TaxTMI 
TaxTMI 
2022 (5) TMI 588
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.... on hold for drawing samples as Revenue suspected mis-declaration. Initially, the Customs Authorities took a sample from import consignment with respect to the Bill of Entry No. 6110507 dated 17.12.2019 on Ist check basis and sent the same for testing to Dy. Chief Chemist, JNCH vide Test Memo No.1059045 dated 17.12.2019. Vide report dated 27.12.2019, it was opined as under:- "The Sample is in the form other than light oil and preparations, Kerosene (SKO) and Diesel (HSD)". The appellant paid duty on 31.12.2019 as the goods were found as declared. However, the said goods were not allowed to be cleared and put on hold by the Department. Thereafter, the sample was once again drawn on 07.01.2020 and again forwarded to the Dy. CC, JNCH for retesting. The same Dy.CC, JNCH vide his test report no.18/GIIB(I) dated 21.01.2020 opined as under:- "The above tested parameters is in the range of diesel oil. It is other than the light oil and preparations solvent (125/240), Kerosene (SKO) and Vacuum Gas Oil". Thereafter, samples were drawn under Panchnama for other 4 Bills of entry and forwarded to the DYCC, JNCH for testing. As per test report, it appeared ....
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....13.12.2019 Country of Origin Kuwait Description of Goods Mixed Mineral Hydrocarbon Oil- CTH27101988 Quantity 73090 Kgs. Invoice No. and Date KW-SMB-INV-121 dated 13.11.2019 Declared Invoice Value (C&F) 43123.10 USD Exchange Rate 1.00 USD = 72.40 INR Supplier M/s. Babji International Co. Kuwait. Container No. MEDU5654814, MEDU5861745, MEDU6929217 and TGHU0968761 Goods as classified by Revenue Diesel CTH 27101944 Declared Assessable Value 31,24,128.44 Re-determined Value @ Rs.43.14/Ltr. 37,83,723.12 Table- D Importer M/s. Jaymco Polymers Pvt.Ltd. IEC 0310057744 Bill of Entry 6024354 dated 10.12.2019 IGM No. 2241215 dated 10.12.2019 Country of Origin Qatar Description of Goods Mineral Hydrocarbon Oil-CTH27101990 Quantity 160300 Kgs. Invoice No. and Date QT-SMB-INV-100 dated 02.12.2019 Declared Invoice Value (C&F) 95378.50 USD Exchange Rate 1.00 USD = 72.40 INR Supplier M/s. SMB Golden General Trading Co., Kuwait. Container No. CAIU2271662, GLDU3898070, MRSU0280314, MSKU2315450, MSKU3569491, MSKU4125....
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....proper storage of the consignment being inflammable and had also prayed for provisional release to be allowed by the Revenue. Thereafter, Revenue passed order dated 31.08.2020 for provisional release, subject to the conditions:- (i) Execution of bond of Rs. 2,90,36,082/-; (ii) Security deposit of Rs.3,77,32,753/- on account of differential duty, fine and penalty that may be levied at the time of adjudication; and (iii) Payment of self-assessed duty, where it is not paid. 7. The appellant objected to taking of assessable value of Rs.80.11/- per litre, determined by the Department for the purpose of provisional release, and in fact, the customs duty has been applied twice. The Hon'ble Bombay High Court, while passing the final order in respect of the Writ Petition No.2451/2020, observed as follows:- i. Petitioner is granted liberty to file appeal before the CESTAT under Section 129-A(1)(a) of the Customs Act against the order dated 31.08.2020. ii. If such appeal is filed within a period of four weeks from today and an application is made for early hearing, CESTAT shall decide the appeal within a perio....
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....toms, NS(V) while permitting the provisional release of the consignment in question. The Appellant was shocked and surprised by the Adjudication Order dated 23.11.2020 passed by the Adjudicating Authority and thereafter apprised this Tribunal about the same, and withdrew its appeal filed before the Tribunal against the Order dated 31.08.2020 (prov. release). 9. In the Order-in-Original No. 427/2020/ADC/NS-I/Gr. I&IA/JNCH dated 23.11.2020, it was ordered:- a. Amendment of Description and CTH in the subject Bills of Entry and re-assessment accordingly; b. Rejected the declared value under Section 14 of the Customs Act, 1962 read with Rule 12 of Customs Valuation Rule and re-determined the same; c. Confiscation of the goods namely Keorsene (IS:1459) (changed classification) covered under 03 Bills of Entry No. 6227454/25.12.2019, 6022517/10.12.2019, 6024354/10.12.2019 having re-determined value of Rs. 2,36,81,377.54 u/s 111(d) and 111(m) of the Customs Act, 1962; d. Conf....
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.... case of CCE vs Sushma Textiles Ltd 2004 (167) ELT 487 (S.C.) C. The samples have not been drawn in accordance with the methodology in the prescribed containers as required under the BIS Specification IS 1447-1 rendering the Test Reports, a complete nullity. D. Non-specification of method of testing in the Test Reports renders the same completely unreliable. E. Case laws relied by court below in the impugned order are irrelevant. i. Reliance Cellulose Products Ltd. Vs CCE 1997 (93) ELT 646 (SC) ii. Anand Mohata Agro Indus P. Ltd. Vs C.C. Import 2019 (370) ELT 1656 iii. Collector of Customs, Madras and ors Vs D. Bhoormull 1983 (13) ELT 1546 (SC) F. The issue in dispute is no longer res-integra and stands decided by the Tribunal in favour of importer in the case of Swarna Oil Services Vs. CC in Final Order No. A/11026-11028/2020 dated 01.06.2020 G. Denial of re-testing in the instant case is against direction in Cir. No.30/2017, in violation of principles of N justice, hence completely untenable and vitiates the impugned order. H. No reliance whatsoev....
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....eas supplier and admittedly no proceedings have been initiated against them. D. The findings of the Adj. Authority that the Appellant had connived with the CHA in order to import prohibited goods is completely bereft of any merits and not supported by any evidence. No reliance ought to have been placed on the Statement of Shri Tarachand Rathod, staff of CHA as Shri Rathod had retracted from his statement dated 21.08.2020 under cover of his letter dated 24.08.2020. Shri Rathod has also filed an affidavit before the Hon'ble Bombay High Court during the course of proceeding with regard to provisional release of the goods, citing that his statement was recorded under-force and duress. The said affidavit and letter of retraction was duly filed before the OA. E. Further the Cross examination of Shri Rathod was denied by the OA. In this regard, the Appellant has relied upon the judgment of the Hon'ble Madras High Court in the case of Thilagarathiam Match Works Vs. CCE 2013 (295) E.L.T. 195 (Mad) wherein the Hon'ble Court had held in no uncertain terms, that right to cross examine is a fundamental principle of fair trial covered within the ambit of principles ....
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....eign Trade (Regulation Rules, 1993). As per Rule 17(2) of the said Rules, the Adjudicating Authority was required to impose redemption fine equivalent to the market value of the goods. 13. The Commissioner (Appeals) was pleased to uphold the order-in- original dated 23.11.2020, and dismissed all the 3 cross appeals by these appellants and Revenue. 14. Being aggrieved, the appellant is before this Tribunal, inter alia, on the grounds urged before the Court below. 15. Ld. Counsel for the appellant further urges that the test reports issued by the DYCC/JNCH are not reliable for the reasons that firstly, the samples were not drawn properly, as prescribed in IS 1447-1 and secondly, the test reports are not conclusive as the DYCC/JNCH have not tested all the parameters suggested in Indian Standards for petroleum products. It is urged that test of all parameters prescribed is mandatory to conclusively establish the identity of the alleged petroleum products (Diesel/Kerosene). Since the test reports of the so called representative samples have not been carried out in respect of the certain characteristics, the test reports are unreliable. Hence, the orders of the....
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....ng the callous approach of the Respondent. In view thereof, the Respondent has erred in holding that 10 parameters have been tested and reported in the Test Report as per the Specification IS 1459. 16.1.3 What the Respondent has failed to appreciate is that there are 8 parameters/properties under the IS 1459: 1974 which are required to be tested and reported for confirming whether a product is kerosene or not and not 10, as otherwise held by him. What the Respondent has further failed to appreciate, that though the Test Report has reported 9 parameters, however, in effect these are only 6 parameters which have been tested and reported in the Test Report, as Initial Boiling Point, Final Boiling Point, Volume Distilled at 200°C and 90% distilled at, form part of a single parameter viz. Distillation Range. 16.1.4 Further, what the Respondent has failed to take cognizance of the fact, out of the said 6 parameters, only 3 parameters viz. Flash Point, Smoke Point and Distillation range, match the list of the parameters mandated under IS 1459: 1974. In other words, out of the 8 parameters mandated under IS 1459: 1974, only 3 parameters viz. Flash Point, Smoke Point a....
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.... dated 17.12.2019 16.3.1 Insofar as the Bill of Entry No. 6025517dated 10.12.2019 is concerned, reliance has been placed on the Test Reports No. 232 dated 17.12.2019 by the Respondent to hold that the consignment imported is Kerosene. In addition, the Respondent has, after tabulating the parameters tested and reported in the said Test Report dated 17.12.2019 held that "As per above Test Reports, I find that tests have been carried out as per specification mentioned in IS 1459/1460 and tested all 10 parameters and confirms to Superior Kerosene Oil/Diesel. "In this regards, the Appellant submits that the said reliance placed by the Respondent on the Test Report and the conclusions drawn thereon is completely untenable to say the least. 16.3.2. What the Respondent has failed to appreciate, there are 8 parameters/properties under the IS 1459: 1974 which are required to be tested and reported for confirming whether a product is kerosene or not and not 10 parameters, as otherwise held by him. What the Respondent has further failed to appreciate, that though the Test Report has reported 10 parameters, however, in effect these are only 7 parameters which have been tested ....
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....been tested, reported and satisfied, the Respondent has erred in ignoring the same, rendering the impugned order completely untenable. 17. It is further urged that the Revenue have mis-directed itself by presuming that the product imported is kerosene and thereafter, proceeded to refer and relied upon some literature to discuss the properties, which determine the quality of kerosene. It is further urged that that the parameters of burning quality in IS 1459, has clearly stipulated the true characteristics, which are required to be tested and satisfied i.e. CHAR value bloom on glass chimney. Instead of testing these prescribed particulars, the test report reports Flash Point, which is completely illogical, unintelligible and devoid of any merit. 18. Although the adjudicating authority have referred to characteristics - CHAR value, bloom on glass chimney, but have failed to show how the said characteristics, which governed the parameters, - burning quality has been satisfied. Further, Revenue have failed to appreciate that these characteristics determine not the quality but the burning quality of kerosene, which is an important parameter for determinatio....
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....her Test Report No18 dated 07.01.2020, which forms the basis of the impugned order, wherein it, after testing similar parameters to that of its earlier Test Report dated 21.12.2019 and finding almost identical values, opined that "the above tested parameters are in the range of diesel oil. It is other than light oil & preparation, solvent (125/240), kerosene and vacuum gas oil". 19.3 In view of the aforesaid, it was submitted that inasmuch as the same Lab, on testing similar parameters and arriving at almost identical values, has arrived at two different conclusions, no reliance whatsoever is to be placed on the Test Report dated 07.01.2020 to draw any adverse conclusion or inference against the appellant. The Respondent ought to have appreciated the aforesaid submissions made by the Appellant, which goes to the root of the matter, however, he has completely ignored the same, rendering the impugned order completely untenable. 19.4 Even otherwise, what the Respondent has failed to appreciate is that the said Test Report does not lay down in concrete terms, that the product is diesel. It only lays down that "the above tested parameters are in the range of Diesel Oil....
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.... inconclusive to hold that the consignment is one of diesel oil. Thus the said Test Report, by no stretch of imagination, could have been used as a reliable piece of evidence for drawing any adverse inference/ conclusion against the Appellant. 20. Bill of Entry No. 6356219 dated 04.01.2020 and Test Report No. 30 SIIB (I) dated 10.01.2020. 20.1 Insofar as the consignment/ product imported under cover of Bill of Entry No. 6356219 dated 04.01.2020 is concerned, reliance has been placed by the Respondent on the Test Report No.30 dated 10.01.2020 to hold the consignment in question is one of diesel oil. In this regards, the Appellant submits that the reliance placed by the Respondent is untenable. 20.2 The Appellant submits that what the Respondent has failed to appreciate is the fact that there are 21 parameters/properties under the IS 1460 (as amended) which are required to be tested and reported for confirming whether a product is diesel oil or not. On a perusal of the Test Report dated 10.01.2020,it is observed that though the Test Report has reported 10 parameters, however, in effect these are only 5 parameters IBP, FBP, temp. at 85%, 90%, 95% recovery fo....
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.... Without prejudice to the above, the Appellant submits that it had in its reply categorically urged that no reliance whatsoever ought to be placed on the letter dated 11.02.2020 issued by the Jt. Director (NFSG), JNCH, NhavaShava in respect of the Test Report dated 10.01.2020. The Appellant had submitted that the Test Report and the conclusion drawn thereon are completely comprehensible and that there is no confusion as to the fact that the DYCC, JNCH in its Report had concluded that it may be diesel oil. In view thereof, the Appellant had submitted that since the conclusion is not specifically stating it is diesel oil, no adverse inference ought to be drawn against the Appellant. It is submitted that the Customs, on the other hand, has arbitrarily tried to impinge onto such conclusion and has therefore referred to and relied upon the letter dated 11.02.2020 to allege that the product imported is diesel oil. 20.7 It was therefore submitted that inasmuch as the said letter dated 11.02.2020 is at complete divergence to the conclusions drawn by the Chemical Examiner, DYCC, JNCH in its Test Report dated 10.01.2020, on identical parameters and values, no reliance whatsoev....
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....for the handling and storage of gas oil, diesel oil, fuel oil and lubricating oil. They should not be used for gasoline, aviation jet fuel, kerosene, crude oil, white spirit, medicinal white oil and special boiling point products unless testing indicates there is no problem with solubility, contamination, or loss of light ends. NOTES 1 In no circumstances shall non-linear (conventional)polyethylene containers be used to store samples of liquid hydrocarbons. This is to avoid sample contamination or sample bottle failure. 22. In support of his contentions, ld. Counsel relies on the ruling of the Apex Court in the case of Tata Chemicals Vs. CCE reported in 2015 (320) ELT 45. It is further urged, that the observations in the impugned order by the Court Below- that samples were drawn in presence of the CHA, who are the authorised representative of the appellant and The said representative did not object to at the time of drawing the samples, is of no avail to Revenue. The Revenue cannot take advantage of its wrong. Further, such wrong committed goes to root of the matter, vitiating the Test reports. Thus, the very basis for the allegation of Revenue being un-r....
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....ere resorting to mis-declaration and forging of documents for importing the restricted goods. It is further urged that the appellant in collusion with customs brokers were getting manipulated test reports issued from the office of the DYCC-JNCH by braving the officers therein. It is further urged that in the retraction made by Mr. J. Roda, Director of the appellant company is of no avail and has been done only on legal advice by way of afterthought. 26.2 Similarly, Mr. Taranjeet Singh, G-Card Holder of the Customs Broker has also admitted such facts and has affirmed the statement of the Director, Mr. J. Roda. It is further urged that HSD and SKO are the restricted goods and importable only by State Trading Enterprises. Thus, the said goods are prohibited for the appellants, as per definition in Section 2 (33) of the Actof the Prohibited Goods. It is further urged that Revenue has rightly relied on the principle of preponderance of the probability in absence of comprehensive test report. It is further urged that reliance placed by the appellant on the ruling of the Apex Court in the case of Sushma Textiles (supra) is misplaced as the said ruling is in relation to textiles. ....
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....specified in IS 1459:1974. 31. However, in respect of the other two parameters regarding burning quality and colour, there is absolutely no evidence that the Revenue has produced to establish that the said two parameters are met with. Thus, Revenue has failed to demonstrate how the other two said parameters were also met. 32. It is also not in dispute that for a product to be classified as diesel under CTH 27101944, it has to meet the specifications as per Supplementary Note (e) to Chapter 27, which reads as under:- "High Speed Diesel (HSD) means any Hydrocarbon Oil conforming to the Indian specification/standard of BIS, IS:1460:2005." 33. It is further evident that as per aforementioned IS 1460:2005, the product has to meet the prescribed 21 parameters, wherein in the present case, only six parameters have been tested. The Acidity, Ash%, Copper Strip Corrosion for 3 h at 50% C, total sulphur contents, etc. have not been tested so as to verify the product can be classified as diesel-HSD. 34. The law with respect to the burden of proof or classification is on the Revenue, is well settled by the Hon'ble Supreme Court as held in HPL Chemica....
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....e classified as Kerosene, it has to meet the following specifications1459:1974 "2.1 The material shall consist of refined petroleum distillates. It shall be free from visible water, sediment and suspended matter. 2.2 The material shall also comply with the requirement given in Table I, when tested according to the appropriate methods prescribed under 'P' series of IS: 1448*, reference to which is given in column 4 of the table." TABLE 1 REQUIREMENT FOR KEROSENE Sl. No. Characteristic Requirement Method of Test (Ref.to 'P' Of IS:1448 1. Acidity, inorganic Nil P:2 2. Burning Quality • Char value, mg/kg of oil consumed, Max. • Bloom on glass chimney not darker than grey. 3. Colour (Saybolt)+ Min+10 P:14 4. Copper strip corrosion For 3h at 50^oC P:15 5. Distillation: P:18 a) Percent recovered below 20 Min.200^oC b) Final boiling point, 0C, Min.300^oC 6. Flash point (Abel),0C, Min 35 P:20 7. Smoke Point,mm, Min 18 P:31 8. Total,sulphur,percent by m....