TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 2015
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....Pvt. Ltd. and transferred to M/s. Geet Enterprises, 428, Ground Floor, FIEE, Patparganj Area, Delhi, their C&F agent as declared under Chapter 32 of Customs Tariff Act, 1975 and order to reclassify the declared items in Customs Tariff Head 29141200 of the Customs Tariff Act, 1975. (ii) I order confiscation of the impugned goods seized as per Annexure to Panchnama dated 25.9.2017 under section 111(d) of the Customs Act, 1962. (iii) I impose penalty of Rs. 10,00,000/- (Rupees ten lakh only) on M/s. Videojet Technologies (I) Pvt. Ltd. under section 112 of the Customs Act, 1962. (iv) I impose penalty of Rs. 25,00,000/- (Rupees Twenty Five Lakh only) on M/s. Videojet Technologies (I) Pvt. Ltd. under section 114AA of the Customs Act, 1962. 2. The above order was affirmed in the impugned order of the Commissioner (Appeals). In this appeal, the appellant prayed for setting aside the impugned order and to restrain the departmental officers from taking any proceedings for recovery of duty, interest and penalty. Since the appellant made the mandatory pre-deposit under section 129E of the Customs Act, 1962 Customs Act and filed this appeal, recovery of the remaining amount automatically....
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....s as follows: (i) Description & ingredient along with percentage of each sample. (ii) Whether Butanone (Methyl ethyl Ketone/MEK) present or otherwise. (iii) % of Butanone/MEK in each part number. (iv) Presence of intoxication or psychotropic substances or effects thereof. 6. CRCL sent reports on 2.11.2017 which did not exactly answer the four questions in the test memos. The test reports were as follows: (i) Representative sample 20577, one gallon Expiry date 10.3.2019, S.No. 170691457EG Report - The sample is in the form of dark blue coloured liquid. It is mainly composed of volatile organic solvent (Butanone=Methyl ethyl Ketone) along with organic colouring matter & polymeric compound based on acrylate. NVR=8.4% by mass. (Butanone) Volatile Organic solvent=89.0% by volume. It gives tack free adherent coating. (ii) Representative sample V720-D expiry date 12.7.2019, Serial No.171930817ZH (750 ml) Report- The sample is Butanone (methyl ethyl ketone) in the form of clear colourless liquid). (iii) Representative sample V-902Q expiry date 20.12.2019, Serial No.171710720ZH (1L) Report- The sample is Butanone (methyl ethyl ketone) in the form of colourless liqui....
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....ch MEK can either be extracted from such item and/or such an item can be used in place of MEK (may not be as efficiently as MEK) for manufacture of Narcotic Drugs or Psychotropic Substances. 12. Since the appellant had not obtained an NOC before import, he held that the goods were liable for confiscation under section 111(d) of the Customs Act. He also held that the appellant had, through various acts of omission and commission, rendered themselves liable to penalty under section 112 and 114AA of the Customs Act. 13. In the impugned order, the Commissioner (Appeals) upheld the order of the Joint Commissioner only on the ground that the appellant had not made any new submissions which were not raised before the Joint Commissioner. In other words, he did not apply his mind to the submissions made by the appellant because there were no new submissions and on the submissions already made before the Joint Commissioner, he simply accepted the findings of the Joint Commissioner and did not apply his own mind to the issues. The relevant portion of the impugned order is reproduced below: "5.1 I have gone through the case records, grounds of appeal, written submission made by the advocat....
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....goods which contain MEK requires an NOC from the Narcotics Commissioner as per the RCS Order. Consequently, whether the appellant violated the RCS Order and whether the goods were liable for confiscation under section 111(d) of the Customs Act and whether the appellant was liable to penalties. 18. Even before importing the imported goods, the appellant had met the Narcotics Commissioner on 11.6.2015 and submitted a representation on 8.6.2015 stating that the inks which they import contain MEK ranging from 35% to 90% and seeking clarification if any NOC is required for their import under the RCS Order. The appellant followed it up with reminders. No reply was received and hence they had filed Writ Petition No. 10730 of 2017 in Bombay High Court and the High Court passed order dated 13.10.2017 directing the Narcotics Commissioner to decide on the representations of the appellant. Thereafter, the Narcotics Commissioner passed an Order dated 3.11.2017. In this order, the Narcotics Commissioner recorded clearly that „preparations of MEK are not covered by the RCS order‟ in paragraph 13 which reads as follows: "13. It is nobody‟s case that preparation of MEK are cove....
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....d ink consumables which have a large percentage of MEK without obtaining an NOC from the Narcotics Commissioner. He further asserted that since the major composition of the imported goods was MEK, they should be classified as such under CTI 29141200. He therefore, prays that the impugned order may be upheld and the appeal may be dismissed. 22. We have considered the submissions on both sides and perused the records. We now proceed to decide the issues identified by us in paragraph 2 above. Rejecting the classification of the imported goods under Chapter 32 of the Customs Tariff and reclassifying them under Customs Tariff Item CTI 29141200 (as Methyl Ethyl Ketone) 23. The appellant classified the imported goods as inks and ink consumables under Chapter 32. As per the order of the Joint Commissioner, upheld by the Commissioner (Appeals), they deserve to be classified as MEK under CTI 2914 1200 for the reason that on testing all three samples were found to be predominantly MEK. 24. There is no dispute that the goods were imported as inks/ink consumables and were packed and labelled as such. On the other hand, it is also not in dispute that they have a very large proportion of MEK.....
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....nd goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. (emphasis supplied) 26. Applying Interpretation Rule 1, we proceed to examine the chapter notes of the two chapters. Chapter note 1(a) states that „Except where the context otherwise requires, the headings of this chapter apply only to "separate chemically defined organic compounds, where or not containing impurities". Chapter Note 1(a) to Chapter 32 states that „this chapter does not cover "separate chemically defined elements or compounds except those of heading 3203 or 3204, inorganic products of a kind used as luminophores (heading 3206) glass obtained from fused quartz or other fused silica in the forms provided for in heading 3207, and also dyes and other colouring matter put up in forms or packings for retail sale, of heading 321....
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....lso and if so, what the percentage of MEK was. 30. A question which may arise is if the goods are predominantly MEK, why can they not be classified as MEK by treating the other materials as impurities, etc.? If a good has over 90% of one ingredient and only 10% of others, why cannot it be classified based on the overwhelming ingredient? The answer to these questions lies in interpretative rule 3(a) which holds that „Goods which are mixtures of two or more substances should be classified based on that substance which gives it its essential character‟. 31. One ingredient may be overwhelming by quantity quite a different ingredient may give the good it its essential character and if so, the latter is relevant for classification. For example, a tablet of 500 mg of say, Amoxycillin, will actually weigh several grams. The active ingredient, Amoxycillin will be only 500 mg and the rest will be inert materials such as talc, glue, etc. The overwhelming ingredient of such a tablet will be talc but what gives the tablet its essential character is the miniscule quantity of Amoxycillin. It has to be classified as Amoxycillin and not as talc. Similarly, most tonics are just alcohol....
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....confiscated the goods referring to the order passed by the Narcotics Commissioner which is not „a law for the time being in force‟. 37. A plain reading of the relevant portions of the RCS Order shows that it has been issued under section 9A of the NDPS Act and it regulates various controlled substances including MEK. It has the following three Schedules and each controlled substance is listed in one or more of these schedules : (i) Schedule-A Controlled substance whose manufacture, distribution, sale, purchase, possession, storage and consumption are regulated (ii) Schedule-B Controlled substance whose export from India is subject to controls (iii) Schedule-C Controlled substance whose import into India is subject to controls 38. Schedule C and the corresponding clause 11 of the RCS Order are relevant to this appeal. These are reproduced below. Schedule-C substances are those controlled substance whose import into India is subject to controls as specified in this Order.) 1. Acetic anhydride 2. N-Acetylanthranilic acid 3. Anthranilic acid 4. Ephedrine, its salts and preparations thereof 5. Ergometrine and its salts 6. Ergotamine and its salts 7. I....
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....cetic acid and its salts 40. Wherever the intention was to cover not only the controlled substance but also its salts and preparations, the Schedule indicates so. The relevant entries are: 4. Ephedrine, its salts and preparations thereof ........... 11. Norephedrine (Phenylpropanolamine), its salts and preparations thereof ........ 13. Phenylacetic acid and its salts .............. 16. Pseudoephedrine, its salts and preparations thereof 41. In respect of one precursor, viz., Safrole, any essential oil containing Safrole of 4% or more is also covered. The relevant entry in the Schedule reads as follows: 17. Safrole and any essential oil containing 4% or more safrole 42. Clearly, salts or preparations or goods containing MEK were not included in Schedule C of the RCS Order. The Narcotics Commissioner also clarified in paragraph 13 of his order that salts or preparations containing MEK are not included in Schedule C to the RCS Order. 43. We, therefore, find that the undisputed legal position is that an NOC from the Narcotics Commissioner was not required to import goods which contain MEK and such an NOC is required only to import MEK. The Joint Commissioner confisca....