2015 (2) TMI 783 - AT - Customs

Tribunal overturns customs duty demands due to procedural errors and unreliable test reports

M/s. Sandur Manganese & Iron Ores Ltd. Versus Commissioner of Customs, Central Excise & Service Tax, Goa

The tribunal set aside the impugned order confirming customs duty demands against the appellant for importing specific coke types. The tribunal found ... Classification - Import Low Ash Metallurgical Coke and Low Ash Low Phosphorous Coke - Procedure for drawl of sample and method of testing - Exemption under Notification No. 35/90-Cus dated 20.3.1990 - Concessional customs duty of 20% ad valorem in respect of coke with phosphorous contents of 0.035% or below - Benefit of doubt - Held that:- From the records of the case, it is seen that the goods were imported in July, 1990 and November, 1990. As per the test report furnished by the Chinese supplier and the Testing Agency in Japan, who conducted the test at the behest of the importer, the phosphorous content was found much lower than the 0.035%. The goods were again tested by the Customs laboratory in Goa at the time of importation and as per the Colour Text Comparison method, the phosphorous content was found to be less than 0.035% and the goods were provisionally cleared. After clearance by the customs, the assessee once again got the goods tested by M/s SGS (India) Pvt. Ltd., who also found the samples to be contain phosphorous less than 0.035%. As against the test reports by various agencies, Revenue wants to rely on the test report of the CRCL, which conducted the test in 1993 almost two years after the samples were drawn. There is nothing on record to show that the samples, which were drawn, were kept in airtight containers or the samples were drawn in accordance with IS 436 prescribed for drawal and testing of the samples. In other words, there is no evidence adduced by the Revenue to show that the samples were representative and the sample could not have deteriorated with the passage of time. The Chief Chemist who was cross-examined had also accepted that only the samples kept in airtight containers would not deteriorate. However, there is no evidence forthcoming in this regard adduced by the Revenue. The decision of the Tribunal in the case of Rajkot Engineering Association [1999 (1) TMI 292 - CEGAT, MUMBAI]clearly supports the appellant s case. In the said case, it was held that if the samples were not drawn as per the prescribed procedure and were not kept in airtight containers, the result of such samples can be mis-leading and cannot be accepted. The same view was taken by this Tribunal in the case of Adani Exports Ltd. [2009 (8) TMI 439 - CESTAT, AHMEDABAD]. In view of the foregoing position, the benefit of doubt has to go to the appellant as the Revenue has failed to discharge the burden cast on it to show that the appellants are not eligible for the benefit of exemption Notification No. 35/90-Cus. Decided in favour of appellant. Issues:1. Confirmation of customs duty demands against the appellant.2. Compliance with tribunal's directions regarding sampling and testing procedures.3. Reliance on test reports and validity of customs duty demands.4. Allegation of suppression and sustainability of duty demands.5. Proper drawal of samples and reliance on test reports.Analysis:1. The appeal concerns the confirmation of customs duty demands against the appellant for importing Low Ash Metallurgical Coke and Low Ash Low Phosphorous Coke. The impugned order confirmed duty demands against the appellant under Section 28 of the Customs Act, 1962. The appellant contested the order, leading to the present appeal.2. The impugned order was passed following tribunal orders directing the adjudicating authority to furnish the procedures for sampling and testing to the appellant. Despite the directions, the authority did not comply fully. Previous tribunal orders emphasized the importance of following proper sampling procedures and testing methods, which were not adhered to in this case.3. The appellant presented test reports from recognized testing agencies showing phosphorous content below the threshold. However, the adjudicating authority did not give credence to these reports and relied on a test report from the CRCL conducted years after the import. The tribunal found that the samples were not properly handled, casting doubt on the reliability of the later test report. The tribunal also highlighted the incorrect application of Section 28 of the Customs Act for duty demands.4. The appellant argued against the sustainability of duty demands made years after final assessment and without evidence of suppression. The tribunal noted that if the goods were finally assessed without allegations of suppression, demands made later may not be legally sustainable. The appellant's position was supported by previous tribunal decisions regarding the proper drawal of samples and adherence to testing standards.5. The tribunal found that the evidence and procedures followed by the revenue were insufficient to justify the duty demands. Proper sampling methods were not followed, and reliance on a delayed test report was deemed unreliable. The tribunal emphasized the importance of adhering to testing standards and ensuring the representativeness of samples. Consequently, the impugned order was set aside, and the appeal was allowed.