Naphtha classification turned on proof of ASTM D86 testing and unsupported lab findings could not sustain denial of exemption.

Classification of imported goods turned on whether the prescribed ASTM D86 method was properly used to determine naphtha under Heading 2710 11 19. The record showed that laboratory reports and lab records did not establish compliance with the mandated test, while the department relied mainly on oral assertions and an incomplete cross-examination. A quality certificate from the port of loading referred to ASTM D86 testing, but the adverse report did not disclose the procedure adopted. On that material, the finding rejecting naphtha classification and the related denial of exemption could not be sustained, and the duty, fine and penalties were set aside.

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Issues: Whether the imported goods were classifiable as naphtha under Heading 2710 11 19, whether the prescribed ASTM D86 test had been properly followed, and whether the denial of exemption under Notification No. 21/2002-Cus. was sustainable.

Analysis: Sub-heading Note 4 to Chapter 27 of the Customs Tariff Act, 1975 treats light oils and preparations as those in which 90% or more by volume distil at 210 C by the ASTM D86 method. The record showed that the laboratory reports and lab records did not mention that the prescribed method was actually followed, while the witness relied on oral assertions. The Tribunal also found that the opportunity for effective cross-examination was not properly completed and that the witness was not confronted on the relevant aspects of the testing method. In addition, the quality certificate from the port of loading referred to ASTM D86 testing, whereas the department's report did not disclose the procedure adopted. On this material, the finding that the goods were not naphtha could not be sustained.

Conclusion: The imported goods were held to be naphtha for classification purposes, and denial of exemption was not justified.

Final Conclusion: The adjudication confirming duty, fine, and penalties was unsustainable and was set aside, resulting in allowance of all appeals with consequential relief as per law.

Ratio Decidendi: Where the prescribed tariff test for classification is not shown to have been properly followed in the laboratory record, and the adverse finding rests only on unsupported oral assertion, the classification and exemption denial cannot be upheld.

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