2026 (3) TMI 517 - AT - Customs

Scope of Show Cause Notice: adjudication cannot rely on post-notice tests not referenced; contemporaneous reports prevail.

Adjudication must not introduce a new foundational ground absent from the Show Cause Notice; reliance on laboratory reports produced after issuance of the ... Scope of show cause notice for denial of exemption for all Bills of Entry primarily on the ground that MR had not been ascertained from Customs laboratory and that CSN values as per load port reports were not reliable - benefit of exemption under Notification No. 21/2002-Cus dated 01.03.2002 (as amended by Notification No. 12/2012-Cus dated 17.03.2012) - contemporaneous evidence - burden of proof on claimant - belated testing and evidence deterioration - Whether the impugned order has travelled beyond the scope of the Show Cause Notice by relying upon CIMFR test reports not referred to therein? Scope of show cause notice - HELD THAT:- The Tribunal held that the Show Cause Notice was confined to two primary allegations (absence of MR from an authorised laboratory and asserted unreliability of load-port CSN values) and did not mention CIMFR testing or annex CIMFR reports. The impugned order, however, rested decisively on CIMFR reports dated after issuance of the notice and substituted the original grounds with this belated evidentiary basis. Supply of documents during adjudication and opportunity to rebut could not cure the jurisdictional defect of introducing a new foundational basis not pleaded in the notice. Reliance upon the belated CIMFR report therefore rendered the adjudication beyond the four corners of the Show Cause Notice and legally unsustainable. [Paras 8] The reliance on CIMFR test reports not referred to in the Show Cause Notice renders the impugned order legally unsustainable. Qualification for exemption under Notification No. 21/2002-Mean Reflectance and Crucible Swelling Number - HELD THAT:- The Tribunal recorded that the notification requires MR > 0.60 and CSN 1. The contemporaneous evidence at import comprised a load-port certificate (CSN 1.5, MR 1.75) and the Customs Chemical Examiner's report (CSN 3), both exceeding required thresholds; the later CIMFR report showing CSN 0.5 arose from testing more than two years after sampling. The adjudication did not establish any cogent scientific defect in the contemporaneous reports nor show that remnant samples were preserved to prevent deterioration. Preferring a belated test report over contemporaneous reports without demonstrating the former's reliability or explaining sample preservation was arbitrary; consequently the contemporaneous evidence establishes entitlement to exemption. [Paras 9] The coal imported under the relevant bill of entry satisfied the conditions of exemption and the belated CIMFR report cannot displace the contemporaneous evidence. Final Conclusion: The Tribunal set aside the portion of the impugned order denying exemption and confirming demand (and consequential interest) in respect of the specified bill of entry, holding the order unsustainable for travelling beyond the Show Cause Notice and on merits finding entitlement to the exemption. Issues: (i) Whether the impugned adjudication travelled beyond the scope of the Show Cause Notice by relying upon CIMFR test reports not referred to therein; (ii) Whether the coal imported under Bill of Entry No. 5919332 dated 06.02.2012 satisfied the conditions of exemption under Notification No. 21/2002-Cus as amended.Issue (i): Whether the impugned adjudication travelled beyond the scope of the Show Cause Notice by relying upon CIMFR test reports not referred to therein.Analysis: The Show Cause Notice dated 13.06.2013 alleged finalization of provisional assessment without obtaining Mean Reflectance from an authorized laboratory and questioned the reliability of load port CSN reports; it did not mention remnant samples being sent to CIMFR nor annex CIMFR reports. The impugned order relied decisively on CIMFR reports dated 31.01.2014 and 19.03.2014 which post-dated the Show Cause Notice. The CIMFR reports formed the substituted evidentiary basis for confirming demand while the original grounds in the notice were discarded. The subsequent supply of documents during adjudication did not cure the jurisdictional defect of introducing a new foundational ground not contained in the notice.Conclusion: The adjudication travelled beyond the scope of the Show Cause Notice by relying on CIMFR reports not referred to therein; the impugned order is legally unsustainable on this ground.Issue (ii): Whether the coal imported under Bill of Entry No. 5919332 dated 06.02.2012 satisfied the conditions of exemption under Notification No. 21/2002-Cus as amended.Analysis: The notification required Mean Reflectance (MR) above 0.60 and Crucible Swelling Number (CSN) of 1 or above. Contemporaneous evidence comprised the load port Certificate of Quality dated 17.01.2012 reporting CSN 1.5 and MR 1.75, and the Chemical Examiner's report dated 02.04.2012 reporting CSN 3. The CIMFR report showing CSN 0.5 was produced more than two years after sample drawal; there is no record of preservation or storage conditions to ensure reliability against deterioration. No cogent scientific reason was recorded to reject the contemporaneous departmental report. The importer's contemporaneous documents thus discharged the burden to establish eligibility and preferring a belated test report over contemporaneous reliable evidence was arbitrary.Conclusion: The coal imported under Bill of Entry No. 5919332 dated 06.02.2012 satisfied the exemption conditions of Notification No. 21/2002-Cus as amended; the demand of differential duty and interest is unsustainable.Final Conclusion: The impugned Order-in-Original No. 01/2015 dated 10.09.2015 is set aside insofar as it denies exemption and confirms demand in respect of Bill of Entry No. 5919332 dated 06.02.2012; the appeal is allowed with consequential relief in accordance with law.Ratio Decidendi: An adjudication cannot introduce or substitute a new foundational ground not contained in the Show Cause Notice; contemporaneous test reports evidencing compliance with conditional exemption must prevail over belated testing conducted after substantial delay absent proof of sample preservation and scientific reliability.