2023 (7) TMI 1250 - AT - Customs

Tribunal sets aside Customs Commissioner's order on appeal, grants relief to appellant.

The tribunal allowed the appeal, setting aside the order passed by the Commissioner of Customs (Appeals) and granting consequential relief to the ... Benefit of exemption - Ignoring certificate of origin issued by the exporting Country in respect of imported goods namely cashew - roasted cashew so as to be covered under the exemption N/N. 46/2011-Cus. dated 01.06.2011 as amended vide N/N. 63/2016-Cus. dated 31.12.2016, or not - HELD THAT:- There are no objection to accept the certificate of origin copy available at page 156 of the Appeal Memo that has been issued by the Ministry of Agriculture and Rural Development the Government of Vietnam. At column 8 of it they have certified it as cashew nut Kernel roasted BB Grade. Therefore, in view of the requirement of Annexure-3 of the Customs Tariff (Determination of Origin of Goods) Rules, 2009 in case of doubt regarding certificate of origin containing erroneous description of goods, resolution should have been made in consultation with Competent Authority issuing the certificate but apparently the same has not been followed by the Respondent-Department and, therefore, on this score alone the demand would not survive. On going through the test report submitted by the CEPCI, Kerala there would not be any hesitation to say that the report creates more confusion than giving a fonding/opinion on the product - it can be said that presence of Cardanol was noticed and if the sample is roasted traces of Cardanol will be less but the report lacks the basic clarity as to if Cardanol presence is much more than the same is supposed to be present in roasted cashew! Likewise at point No. 4, it is clearly mentioned that Fatty Acid is found to be higher above 3% and as per FSSAI standard the maximum limit prescribed is 1.25% for plain cashew. If this is the observation, then the sample should have been considered as roasted cashew since Fatty Acid presence is above 3% as for plain cashew Fatty Acid content should be less than 1.25% but surprisingly it (the report) said that on the basis of the above fact it was concluded that the sample was ‘Plain/Raw Cashew Kernel’ (baby bits). The only conclusion that can be drawn is that the report is devoid of all logic and it is apparently prepared to favour the department but it contains the basis of such preparation that is favouring the stand taken by the importer appellant - On perusal of the report, it is noticed that on which date those test were conducted is not available in the said report and on which date they have forwarded the same to the Commissioner, JNCH is also not indicated except putting a head-note on these 10 pages report that it is a clarification of CEPCI with reference to test certificate No. 1039 dated 04.04.2018. It is quite imposable to preserve the samples for 5 years without exposure to moisture etc. having its self-live period also. Therefore, the veracity of these reports are questionable apart from the fact that page 4 of the said report that contents quality parameter of Cashew Kernel during AR roasting indicates that the more time it is exposed to heat the more it looses its moisture content, but from it, no reference could be made as to if after being exposed to moisture again subsequent to roasting also cashew nuts would absorb moisture further. The order passed by the Commissioner of Customs (Appeals), JNCH, Nhava Sheva, Mumbai-II is here by set aside - Appeal allowed. Issues Involved:1. Denial of benefit of exemption Notification No. 46/2011-Cus. as amended by Notification No. 63/2016-Cus.2. Mis-declaration of imported goods as 'Roasted Cashew Kernel'.3. Validity and acceptance of the Certificate of Origin.4. Reliability of the test report from the Cashew Export Promotion Council laboratory.Summary:1. Denial of Benefit of Exemption Notification:The appellant challenged the denial of the benefit of exemption Notification No. 46/2011-Cus. dated 01.06.2011, as amended by Notification No. 63/2016-Cus. dated 31.12.2016. The denial was based on the claim that the imported goods were not 'roasted cashew' and thus not eligible for the exemption. The adjudicating authority's decision, which was upheld by the Commissioner of Customs (Appeals), was contested in this appeal.2. Mis-Declaration of Imported Goods:The Department of Revenue Intelligence (DRI) alleged that the appellant mis-declared the imported goods as 'Roasted Cashew Kernel' under Tariff Item No. 20081910 to avail the exemption benefits. Laboratory testing and the statement of the proprietor suggested that the goods were plain cashew kernels, leading to a demand for differential duty, interest, and penalties.3. Validity and Acceptance of the Certificate of Origin:The appellant argued that the Customs Authority failed to follow the stipulated procedure for verifying the Certificate of Origin issued by the exporting country. The certificate was issued by the Ministry of Agriculture and Rural Development, Government of Vietnam, certifying the goods as 'cashew nut Kernel roasted BB Grade.' The tribunal found that the Customs Authority did not consult the competent authority of the exporting country to resolve doubts about the certificate, which adversely impacted international treaties and the bilateral relationship.4. Reliability of the Test Report:The test report from the Cashew Export Promotion Council laboratory in Kerala was found to be inconclusive and contradictory. The report indicated the presence of Cardanol, which should be less in roasted cashews, and higher Fatty Acid content, which contradicted the conclusion that the sample was plain cashew. The tribunal observed that the report lacked clarity and logic, and subsequent supplementary reports were questionable in their veracity and reliability.Conclusion:The tribunal allowed the appeal, setting aside the order passed by the Commissioner of Customs (Appeals), JNCH, Nhava Sheva, Mumbai-II, and granted consequential relief to the appellant.Order Pronounced:The order was pronounced in the open court on 20.07.2023.