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TMI Blog2024 (10) TMI 1555X X X X Extracts X X X X X X X X Extracts X X X X ..... r its claim of classification of goods the entire proceeding is vitiated. As discussed above the facts of this case, the department did not discharge the onus to prove the claim of the classification of goods as NGL under tariff item 2710 1220 as correct. Therefore, the classification of goods as Naphtha under Tariff item 27101290 as declared by the appellant is held to be correct. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. RAJU Shri Vipin Jain with Mrs. Dimple Gohil and Shri Akshit Malhotra , Advocates appeared for the Appellant Shri Rajesh Nathan, Assistant Commissioner ( AR ) , appeared for the Respondent ORDER RAMESH NAIR The brief facts of the case are that the Reliance Industries Ltd., the Main Appellant in the instant case, imported Naphtha (A-180 grade) from Saudi Aramco Products Trading Company ( Saudi Aramco ), by classifying it under TI 27101290 of the Customs Tariff Act, 1975 as other light oils and preparations , and declaring it as Naphtha under two Bills of Entry No.6489112 dated 25.08.2016 and 7533186 dated 21.11.2016. The Main Appellant also claimed exemption from payment of applicable duties of customs, in term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Abe San, the representative of Saudi Aramco. 1.4 In addition, the SCN also referred to and relied upon the opinion dated 04.10.2017 of the Chemical Examiner, CECL, Vadodara, ( Chemical Examiner ) and an Email dated 01.12.2017 issued by the Chief Scientist, Indian Institute of Petroleum ( IIP ), Dehradun ( Chief Scientist ). 1.5 The Main Appellant submitted its interim reply dated 15.03.2021, inter alia, requesting for cross examination of the Joint Director since his opinion (under letters dated 24.01.2017, 20.07.2017, 31.07.2017 and 20.09.2020), was the primary evidence and as such, formed the very basis of the SCN. The cross examination was also sought as the said opinion, besides being completely contrary to the views/ opinions of both, the Chemical Examiner and Chief Scientist, was also completely unreasoned and unsubstantiated. This request was once again made by the Main Appellant during the course of preliminary hearing held on 09.05.2023, as well as in his letter dated 15.05.2023, filed post such preliminary hearing. 1.6 In response, the Respondent granted cross-examination of the Joint Director. The said cross-examination was, thereafter, conducted by the Main Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said opinion and thereby dropped all proceedings against the Appellants, since the onus was not discharged by the Revenue in the present case, which, however, he has failed to do, rendering the impugned order totally untenable. 2.2 Without prejudice to the above, the Main Appellant submits that once the opinion of the Joint Director was liable to be discarded, it was incumbent upon the Respondent to have relied upon the other expert opinion on record, i.e., the opinion dated 04.10.2017 given by the Chemical Examiner, wherein he had clearly opined that it was not possible to say that whether the goods in question were extracted from natural gas or otherwise; and thereby ought to have dropped the proceedings initiated by the SCN, since the onus was not discharged by the Customs, which, however, he has failed to do. The impugned order, thus, deserves to be quashed and set aside. 2.3 Without prejudice to the above, the Main Appellant submits that the other evidences relied upon by the Respondent, namely the letters dated 25.04.2017 18.05.2017 issued by Saudi Aramco along with the product specification sheet dated 15.01.2014, or the GPA 3132 specifications or the email corresponden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l below 175 C and not less than 95% must distil below 240 C. Since both these requirements, as explained above, stands fulfilled by the goods in question, the same were correctly declared as Naphtha and classified under TI 2710 1290 by the Appellant. 2.8 Without prejudice to the above, the Main Appellant submits that the Respondent ought to have appreciated that since Naphtha was not defined under the Customs Tariff Act, 1975, its meaning ought to have been construed in terms of its commercial or trade understanding or according to its popular meaning. The Respondent ought to have appreciated that since Naphtha (A-180 grade) was commercially known, traded and understood as Naphtha, it was correctly declared as Naphtha and classified under TI 2710 1290 in the Bills of Entry dated 25.08.2016 and 21.11.2016. 2.9 Alternatively, assuming without admitting that the goods in question were NGL, still the benefit of exemption under the Advance Authorization Scheme was admissible to the Appellant as NGL is also a type of Naphtha 2.10 Without prejudice to the above, the Main Appellant submits that even if it is assumed that the goods in question were NGL, still the benefit of exemption was av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the list of import item Naphtha is mentioned under ITC 27101290, though we do not agree that imported goods is not Naphtha but NGL, the appellant vehemently argued that even the NGL is also Naphtha therefore, since the Naphtha is allowed to be imported , the imported goods is allowable under the same advance authorization. The appellant have vehemently argued that assuming without admitting the goods in question were NGL still the benefit of exemption under advance authorization was admissible to the appellant and NGL is also a type of Naphtha. Since broad description given in the advance authorization, we are of the view that even though the type of Naphtha is different but the same is clearly covered under the advance authorization and hence irrespective of the department s contention that the goods is NGL but the NGL is also a type of Naphtha, the same is covered by the advance authorization. Accordingly, the clearance of goods under Advance Authorization cannot be questioned. 4.3 As regard ITC code no. even if the departments contention is that TI 27101290 does not cover NGL for the purpose of advance authorization it does not affect the eligibility to clear the goods un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As such there was neither any infirmity in the import of the goods in question nor in the exemption claimed by the appellant under the advance authorization scheme read with governing notification 18/2015-CUS dated 01.04.2015 (as amended)therefore, even if the contention of the revenue is that the goods imported is NGL is correct then also the clearance of goods under advance authorization cannot be said to be incorrect or illegal. On this basis itself the entire demand is liable to be set aside. 4.6 Without prejudice to the above, we also find that the NGL is a type of Naphtha which is evident from the legislative changes made under the Finance Act, 2019 with Notification No. 89/2019-Cus (N.T) 10.12.2029 to heading 2710 of the Customs Tariff Act, 1975 whereby the 8 digits tariff items under 6 digits sub heading 271012 which covers light oils and preparations were substituted. As per this substitution, the specific tariff item 27101220 which covered NGL was deleted and three new tariff items 27101221 ( Light Naphtha), 27101222 (Heavy Naphtha) and 27101223 (Full Rich Naphtha) were inserted to cover Naphtha . An interpretation of this substitution indicates that the same was brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant have also produced the minutes of meeting held on 11-6-2009 wherein their case for amendment of licenses was considered by the licensing authority. In the minutes of the said meeting, the Ministry of Commerce has held as follows :- Case No. 208 M/s. Condor Footwear (India) Limited Surat NC.11/10 dated 11-6-2009 F. No. 1/84/162/42/AM10-DES-V Request for import against Advance Authorisation No. 5210021658, dated 6-6-2007 - under Para 4.7 of HBP (Vol. 1) 2004-2009 Decision : The Committee considered the case as per agenda and along with other relevant papers and heard Sh. Rakesh Adnani, Director and Sh. Surendra Gandhi, an authorized representative of the firm, who appeared for personal hearing before NC. They explained the case along with relevant papers and sample of the export item. In this case advance authorization in question was issued on 6-6-2007 to the applicant firm and input output norms were ratified by norms Committee by allowing the inputs as per SION at S. No. A-3541. In this case firm imported Synthetic cloth for Uppers (Non- Woven/Woven/Knitted/Laminated with PVC/PU) HSW-KN06B-LP. The Committee felt that as per SION, A-3541, it is clearly specified that the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any change in the ITC (HS) Code has no bearing on the benefits to be given under advance authorization issued under Para 4.7 of HBP. In this circumstance, we hold that amendment made to the license will have a retrospective effect and the benefit of the notification cannot be denied on the ground that the classification of the goods did not match the classification specified in the advance license as long as the description of the goods matches with that prescribed in the license. 6. In view of the above, appeals are allowed. 4.8 In view of above decision, even if ITC HS code is different but so long description is correct, the clearance of import is allowed. Accordingly, irrespective of dispute raised by revenue on classification, the appellant is otherwise eligible for clearance of goods under Advance Authorisation, therefore, the impugned order is not sustainable on this ground alone. 4.9 Without prejudice to the above, we find that the revenue s entire case in the present matter is based on the opinion given by the Joint Director under his letters dated 24.01.2017, 20.07.2017, 07.01.2020, 31.07.2017 and 17.06.2020. We find that in as much as opinion of the Joint Director read i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oiling liquid petroleum product (ii) the product must be extracted from natural gas. 4.11 This means that unless and until the aforesaid two conditions are cumulatively satisfied by a product it cannot be held to be NGL and as consequence being classified under TI NO 27101220 of Customs Tariff Act, 1975. However, it admittedly could not be established that the goods in question were extracted from natural gas as per the opinion of IIP Dehradun. Therefore, since the vital and the conclusive factor that whether the goods in question was extracted from the natural gas or otherwise , the onus cast on the department had not been discharged. In this regard we refer to the extract of letter dated 04.10.2017 of chemical examiner, CECL Vadodara as below:- On perusal of analytical finding and available literature here . it is not possible to say whether the subject product extracted from natural gas or otherwise. Hence, said matter may be forwarded to Indian Institute of Petroleum being a apex and premier organization in the country which carried out research and development for down center of hydrocarbon industry, if required. 4.12 On the above, the DRI under the cover of letter dated 25.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating authority has failed to appreciate that a perusal of record on cross-examination dated 13.06.2023, 12.07.2023 and 03.08.2023 of the Joint Director along with reply dated 24.07.2023 shows that the conclusion drawn by him in his opinion in particular that the goods in question is Natural Gas were nothing but bald assertions or statement having no basis and/or technical literature, book or evidence to support or corroborated the same. Therefore, on a joint perusal of the opinion and record of cross-examination no reliance whatsoever could be placed on the same to arrive at a conclusion that imported goods in dispute were NGL classifiable under tariff item no. 27101220 and not naphtha under tariff item no. 27101290. 4.16 The appellant have also pointed out that it is on record that Joint Director had preferred and relied upon the GPA 3132 specifications to opine that the goods in question were conforming to the requirement of NGL. In this regard the appellant have submitted that the said opinion given by the Joint Director, GPA 3132 specifications totally inconclusive. The GPA 3132 specifications stipulates satisfaction of 7 product characteristics i.e. (i) Reid Vapour Pressure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusing the reports dated 28-2-2017 it is clearly mentioned in the column of correct description Classification of the sample that appropriate HS Code could not be provided due to rupture of yarn in weft while untwisting. 2.1 On the other hand in report dated 21-3-2017 in correct description classification column it is mentioned, sample is classified as polyester woven printed quilt case under HS Code 6302 22 as classified by the appellants. Another reliance of the department is on the report of ATIRA (Ahmedabad Textile Industry Research Association) dated 27-3-2017 states that the actual strength of the warp and weft used in making fabric cannot be ascertained. If we go by all the above reports mentioned except for the report dated 21-3-2017 which classifies the goods as quilt cover all the other reports are inconclusive. If at all any report to be relied upon it is report dated 21-3-2017 which was brushed aside as tampered by the department without giving any details who tempered with the report and what action was taken. 2.2 Even if we accept the corrected report and all other reports they are all inconclusive and instead of relying upon them they should have been sent for ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r oral or documentary. It is for the taxing authority to lay evidence in that behalf even before the authority first adjudicating. In Hindustan Ferodo Ltd. v. Collector of Central Excise, Bombay 1997 (89) E.L.T. 16 (S.C.) : It is not in dispute before us, as it cannot be, that the onus of establishing that the said rings fell within Item 22F lay upon the Revenue. The Revenue led no evidence. 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. Also in recent order CESTAT held in the matter of Alpha Foam Pvt. Ltd. v. Commissioner of Central Excise, Pune-I - 2019 (365) E.L.T. 636 (Tri. - Mumbai) : The impugned order clearly recognises that the test report is not final. However, he continues to rely on the said report. He has relied on the fact that the original adjudicating authority has evaluated the product in terms of the technical literature available. We find that the office of the chemical laboratory is not sure of exact classification and has raised some doubts about classification, it is not open to original adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Authorities making it clear that it was open to the Excise Authorities to issue a fresh show cause notice to the appellant on the basis that the tablets were classifiable under Heading 17.04 as items of confectionary. This would have given the appellant the opportunity to place on record such material as was available to it to establish the contrary. It is impermissible for the Tribunal to consider a case that is laid for the first time in appeal because the stage for setting out the factual matrix is before authorities below. In view of the above settled law, irrespective whether the classification claimed by the appellant is correct or not since the classification proposed by the Revenue is absolutely incorrect, the entire case of the Revenue will not sustain. 3. Since the revenue has not been able to discharge their burden of proof. Hence the classification of goods declared by the appellants cannot be disturbed. 4. As per our above discussions and findings, the impugned orders are not sustainable. Hence, the same are set aside. 5. The appeals are allowed with consequential relief, if any, in accordance with law. 4.19 In view of the above judgment, it is settled law that in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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