2013 (10) TMI 1105 - AT - Customs

Court reclassifies imported cargo as 'Qatar Low Sulphur Condensate'

M/s ESSAR OIL LTD Versus COMMISSIONER OF CUSTOMS

The court determined that the imported cargo classified as 'Qatar LSC Crude Oil' was more appropriately categorized under 27090000 as 'Qatar Low Sulphur ... Stay application - Clasification of 61683.178 MT of imported cargo declared as 'Qatar LSC Crude Oil'- under 27090000 or under 27101990 - Held that:- On careful examination of the said reports/opinions given by the Chemical Examiner, Kandla, it is seen that the said test reports/opinions made by the Kandla, Laboratory are not the conclusive opinion on the clasification of the cargo imported by the appellant. Further in view of the report dated 8/10/1999, of the Harmonized System Committee of World Customs Organization, on classification of 'Gas Condensates' also the chemical composition and physical characteristics of gas condensate of CTH 27.09 and similar synthetic products of CTH 27.10 are very similar and over-lapping. It is further expressed by the committee in this report that there is no practical way of distinguishing between the two groups of product. Appellant has reasonably explained with the help of contracts, value of comparable goods, journals and other literature available on the subject that imported cargo is Qatar Low Sulphur Condensate (crude oil). The assessments of the imported cargo were also finalized by the assessing officer on 25/02/2010 after receipt of the first test report from Chemical Examiner, Kandla. The order finalizing the provisional assessments has not been appealed against by the Revenue. Appellants have, therefore, made out a prima-facie case for complete waiver of confirmed duties and penalties - Stay gtranted. Issues: Classification of imported cargo as 'Qatar LSC Crude Oil' under 27090000 or 27101990.Analysis:The case involved a dispute over the correct classification of 61683.178 MT of imported cargo declared as 'Qatar LSC Crude Oil' (QLSC) under either 27090000 or 27101990. Appellants, M/s. Essar Oil Limited, claimed the classification under 27090000 as 'Qatar Low Sulphur Condensate (crude oil)'. Samples of the imported cargo were tested, and the Chemical Examiner initially reported that the sample was a mixture of mineral hydrocarbon oils flashing below 25 C, other than petroleum crude oil. The cargo was provisionally assessed and later certified as Crude Petroleum Condensate classifiable under 2709 of HSN by the Chemical Examiner. However, the Chemical Examiner's opinion was not conclusive, and the World Customs Organization's report highlighted the difficulty in distinguishing between similar products of headings 27.09 and 27.10.Arguments:The appellants argued that the imported cargo was Qatar Low Sulphur Condensate (QLSC) based on the contract, price agreement, and quality certificate. They also referenced a report of the World Customs Organization Harmonized System Committee, stating the challenge in distinguishing between products of heading 27.09 and 27.10. On the other hand, the Revenue contended that the cargo imported was a refined product of CTH 27.10 as per the opinion of the Chemical Examiner, Kandla.Judgment:After hearing both sides and examining the records, it was observed that the Chemical Examiner's reports were not conclusive on the classification of the cargo. Considering the overlapping characteristics of gas condensates of CTH 27.09 and synthetic products of CTH 27.10, and the lack of a practical way to distinguish between them, the appellants' explanation supported by contracts and literature indicated that the cargo was Qatar Low Sulphur Condensate (crude oil). The assessments were finalized based on the first test report, which was not appealed by the Revenue. Therefore, a prima facie case was established for a complete waiver of confirmed duties and penalties. Consequently, a complete stay was granted against the recoveries of confirmed dues and penalties until the disposal of the appeals.