2020 (8) TMI 656 - AT - Customs

Tribunal remands case for fresh adjudication, orders new cross-examination & lab records review.

M/s. Neptune Trade Link Pvt Ltd, M/s. Worldlink TC Bond Store, Dushyant R Patel, M/s. Hazoor Sahib Chemicals P Ltd and Satender Kumar Gupta Versus C.C. -Kandla

M/s. Neptune Trade Link Pvt Ltd, M/s. Worldlink TC Bond Store, Dushyant R Patel, M/s. Hazoor Sahib Chemicals P Ltd and Satender Kumar Gupta Versus C.C. ... Issues Involved:1. Classification of imported goods as 'Naphtha' under CTH 2710 11 19.2. Compliance with ASTM D86 testing method.3. Validity of cross-examination of Chemical Examiner and Chemical Assistant.4. Reliance on test reports from IOC Limited and Reliance Industries Limited.5. Imposition of redemption fine and penalties.Detailed Analysis:1. Classification of Imported Goods:The appellants imported 'Naphtha' and classified it under CTH 2710 11 19, claiming benefits under Notification No. 21/2002-Cus. The revenue contended that the goods did not meet the criteria for 'light oils and preparations' as per Note 4 to Chapter 27 of the Customs Tariff Act, 1975, which requires 90% or more by volume to distill at 210°C using the ASTM D86 method. The revenue argued that the imported goods should be classified under CTH 2710 19 90 as 'other' and imposed a higher duty rate.2. Compliance with ASTM D86 Testing Method:The core issue was whether the ASTM D86 method was followed during the testing of the imported goods. The Tribunal had earlier remanded the case for cross-examination of the Chemical Examiner to verify the testing method. During cross-examination, Shri. Dilip Mehta, Assistant Chemical Examiner, admitted to not being aware of the ASTM D86 method's specifics, including the grouping and proper use of thermometers. This raised doubts about the compliance with ASTM D86.3. Validity of Cross-Examination of Chemical Examiner and Chemical Assistant:The Tribunal's remand order directed the cross-examination of the Chemical Examiner. However, the adjudicating authority introduced Shri. T.K. Myelvalganan, Chemical Assistant Grade-I, for cross-examination, arguing that he conducted the tests under Shri. Dilip Mehta's supervision. The appellants protested this introduction, claiming it was beyond the Tribunal's remand scope. The Tribunal found that since the test report was signed by both Shri. Dilip Mehta and Shri. T.K. Myelvalganan, cross-examination of both was relevant.4. Reliance on Test Reports from IOC Limited and Reliance Industries Limited:The appellants argued that the test reports from IOC Limited and Reliance Industries Limited were unreliable as these entities are business competitors. Additionally, these reports did not explicitly state that the ASTM D86 method was followed. The Tribunal noted that these reports could only serve as supportive evidence and not as the sole basis for classification.5. Imposition of Redemption Fine and Penalties:The appellants contended that the redemption fine was imposed arbitrarily without considering the margin of profit and that penalties were unjustified. They argued that they had entered a contract specifying the import item, and any discrepancy in the imported goods' nature could not be attributed to them. The Tribunal did not delve deeply into this issue, focusing instead on the procedural lapses in testing and cross-examination.Conclusion:The Tribunal set aside the impugned order and remanded the matter for fresh adjudication. The adjudicating authority was directed to conduct a fresh cross-examination of the Chemical Assistant Grade-I, who actually undertook the tests, and to produce all necessary lab records to ascertain the actual readings and equipment used during testing. The appeals were allowed by way of remand.