TaxTMI 
TaxTMI 
2024 (10) TMI 1555
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....16. The Main Appellant also claimed exemption from payment of applicable duties of customs, in terms of Notification Nos.18/2015-Cus and 21/2015-Cus, both dated 01.04.2015 against 19 Advance Authorizations. 1.1 In terms of the Customs established practice, representative samples from the imported goods were drawn and sealed on 26.08.2016 and 17.11.2016 by the Customs for testing the same. Pending receipt of the test results, the imported goods were assessed provisionally under Section 18 of the Customs Act, 1962 and were thereafter allowed to be cleared for home consumption. 1.2 The samples so drawn by the Customs were then tested at the Main Appellant's In House ISO 9000 accredited Naphtha Cracker Laboratory, in presence of the officers of Central Excise & Customs ('CECL'), Vadodara. Based on the testing, Analysis Reports dated 14.09.2016 and 30.12.2016 were prepared. The Chemical Examiner, CECL Vadodara, thereafter, on the basis of such Analytical Reports dated 14.09.2016 and 30.12.2016, issued his own Test Reports dated 21.09.2016 and 27.01.2017, which were directly sent by him to Customs. For ease of reference, the details of sampling, Analytical Reports and Test Repo....
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....ed post such preliminary hearing. 1.6 In response, the Respondent granted cross-examination of the Joint Director. The said cross-examination was, thereafter, conducted by the Main Appellant's Legal Counsel on a virtual platform on 13.06.2023, 12.07.2023 and 03.08.2023. During the course of cross examination held on 12.07.2023, as the Joint Director expressed his inability to hear the questions put across to him due to poor internet connectivity at his end, the Respondent suggested the Main Appellant's Counsel to prepare and send a list of questions for the Joint Director to answer, along with relevant literature and data. The Main Appellant's Counsel accepted the said suggestion and accordingly sent a list of questions by his email dated 14.07.2023. The Joint Director, thereafter, sent his reply to the said list of questions, which was conveyed by the office of the Respondent under their email dated 25.07.2023. 1.7 After considering the appellant's reply to show cause notice and also personal hearing attended by the appellant, the impugned adjudication order was passed wherein, the demand of custom duty with interest, fine and penalty as proposed in the show ....
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....e, the Main Appellant submits that the other evidences relied upon by the Respondent, namely the letters dated 25.04.2017 & 18.05.2017 issued by Saudi Aramco along with the product specification sheet dated 15.01.2014, or the GPA 3132 specifications or the email correspondence exchanged between Mr. Sachin Gupta and Mr. Abe San, were only to support the primary and the main evidence, i.e., the opinion of the Joint Director. Once the main evidence, on which the entire case of the Revenue was admittedly based upon, is discarded, all these supporting evidences were also rendered inconsequential and irrelevant. In view thereof, the impugned order is liable to be quashed and set aside on this ground alone. 2.4. The goods in question were correctly described as Naphtha and thus, were correctly classifiable under TI 2710 1290 of the Customs Tariff Act, 1975 2.5 Without prejudice to the above, the Main Appellant submits that going by the evidence relied upon by the Respondent in the impugned order, it is evident that the goods imported by the Appellant was Naphtha, which were classifiable only under TI 2710 1290 of the Customs Tariff Act, 1975. It is submitted that the Respondent has ....
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....mitting that the goods in question were NGL, still the benefit of exemption under the Advance Authorization Scheme was admissible to the Appellant as "NGL" is also a type of "Naphtha" 2.10 Without prejudice to the above, the Main Appellant submits that even if it is assumed that the goods in question were NGL, still the benefit of exemption was available as the Respondent has failed to appreciate that NGL is also a type of Naphtha. In other words, Naphtha is the genus and NGL is the species. Accordingly, if the Advance Authorizations specifically cover and allow import of Naphtha, it is axiomatic that all species including NGL, would be covered under the genus of Naphtha, and will also automatically get covered by the Advance Authorizations. 2.11 The impugned order confirming demand of customs duty under Section 28 of the Customs Act,1962, prior to finalization of the provisionally assessed Bills of Entry dated 25.08.2016 and 21.11.2016 is without jurisdiction. 2.12 Without prejudice to the above, the Main Appellant submits that as per Section 28 ibid., the time to recover duty would commence from the relevant date, which in case of provisional assessments is the date of f....
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.... that the goods is NGL but the NGL is also a type of Naphtha, the same is covered by the advance authorization. Accordingly, the clearance of goods under Advance Authorization cannot be questioned. 4.3 As regard ITC code no. even if the departments contention is that TI 27101290 does not cover NGL for the purpose of advance authorization it does not affect the eligibility to clear the goods under the advance authorization so long the description mentioned in the advance authorization covers the description of imported goods. Therefore, even if it is assumed that the goods imported is NGL, the same is permissible to be cleared under the advance authorization which is issued for imported item namely Naphtha. We find that the Glossary of petroleum terms under IS 4639: 1968 defines Naphtha/petroleum Naphtha as under:- "A generic term applies to refined, partly refined or unrefined petroleum products and liquid products of natural gas not less than 10% of which distil below 175°C and not less than 95% of which distil below 240°C when subjected to standard method" 4.4 Further IS specification 11794;2022 which provides the requirements and test methods of Naphtha us....
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....e Customs Tariff Act, 1975 whereby the 8 digits tariff items under 6 digits sub heading 271012 which covers light oils and preparations were substituted. As per this substitution, the specific tariff item 27101220 which covered NGL was deleted and three new tariff items 27101221 ( Light Naphtha), 27101222 (Heavy Naphtha) and 27101223 (Full Rich Naphtha) were inserted to cover Naphtha . An interpretation of this substitution indicates that the same was brought in effect (a) to end the dispute on classification of Naphtha and NGL (b) to specifically covered all types of Naphtha including NGL. It is for this reason because the specific entry of NGL was deleted as the same goods have rendered the tariff items 27101221,27101222 and 27101223 otiose. Therefore, we do not find any infirmity in either the import of goods in question or in the exemption claimed by the appellant under advance authorization. 4.7 We find that as discussed above the NGL is also a "Naphtha" and therefore, allowed to be cleared under Advance Authorisation, The revenue also contended that ITC HS code of Naphtha and NGL is different, hence, Advance Authorisation having different ITC HS code, i.e. 27101290 and NGL....
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....for personal hearing before NC. They explained the case along with relevant papers and sample of the export item. In this case advance authorization in question was issued on 6-6-2007 to the applicant firm and input output norms were ratified by norms Committee by allowing the inputs as per SION at S. No. A-3541. In this case firm imported Synthetic cloth for Uppers (Non- Woven/Woven/Knitted/Laminated with PVC/PU) HSW-KN06B-LP. The Committee felt that as per SION, A-3541, it is clearly specified that the import item viz., Synthetic cloth for Uppers (Non-Woven/Woven/ Knitted/Laminated with PVC/PU) and Synthetic cloth for Insole (Non- Woven/Woven/Knitted/Laminated with PVC/PU) are to be used for Uppers & Insole of the export product Synthetic Slippers/Sandals with PU Sole of all sorts irrespective of ITO (HS) Code, It has been observed that description of import item was classified under ITC (HS) Code 5903 10 90 with effect from the date of issue of the advance authorization. It was observed that in this case, the SION permitted the import item as per Bill of Entry and description covered under ITO (HS) Code 5903 10 90. The sample submitted by the firm has a clear view that item's de....
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....ance of import is allowed. Accordingly, irrespective of dispute raised by revenue on classification, the appellant is otherwise eligible for clearance of goods under Advance Authorisation, therefore, the impugned order is not sustainable on this ground alone. 4.9 Without prejudice to the above, we find that the revenue's entire case in the present matter is based on the opinion given by the Joint Director under his letters dated 24.01.2017, 20.07.2017, 07.01.2020, 31.07.2017 and 17.06.2020. We find that in as much as opinion of the Joint Director read in the context of cross-examination held on 13.06.2023, 12.07.2023 and 03.08.2023 (including letters dated 14.07.2023 and 25.07.2023) is cryptic, unreasoned and unsubstantiated, carrying no evidentiary value in the eyes of law. Thus, the onus was not discharged by the Revenue in the present case. We find that as per the opinion dated 04.10.2017 given by the Chemical Examiner, wherein he had clearly opined that it was not possible to say that whether the goods in question were extracted from natural gas or otherwise. The actual nature of the goods could not be ascertained. Hence, the onus was not discharged by the Customs. We fi....
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....cast on the department had not been discharged. In this regard we refer to the extract of letter dated 04.10.2017 of chemical examiner, CECL Vadodara as below:- "On perusal of analytical finding and available literature here ............................................................................................................................................. ................... it is not possible to say whether the subject product extracted from natural gas or otherwise. Hence, said matter may be forwarded to Indian Institute of Petroleum being a apex and premier organization in the country which carried out research and development for down center of hydrocarbon industry, if required." 4.12 On the above, the DRI under the cover of letter dated 25.10.2017 and also written to Chief Scientist IIP Dehradun with a proposal to send the samples of the goods in question for testing at their end and for seeking their opinion as well on the same set of queries put across the Joint Director and the Chemical Examiner, CECL, Vadodara. The Chief Scientist IIP Dehradun vide its email dated 01.12.2017 informed the DRI that such type of investigative analysis was n....
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...., book or evidence to support or corroborated the same. Therefore, on a joint perusal of the opinion and record of cross-examination no reliance whatsoever could be placed on the same to arrive at a conclusion that imported goods in dispute were NGL classifiable under tariff item no. 27101220 and not naphtha under tariff item no. 27101290. 4.16 The appellant have also pointed out that it is on record that Joint Director had preferred and relied upon the GPA 3132 specifications to opine that the goods in question were conforming to the requirement of NGL. In this regard the appellant have submitted that the said opinion given by the Joint Director, GPA 3132 specifications totally inconclusive. The GPA 3132 specifications stipulates satisfaction of 7 product characteristics i.e. (i) Reid Vapour Pressure (RVP) (ii) Percentage Evaporated @ 140°F ;(iii) Percentage evaporated @275°F; (iv) end point ; (v) Corrosion ; (vi) Colour; (vii) reactive sulphur, to define and confirm the product is natural gasoline. The relevant extract of 3231 specification is reproduced herein below: scan from page 20,21 of the appeal. ....
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.... in correct description & classification column it is mentioned, sample is classified as polyester woven printed quilt case under HS Code 6302 22 as classified by the appellants. Another reliance of the department is on the report of ATIRA (Ahmedabad Textile Industry Research Association) dated 27-3-2017 states that the actual strength of the warp and weft used in making fabric cannot be ascertained. If we go by all the above reports mentioned except for the report dated 21-3-2017 which classifies the goods as quilt cover all the other reports are inconclusive. If at all any report to be relied upon it is report dated 21-3-2017 which was brushed aside as tampered by the department without giving any details who tempered with the report and what action was taken. 2.2 Even if we accept the corrected report and all other reports they are all inconclusive and instead of relying upon them they should have been sent for retesting which the Commissioner categorically denied stating that he does not find any cogent reason to grant resampling and retesting at this stage as samples were tested at two different recognised institutions and expert committee. 2.3 The department....
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.... : "It is not in dispute before us, as it cannot be, that the onus of establishing that the said rings fell within Item 22F lay upon the Revenue. The Revenue led no evidence. The onus was not discharged. Assuming therefore, that the Tribunal was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless, have been allowed." Also in recent order CESTAT held in the matter of Alpha Foam Pvt. Ltd. v. Commissioner of Central Excise, Pune-I - 2019 (365) E.L.T. 636 (Tri. - Mumbai) : "The impugned order clearly recognises that the test report is not final. However, he continues to rely on the said report. He has relied on the fact that the original adjudicating authority has evaluated the product in terms of the technical literature available. We find that the office of the chemical laboratory is not sure of exact classification and has raised some doubts about classification, it is not open to original adjudicating authority to decide the issue suo motu without going back with the said clarification to the office of the Chemical Examiner. The Commissioner (Appeals) has in his order observed that the technical ba....