9911796707
TMI Blog2024 (7) TMI 1571X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequence, is duty liability of Rs. 1,27,19,657/- besides payment of fine of Rs. 10,00,000/- under section 125 of Customs Act, 1962 and penalties under section 114A and 114AA of Customs Act, 1962 before compliance with direction to reexport the goods confiscated under section 111(d) and section 111(m) of Customs Act, 1962. The first appellate authority reduced the redemption fine to Rs. 5,00,000/- and penalty on the individual under section 114AA to Rs. 10,00,000/-. 2. The core of the issue is that the goods claimed by the importer to be 'penetrating oil - 60 (for industrial use)', conforming to description corresponding to tariff item 3403 9900 of First Schedule to Customs Tariff Act, 1975, was held to be 'diesel oil' chargeable to duty corresponding to tariff item 2710 1990 of First Schedule to Customs Tariff Act, 1975 by relying upon test reports of the Central Revenue Control Laboratory (CRCL) and, thereby, in violation of 'canalising' restriction in the Foreign Trade Policy. Further relying on the tests, the original authority also held it to be 'adulterated' and, thus, also in contravention of municipal laws enacted for control of petroleum products in the domestic market. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he imported goods erroneously as diesel oil and then posited that the presence of other substance adulterated the diesel oil rendering it liable to be denied clearance for home consumption as the goods contravened the laws pertaining to handling of diesel which the first appellate authority upheld. 4. According to Learned Authorised Representative, the test report made it abundantly clear that the goods were a mixture of hydrocarbons with more than 70% by weight of 'petroleum oil or oil from other bituminous mineral' and, thereby, warranted classification within heading 2710 of First Schedule to Customs Tariff Act, 1975. He submitted that diesel is 'canalized' for import and, consequently, could be permitted for import only by designated agency. 5. It would appear that the differential duty was fastened by recourse to rejection of declared value under rule 12 and under the authority of rule 3(4) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as consequence of re-classification rendering the invoice to be invalid. The confiscation of impugned goods, with attendant ramifications, appears to have stemmed from ineligibility to import diesel oil and adulte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which are pre-requisites of assessment to enable clearance for home consumption. A shakier foundation for adjudicatory consequence is difficult to contemplate. The 'proper officer' was required to ascertain correctness of declaration of 'rate of duty' and 'value' for assessment of duty liability under section 17 of Customs Act, 1962 and the 'proper officer' under section 47 of Customs Act, 1962 was to allow clearance for home consumption after ascertainment that duty as assessed had been discharged and the goods are not prohibited. From that responsibility to ordering re-export after confiscation of goods for the observed breaches is a long trek outside the framework of law. 7. Without deliberating further on this mis-adventure, we turn to the classification exercise undertaken by the lower authorities. We have, time and again, set out the rules for engagement in classification disputes which the Hon'ble Supreme Court has set out in Hindustan Ferodo Ltd v. Collector of Central Excise [1997 (89) ELT 16 (SC)] thus 'It is not in dispute before us as it cannot be, that onus of establishing that the said rings fell within Item No. 22-F lay upon the Revenue. The Revenue led no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decisions of the Hon'ble Supreme Court supra. 9. From a perusal of the finding of the original authority, and sustained in the impugned order, which relied upon the test reports for overruling the declared classification solely by the content of 'petroleum oils or oils obtained from bituminous minerals' being above 70%, the test report, at serial number 11, offers no clue about the manner of computation or conformity thereof with the heading proposed in the show cause notice. In both the test reports relied upon, besides indicating lack of conformity with IS:1460 in that of their own laboratory and in that of the state level coordinator - oil industry of sample not meeting the test of high speed diesel, the possibility of conforming to the other tariff line for diesel oil had not been considered. That is a flaw in the classification exercise which the lower authorities were required to in the light of the reports of non-conformity. Without support of ascertainment of one, and despite the reported nonconformity with the other, the lower authorities sustained finding of the impugned goods being diesel oil and, yet, resorted to an unrelated subheading to determine rate of duty. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The adjudicatory exercise was not sufficiently exhaustive and the affirmation in appellate disposal was flawed for that reason justifying invalidation of the adopted classification. 12. The appellant had, and in accordance with the past practice, sought coverage within 'Lubricating preparations (including cutting-oil preparations, bolt or nut release preparations, anti-rust or anti-corrosion preparations and mould release preparations, based on lubricants) and preparations of a kind used for the oil or grease treatment of textile materials, leather, furskins or other materials, but excluding preparations containing, as basic constituents, 70 % or more by weight of petroleum oils or of oils obtained from bituminous minerals - Containing petroleum oils or oils obtained from bituminous minerals:' corresponding to heading 3403 of First Schedule to Customs Tariff Act, 1975. The essence of this classification is not only, as far as the impugned goods are concerned, that it covers 'lubricating preparations' but also, parenthetically, specifies certain applications before excluding 'preparations containing, as basic constituents, 70% or more by weight of petroleum oils or of oils ..... X X X X Extracts X X X X X X X X Extracts X X X X
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