Imported goods correctly classified as Low Aromatic White Spirit under CTH 2710 1990, confiscation and penalty quashed

CESTAT Kolkata held that imported goods were correctly classified as Low Aromatic White Spirit under CTH 2710 1990, not Kerosene under CTH 2710 1910 as determined by the adjudicating authority. The tribunal found no mis-declaration occurred since the goods met technical specifications for Low Aromatic White Spirit per IS 1459:2018 standards. Confiscation under Sections 111(m) and 111(d) of Customs Act 1962 was set aside as no Foreign Trade Policy violation existed. Penalty under Section 112(a)(i) was also quashed due to absence of mis-declaration.

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Issues Involved:

1. Classification of the imported goods as 'Low Aromatic White Spirit' or 'Kerosene'.
2. Compliance with the Foreign Trade Policy and the Petroleum Act.
3. Validity of the CRCL Test Report.
4. Confiscation and penalty under the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Classification of the Imported Goods:

The primary issue in this case revolves around the classification of the imported goods. The appellant classified the goods as 'Low Aromatic White Spirit' under Customs Tariff Item No. 2710 1990, while the Department reclassified them as 'Kerosene' under CTH 2710 1910 based on the CRCL Test Report. The Tribunal observed that the Test Report from CRCL, Kolkata, which suggested the goods had characteristics of 'Kerosene', was not conclusive. The report did not test all necessary parameters as per IS 1459:2018, such as Colour, Copper Strip Corrosion Test, and Distillation Test. The Tribunal noted that the goods failed to meet the specification required for Kerosene in these aspects. Additionally, the appellant provided a precedent where similar goods were classified under CTH 2710 1990, supporting their claim.

2. Compliance with the Foreign Trade Policy and the Petroleum Act:

The Department argued that 'Kerosene' could only be imported by State Trading Enterprises or agencies approved by DGFT, according to the Import Policy. However, since the Tribunal concluded that the goods were 'Low Aromatic White Spirit', there was no violation of the Foreign Trade Policy. Consequently, the classification under CTH 2710 1990 meant there was no breach of the Petroleum Act or the related rules.

3. Validity of the CRCL Test Report:

The Tribunal critically evaluated the CRCL Test Report and found it inadequate for classifying the goods as 'Kerosene'. The report did not adhere to all the parameters outlined in IS 1459:2018, leading to an inconclusive classification. The Tribunal emphasized that without a comprehensive test, the classification could not be changed based solely on the partial findings of the CRCL report.

4. Confiscation and Penalty under the Customs Act, 1962:

Given the Tribunal's conclusion that the goods were 'Low Aromatic White Spirit' and not 'Kerosene', the basis for confiscation under Section 111(m) and Section 111(d) of the Customs Act, 1962, was invalid. The alleged mis-declaration was not sustained, and therefore, the penalty imposed under Section 112(a)(i) was also set aside. The Tribunal held that the goods were not liable for confiscation, and the question of re-export on payment of redemption fine did not arise.

Conclusion:

The Tribunal set aside the impugned order, allowing the appeal filed by the appellant. The goods were classified as 'Low Aromatic White Spirit' under CTH 2710 1990, and there was no violation of the Foreign Trade Policy or the Petroleum Act. The penalty and confiscation orders were also annulled, providing relief to the appellant.

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