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TMI Blog2025 (1) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... poxidation of soya bean oil with hydrogen peroxide and either acetic or formic acid obtained by converting the double bonds into epoxy group which is non-toxic and of higher chemically reactivity. As per the Explanatory Notes heading 1518 covers epoxidized oils obtained by treating, for example soya bean oil with per acetic acid pre-formed or formed in situ by reaction between hydrogen peroxide and acetic acid in the presence of a catalyst. They are used as plasticisers or stabilisers for e.g. vinyl resins - note 6(c) fits the impugned goods squarely and the impugned goods hence are covered under CTH 1518. While plasticisers, are also covered by heading 3812 it pertains to the category of compound plasticisers. The HSN notes makes it clear that ESBO fall under CTH 1518 which is the more specific heading hence as per Rule 3 (a) of RIT the goods have been classified correctly. The classification of goods as per the impugned order is hence upheld. Proper date for calculating time bar of SCN / demand - HELD THAT:- As regards the date of supplying all RUDs, the appellant has stated that although the SCN mentioned that the relied upon documents were enclosed as Annexure A along with a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-adoption of the classification as stated in the COO certificate was evident to the departmental officers in the two cases examined by them. The appellant had provided the product literature, letter describing the captive use of the product and the material safety data sheet when called for by the department officer. This was followed by the department accepting the classification in one case. Further the impugned goods which are plasticisers, are also covered by heading 3812, although it may not have been the more specific heading and had to yield to heading 1518. The importer cannot be held responsible for taking an alternate view when he has submitted all the necessary documents that have helped the department to now come to a different view. The plea of the appellant hence succeeds on this issue. The department has failed to make out a case of suppression or misdeclaration etc. Confiscation and penalties are liable to be set aside since there is no suppression of facts etc. - HELD THAT:- No case of suppression, mis-decleration etc., has been made out. This being so the demand has to be limited to the normal period and the question of confiscation and penalties does not arise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date HSN CODE Assessable Value Duty Paid Date Total Duty 1 2478534 17.07.2017 38123990 ₹ 14,89,244 18.07.2017 ₹ 4,03,816 2 4230263 01.12.2017 38123990 ₹ 15,54,098 02.12.2017 ₹ 4,21,401 3 5331154 23.02.2018 38123990 ₹ 15,69,370 01.03.2018 ₹ 4,35,265 4 5986892 16.04.2018 38123990 ₹ 16,41,035 17.04.2018 ₹ 4,55,141 5 7028800 01.07.2018 38123990 ₹ 17,08,705 03.07.2018 ₹ 4,73,909 6 7850542 31.08.2018 38123990 ₹ 15,95,484 03.09.2018 ₹ 4,42,507 7 8854412 14.11.2018 38123990 ₹ 16,43,400 26.11.2018 ₹ 4,55,797 8 9682892 17.01.2019 38123990 ₹ 14,89,125 18.01.2019 ₹ 4,13,009 9 2406562 13.03.2019 38123990 ₹ 14,65,610 14.03.2019 ₹ 4,06,487 10 3257383 16.05.2019 38123990 ₹ 15,25,264 16.05.2019 ₹ 4,23,032 11 3735467 20.06.2019 38123990 ₹ 15,00,202 21.06.2019 ₹ 4,16,081 12 4322465 01.08.2019 38123990 ₹ 14,86,331 02.08.2019 ₹ 4,12,234 13 5037835 24.09.2019 38123990 ₹ 15,72,516 26.09.2019 ₹ 4,36,137 14 6400980 09.01.2020 38123990 ₹ 16,95,323 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiable under Section VI of the HSN. Since chapter 38 of HSN forms part of Section VI and it was and continues to be the bona fide belief of the Appellant that ESBO is classifiable under chapter 38, chapter 15 is not relevant in the instant matter. Further, ESBO is as an industrial product and merits classification under chapter 38-Miscellaneous Chemical Products. The Ld. Advocate prayed that the appeal may be allowed. 3.2 The Ld. AR stated that the appellant manufactures soft PVC compounds and masterbatches for extrusion and injection molding applications. One raw material used is ESBO under CAS No. 8013-07-8 which is a secondary plasticizer. Additionally, they have furnished a 'Product Description Sheet' by the supplier wherein the composition of the product is 99.8% ESBO and 2% water. 'Epoxide Soyabean Oil is admittedly a secondary stabilizer which is used in the manufacturing of PVC compound. The Ld. AR stated that the Explanatory Notes of the CTH 1518 (A) (6) (c), covers ESBO, which covers 'epoxidised oils obtained by treating, for example, soya-bean oil with per acetic acid pre-formed or formed in situ by reaction between hydrogen peroxide and acetic acid in the presence of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. E) Confiscation and penalties are liable to be set aside since there is no collusion or any wilful mis-statement or suppression of facts or any intentional furnishing of false information. We shall take up the issues below. 5) Classification of imported 'Epoxidised Soya Bean Oil" 5.1) We find that ESBO has received an NOC from the Central Drugs Standard Control Organisation (Drugs Control Department) for manufacturing PVC compounds certifying the same to be as "Not for medical or human consumption". The appellant has declared the product to be classifiable under CTH 3812. Its their view that ESBO being an industrial product merits classification under chapter 38 - Miscellaneous Chemical Products. Per contra, revenue is of the opinion that vegetable fats and oils like ESBO and their fractions, which are subject to processes like being boiled, oxidized, dehydrated, sulphurised, blown, polymerized by heat in vacuum or in inert gas or otherwise chemically modified fall under Chapter 15 of the Customs Tariff and are more specifically covered under CTH 1518. 5.2) It would at this stage be relevant to examine the respective tariff headings. (I)The relevant portion of CTH 381 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e International Convention on Harmonised Commodity Description and Coding System, which was adopted in 1983, and enforced in January, 1988. This multipurpose international product nomenclature harmonises description, classification, and coding of goods. While the primary objective of the HSN is to facilitate and aid trade, the Code is also extensively used by governments, international organisations, and the private sector for other diverse purposes like internal taxes, monitoring import tariffs, quota controls, rules of origin, transport statistics, freight tariffs, compilation of national accounts, and economic research and analysis. In the present times, given the widespread adoption of the Harmonised System by over 200 countries, it would be extremely difficult to deal with an international trade issue involving commodities, without adverting to the Harmonised System. The Code is the bedrock of custom controls and procedures. The HSN consists of over 5000 commodities groups, which are structured into 21 Sections and 97 Chapters, which are further divided into four and six digit sub-headings. Many custom administrations, like India, use an eight or more digit commodity coding sy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (India) Private Ltd., Civil Appeal No. 1766 of 2009, held that the HSN Explanatory Notes would be binding once the entry in the HSN corresponds to the description in the First Schedule. The Apex Court held that once the entries are aligned and reflect the same position, the General/Explanatory Notes in the HSN would be applicable and cannot be ignored while classifying goods. The relevant paras of the decision are extracted below: "17. To sum up, the First Schedule to the Act of 1985 is based on the HSN, which is an internationally standardized system developed and maintained by the World Customs Organization for classifying products, and unless the intention to the contrary is found within the Act of 1985 itself, the HSN and the Explanatory Notes thereto, being the official interpretation of the Harmonized System at the international level, would be of binding guidance in understanding and giving effect to the headings in the First Schedule. It is only when a different intention is explicitly indicated in the Act of 1985 itself that the HSN would cease to be of guidance. … 34. … Once the entries are aligned and reflect the same position, the General/Explanatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) . . . (3) . . . (4) . . . (5) . . . (6) The other modified oils in the heading include: a. Maleic oils obtained by treating e.g. soya-bean oil with limited amounts of maleic anhydride at a temperature of 200˚C or more, in conjunction with sufficient polyhydric alcohol to esterify the extra acid groups. Maleic oils so obtained have good drying properties. b. Drying oils (such as linseed oil) to which have been added in the cold small quantities of driers (e.g. lead borate, zinc naphthenate, cobalt resinate) to increase their drying properties. These oils are used in the place of boiled oils, in the preparation of varnishes or paints. c. Epoxidised oils obtained by treating, for example, soya-bean oil with per acetic acid pre-formed or formed in situ by reaction between hydrogen peroxide and acetic acid in the presence of a catalyst. They are used as plasticisers or stabilizers for e.g. vinyl resins. d. Brominated oils used as an emulsion or suspension stabilizer for essential oils, for example, in the pharmaceutical industry. (emphasis added) The note 6(c) fits the impugned goods squarely and the impugned goods hence are covered under CTH 1518. While pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng cause to the claims made in the notice. We have gone through the correspondence. We find that the omission is not a minor one. The entire set of documents at Annexure A & B, not merely a few documents, were not provided to the appellant. Hence, we agree with the legal grievance made out by the appellant as the issue of SCN is not an empty formality and is an opportunity for the noticee to deny his guilt and establish his innocence. [See Commissioner of Central Excise, Nagpur Vs Ballarpur Industries Ltd. -- 2007 (215) E.L.T. 489 (S.C.)]. This process can effectively start when he is told what the charges leveled against him are and he is provided the documents and work sheet based on which the allegations against him are based. Hence, the principles of natural justice and procedural fairness require that the time limit for the purpose of calculating time bar, be reckoned from the date when the documents and worksheet was made available to the appellant, enabling him to commence making a proper defence of his case, which was on 04.01.2023. 7. Abrupt change in classification as held in the impugned order without any change in facts or law is improper 7.1) We find that the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee, correcting any deviation when necessary and the need to maintain certainty and predictability of taxes over a long period of time against frivolous allegations as per the doctrine of consistency or the precedential value of the earlier pronouncement. No blanket principle is possible and the judgements cited by the appellant are peculiar to the facts of the individual cases. Hence, while once the department has adopted a classification, it should not ordinarily be permitted to take a different stand, it may however be necessary if there is any good or cogent reason for the change and in public interest. In this case the department had investigated the matter by a specialized investigative agency (DRI). Such an enquiry is generally able to unearth facts and obtain statements of those involved which gives a more complete picture of the goods involved and the declaratory practices adopted, which is not possible to be obtained by the normal assessing officer. 7.6) In Warner Hindustan Ltd. Vs Commissioner -- 1999 (113) E.L.T. 24, the Hon'ble Supreme Court opinioned that the correct course for making a change of an approved classification was to issue a fresh show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm signifying good faith. Honesty is the core of Good Faith. Its connotation is pure purpose free of taint or deception or dishonest design. Section 52 of the Indian Penal Code defines "good faith" as, "Nothing is said to be done or believed in 'good faith' which is done or believed without due care and attention." Perhaps the appellants action would fail this test. However, the question is whether the lack of bona fide alone would permit for the issue of SCN invoking the extended time limit. We feel that something more than is necessary. In fact, the Customs Act contemplates a positive action which betrays a negative intention of willful default. [See: Easland Combines, Coimbatore v. The Collector of Central Excise, Coimbatore - (2003) 3 SCC 410 / 2003 (152) ELT 39 (S.C.)]. There is nothing in the OIO that brings out this negative intention. It's not the departments case that the COO certificate and other documents were not supplied along with the BoE's and hence were suppressed. The non-adoption of the classification as stated in the COO certificate was evident to the departmental officers in the two cases examined by them. The appellant had provided the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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