TaxTMI 
TaxTMI 
2023 (7) TMI 774
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....nd accordingly, confirmed the adjudged demands on the appellants. 2. Brief facts of the case are that the Appellants are engaged in trading of goods such as lubricant, engine oil, Gas oil, Bio Diesel and Mineral spirit etc., and also used to trade in Gas oil in Dubai on profit sharing basis with Skynet Vault PTE Ltd, Singapore ('Skynet/foreign supplier'). The Appellants started importing Mineral Spirit Grade C from Skynet in the year 2017. The goods were sold as 'Mineral Spirit' by the Appellants to Real Fuel Tech and in turn, Real Fuel Tech sold the same to different buyers. 3.1 The present appeal relates to the goods imported vide 54 Bills of Entry (B/Es), where the same have been declared by the appellants as Mineral Sprit, falling under CTH 27101990 of the Customs Tariff Act, 1975 ("for short, referred to as "the Tariff Act"). Out of the aforesaid 54 B/Es, goods in relation to 51 B/Es were assessed and cleared by the Customs department as 'Mineral Spirit', based on the test reports issued by Bureau Veritas. The remaining 3 B/Es having Nos. 5967331, 5967362 and 5967418, all dated 13.04.2018 filed by the Appellants have been investigated by the DRI and as per them, the good....
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....3 live Bills of Entry, and in respect of goods imported in the past vide 51 Bills of Entry, the department had proposed re-classification of the same from 'Mineral Spirit' to 'High Speed Diesel' (HSD) falling under CTH 27101930 of the Tariff Act, on the basis of the evidences: namely, (a) the test reports issued by the Customs Laboratory, Chennai relating to the live Bills of Entry, (b) statements of the Appellants, (c) statements of the purchasers, (d) invoices issued by Gulf Petrochem FZC to Skynet relating to the sale of ultra low sulfur gas oil/ gas oil recovered from the mail ID of the Appellants from the CPU seized by DRI, (e) diary for the year 2016 recovered from the residential premises of the proprietor of the Appellant, (f) diary of 2018 with the name of Trigel Petrochem Pvt. Ltd. and (g) marshal quality slip pad recovered from the residential premises of the proprietor of the Appellant. The Department also proposed to reject the valuation of the goods i.e., live as well as past imports on the basis that the goods are not 'Mineral Spirit' but 'HSD'. 4.2. The Appellants were called to show cause as to why: (A) With regard to the live consignment imported vide ....
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....ments were recorded under the force and duress and they were not aware of the contents of the statements. They further stated that they had purchased mineral spirits from the Appellants and sold the goods as mineral spirits onwards. 5.2 The Learned Additional Director General also allowed cross examination of Mr V. Suresh, Joint Director of Customs Laboratory, Chennai. During the cross-examination, Mr. V. Suresh, had agreed that the results may vary, if a wrong procedure is used for collection of samples and also agreed that he only tested the samples for vital parameters of mineral spirits as well as vital parameters of diesel oil as per IS 1745:1978 and IS 1460:2005 respectively. He also admitted that it was not possible to conduct all tests prescribed under IS 1460:2005 pertaining to Diesel Oil. 5.3 The SCN was adjudicated by the Learned Additional Director General vide the Impugned order, in confirming the entire demand proposed for recovery in the SCN and also imposed penalties by relying upon the aspects namely, (a) the retracted statements of the Appellants, (b) the test reports of the Customs Laboratory, Chennai (c) the purchasers' statements and (d) documentary evide....
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....nd may be considered as Diesel Oil'. The use of term 'may be' shows that the opinion/findings in the test report itself is inconclusive and the same cannot be relied upon to fasten any liability on the Appellant. (f) The Customs Laboratory, Chennai did not have equipment/ facility to test the samples on HSD parameters during the period in dispute. Circular No. 43/2017 dated 16.11.2017 read with Circular No. 15/2019 dated 07.06.2019 clarifies that the Revenue Laboratories have now acquired i.e., on 07.06.2019 testing facilities for some of the samples listed in Annexure to the Circular following upgradation and the list included Diesel Oil i.e., both HSD and LDO. Hence, in terms of aforesaid circulars, the Chennai Customs laboratory did not have facility to test the samples for HSD before 07.06.2019. In the present case, aforesaid test reports were issued before 07.06.2019 when the said laboratory was not equipped to test samples for HSD and accordingly, the test report has been given without the same being equipped to carry out the required test. (g) The samples imported under Bill of Entry Nos. 5967362 and 5967418 both dated 13.04.2018 were tested by the Customs ....
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....8 i.e., date prior to the import action of the live consignment. Hence, assuming without admitting that aforesaid invoices relate to the Appellants, even then, the same does not relate to live consignments as all the invoices were issued prior to 13.04.2018. For past consignment, the test reports clearly classify the goods as Mineral Spirit. (m) For the past consignments, it was submitted that the goods were assessed on the basis of the test reports which categorically stated that the goods were 'Mineral Spirit'. There is neither any allegation in the SCN nor any findings recorded in the impugned order that the aforesaid reports are wrong. Since the correctness of the reports are not in dispute, the goods imported vide 51 bills of entry cannot be re-classified. (n) 4 Purchasers in cross examination has admitted that their statement was recorded under duress and what is purchased by them from Appellant was Mineral Spirit only. Statement of balance purchasers could not be relied upon as they did not appear for cross examination. (o) Without prejudice, test reports of live consignment cannot be used to reject the classification of past import. Reliance was p....
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....tum of the aforesaid case cannot be made applicable to past consignments as there is no test report to state that the goods are other than Mineral Spirit. In fact, for the past imports, the test reports clearly stated that the goods are Mineral Spirit. 10. Before we consider the submissions made by both sides, it is important to note that the impugned order relates to: (i) Imports made by 3 B/Es i.e., Nos. 5967331, 5967362, 5967418 all dated 13.04.2018, for which goods are yet to be cleared; (ii) imports made by 51 bills of entry, for which the goods have already been cleared on the basis of test reports, certifying the goods to be mineral spirit. 11. The dispute between the parties is of classification of imported goods. The Appellant has declared the goods as 'Mineral Spirit' falling under CTH27101990, whereas the department is of the view that the said goods are 'High Speed Diesel Oil' falling under CTH 27101930 of the Tariff Act for the live consignment pertaining to three bills of entry referred to above, The adjudicating authority, has relied upon the test report of Custom House Laboratory, Chennai which certifies that the goods may be considered as Di....
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....ty slip pad had been relied upon in the show cause notice and impugned order, as it mentions sale of W. Diesel to support the allegation of receipt or sale of HSD by the Appellants. However, the said slip does mention anything about receipt or sale of HSD by the Appellants. (i) That documentary evidence in the form of diary 2018 belonging to 'Trigel Petrochem P Ltd.' has been relied upon in the show cause notice and impugned order as it mentioned Diesel to support the allegation of sale of HSD to them by the Appellants. However, the said diary supports the case of the Appellants, as it mentions 'Loading of Mineral Spirit' which was supplied by the Appellants to them. (j) M/s Gulf Petrochem FZC is not the supplier of the Appellants and the purported invoices recovered from the email relates to the sale of 'Gas Oil' or 'Ultra low Sulfur Gas Oil' by M/s Gulf Petrochem to Skynet. There is no documentary evidence showing sale of 'Ultra Low sulfur Gas Oil' or 'Gas oil' from Skynet to Appellants. (k) Ultra Low sulfur gas oil is different than HSD, as the same does not fit into the Indian standards specification of IS 1460:2005 for HSD, as held by the Learned Add....
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....ral Spirit' and 'High Speed Diesel Oil'. Indian Standard for Mineral Spirit is IS 1745:1978 and the same provides for 9 parameters. Once all parameters are fulfilled, the product can be called as Mineral Spirit. Similarly Indian Standard for HSD is IS 1460:2005 prescribing 21 parameters to be tested. Once all the parameters are as per the prescribed standards, the product can be classified as HSD. In the present case, for live consignments, test reports are issued by the Customs Laboratory, Chennai. The same after testing 6 parameters has concluded that the goods imported by the Appellant may be considered as Diesel Oil. 15. We are in agreement with the Appellant that the said Test cannot form the basis of re-classification of goods from Mineral Spirit to HSD for more than one reason. 16. On perusal of the test report annexed to the Appeal Memorandum, we note that the Joint Director, in both the test reports, after testing the samples on 6 parameters has concluded that "the samples under reference is other than Mineral Spirit. Each of the two samples may be considered as Diesel Oil." The use of term 'may be' goes on to show that the report issued by the Custom House is not co....
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....o the clarification provided vide Board Circular No. 43/2017-Customs dated 16.11.2017 read with Circular No. 15/2019- Customs dated 07.06.2019. The said circulars were shown to us by the Appellant at the time of hearing and are attached to the compilation filed by the learned Advocate. Vide Circular No. 43/2017-Customs dated 16.11.2017, the Board has identified items whose samples cannot be tested at present and has given a list of laboratories functioning under other departments/ ministries where such samples can be tested. Sr. No. 10 (item 25 in column 3) of the annexure to the said Circular covers 'Diesel Oil'. Subsequently, another Circular No. 15/2019- Customs was issued, clarifying that the Revenue Laboratories have been acquired with such facilities for testing of the notified products including Diesel Oil during the period around June, 2019. The same therefore proves beyond doubt that the Customs Laboratory, Chennai did not have equipment/ facility to test the samples on HSD parameters before 07.06.2019. We find that in the present case, both the test reports have been issued before the said date of 07.06.2019. The contents of the statements provided by the Joint Director i....
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....has not tested all the 21 parameters required in terms of IS 1460: 2005. We are of the view that without testing all the aforesaid parameters, the test reports cannot be considered to reclassify the imported goods as Diesel Oil. In this context, the Tribunal in the following cases have consistently taken a view that all the parameters stated under the Indian Standard needs to be tested for goods to be considered under that particular heading: (a) Deep Water Specific 1 Inc, Transocean Offshore Deepwater Drilling Inc v CC, Vijaywada, 2019 (4) TMI 1704; (b) Transocean Discoverer LLC v Commissioner, 2015 (7) TMI 816; (c) CGG Marine v Commissioner, 2016 (6) TMI 709; (d) Schlumberger Solutions Pvt Ltd v CC (import), 2016(11) TMI 170; (e) Commissioner of Customs v Roshan Petrochem, final order no. 40047-40050/2022 dated 04.02.2022. 21. Learned AR had relied upon the judgement dated 20.01.2022 passed in R/TAX APPEAL NO.297 of 2021 by the Hon'ble Gujarat High Court in the case of Rajkamal Industrial Pvt Ltd. and submitted that it is not necessary to test all the 21/22 parameters mentioned in IS for HSD, when the test reports state that the Imp....
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....tly held that test report of live bill of entry cannot be used to reject the classification of past import, which after due assessment by the proper officer have been cleared for home comsumption: (a) Penshibao wang P Ltd v. Commissioner of Customs 2016 (338) ELT 597 (Tri); (b) P. K. Exim v. CC Mundra, 2021 (9) TMI 142 - CESTAT Ahmedabad; (c) Shalimar Paints Ltd v/s Commissioner 2001 (134) ELT 285 (Tri- Kolkata) upheld by Hon'ble Supreme Court 2002 (145) ELT A242; (d) A.R Trading Company v/s Commissioner 2020 (372) ELT 388 (Tri- Bang). 23. Having held the above, it is important to deal with the other evidence relied upon by the Adjudicating authority in the form of statements, emails, diary entries, invoices of Gulf Petrochem issued to Skynet, diary for the year 2018, Marshal Quality slip pad to confirm that charge of mis-classification on both live and past consignment. We would like to note that at the time of hearing of appeal, the department was permitted to counter the arguments of the counsel for the Appellants on undisputed facts. In the reply filed by the Learned AR apart from test reports, cross-examination of Joint director, RTI repl....
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.... mineral spirit only. It is in fact the Appellants, who have produced corroborative evidence showing clearance of goods as Mineral Spirit. It was not open for the adjudicating authority to simply brush aside the retraction and follow the retracted statements without any corroborative evidence. 24. We also find merits in the arguments of the Appellants that the adjudicating authority has erred in the impugned order by placing reliance on the invoices of Gulf Petrochem FZC to hold that the goods imported under live consignments were not mineral spirit but HSD. We find that these invoices cannot be relied upon to hold that the goods were mis-declared by the Appellants. On perusal of the records, we find that the aforesaid invoices were printed out from email id of [email protected] from the computer seized by the DRI during investigation. We find that the foreign supplier of the Appellants is Skynet and the remittance for goods supplied to the Appellants was made to Skynet in Singapore as is evident from their invoices submitted by the Learned Advocate during the course of hearing. However, all the invoices that were retrieved from the aforesaid mail id were issued by Gulf Petr....