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of <h1>Rubber Processing Oil classification appeal allowed, valuation enhancement set aside, penalties waived for country origin mis-declaration</h1> <h3>Rajkamal Industrial Pvt Ltd, Meet Bhadresh Mehta, Zahid Hussen, Bhadresh C Mehta, Amit Bhardwaj, Bagwan Petroleum Versus C.C. -Kandla</h3> Rajkamal Industrial Pvt Ltd, Meet Bhadresh Mehta, Zahid Hussen, Bhadresh C Mehta, Amit Bhardwaj, Bagwan Petroleum Versus C.C. -Kandla - TMI Issues Involved:1. Classification of Rubber Processing Oil (RPO).2. Enhancement of the value of imported RPO.3. Mis-declaration of the country of origin in the bills of entry.4. Proportionality of penalties and redemption fines imposed.Summary:1. Classification of Rubber Processing Oil (RPO):The primary issue was whether RPO should be classified under Chapter Heading 27101990 as claimed by the appellants or under Chapter Heading 27079900 as classified by the Revenue. The lower authorities based their decision on the test report from the Custom House Laboratory at Kandla, which showed non-aromatic constituents less than aromatic constituents. However, the method specified under BIS was not adopted, making the test report unreliable. The Tribunal referenced the case of Shah Petroleum Ltd. vs. Commissioner of Customs, where it was held that RPO should be classified under 2713. The Tribunal concluded that the department's claim to classify RPO under 27.07 fails, and the appellant's classification under 27101990 is correct.2. Enhancement of the Value of Imported RPO:The enhancement of the value was based on consent letters from the directors of the appellants. The Tribunal held that the burden lies upon the Revenue to show that the declared value is incorrect and that proper methodology under Section 14 of the Customs Act read with Customs (Determination of Value of Imported Goods) Rules, 2007 must be followed. Since no contemporaneous value was adopted nor any proper method followed, the enhancement of the value was deemed unsustainable. The Tribunal cited the case of Guru Rajendra Metal Alloys India Pvt Ltd vs. CC, reinforcing that valuation cannot be enhanced merely based on consent letters.3. Mis-declaration of the Country of Origin:Both lower authorities held that the appellants mis-declared the country of origin as UAE instead of Iran. The appellants argued that the declaration was based on documents received from the supplier and there was no deliberate intention to mis-declare. The Tribunal found that since the appellants did not benefit from the incorrect declaration and were not the party to make the incorrect declaration, they cannot be held responsible. This view was supported by the case of Agarwal Industrial Corporation Ltd vs. Commissioner of Customs, where penalties were set aside due to the lack of malafide intention.4. Proportionality of Penalties and Redemption Fines:The appellants argued that the penalties and redemption fines imposed were disproportionate to the differential duty involved. For instance, M/s. Rajkamal had to pay a differential duty of Rs. 7,78,683/- but faced a redemption fine of Rs. 22 Lacs and total penalties of approximately Rs. 47,79,422/-. The Tribunal, considering the overall facts and the lack of intention to evade duty, held that the penalties and fines were indeed disproportionate and thus unsustainable.Conclusion:The Tribunal set aside the impugned order, allowing the appeals with consequential relief in accordance with the law. The decision was pronounced in the open court on 01.02.2024.
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