are to be classified as per CTH heading claimed/declared by the appellant in the bills of entry. Accordingly, we hold that rejection of transaction value is also bad and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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