Freely importable sulphated oils were held outside the negative list where trade and customs materials supported importability.

Sulphated fish oil and sulphated neatsfoot oil were treated as freely importable goods used in leather manufacture, with trade and customs materials showing that they did not fall within the negative list. A clarification from the Council for Leather Exports, a customs exemption notification under Section 25 of the Customs Act, 1962, and DGFT communication on sulphated fish oil all supported the view that the goods were not prohibited imports. The appellate order was therefore set aside and the original adjudication restored in favour of the assessee.

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Issues: Whether sulphated fish oil and sulphated neatsfoot oil were freely importable and outside the negative list, and whether the order of the Collector (Appeals) setting aside the original adjudication was liable to be reversed.

Analysis: The imported goods were treated as sulphated oils used in leather manufacture. The record included a clarification from the Council for Leather Exports stating that such chemicals did not figure in the negative list and were freely allowed for import by the leather industry. The decision also noted the departmental notification granting partial exemption from customs duty under Section 25 of the Customs Act, 1962, which supported the view that the goods were not being treated as prohibited imports. Further support was drawn from the DGFT communication indicating that sulphated fish oil was freely importable without licence during the relevant licensing period.

Conclusion: The goods were held to be freely importable and not covered by the negative list. The appellate order was set aside and the original order of the Additional Collector was restored, in favour of the assessee.

Ratio Decidendi: Where the competent trade and customs authorities treat a product as freely importable and issue a duty exemption notification in respect of it, the goods cannot be sustained as prohibited imports under the negative list absent contrary legal basis.

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