2009 (2) TMI 306 - AT - Customs

Imported product misclassification corrected by tribunal emphasizing adherence to CBEC circulars for uniform classification practices.

The tribunal found that the classification of the imported product, Crude Palm Stearin, under Chapter Heading 3823.11.12 was incorrect. It should have ... Classification of the product imported “Crude Palm Stearin”. The appellants have claimed the classification under Chapter sub heading 15.11.90.90 while the revenue wants to put it into Chapter Heading No. 38.23.11.12 of the Customs Tariff Act, 1975 – we find that the Chemical Examiner while giving his report refers to some literature supplied by the party. The appellants in their appeal have stated that they had not given any such literature to the department and therefore reliance placed by the Chemical Examiner on some literature is misplaced. In any case the appellants wanted to cross-examine the Chemical Examiner but the department has not allowed the same. Moreover, even the request for retest of samples has not been complied with. The appellants have also produced the analysis certificate at the load port and we find that those certificates conform to the specification of Crude Palm Stearin – Lower authorities not sought ester value of samples to arrive at correct classification as per CBEC circular No. 81/2002-Cus., dated 3-12-2002 - we find that the impugned orders vide which the classification of the product ordered under Chapter Sub-Heading No. 3823.11.12, is liable to be set aside and we do so. We direct the lower authorities to classify the product under Chapter Sub Heading 1511.90.90 of the Customs Tariff Act, 1975 and finalize the bills of entries which were provisionally assessed. Needless to say that the consequential relief, if any, in accordance with law, will be available to appellants on finalization of the said bills of entries. Issues Involved:1. Classification of imported goods (Crude Palm Stearin).2. Adherence to CBEC circular dated 3-12-2002.3. Onus of classification on the department.4. Consistency in classification practices across different ports.5. Technical analysis of the product (triglycerides and ester value).Issue-wise Detailed Analysis:1. Classification of Imported Goods:The primary issue in the case is the classification of the imported product, Crude Palm Stearin. The appellants claimed classification under Chapter Sub-heading 1511.90.90, while the revenue classified it under Chapter Heading 3823.11.12. The Chemical Examiner's report indicated the presence of 23.2% free fatty acids but did not ascertain the remaining 76.8% content. The tribunal found that the balance content, likely triglycerides, was not evaluated correctly, leading to an incorrect classification by the revenue.2. Adherence to CBEC Circular Dated 3-12-2002:The CBEC circular clarified the distinction between Palm Stearin (triglycerides) and industrial monocarboxylic fatty acids (free fatty acids). The circular emphasized the need for chemical analysis to determine the ester value. The tribunal noted that the lower authorities failed to follow the CBEC circular's directives, as they did not ascertain the ester value, which was crucial for correct classification.3. Onus of Classification on the Department:The tribunal highlighted that the onus to classify a product correctly lies with the department. The department failed to conduct a thorough chemical analysis to determine the ester value, which would have confirmed the presence of triglycerides. This failure led to an incorrect classification under Chapter 38 instead of Chapter 15.4. Consistency in Classification Practices Across Different Ports:The appellants argued that the same product was consistently classified under Chapter 15 at other ports. The tribunal noted that the learned Commissioner (Appeals) did not appreciate the consistent practice followed by customs authorities across different locations. The tribunal emphasized the need for uniformity in classification practices to avoid discrepancies.5. Technical Analysis of the Product:The tribunal reviewed the technical aspects, including the presence of triglycerides and the ester value of the product. The Load Port Analysis provided by the appellants showed the ester value, supporting their claim that the product was Crude Palm Stearin. The tribunal found that the Chemical Examiner's report was incomplete as it did not evaluate the ester value, leading to an incorrect classification.Conclusion:The tribunal concluded that the impugned orders classifying the product under Chapter Heading 3823.11.12 were incorrect. The product should be classified under Chapter Sub Heading 1511.90.90. The tribunal directed the lower authorities to finalize the bills of entries provisionally assessed and provide consequential relief to the appellants in accordance with the law. All appeals were allowed, and the tribunal emphasized the need for adherence to CBEC circulars and uniform classification practices.