TaxTMI 
TaxTMI 
2017 (5) TMI 1281
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....ectively for the period to 01.08.2011 to 12.08.2013 by classifying the Rubber Process Oil (RPO) imported by Appellants under CTH 27079900 as 'Oils and other products of the distillation of high temperature coal tar, similar products in which the weight of aromatic constituents exceed that of non-aromatic constituents" Interest liability on the above demands were also confirmed and penalties under the provisions of Customs Act were imposed. Penalties were also imposed upon co-appellants who are employees of the Appellant companies. Further the seized goods i.e RPO weighing 527.152 MTs, 3000 MTs and 1487.919 MTs lying in the warehouse and belonging to the Appellants adjudged as hazardous waste was allowed to be re-exported. Aggrieved with the impugned orders the Appellants are before us. 3. The brief facts of the case are that the Appellants are engaged in the manufacture of RPO and have been importing the same since long time, classifying the same under chapter heading 2710. The RPO is manufactured by lubricating oil refineries from vacuum gas oil. The oil is cracked at high temperature and treated with solvents, various types of lubricating oils are obtained and the bottom r....
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....oresaid report the custom department issued a show cause notice dt. 08.08.2013 alleging that the product was mis-classified, was off-specification and was hazardous and therefore illegally imported. Though the Appellants sought re-testing by a recognized laboratory and cross examination of the Chemical Examiner, the same was not allowed and the demands, penalties and proposals made in the show cause notice were confirmed. 4. The adjudicating authority held that from the report of CRCL it is confirmed that the Aromatic constituents in the consignments of RPO was more than non aromatic constituents. As per chapter note 2 of chapter 27 of first schedule to the central excise tariff act, 1975 references to "petroleum oils and oils obtained from bituminous minerals" include not only petroleum oils and oil obtained from bituminous minerals but also similar oils as well as those consisting mainly of fixed unsaturated hydrocarbon obtained by any process, provided that the weight of the non aromatic constituents exceeds than that of the aromatic constituents and hence goods are classifiable under CTH 2707 which is specific heading for classification based on aromatic constituent in place....
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....o separate testing for aromatic content is required separately at all. From the test report it is seen that Aniline point was within range specified in BIS Specification which is relevant. Despite the CRCL has reported aromatic content of 77.2% which is wrong. In the same communication of CRCL it has been informed that JNCH laboratory was equipped for all tests as per BIS Specification namely density, kinematic viscosity, flashpoint, aniline point and pour point (admittedly the aromatic content is not a part of the specification). It was stated that if the sample did not confirm to the requirements of BIS specification, then the samples should be forwarded for a hazardous waste analysis to the laboratory of Custom House, Mumbai which was equipped by the Board for such analysis or alternatively to the laboratory of Indian Rubber manufacturer Association (IRMRA). The said communication also stated that the imported product in the name of RPO are mainly aromatic extracts (generated organic residues from petrochemical process and refining), which are produced during the refining of lubricating oil base stock and such aromatic extracts derived from the treatment of lubricating oils with....
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....Vide report dated 8.10.2015 M/s Sky Lab Analytical Laboratory reported that all RPO is non-hazardous with respect to PAH as per Schedule-II, Class A of the said rules. That it is clear from the above facts that the CRCL did not have the necessary expertise nor it has the necessary equipment to test the PAH content. It did not actually tested PAH content and testing of PAH content was outsourced without disclosing that it had not itself tested the PAH content. That the above facts also show that two independent laboratories, one each appointed by the Hon'ble Bombay High Court and this Hon'ble Tribunal, have both tested the sample and reported that the RPO sample sent to them was non-hazardous in nature as SCHEDULE-II CLASS A of the said Rules. The above two independent report is not challenged or disputed by the department and have been accepted by the department. He submits that in view of such facts the impugned order holding that imported RPO is hazardous and confiscation thereof as well as demand of duty is illegal and is required to be set aside. 7. He submits that the CRCL report gives no methodology (test method) for arriving at the PAH content. It is pointed out t....
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....ating authority. He relies upon the following judgments to say that the classification of the goods can be raised at any stage (i) J.K. Synthetics Ltd Vs. Collector of Customs 1992 (62) ELT 42(TRI) (ii) Collector of Customs Vs. Photogravurs (India) Pvt Ltd. 1987 (29) ELT 647 (TRI) (iii) Voltas Ltd. Vs. Collector of Customs, Bombay 1997 (91) ELT 261 (SC) He submits that the assessment of imported RPO at the time of clearance was final assessment. He further submits that prior to introduction of Notification No.52/2011 dt. 25.06.2011 the duty was 10% on goods falling under chapter heading 27.10 and in the said notification it was reduced to 5%. That it is after the reduction of the duty that the department started objecting to the classification. By Circular dt. 12.08.2011 the CBEC stated that the RPO which meets the requirement as stipulated in chapter note 2 would remain classifiable under ch sub heading 27.10 and that it was only after the issue of the said circular that the Customs Department started drawing samples. Prior to introduction of Notification No.52/2011 the duty payable under chapter 27.10 and 27.07 was same and hence no dispute arose. He submits that sinc....
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....y NABL for testing of PAH content in Used/ waste oil only. That as per letter of Dr. Y.K.S. Rathore, Director, CRCL for analysis of PAH content in sample u/s, CRCL has sub contracted services of M/s Avon Food Lab Pvt. Ltd in pursuance of Board's Circular No.9/2009 - Customs dt. 23.02.2009 which is notified by Ministry of Environment & Forest. The said agency is accredited for "Testing of PAH content in Petroleum Products" from National Accredition Board for Testing and Calibaration Laboratories as per standard of ISO/IEC 17025:2005 whereas Mr. Ashwamedh is not accredited for said test. That the said laboratory has given only factual report without drawing any conclusion as it is not the duty of the laboratory to do so. He relies upon the judgment of Hon'ble Delhi High Court in case of Marut Nandan Overseas Ltd. Vs. S.K. Singhal, CCU 2002 (141) ELT 14 (DEL) in support of his contention. He submits that M.s Ashwamedh and M/s Sky Lab has overstepped their duties. That the CRCL report merits to be accepted in holding that the goods are Hazardous waste. He also submits that as per letter of Dr. Rathore, the Appellant has filed applications before National Green Tribunal that the....
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....judicating authority for chemical tests from any other recognized laboratory and cross examination of Chemical Examiner. The adjudicating authority on the basis of CRCL, New Delhi confirmed the demands and passed order as above. Subsequently the Appellant during pendency of the present appeal before Tribunal has filed a writ petition before the Hon'ble High Court at Mumbai for retesting of samples by independent laboratory. In the proceedings before the Hon'ble High Court the facts came out that the goods were not tested by the CRCL, New Delhi itself but were got tested from M/s Avon Food Labs (Pvt) Ltd said to be recognized by the Ministry of Environment & Forests. The Hon'ble High Court agreed with the pleadings of the Appellant as to testing of goods from other approved laboratories and directed the sample to be tested by approved laboratory. The sample of goods on the direction of the Hon'ble High Court were got tested by M/s Ashwamedh Engineers and Consultants, Nashik by the Customs authorities. Later the CRCL objected to report of M/s Ashwamedh Eng. Terming it to be incomplete and inappropriate as the Laboratory did not report percentage of dry solid material (sed....
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....nsultants Co-op So. Ltd. who conducted test of the sample on 9 parameters as directed in letter dt. 14.11.2014 issued by office of Commissioner of Customs (Import-II), New Customs House, Ballard Estate, Mumbai. The laboratory in its report concluded that the sample of RPO does not confirm to requirements of IS 15078 : 2001 (Reaffirmed 2012), Petroleum based Process Oils for Rubber Industry - Specifications with Kinematic Viscosity at 100^0 C. It further opined in its detailed report that the samples are Non hazardous. It was also mentioned in said report that the test has been performed as per ASTM - D5233-92 as mentioned in foot note (v) of the schedule - II of the HWMHTMR Rules. The Hon'ble Court while disposing the Writ petitions permitted the Appellants to rely on said report in their case pending before Tribunal. The revenue again before Tribunal had objected to the said report on the ground that the laboratory has not reported percentage of dry solid material (sediment) which is required to decide mode of extraction while adopting "Toxicity Characteristics Leaching Procedure (TCLP) as per ASTM - D2533-92" and that analysis has opted wrong mode of extraction and sample pre....
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....al Manager, Mr. Vijay Thakare and handed over to the Technical Manager and Government Analyst Mr. Vijay Thakare for conducting the analysis of parameters mentioned. The laboratory formalities were completed by handing over the format no.QF/5.8/3 'Sample Analysis Request and Chain of Custody Record (ARC)' duly signed by the Sample receipt in-charge and laboratory personnel. Total sample quantity in plastic bottle was quantified by knowing the bottle diameter, height of liquid in BOTTLE AND using formula. This turned out to be around 665 ml. Parameters mentioned as per letter referred above were to be anaiyzed: Colour of Sample Ash Content Flush Point (COC) Density (gm/ml at 15^0C Kinematic Viscosity at 100^0C Aniline Point Aromatic Content (% by mass) PAH (mg/kg) Test for Halogens Analysis Methodology: Analysis of Rubber Processing Oil has been earned out with a view of comparing the analytical values against the Requirements of Petroleum Based Oils for Rubber Industry, IS: 15078:2001 (Reaffirmed 2012), Type A, Aromatic in respect of parameters - Colour, Flash Point, Density, Kinematic Viscosity and Aniline Point. Analysis OF Polyaro....
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....til two phases are completely miscible. The mixture is then cooled at controlled rate and the temperature at which the two phases separate is recorded as the aniline point. 7. Automatic Content (% by mass): There are no limits in Hazardous Waste (Management Handling and Transboundary Movement) Rules, 2008 (HWMFITMR for short hereafter) for this specific 'aromatic content parameter. It appears under Class C8 as 'Aromatic compounds other than those listed wider A 12 to A18'. There seems to be no specification in Rubber Processing Oils standards for this parameter. Hence it was analysed by standard method Clay-gel ASTM D 2007-98 8. Polyaromatic Hydrocarbons (FAHs): For determining the concentration of all the PAHs the Toxicity Characteristics Leaching Procedure (TCLP)' as per ASTM-D5233-92 is adopted as mentioned in footnote (v) of Schedule-II of HWMHTMR. The analysis is done by using USEPA/SW846/8100 method. The sample is passed through the Chromatographic column using Dichloromethane, Hexane and Methanol separately. After this, sample is evaporated in rotary shaker. After evaporation, all the layers are RUN On Gas Chromatograph using Flame Ionization Dete....
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....MHTMR. *** As Schedule-Il Class-B of HWMHTMR. # For determining the concentration of PAH and Halogens, the 'Toxicity Characteristics Leaching Procedure (TCLP)' as per ASTM-D5233-(v) of Schedule-II of HWMHTMR. 92 IS adopted as mentioned in fact note v 0 Schedule-II HWMHTMR. Analysis Results of Polyaromatic Hydrocarbons as per Class-A of the Schedule-II of HWMHTMR as below: S.No. Parameter Results Limits Units Method Class Class A: Poly Aromatic Hydrocarbons (PAH) 50 USEPA/ SW 846/ 8100 A12 Napthalene BDL mg/kg A13 Anthracene BDL mg/kg A14 Phenantren LDL mg/kg A15 Chrysene BDL mg/kg Benzo (a) anthracene BDL mg/kg Fluoranthene BDL mg/kg Benzo (a) pyrene BDL mg/kg Benzo (K) fluoranthene BDL mg/kg Indeno (1, 2, 3-cd) pyrene BDL mg/kg Benzo (ghi) perylene BDL mg/kg Detection Limit : 0.2 mg/kg BDL: Below Detection Limit Conclusion : 1. The Sample o....
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.... • The percentage value of dry solid material was not included in the Analysis Report as your letter dated 14.11.2014 did not mention it as one of the test parameters. iii Please provide copy of Annexure i.e. Scope of Accreditation of Chemical Testing issued by NABL along with Certificate No. T-1188 on 02.12.2012 and valid upto 01.12.2014 • Copy of NABL Certificate No.T.1188 dated 02.12.2012 and valid upto 01.12.2014 along with Scope for Used/Waste Oil which includes Poly Aromatic Hydrocarbons (PAH) is enclosed Annexure-2. As per point No. r(iv) of your letter, we would like to clarify that the method opted for extraction and sample preparation procedure were correct. Extraction was done as per the requirement of Schedule-II of Hazardous Wastes (Management, Handling & Transboundary Movement) Rules 2008 (HWMHR), foot not (v) which mentions "For determining the concentration of the hazardous constituents in the waste "Toxicity Characteristics Leaching Procedure (TCLT)" as per ASTM-DS5233-92 should be adopted". Further the extracted sample was given clean-up as per methods USEPA 3650 followed by US EPA 3611B. Hence the final extracts were in Dichlorom....
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....oint (COC), Density, Kinematic Viscosity at 100^0C, Aniline Point, Aromatic Content, (% by mass), PAH (mg/kg) and Test for Halogens. The report further clearly states that Analysis of RPO has been carried out with a view of comparing the analytical values against the requirements of Petroleum based Oils for Rubber Industry, IS : 15078:2001 (Reaffirmed 2012), Type A, Aromatic in respect of parameters - Colur, Flash Point, Density, Kinematic Viscosity and Aniline Point. It is thus obvious that the test was done as per the requirement and if the report does not contain the sedimentary parameter the same cannot be a ground to brush aside the report of M/s Aswamedh Engineers. It is more so in the light of the fact that the CRCL test results and Test report of M/s Avon Foods is highly doubtful and cannot be accepted on its face. It is merely a one page report of M/s Avon containing one parameters of PAH without any comment. The report of M/s Avon Foods and CRCL is as under : 16. We thus find that the report of M/s Avon Foods and CRCL cannot be taken as basis to hold impugned goods as hazardous or not of accepted levels. Also at. no point of time it was revealed that the test was condu....
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....ste (Management Handling and Transboundary Movement) Rules, 2008 (HWMHTMR rules) is reliable and the objections raised by the revenue does not hold any substance. It is also seen that it is only after the receipt of the report by M/s Aswamedh Engineers that the CRCL objected not only to the test report but even the eligibility which is not correct. Once the laboratory is accredited to such test and secondly they have tested the parameters as asked by the revenue, the objection raised by the revenue, which are even not sustainable in view of our observations, are not correct. 17. Further we are of the view that once the Hon'ble High Court had directed the sample to be tested by M/s Ashwamedh, the objections of the CRCL does not carry much weight. We also find that in terms of Circular No.9/2009 - Customs dt. 23.02.2009 the Ministry of Environment & Forest has recognized laboratories for the purpose of testing of samples and the assistance of the same may be utilized in testing the samples of Hazardous waste. Once M/s Ashwamedh Engineers are recognized by the MoEF as found above for the testing of samples the CRCL cannot comment upon the same. 18. The report of second lab M....
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....her the goods are classifiable under chapter sub heading 2707 9900 as canvassed by the revenue or 2710 1960 as canvassed by the Appellants or under 2713 9000 as alternatively pleaded by the Appellants. We find that goods were purported to be classified under chapter subheading 2707 9900 by the revenue on the ground that Rubber Process Oil (RPO) which meets the requirements stipulated in the chapter Note 2 of chapter 27 would remain appropriately classifiable under subheading 2710 and that in case where the weight or aromatic constituent exceeds that of non aromatic constituents then such product would appear more appropriately classifiable under 2707 subject to meeting the requirements. The chapter note 2 of chapter 27 read as under : Reference in heading 2710 to "petroleum oils and oils obtained from bituminous minerals" include not only petroleum oils and oils obtained from bituminous minerals but also similar oils, as well as those consisting mainly of mixed un-saturated hydrocarbons, obtained by any process, provided that the weight of the non aromatic constituents exceeds that of the aromatic constituents. However, the references do not include liquid synthetic polylefin....
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....en as per the HSN Explanatory Notes to said chapter the correct classification would be under chapter sun heading 271390 00. The more specific tariff heading is ought to be assigned to the goods in case if two headings are equally applicable. We therefore hold that the raw RPO imported by the Appellants would merit classification under chapter heading 2713.90 and would be liable to duty accordingly. 23. The demands against the Appellants have also been raised by invoking extended period of limitation in respect of previous imports. We find that during the course of earlier imports also the samples were drawn by the Custom Authorities and were sent for testing. The aromatic contents were found to be less than 50% by weight and the goods were allowed to be cleared. In such view of facts it cannot be said that the Appellants have suppressed any facts from department. Further we find from the bill of entry for home clearances that there is no mention of any provisional assessment of the same which shows that the Bills of Entry were finally assessed. From the detailed discussions made hereinabove, it can be seen that the issue involved is grave interpretation of Iaw that whether good....
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....eport, in full or in part, shall not be used for advertising or as evidence at any court of law. This report can not be reproduced, except when in full without the written pe, nisation of the Director The sample will be destroyed after three weeks from the date of issue of the test report (in case of non-perishable products only) The liability of the laboratory is limited to the ovarsed amount All disputes are subjected to the Delhi Jurispiction C-35/23, Lawrence Road Industrial Area, Delhi 110035 Tel. +91-11-45202222 Fax +91-11-47052525 E-mail: alfondlatino can affoodlabnail.com Naise Document 3 REST RESULT 89 13 Div. R. Das Just Rar it No. 313/01 Lab No. Lats Data End 1081609118279/29-1.13 TEST RESULT: C-No. 35-cus/ CRO/13/CL 7621 Icht 21-03-13 dated 15/04/18 The sample is in the form of amber coloured viscous liquid having green Huonescence Wale Nil with the following characteristics Ash content Nil, pidity: Nil Sediment: Nils Plain point (coc) Above disc [Actual being 230°c) Density (filme) al 15 kinematic viscosity at 150°c 18 st TECHNICAL OPINION: Aniling point Below ssc ndus Ansmatic ....