TaxTMI 
TaxTMI 
2011 (1) TMI 877
X X X X Extracts X X X X
X X X X Extracts X X X X
....th the master of the vessel revealed that description of goods was described therein as (i) Naphtha (ii) Naphtha (or equivalent to Condensate) (iii) Condensate (Naphtha) (iv) Naphtha (Condensate) in the documents namely stowage plan dated 20.05.2004, dead weight statement dated 21.5.2004, cargo report ullage reports dated 16.5.2004 and 21.5.2004, cargo operation plan check dated 10.5.2004, letter from M/s. Samchira FZE dated 05.5.2004 addressed to the owners of MT Nolowati whereas the mate receipt dated 16.5.2004 issued at Bandar Mahshahr did not mention any description about the goods. As it was felt that goods were mis-declared, the same were detained on 25.5.2004 at tank farm Nos. JKS -004, JKS- 007 and JKS- 014 of M/s. J.K. Synthetics Limited, Kandla. Representative samples of the goods imported per above vessel were drawn on 21.5.2004 (on board) and on 24.5.2004 and again on 28.5.2004 from the tank farm. 2. During the course of investigation statements of representatives of various firms concerned were recorded, premises were searched, samples were got tested by laboratories, documents were recovered and after completion of investigation a show cause notice was issue....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d and adjudicating process started. Only in reply to the show cause notice, the appellant had sought re-testing of the samples by using the armenian samples and by the a considerable time has already been lapsed. Having not challenged test reports during the relevant period and having not obtained the expert opinion at that time and in view of the fact that appellant have not been able to explain rather did not to explain what prevented them to produce the expert opinion earlier. In the normal course the expert opinion would have been rejected. However, in the interest of justice and also in view of the fact that the expert opinion is only comments on the test reports, we find that there is no harm in allowing this application. Accordingly, this application for inclusion of evidence is allowed. 5. Learned advocate on behalf of the appellants submitted that product imported namely Gas Condensate is covered by Tariff Heading 2709. In view of the explanatory notes to HSN which specifically says that heading also covers Gas Condensate . Further he also drew our attention to Para 22 of the show cause notice wherein this fact has been accepted. Further, Chapter note to CTH 2709....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Industries case was cited to support his claim that Revenue utterly failed to show that the goods are mis-declared. It was submitted on the basis of this decision that principle of natural justice were not observed and seized samples were not provided for cross-check. 6. Further, he also drew our attention to the correspondence made by the learned advocate for the appellants with all the three laboratories and submitted that all the three laboratories have admitted that they have no specifications for Gas Condensate at all with them. In the absence of specifications no tests could have been conducted for Gas Condensate and therefore, the test reports have to be rejected. He also submitted that all the documents such as invoice, bill of lading, bill of entry etc. shown and described the goods as Condensate only. The test reports relied upon by the Revenue suffered from three infirmities namely, query made by the department is not discussed or explained; no reasons have been given for the conclusion reached and method adopted for conducting the test has not been disclosed. These three infirmities also support the case of the appellants that the product is only Gas Condensa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etroleum products are usually grouped into three categories; light distillates (LPG gasoline Naphtha), middle distillates (Kerosene diesel) and heavy distillates (heavy fuel oil, Lubricating oil, Wax, Asphalt). He submitted that from this it is to evident that even the names they given to the product in some documents i.e. Naphtha and Middle distillates, who take out the product from CTH 2709 and bringing it under 2710 as refined petroleum. 10. He also submitted that there is a strong case of mis-declaration against the appellants in this case as brought out from various documents recovered from the master of the vessel and other firms and also from statements recorded. He submits that in view of the efforts made by the appellant and appellant firms in this case to mis-declare the goods at the time of loading the goods, at the time of filing of IGM and the differences between the documents available with the master of the vessel and IGM filed with the department would prove and clearly show that elaborated efforts were made to ensure that the correct description of the goods was not given. In the result, the only conclusion could be drawn is that what has been imported is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the product imported by them is Gas Condensate. According to this book, the Crude oil is :- Crude oil is a liquid hydrocarbon, but that term also covers natural gas liquids and condensates. Natural gas liquids [NGL] and condensates are hydrocarbons whose molecules are in a gaseous state in a natural gas reservoir but which condense , because of the reduction in pressure and temperature, when the natural gas is produced. This gives rise to the recovery of considerable quantities of propane and butane (liquefied petroleum gas) and also products with molecules containing between 5 and 10 or 15 carbon atoms, for which the correct description is condensate. These are categorized as light condensates (C5 to about C 10 ) which are very similar to naphtha and heavy condensates (C5 to about C 15) which yield naphtha and middle distillates (kerosene and gas oil). It is not always easy to distinguish between condensates and light crude oils and hydrocarbon reservoirs vary almost infinitely between exclusively pure natural gas to exclusively heavy oil. Some fields also contain only condensate, but most crude oils consist of a mixture of hydrocarbon molecules, from gases to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is available. According to table-1 in the letter of Geo-chem International Independent Inspection and Testing Company submitted on 31.7.2005 by the appellants, would also show that C-5 to C-20 is the range in which Naphtha, Kerosene and Gas Oil would be available in the mix. This is the range for Gas Condensate also. 14. It is also noticed that the letter of the Geo Chem also gives the results of test conducted on the products imported by the appellants and also gives the details of processes conducted and the resultant products. 15. While elaborate submissions made by the appellants as regards the test reports show that the product imported is a mixture of hydrocarbons what it does not show that is whether product was a result of refining of crude oil or was the result of Gas Condensate liquid which arise during the period when natural gas emerging from the well cools down because of reduction in pressure and temperature. While there is no dispute that the product that emerges because of lowering of pressure and temperature is called gas condensate and to be classified under 2709 as per HSN, for this purpose it become necessary to show that the product is gas ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that on 07.05.2004 they had got the message that vessel MT Nolowati would be discharging approximately 7000 MT of Naphtha. Based on this message he gave message to M/s. Vibhuti Shipping Pvt. Limited, Gandhidham who are the charterer s agents and who would enter/ clear the vessel with the required authorities. On 19.5.2004, their head office forwarded a message of owner to M/s. Vibhuti Shipping Pvt. Limited attaching bill of lading copy, cargo manifest and mate receipt where the description of the goods was given mentioning as Condensate. He also stated that he had taken up the change of description of the goods between 07.5.2004 and 19.5.2004 with his head office and his head office has told him that they would be taking up the issue with the owner. Shri V.K. Agarwal, Director of M/s. Pushpal Exports Pvt. Limited who purchased the portion of imported cargo stated that in April 2003, Shri Dinesh Gupta of M/s. Kiran Roadlines, Gandhidham, CHA and Shri Jitendra Sharma their manager had suggested that they could import a product Condensate for which there is a good demand. Thereafter they had enquired and conducted enquiries and found out purchasers. After seeing the test reports of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....heard about such cargo before and he did not know what type of cargo it was was. He also stated that they had license for importing Naphtha and had imported kerosene earlier. Shri Hukmat Tarachand Bhojwani, Director of M/s. Vibhuti Shipping and Partner of World Link TC Bond Stores stated that he was not aware of the difference between Condensate and Naphtha and pleaded ignorance of most of the facts. Shri Dinesh Gupta, Partner of M/s. Kiran Road Lines, CHA denied that he had given the ideas to the importers to import Condensate and also stated that he had not provided any assistance other than clearing works to any of the importers. However, he admitted that he had told Shri V.K. Gupta about duty structure of the product Condensate and bill of entry of some other importers but not given suggestions to import the product. In the light of discussion above and from the statements importers who are aware of the suppler IPCC Iran and the master of the vessel would clearly show that while on its voyage from Iran to Kandla, vessel did not have a single document on board describing the goods in clear and unambiguous terms as condensate. Further, on the statements of Chief Officer and maste....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the master of vessel on 23.5.2004 stated to have been issued by Bundar Imam Petrochemical, did not mention the description of the goods as well as details of the consignee and consignor. It is to be noted that it was Bandar Imam Petrochemicals, which is ______ of IPCC, which had sold the product to M/s. Avanti Industries. The whole case of the department as regards mis-declaration and the planning undertaken by the importers with the collaboration of owner of the ship would not have been necessary if the product was Condensate. The elaborate planning could not have been unearthed but for the surprise visit to the ship and search of the ship and recording of statement of master of vessel and recovery of other documents, such as email, mate receipts etc. While test reports are inconclusive, efforts made to ensure mis-declaration of the goods and efforts made to declare the same as Condensate, are very clear. If the product was condensate there was no need for elaborate description, planning and conspiracy. Under these circumstances, in the absence of any conclusive evidence from the test reports, the only conclusion that can be reached is that the product is not Gas Condensate. ....