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TMI Blog2024 (2) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... arried out, the claim of the classification of the department is applicable only in respect of goods contained in the containers from which the samples were drawn and not for the other containers. Enhancement of the valuation - HELD THAT:- The enhancement was made merely on the consent letters given by the directors of the appellant. In our view on hear say from director valuation cannot be decided if there is any doubt on the valuation, the due process of law as contemplated under Section 14 of the Customs Act read with Customs (Determination of Value of imported value) Rules, 2017 must be complied with. However, in the present case neither any contemporaneous value was adopted nor any method as prescribed under Section 14 read with Custom Valuation Rules, 2007 was followed. Therefore, merely on the basis of statements of director valuation cannot be enhanced. Therefore, the enhancement of the value is not sustainable in the facts of the present case. This issue has been considered in the case of Guru Rajendra Metal Alloy wherein the tribunal held that only on the basis of the consent letters of the importer enhancement of valuation cannot be made - the enhancement of the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assified by the Appellants or under Chapter Heading No. 27079900 as classified by the Revenue. (ii) Whether the value of the imported RPO can be enhanced based on the consent letters given by the directors of the Appellants at the time of release of the goods, without following the due process of law as contemplated under Section 14 of the Customs Act read with Customs (Determination of Value of imported value) Rules, 2017 (iii) Whether the Appellants mis- declared the Country of Origin in the Bills of entry filed by them. (iv) Whether the quantum of penalties and redemption fine imposed disproportionate to differential duty involved in the matter 1.3 The order of the Adjudicating Authority was based on the test report of Custom House Laboratory at Kandla. Few test reports of Custom House Laboratory, Kandla and the statements of the Director of the appellant M/s. Rajkamal Industrial Pvt Ltd and statements of CHA. 2. Shri Hardik Modh, Learned Counsel along with Shri Amit Laddha, Learned Advocate appearing on behalf of the Appellant submits that the Custom Department relied upon the Chapter Note 2 of Chapter 27 for rejecting the classification under Chapter Heading 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case none of the reports provides the testing method and therefore, the same is not applicable. In the following cases, it is held that whenever the method of testing is relevant, the method adopted ought to be mentioned in the test report. He takes support of the following judgments:- UK Paints Industries vs. Collector of Customs 1994 (74) ELT 392 (T) Samdur Manganeze Iron Ores Ltd vs. Commissioner of Customs 2004 (177) ELT 1094 (Tri.Mum) Samdur Manganeze Iron Ores Ltd vs. Commissioner of Customs 2007 (218) ELT 291 (Tri. Mum) 2.3 As regard the enhancement of the value of the goods, he submits that both the lower authorities enhanced the value based on the consent letters by the director of both the importers. It is settled law that the burden lies upon the revenue to show that the value declared by the importer is incorrect. Once, it is found that value declared by the appellant is incorrect, proper methodology as provided under Section 4 read with Customs Act read with Customs (Determination of Value of Import Goods) Rules, 2007 is to be followed for ascertaining correct value of the imported goods. The lower authorities ought to have ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to have been enhanced on the basis of the Consent letters. There is no undue benefit in declaring another country of origin. Therefore, he prays that the appeals may be allowed with consequential relief. 3. Shri Himanshu P Shrimali, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both sides and perused the records. We find that the main issue to be decided in the present case is the classification of Rubber Processing Oil imported. The lower authorities have decided the classification under Chapter Heading No. 27079900 on the basis of a test report of Custom House Laboratory, Kandla. The basis of department s claim for classification of RPO is the chapter note 2 of chapter 27 of Customs Tariff Act which is reproduced below: 2. References in heading 2710 to petroleum oils and oils obtained from bituminous minerals include not only petroleum oils and oils obtained from bituminous minerals but also similar oils, as well as those consisting mainly of mixed un- saturated hydrocarbons, obtained by any process, provided that the weight of the non-aromatic con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions made by both the sides, and perused the rerecords. In the present appeal, issue to be decided by us in the appeal filed by M/s. Amit Petrolubes Pvt Ltd are as under :- i. Classification of Rubber Processing Oil (RPO) ii. Country of origin of said goods iii. Enhancement of declared value twice. 4.1. As regards classification of Rubber Processing Oil (RPO), we find that was held by the revenue under CTH 27079900 treating the parameters of aromatic constituents is 50% i.e. more than non-aromatic constituents on the basis of test report dated 26.09.2012 issued by Customs laboratory. 4.2. The submission of the appellant is that test report of Customs laboratory, Kandla does not mention, the method adopted by customs laboratory for testing the sample. Therefore, the said test report cannot be qualified as evidence to decide the classification. We find that as against the above test report dated 26.09.2012. The Quality Certificate No. TOP 2012/COQ-148 dated 02.08.2012 provided by the supplier M/s. The Oceanic Petroleum Source Pvt Ltd., Singapore shows aromatic content as 35.8 measured by adopting ASTM D2140 method. Moreover, accredited laboratory namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of duty on this basis. 4.6. Considering the said decision of the Tribunal and fact of the present case, we hold that no penalty is sustained on this ground. 4.7. As regards the 3rd issue i.e. enhancement of the value of the imported goods twice, we find that once the value was enhanced from USD 500 PMT to USD 515 PMT , which was accepted by the appellant. However, the value was further enhanced to USD 585 only on the basis of one invoice bearing No. TOP SPL /CP/34 dated 09.07.2012 produced by the shipping agent. 4.8. On this basis, the assessable value is determined by adding freight @20 % and insurance @ 1.125%. We find that the appellant tendered copy of Bill of Lading No. MYPKGINIXY517631 dated 12.07.2012 for the subject goods confirming that freight was pre-paid. Therefore, when the freight is pre-paid and inclusive in the price, there is no requirement to add element of freight @20% for USD 585. 4.9. It is also observed that about the aforesaid invoice produced by the shipping line, the appellant had no knowledge and it is not also known when such invoice was produced before custom authority at the port of export. Hence, we are of the view that, it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered about 30 products, test reports relatable to only 4 products are available and there is absolutely no material against the appellant in so far as the remaining 26 products are concerned. He submits that presuming though denying that the test reports of CRCL are correct, the same can be made the basis for classifying only those products to which the test report relates. The same cannot be made applicable to the other items for which no samples were either drawn or if samples were drawn, there is no test report. For this proposition he relied upon the Tribunal s decision in the case of S.D. Kemexc Indus. v. CCE - 1995 (75) E.L.T. 377. In the said decision assessee was manufacturing 22 different types of chemicals. The Department drew samples only from two types of chemicals. It was held that test reports can be made applicable only for the two products for which the samples were drawn and not to the rest of the products. Following the ratio of the above decision we fully agree with the contention of the ld. adv. that the test reports, if at all could be made applicable only to the 4 items in question to which it belonged to. The balance 26 products would be classified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el under the law and their claim for classification under Heading 27.15 cannot be rejected on the ground that under the Erstwhile Tariff the goods were being classified under item relatable to paints, varnishes etc. especially when the entire tariff structure has been changed and the classification under the new Tariff Act is required to be made in the light of interpretative rules, chapter notes and section notes with guidance from explanatory notes in Harmonised commodity description and coding system. In this matter the appellant has referred to a number of decisions. It is seen that there is no dispute about the said legal position that in the matter of classification there cannot be any res judicata and assessee can always claim change in classification of the goods. 10. The appellants claim for classifying the goods in question under heading 27.15 which covers Bituminous mixtures (including emulsions suspensions and solutions) based from natural Asphalt, Natural Bitumen, Petroleum Bitumen, mineral tar or mineral tar pitch, is based upon their production records. The appellants are diluting the asphalt, Bitumen etc. in solvents for manufacture of the said goods. There wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmittedly no other constituent, whatsoever, was found by the examiner in the said samples. The said report in fact favoured the appellants inasmuch as the goods consisting of only Bitumen and solvents and nothing but Bitumen, are classifiable under heading 27.15. As for the report of CRCL is concerned, the appellants have challenged the same on various grounds and have questioned the correctness and authenticity of the same. In their written submissions filed during the course of hearing the appellants have submitted as under in respect of the said report of the CRCL :- (i) The said samples were sent to CRCL on 8.12.88 and were registered at CRCL on 9-3-1989, that is, after about 4 months. Nothing is known as to what happened to the samples during the said period of 4 months. (ii) For a period of about 1 year 3 months since sending of the said samples on 8-12-1988 CRCL remained totally inactive in the matter. The purported test reports of the three samples were given by CRCL in its letter dated 7-2-1990. Nothing is known as to what happened to the samples during the said long period of more than one year and as to why the testing was not conducted during the said long pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of presence of any epoxy resin in the first report of the chemical examiner. The appellants production records also do not show that any resin has been used by them. This was also not the case of the Revenue in the show cause notice. The appellants request for giving composition of the goods was also turned down. In these circumstances there remains no doubt that such a report given by CRCL after a period of one year and three months of drawing of the sample cannot be given much evidenciary value, especially when the same is contrary to the earlier report and the other entire facts on record. If the said report is taken out of consideration nothing remains on record to tilt the case in favour of the Revenue. 16. The appellants have also referred to the HSN explanatory notes in support of their contention that Bitumen mixtures are properly classifiable under Heading 27.15. The use of the expression includes in the explanatory notes under Heading 27.15 only shows that the list is exhaustive and cannot be limited to the very view mentioned therein. Clause (d) below Heading 27.15 in respect of excluded category of items also supports them. The said clause (d) is reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Act read with Customs (Determination of Value of imported value) Rules, 2017 must be complied with. However, in the present case neither any contemporaneous value was adopted nor any method as prescribed under Section 14 read with Custom Valuation Rules, 2007 was followed. Therefore, merely on the basis of statements of director valuation cannot be enhanced. Therefore, the enhancement of the value is not sustainable in the facts of the present case. This issue has been considered in the case of Guru Rajendra Metal Alloy wherein the tribunal held that only on the basis of the consent letters of the importer enhancement of valuation cannot be made. The case of Guru Rajendra supra is based on the Hon ble Supreme Court judgment in the case of Century Metal Recycling Pvt. Ltd. Vs. Union Of India reported at 2019(367) ELT 3 (SC). Therefore, as per settled law on the facts of the present case, the enhancement of the value by the lower authorities is without any legal basis. Hence, the same will not sustain and accordingly, the enhancement of the value done by the Revenue is set aside. 4.6 As regard the issue of mis-declaration of Country of Origin in the bills of entry filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1962. Further, I find that in the case of Oriental Containers Limited v. Union of India (cited supra), the Hon ble High Court of Bombay in para 9 has observed as under : 9. Having heard the Counsel on both the sides, we are of the opinion that in the present case, it is admitted by the Customs authorities that the petitioners are not party to the fraud and there was no mala fide intention on the part of the petitioners in importing the Tin Plate/Waste instead of Tin Plate Prime. In fact, the petitioners have paid to the foreign supplier the price of tin plate prime and in return got tin plate waste. The petitioners have paid the customs duty payable on Tin Plate Prime. Under the circumstances, when the petitioners are innocent victims of the fraud played by the foreign supplier and the petitioners have suffered double jeopardy by paying the price and the duty payable on Tin Plate Prime, on account of the fraud committed by the foreign supplier, the petitioners could not be held to be guilty of violating any of the provisions of the Act and hence confiscation of the goods is not justified. It is pertinent to note that the rate of customs duty on Tin Plate Prime is higher th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods with a view to avail the benefit of lesser rate of duty. We, therefore, set aside the confiscation and consequently the redemption fine imposed on them in both the appeals as well as the penalty. 7. In view of my discussion above, I am of the considered view that the impugned order is not sustainable in law and therefore I set aside the impugned order in totality and allow the appeal of the appellant with consequential relief, if any. 4.7 From the above decision it can be seen that in the identical circumstances, this Tribunal held that for incorrect mention of country of origin, the importer cannot be penalized. Accordingly, in the present case also considering overall facts and the fact of incorrect declaration, if any, regarding country of origin in the Country of Origin Certificate, the appellant is not liable for any penalty or fine. 4.8 As regard the appeals filed by individuals as observed by us above, since the impugned order against the main appellants is not sustainable, there is no reason to continue the personal penalty upon the individuals co-appellants. 5. In result, the impugned order is set aside. Appeals are allowed, with consequential relie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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