2015 (1) TMI 262 - AT - Customs

Court Rules in Favor of Appellant: Imported Goods Classified as Duty-Free 'Qatar Low Sulphur Condensate'.

M/s. Essar Oil Limited, Shri T. Srinivas Versus Commissioner of Customs, Jamnagar (Preventive)

The court allowed the appeals, concluding that the classification claimed by the appellant for the imported goods as 'Qatar Low Sulphur Condensate' under ... Classification of ‘Qatar Low Sulphur Condensate’ (Qatar LSC - CTH 27090000 or CTH 27101990 - exemption under Notification No. No. 21/2002-Cus dated 01.3.2002 read with Notification No. No. 74/2008-Cus dated 04.6.2008 - Held that:- it is apparent that there are overlapping in the nature and properties of Natural Gas Condensates of CTH 2709 and some the synthetic products of CTH 2710. This dispute/ confusion has been internationally accepted by the World Customs Organization, Brussels as per report dated 08.10.1996 of Harmonised Systems Committee on classification of ‘Gas Condensates’ Chemical Examiner, Kandla in its very first report dated 29.1.2010 certified that the sample tested is pale yellow oily liquid and is comprised of mixture of mineral hydrocarbons. In the same report, he is opining that the sample is of ‘other than petroleum crude’ and in the same breath he further asks for the literature on the claim of the appellant. When the literature is supplied by the Superintendent, Vadinar Chemical Examiner promptly confirm that samples are of crude Petroleum and are classifiable under SH 2709 of HSN. A chemical analyst dealing with physico chemical testing of petroleum products impulsively could not have said in report dated 29.01.2010. that the goods are ‘other than Petroleum Oil’ and simultaneously asking for the literature/ related documents when internationally it is accepted that it is difficult to distinguish ‘Gas Condensates’ of CTH 27.09 and similar synthetic products of CTH 27.10. There could be a situation where report of the Chemical Examiner is palpably wrong. Chemical examiner has given conflicting opinions, therefore, the same can be questioned. chemical examiner can give opinion on the chemical nature of the goods tested but can not suggest whether a ‘Gas Condensate’ imported by the appellant will be classifiable under 2709 or 2710. The international authorities on classification of ‘Crude Gas Condensate’ has expressed concern and confusion over the difficulty in distinguishing these products of CTH 2709 from similar synthetic products of CTH 2710. When products of CTH 2709 and 2710 have similar characteristics/ compositions then the only way to entertain a contrary classification adopted by the appellant, was to extend the investigation to the place of origin of the goods. No such enquiry seems to have been made with the supplier which is owned by Govt. of Qatar. It is also not the case of the Revenue that customs documents provided by the appellant at the time of clearance are fake or forged by deliberately given a wrong description. Appellant has argued that the price at which the ‘Gas Condensate’ is imported tallies with the crude rates as per the established journals of the imported products. There is no evidence on record to indicate that imported goods were of refined category falling under CTH 2910 which fetched higher value in international oil market. Rather there is no case that the imported goods are under valued. It is also difficult to comprehend that the present importer will bring refined products for re-refining of the same again. There is also nothing on record that the supplier of imported goods has done any major processes on the natural product other than those specified in HSN explanatory notes under HSN Heading No. 27.09 - there is no logical reason with the Revenue not to accept the classification claimed by the appellant on the basis of the documents available on record as per their contract dated 11.12.2009 entered with Vitol Asia Pte. Limited, Singapore - Decided in favour of assesse. Issues Involved:1. Classification of the imported goods (Qatar Low Sulphur Condensate).2. Validity of the chemical examiner's reports and opinions.3. Denial of cross-examination of the chemical examiner.4. Time-bar aspect of the demands.Detailed Analysis:1. Classification of the Imported Goods (Qatar Low Sulphur Condensate):The main issue was the correct classification of the imported goods described as 'Qatar Low Sulphur Condensate' (Qatar LSC) in Bill of Entry No. F-91 dated 28.12.2009. The appellant claimed the classification under CTH 27090000 as a natural gas condensate, which would exempt the goods from duty under Notification No. 21/2002-Cus dated 01.3.2002 read with Notification No. 74/2008-Cus dated 04.6.2008. The adjudicating authority, however, classified the goods under CTH 27101990 based on the test reports and opinions given by the Chemical Examiner, Kandla.2. Validity of the Chemical Examiner's Reports and Opinions:The appellant argued that the case was built on the Chemical Examiner's tests and subsequent opinions. They contended that the Chemical Examiner should only provide chemical analysis and not classification opinions. The Chemical Examiner's initial report dated 29.1.2010 stated that the sample was 'other than Petroleum Crude Oil,' but later reports and opinions were conflicting. The Harmonized System Committee of the World Customs Organization recognized the difficulty in distinguishing between 'Gas Condensates' of CTH 2709 and similar synthetic products of CTH 2710. The Chemical Examiner's conflicting reports and the lack of a conclusive opinion further complicated the classification.3. Denial of Cross-Examination of the Chemical Examiner:The appellant requested the cross-examination of the Chemical Examiner, which was denied by the adjudicating authority. The court noted that the Chemical Examiner's reports and opinions were the only evidence with the Revenue to classify the imported goods under CTH 2710. The denial of cross-examination was deemed unjustified, especially given the conflicting opinions and the significant role of the Chemical Examiner's reports in the case.4. Time-Bar Aspect of the Demands:The appellant argued that the entire demand was time-barred as the provisional assessment was finalized on 25.2.2010, and the show cause notice was issued on 16.6.2010. However, the court did not delve into the time-bar aspect as the issue was decided in favor of the appellant on merits.Conclusion:The court concluded that there was no logical reason for the Revenue not to accept the classification claimed by the appellant based on the documents available, including the contract dated 11.12.2009 with Vitol Asia Pte. Limited, Singapore. The appeals filed by the appellants were allowed, and the miscellaneous applications were disposed of accordingly. The operative part of the order was pronounced in the court.