2018 (5) TMI 74 - AT - Customs

Appeal denial of exemption on crude palm oil due to beta-carotene content leads to key distinctions in court ruling.

Commissioner of Customs (Prev) Jamnagar Versus M/s Ruchi Soya Industries Ltd.

The appeal was against the denial of exemption on crude palm oil due to beta-carotene content below the threshold. The dispute over test results and ... Import of crude palm oil - Benefit of exemption under N/N. 21/2002-Cus dated 12th March 2002 - denial on the ground that beta-carotene content in the crude palm oil imported by M/s Radha Vansapati Ltd being below the prescribed to disentitle them from the privilege - Held that: - It is not in dispute that the palm oil under import was in crude form and requires refining, bleaching and deodorizing before release for human consumption. The primary purpose of prescribing a broad range of beta carotene content in the exemption notification is to ensure that it is applicable only to palm oil that is intended to be subjected to value addition in India. The various tests of the samples were effected over a period of four months and there is a consistent decline in the distinguishing content. Furthermore, the first test at Kandla passes muster - No other evidence to establish that the consignment did not, at any stage, comply with threshold requirement is placed on record. The conformity of impugned goods with crude palm oil as per the prescribed parameters at the time of import is not in question - appeal dismissed - decided against Revenue. Issues:1. Denial of benefit of exemption on crude palm oil due to beta-carotene content.2. Discrepancy in test results for beta-carotene content.3. Appeal against discarding of test results and depletion of carotene content.4. Interpretation of beta-carotene content requirement in the exemption notification.5. Evaluation of test results over time and impact on eligibility for concessional rate of duty.Issue 1: Denial of benefit of exemption on crude palm oil due to beta-carotene content:The appeal was against the order setting aside the denial of exemption on crude palm oil due to beta-carotene content below the prescribed threshold. The first appellate authority discarded test results due to lapse of time causing depletion of carotene content in the oil. The dispute on quantity was settled and not pressed.Issue 2: Discrepancy in test results for beta-carotene content:The appeal involved a discrepancy in test results for beta-carotene content in imported crude palm oil. Various tests showed different levels of beta-carotene, leading to a demand of duty. The last test result was disputed by the Revenue, citing depletion of carotene content over time.Issue 3: Appeal against discarding of test results and depletion of carotene content:Revenue challenged the discarding of the last test result, arguing against the depletion of carotene content over time. The appeal referenced previous decisions and scientific opinions on the reduction of carotene content in crude palm oil with time and temperature variations.Issue 4: Interpretation of beta-carotene content requirement in the exemption notification:The judgment highlighted the distinction between crude and refined palm oil, emphasizing the purification process that alters the carotene content. The exemption notification incentivizes the import of crude palm oil for domestic refining, subject to specific beta-carotene content requirements.Issue 5: Evaluation of test results over time and impact on eligibility for concessional rate of duty:The judgment analyzed the test results of imported crude palm oil over a period of four months, noting a consistent decline in beta-carotene content. Expert opinions supported the view that carotene content diminishes with time, impacting the eligibility for concessional duty rates. The appeal of Revenue was dismissed based on the conformity of the imported goods with the prescribed parameters at the time of import.