AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 1849
X X X X Extracts X X X X
X X X X Extracts X X X X
....erein after, referred to as 'the impugned order') passed by the Commissioner of Customs (Appeals), Mumbai Zone-III, Mumbai. Miscellaneous applications filed for additional ground is taken on record. 2.1 The brief facts of the case are that the appellants herein had imported 'Sodium Tri-Poly Phosphate (STPP)' declared as 'Food Grade' from M/s Sheetal Enterprises, Hong Kong, China by classifying it under Customs Tariff Item (CTI) 2835 3100, for total quantity of 150 MTs by filing two Bills of Entry (B/Es) No. 4432859 and No.4433390 both dated 23.08.2011 (each of 75 MTs) and seeking clearance of goods from Customs authorities at the port of import. The department had developed an intelligence indicating that some of the importers are mis-declaring the grade of STPP in order to avoid payment of Anti-Dumping Duty (ADD) imposed vide Notification No.58/2011-Customs dated 08.07.2011 read with Corrigendum dated 14.07.2011. On such basis, the customs authorities in assessment of the subject import goods had ordered for examination of the goods, to check marking of description, weight etc., verify No Objection Certificate (NOC) from Public Health Officer (PHO) and for drawing representativ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under Section 111(m) of the Customs Act, 1962; demanding differential duty of customs i.e., Anti-Dumping Duty under Section 28(1) ibid and for imposition of penalties on the appellants under Sections 112(a), 112(b), 114A and 114AA ibid. 2.3 In adjudication of the above SCN dated 07.06.2012, the original authority had passed an Order-in-Original dated 26.09.2013 in confirmation of all the proposals made in the SCN. This included confiscation of entire imported goods and offering it for release upon payment of redemption fine of Rs.5,00,000/-; finalization of provisional assessment appropriating the duties of customs paid for an amount of Rs.16,43,354/- at the time of filing B/Es and confirmation of duty demand of Rs.37,27,980/- towards ADD under Section 28(1) ibid; imposition of penalty of Rs.37,27,980/- on the importer under Section 114A ibid; imposition of penalties of Rs.5,00,000/- each on the appellant company and Shri Mahendra Kumar Jain under Section 114AA ibid; Rs.3,00,000/- on the appellant Shri Mahendra Kumar Jain under Section 112(a) ibid; and similar penalty of Rs.1,00,000/- on the Manager of CHA Shri Pawan Kumar Singh, Shri Ajoy Dharam Rout. In an appeal filed by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to certify a product as food grade. He also stated that the specification for food grade and industrial grade are overlapping and there is no distinctive test by which one can state that the product is of food grade or otherwise; to certify material to be a food grade certain additional tests have to be done to ensure that it can be safely consumed by human being. In the absence of such specifications/test it would not be proper to declare it as food grade. Therefore, he had certified the imported goods to be of industrial grade. He also stated that they're not recognised by FSSAI, but are having NABL accreditation. Therefore, learned advocate submitted that such report of the laboratory cannot form the basis to conclude that the imported goods are of industrial grade i.e., other than food grade. Since the levy of anti-dumping duty is specifically on STPP of other than food grade, the appellants cannot be subject to payment of ADD on the basis of assumptions, presumptions, conjectures or surmises, that too on the basis of selective part of the test report from the laboratory convenient to the customs authorities, totally disregarding the FSSAI report and the fact that both CRCL, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that issue of gradation of impugned goods, has been clarified to say that on account of safety parameters i.e., absence of toxins, heavy metals, the report was given as industrial grade by Chemo Test Laboratory. Further, the imported goods arrived without manufacturer-printed 'food grade' markings; labels/stickers were manually applied at the CFS. Thus, learned AR justified the action in the impugned order, for confirmation of differential ADD; for confiscation of the imported goods and for imposition of penalties on appellants. 5. We have heard both the learned Advocate appearing for the appellants and the learned Authorized Representative of the Department and perused the case records. 6. The dispute between the appellants-importer and the department lies in the appropriate categorization of imported goods, by determining whether it is of 'food grade' or otherwise; and thereafter deciding on the applicability of the Notification No.58/2011-Customs dated 08.07.2011 read with Corrigendum dated 14.07.2011, for demand of Anti-Dumping Duty; and whether such imports attract the alleged violations under the Customs Act, 1962 for confiscation of the goods and for imposition of pen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de by the SIIB Customs investigation with Envirocare Labs Private Limited, for the analysing of the test reports to confirm whether the imported goods is a food grade item or not, it was replied by the said laboratory vide letter dated 24.09.2011 that the samples were tested as per the request made by the FSSAI and if FSSAI requests then retesting can be taken up. It was further stated that the analysis is carried out as per COA received along with the samples received from Authorised Officer of FSSAI. The analysis is carried out as per FSSR guidelines in perspective after taking into consideration safety parameters and not in the perspective of gradation of the product. It was also stated by them that the imported goods are not categorised under current FSSR regulation. Their analytical results comply with the COA taking to consideration of standard analytical deviation. Hence, they stated the test results provided by them are in line with food safety consideration and not for gradation purpose. (iv) Central Food Laboratory, Pune vide their letter dated 11.10.2011 addressed to Customs SIIB investigation authorities had stated that "this laboratory is not having the necess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted 20.07.2011 issued by the said Trader M/s Sheetal Enterprises in support of their claim that the subject STPP is of Food Grade. Further, it has also come on record that those subject goods were imported by them first time, but they were in the business of importing chemicals and having knowledge that for the chemicals the Certificate of Analysis issued by the manufacturer is essential for verifying the contents of the chemicals from the point of view of the assessment. 128. Thus, I hold that the STPP imported by the importer was found to be of Industrial Grade and hence as per Notification No.58/2011 dated 08.07.2011, the STPP was not of Food Grade and hence importer is liable for anti-dumping duty as per the provisions of Notification 60 dated 01.04.2003 for imports from China. 129. As the importer had declared the STPP to be of Food Grade I hold that the importer had missed declared the pH of the goods in an attempt to escape from the payment of legitimate anti-dumping duty leviable on the subject goods and thereby contravened the provisions of Customs Act, 1962." 8.2 Learned Commissioner (Appeals) had also examined the issue of categorization of imported ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the margin of dumping in relation to such article....." The Directorate General of Trade Remedies-DGTR (earlier known as Directorate General of Anti-dumping and Allied Duties) in the Department of Commerce, Ministry of Commerce conduct anti-dumping investigations and submit its recommendation to the Government of India. Further, in terms of sub-section (2) of Section 9A ibid, pending determination of the margin of dumping in relation to any anti-dumping investigation, the government has the power to impose anti-dumping duty provisionally on the basis of the provisional estimate of normal value and the margin of dumping given by DGTR. In the present case, the Central Government had issued Notification No. 14/25/2009-DGAD dated 21.05.2010 giving the recommendations made by the DGTR on the basis of provisional estimate as follows: "39. The Authority notes that STPP has two grades: Technical Grade and Food Grade and the domestic industry does not manufacture food grade STPP. But since, as acknowledged by some of the responding exporters, food grade STPP can be substituted for technical uses, for the purpose of preliminary finding the Authority has not excluded the food ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ket and import of the same into the country being very low and negligible and because price of food grade STPP is around 25% higher than the technical grade STPP and usage of both the grades is not substitutable both the ways, the Authority holds that there is no need to include the food grade STPP within the purview of antidumping measures. In view of the above, the Authority notes that the recommendation of anti-dumping measures on imports of Food grade STPP is not warranted. xxx xxx xxx xxx 124. Having regard to the lesser duty rule followed by the Authority, the Authority recommends imposition of anti-dumping duty on the imports of the subject goods originating in or exported from the subject country, excluding the Food Grade STPP, equal to the lesser of margin of dumping and the margin of injury, so as to remove the injury to the domestic industry. Accordingly, antidumping duty equal to the amount mentioned in Col 8 of the table below is recommended to be imposed from the date of imposition of the provisional duty notified by the Central Government, in the event of acceptance of these recommendations by the Central Government, on all imports of subject goods,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t "the sample is in the form of white powder. It is a phosphate compound of sodium. As this laboratory is not equipped to verify the description of the product and also its grade, whether food grade or otherwise. Hence, the sample may be forwarded to any Government Food Laboratory." Further, the Central Food Laboratory, Pune vide their letter dated 11.10.2011 addressed to Customs SIIB investigation authorities had stated that "this laboratory is not having the necessary equipment to carry out the analysis of the Sodium Tri-Poly Phosphate. Hence sample is not accepted.". Therefore, the rest of the two laboratory test reports alone forms the basis for determining the nature of the imported goods, whether these are 'Food grade STPP' or 'Technical grade STPP'. 9.4 Food Testing and analysis is an essential part of the food safety ecosystem to assure that the food is safe to consume in terms of Food Safety and Standards (FSS) Act, 2006. For the same, Food Safety and Standards Authority of India (FSSAI) recognizes and notifies NABL accredited food laboratories under Section 43 of FSS Act, 2006. FSSAI is also recognizing foreign laboratories to reduce the time in clearance of food consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that case the opinion of a referral lab can be taken on the parameters specified by the Customs department. However, from the facts it is seen that there is no such action taken by customs authorities and they had sent the samples to one another testing laboratory i.e., M/s Chemo Test Laboratory. Further, no specific additional testing parameters were given by customs for determining the imported goods, whether it is of Food grade or other Technical grade. 9.5 Furthermore, in the cross examination of Dr. Atul Pusalkar of M/s Chemo Test Laboratory conducted before the adjudicating authority i.e., the Additional Commissioner of Customs (Import) on 24.06.2013, on a specific query to state whether as per the parameters under test results of the sample as given by them in the test report dated 13.10.2011, whether the sample conforms to food grade or otherwise, he had replied as follows: "Not conclusively because the parameters given for industrial grade on food grade are overlapping and hence there is no distinctive test which can state that the product or material is food grade. To certify material to be of food grade certain additional tests have to be done to ensure that it can b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act 2006 and the rules made thereunder and thus he had issued NOC for further clearance by Customs. Plain reading of the two laboratory test reports given by M/s Chemo Test Laboratory and M/s Envirocare Labs Private Limited, it transpires that they both have tested certain common parameters and thus the one in which the Authorised Officer, FSSAI had endorsed his certification and further clarified vide FSSAI letter dated 28.09.2011 stating that the imported product is an additive falling under the category of proprietary food has the support of legal authority under the Food safety laws. Therefore, the analysis done by M/s Envirocare Labs Private Limited from food safety angle and its test report, has more legal validation in terms of FSS Act and Rules made thereunder. Thus, from the above analysis, we find that the imported goods in the present case have been proved beyond reasonable doubt that they are of "food grade". Further, in the absence of any other specific evidence submitted by the Customs SIIB investigation during the adjudication or appeal proceedings, the allegations levelled against the importer for having imported technical grade STPP under the guise of food grade S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he classification of the imported oil as HSD by the Customs authority highly doubtful. If the expert or the test reports had clearly mentioned that in spite of the high degree of flash point shown by the samples, and non-examination in respect of all the parameters, these samples can still be considered to be that of HSD, we would have accorded due deference to such opinion. But as noted above, neither the expert nor the test results categorically and in clearly terms mention that these samples are that of HSD, except for making an ambiguous remark that these samples conform to certain parameters of HSD as per IS 1460:2005. As discussed above, by mere conformation to certain parameters of HSD, the samples cannot be equated with HSD. The expert opinion and the test results are as vague as these can be qua classification of the oil as HSD. 73. However, as noted above, the High Court, by applying the test of preponderance of probability concluded that the substance in question is HSD. 74. At this juncture it may be apposite to dwell briefly upon the meaning of the expression "preponderance of probability" in contradistinction to "proof beyond reasonable doub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....certainty, but it must carry a high degree of probability. Proof beyond reasonable doubt does not mean proof beyond the shadow of doubt. The law would fail to protect the community if it admitted fanciful possibilities to deflect the course of justice. If the evidence is so strong against a man as to leave only a remote possibility in his favour which can be dismissed with the sentence, "of course it is possible, but not in the least probable" the case is proved beyond reasonable doubt, but nothing short of that will suffice." (emphasis supplied) 721. The law recognises that within the standard of preponderance of probabilities, there could be different degrees of probability. This was succinctly summarised by Denning, LJ in Bater v. Bater [Bater v. Bater, [1951] P. 35 (CA).], where he formulated the principle thus : (p. 37) "... So also, in civil cases, the case must be proved by a preponderance of probability, but there may be degrees of probability within that standard. The degree depends on the subject-matter." 722. The definition of the expression "proved" in Section 3 of the Evidence Act is in the following terms: "3.... "Proved". ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....il cases this, normally, is the standard of proof to apply for finding whether the burden of proof is discharged." (emphasis supplied) 725. The court recognised that within the standard of preponderance of probabilities, the degree of probability is based on the subject-matter involved. 726. In State of U.P. v. Krishna Gopal [State of U.P. v. Krishna Gopal, (1988) 4 SCC 302 : 1988 SCC (Crl.).], this court observed : (SCC p. 314, para 26) "26. The concepts of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. Forensic probability must, in the last analysis, rest on a robust common sense and, ultimately, on the trained intuitions of the Judge. " 78. What the aforesaid decisions postulate is that there may be varying range in the degree of probabilities. Certainly, where the proceedings involve requirement of fulfilment of technical/scientific parameters with confiscatory and penal consequen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the samples are of HSD except for stating that the samples conform to certain specifications of the IS 1460:2005. (vii) In view of the ambiguity and lack of clarity in the expert opinion/laboratory test results, it would be unsafe to draw the inference that the Department had been able to prove their case even by applying the test of preponderance of probability merely because the samples conform to certain parameters. (viii) If the Department with all the resources at their command and access to various laboratory facilities could not get the samples tested in respect of all the 21 parameters, expecting the assesses/appellants to get the samples tested to show that these do not conform the specifications and are not HSD does not appear to be reasonable. Thus, shifting of onus to the assesses to prove otherwise appears to be unreasonable and meaningless. (ix) The burden was not on the assessees to demonstrate that nonconformity with the remaining 8 parameters would vitiate the conclusion that the samples were of HSD. 81. The aforesaid difficulties in our opinion can be overcome, if we apply the test of "most akin" as contemplated under Rul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....primarily on applying the test of preponderance of probability which may not necessarily fulfil the "most akin" test. The High Court came to the conclusion based on the incomplete test reports and noncommittal opinion of the expert Dr. Gobind Singh who in categorical terms had not stated that the imported goods are HSD. There was no opinion that the imported goods are most similar to HSD to satisfy the test of "most akin". The definitive opinion and finding that the imported goods are "most akin" to HSD is missing in the reports and opinion for classifying the imported goods as HSD. 85. The oil in question does not fully satisfy the specifications of HSD in terms of IS 1460:2005. Hence, the correct test will be whether the oil/article in issue is most akin to HSD or not for which appropriate scientific evidence in the form of laboratory test reports and opinion of the scientific experts will be of utmost relevance. 86. For the reasons discussed above, as the results of the test are inconclusive, so being the opinion of the expert, we are unable to agree with the conclusion of the High Court. Under the circumstances, the option before this Court is, either to send ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....herwise, laying down such parameters would be meaningless. Hence, to avoid these difficulties, doubts and uncertainties in future, the respondents are directed to ensure that proper facilities are made available in the appropriate laboratories for undertaking tests for all these parameters or at least for those parameters which the Authorities consider are of essential character to satisfy the "most akin" test without which the article in issue cannot be properly classified. Accordingly, we direct the respondents to take necessary steps in this regard within a period of six months for proper testing in all the parameters in future. 89. For the reasons discussed above, we allow these appeals by setting aside the impugned common judgment and order dated 20.01.2022 passed in Revenue Tax Appeal No. 297 of 2021, Revenue Tax Appeal No. 298 of 2021 and Revenue Tax Appeal No. 299 of 2021." 10.2 We also find force in the argument advanced by the learned Advocate for the appellants that submissions made by the appellants-importer along with the documents clearly support their case that the imported goods are of 'Food Grade' and not of 'Technical/Industrial grade'. The la....