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TMI Blog2023 (8) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... o be drawn from each sub lots by drawing of samples from the same sub lots. In relation to requirement of testing of Coking coal which as per the appellant required reasons to be recorded under Section 18(b) in view of decision in case of Tata Chemicals [ 2015 (5) TMI 557 - SUPREME COURT] by the proper Officer indicating why it deemed if necessary to do the chemical test - It is found that the department has not provided any reason as to why the commodity was subjected to chemical test other than the emphasized portion above. Despite affording opportunity, department has not brought on record any administrative instructions or any circular etc. which required the Coking coal was required to be subjected to chemical test. It has also not brought on record any file note indicating why Proper Officer deemed it necessary to conduct chemical test or other test. There is nothing on record that the sampling was done by the department by segregating lots and sub-lots and not randomly. Further, the date of sampling by CRCL has not been indicated by the department even while seeking explanation in the year 2013 from the CRCL authorities regarding their opinion as to what will happen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 28 of the Customs Act 1962, which relied upon Test report dated 7-3-1996 of CRCL, New Delhi, as per which the Ash content was 21.33%. The Notice contended that since the ash content as per the said test report of CRCL, New Delhi was above 12%, the goods were not eligible for the said exemption and accordingly, the Notice demanded differential duty of Rs. 71,32,025/-, purportedly under Section 28 of the Customs Act 1962. The Appellant contested the Show Cause Notice and the CRCL Test report relied upon in the Notice. 5. By Order-in-Original dated 30-11-2004 (Page 22 of Appeal), the Assistant Commissioner of Customs confirmed the said demand for duty of Rs.71,32,025, purportedly under Section 28 of the Customs Act 1962. The said Order-in- Original, mentioned at Page 3, that the provisional assessment had been finalized on 24-3-1999. The said Order-in-Original was confirmed by the Commissioner (Appeals) by Order-in-Appeal dated 19-12-2012, against which Appellant preferred Appeal No. C/587 of 2005 to this Hon'ble Tribunal. 6. This Hon'ble Tribunal by its Order dated 19-12-2012 held that if as mentioned in the Order-in-Original the provisional assessment had been fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective, resort to provisional assessment and the entire chemical analysis of the imported goods done by the Department is ultra vires Section 18(b) of the Customs Act. 12. The said ratio and principle laid down by the Hon'ble Supreme Court squarely applies in the present case. In the present case also, the Appellant's claim for exemption as Coking Coal of ash content below 12% was duly supported by the Load Port Test Certificate, as per which the ash content was below 12%. As held by the Hon'ble Supreme Court in the said decision, in absence of any reason or ground advanced for doubting or rejecting the said certificate as defective, the assessing officer had no jurisdiction to resort to provisional assessment under Section 18 by sending the sample for test and accordingly, the entire chemical analysis of the imported goods done by the Department is ultra vires Section 18(b) of the Customs Act. 13. Further, the Hon'ble Supreme Court has in Paras 16 and 17 of the said judgment held that where admittedly sample sent for test by the department is not drawn by systematic sampling as provided in IS 436, the test report of such sample cannot be relied upon and it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn as provided in IS 416, no reliance can be place on the test report of such sample and it is immaterial that the method of sampling had not been objected to by the importer at the time of drawl of sample. 17. The learned advocate further submitted that this Hon'ble Tribunal has in the case of Adani Exports Ltd v CC-2010 (249) ELT 93 held that unless it is evident from the record that the sample of coal was drawn by Customs in accordance with IS 436, no reliance can be placed on test report of such sample. In any event no reliance can be placed on the CRCL Test Report on account of delay in testing and since CRCL did not have the instrument for testing prior to 2019: 18. Without prejudice to the aforesaid submissions, in any event, it is submitted that no reliance can be placed on the CRCL report for the following additional reasons: a) Admittedly, CRCL tested the said sample after delay of 11months from the date of sending of sample to CRCL, b) Admittedly, as per CRCL Brochure, it did not have the instrument for analyzing Ash content in coal prior to 2019, when analysis was carried out manually, as a result of which as per CRCL Brochure itself, results wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner and Commissioner (Appeals) have traveled beyond the Show cause notice and relied upon clarification dated 22-10-2013 obtained by the Deputy Commissioner from CRCL, behind the Appellant's back. The same was not relied upon in the Show Cause notice and no copy of the same was provided to the Appellant and no opportunity was given to the Appellant to respond to the same. By not providing a copy of the same before passing the Order-in-Original, the Deputy Commissioner deprived the Appellant of an opportunity to respond to/ rebut the same and to seek cross-examination of the signatory of the said clarification. 23. In view of the aforesaid submissions it was prayed by the appellants that, the impugned Order-in-Appeal is liable to be set aside. 24. In response, the AR of the department contested the appeal by firmly reiterating the points made by lower authorities. The Department sought, inter alia on the sampling procedure as laid down by the department itself in Chapter relating to appraising manual Volume-II issued by the department for sampling of Cargo same is reproduced below for ease of reference:- 6.16 6.16 Sampling of cargo 1. Call for sample-general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aiser should himself visit the docks and examine the goods. such inspection should be done on the same day. (adopted from g.i.m.i 25/5 /59-cus.(crc) dated 10-9-59 w.r.t. e.no.27/6/59-cus (crc) a.d.o.no.117/59) (iii) In all cases of doubt, samples should also be examined by the A.C.docks, who will countersign the Appraiser's notes on the bill of entry in confirmation of the assessment. (iv) When the A.C. or group A.O. considers that the test of any sample by the chemical examiner is necessary, he will forward the sample with the requisite memo duly filled up by the clerk and countersigned by the appraiser, to the chemical examiner under his signature in the usual manner. (v) in the absence of any record of previous test or in cases where the strength recorded is no longer valid, samples of all preparations containing spirit should be drawn for test unless the importers expressly state on the bill of entry not to be tested . This applies to preparations other than wines and liquors. (vi) Samples of dyes, which have not either been already tested within the specified period or which are not already included in the standard test, shall be similarly tested at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of whether the goods are supplied directly by a manufacturer or by a supplier in the country of export. Drawing of Samples avoidance of Delay-Instruction Reg.: In order no.505/83-c to 515/83 - c dated 12-9-83 customs, central excise and gold (control) appellate tribunal, commented adversely on the department for not drawing samples with promptitude and for reviewing and recovering duty after years of completion of tests. To avoid such a situation and to safeguard revenue, it should be ensured that samples, where necessary, are drawn with utmost promptitude and that follow-up action is taken without any loss of time. (re.ministry's letter 384/85 / 8 -au dated 6 - 4 - 84 ) . 25. It was also submitted that the present case the appellant had imported weak coking coal with Ash content less than 12% and availed the exemption of duty under Notification No. 19/1994-Cus dated 01.03.1994 (as amended) i.e. 5% of effective rate instead of tariff rate i.e. 35%). There are various category of Coal viz. Weak Coking Coal, Steam Coal, Anthracite Coal, Bituminous Coal etc. and all the categories have different market value in international market, which bearing on govt. revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Manual. 26.4 Secondly, without prejudice to the aforesaid submission, it is submitted that there is nothing in the said Appraising Manual which prescribes the method/ procedure of drawing of samples of Coal. Neither the letter of the Assistant Commissioner nor the letter of learned AR has specified any particular Para of the said Appraising Manual which prescribes the method/ procedure of drawing of samples of coal. There is no Para in the said Appraising Manual which prescribes drawing of only Random Sample of Coal as against the method of Systematic Sampling of Coal provided in IS 436, which requires dividing the entire quantity of coal into sub-lots and drawing of gross sample from each sub-lot and arriving at the average of test results of all sub-lots. In fact, at the hearing on 26-7-2023, the learned AR had produced letter from Assistant Commissioner forwarding the IS 436 as providing the applicable method for sampling of coal. 26.5 Accordingly, in terms of the said decision of the Hon ble Supreme Court in Tata Chemicals Ltd v CC 2015 (320) ELT 45 (SC), since no method/procedure of drawing of sample of imported Coal is prescribed in law, the applicable method/ pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant did not object at the time of sampling, it will not convert the illegality into a legal act. 11. Further, the Hon ble Supreme Court has held in Para 14 of the said judgment, that in absence of there being any reason or ground to doubt or reject the Load Port Test Certificate showing ash content below 12%, as defective, resort to provisional assessment and the entire chemical analysis of the imported goods done by the Department is ultra vires Section 18(b) of the Customs Act. 12. The said ratio and principle laid down by the Hon ble Supreme Court squarely applies in the present case. In the present case also, the Appellant s claim for exemption as Coking Coal of ash content below 12% was duly supported by the Load Port Test Certificate, as per which the ash content was below 12%. The Show Cause Notice on Page 19 of Appeal records that the Appellant had claimed the exemption based on the Load port test report. However, no reason or ground has been mentioned for doubting or rejecting the said certificate as defective. Consequently, the assessing officer had no jurisdiction to resort to provisional assessment under Section 18 by sending the sample for test and accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moisture 10.00%) of Indonesia origin at Porbander Port from Bengkulu and bill of entry No. F-5 dated 17.04.1995 was filed for clearance of the said consignment of 14861.380 MT (with moisture 10.00%) Coking Coal, declared Ash contents below 12 % (weak coking coal). The appellant had claimed assessment of Coking Coal of Ash contents below 12 % (weak coking coal) on the basis of invoice No. 95001 dated 11.04.1995 for US $ 7219665.84 at a rate of US $ 48.58 PMT C F Porbander port. The goods was classified under sub- heading no. 2701.19 of the customs Tariff attracting Customs duty @ 5% Adv. In terms of Notification No. 21/95 - Cus. Dated 16.03.1995, on the basis of certificate of sampling Analysis No. 1799287 dated 10.04.1995 issued at load port. As the commodity is subject to chemical test the bill of entry No. F-5 dated 17.04.1995 was assessed provisionally . (Emphasis supplied) 27.1 In relation to requirement of testing of Coking coal which as per the appellant required reasons to be recorded under Section 18(b) in view of decision in case of Tata Chemicals (cited supra) by the proper Officer indicating why it deemed if necessary to do the chemical test. We find that the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the Ash Content on air dried basis as 9.98%. In the same report total moisture on as received basis is 13.56% and inherent moisture (Air Dried), was 7.44%. The said certificate also certified that the sample was analysed in accordance with ASTM method. Further, at the Discharge Port at Okha, samples were drawn for every 2000 Metric tones of the said goods discharged by M/s. SGS India Ltd. which showed the date of attendance as 7-4-1997 to 16-4-1997. It also revealed the method of drawing of samples. The chemical analysis of the same on air dried basis showed the inherent moisture as 6.26% and Ash to the extent of 10.20%. The above two test reports are showing the Ash Contents to be less than 12% and thus are in favour of the assessee. 10. It is seen that Revenue drew the sample on 25-4-1997 and the same was sent to Chemical Examiner, Customs House Laboratory, Kandla by the Superintendent under the coverage of letter dated 8-9-97. As rightly pointed out by the learned advocate though the samples were drawn in the month of April, 1997, the same were sent for testing purposes in September, 1997. There is no explanation coming from the Revenue as to why the samples were k ..... X X X X Extracts X X X X X X X X Extracts X X X X
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