TaxTMI 
TaxTMI 
2025 (11) TMI 2011
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....lity and validity of the show cause notice dated 27.06.2013 issued by respondent no.2 - Additional Director General, Directorate of Revenue Intelligence, Ahmedabad. 3. The show cause notice is issued calling upon the petitioners to show cause as to why the claim of concessional rate of duty in terms of Serial No. 57 of the Customs Notification No.12/2012 dated 17.03.2012 which is equivalent to Serial No. 33A of the erstwhile Customs Notification No. 21/2002 dated 01.03.2002 on the import of goods namely Crude Palm Kernel Oil edible grade covered under the Bills of Entry as per Annexure-C and Annexure-D to the show cause notice should not be rejected. The petitioners were also called upon to show cause as to why the Bills of Entry should not be assessed on the tariff rate of 100% Customs duty corresponding to respective entry being CTH 15132110 along with additional duty of customs leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1985 (SAD) which was claimed as exempt vide Notification No. 20/2006-CUS dated 01.03.2006 and Notification No. 12/2012- CUS dated 17.03.2012 in respect of the import of the goods covered under the Bills of Entry. 4. This Court [C....
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.... in question, clearly show that the same meet with the requirements laid down under Regulation No. 2.2.1 (21) for Palm Kernel Oil. Thus, the record of the case clearly demonstrates that the goods imported by the petitioner are of edible grade in terms of the above supplementary note inasmuch as the Food & Drugs Laboratory has clearly opined that the goods imported by the petitioner from time to time conform to the standards and provisions laid down under the Regulation No. 2.2.1 (21) of the Food Safety and Standards (Food Products and Food Additives) Regulations, 2011 for Palm Kernel Oil and can be used only after refining and conforming to the standards as laid down under Regulation No. 2.2.1 (16). 8. It may be noted that Regulation 2.2.1 (16) defines refined vegetable oil and further provides that refined vegetable oils shall be obtained from the vegetable oils enumerated thereunder. Palm Kernel Oil finds mention at item (xix) thereunder. It is not the case of the petitioner that it is importing goods answering the description of 2.2.1 (16) but that it imports Palm Kernel Oil (Edible Grade) which falls within the ambit of Regulation 2.2.1 (21). It may be noticed that the....
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....thority. The exemption notification as is well known should be construed liberally once it is found that the assessee fulfils all the eligibility criteria. In reading an exemption notification, no condition should be read into it when there is none. If an assessee is entitled to the benefit thereof, the same should not be denied. Therefore, the contention of the respondents that the intent behind the exemption notification to provide for lower rates of oil in public interest has to be kept in mind while construing the said notification does not merit acceptance. On a plain reading of Notification No.12/2012 it is clear that serial no. 57 thereof provides for exemption to the goods falling under Chapter or Heading or Subheading or tariff No.1508, 1509, 1510, 1512, 1513, 1514 or 1515 if the same answer the description "All goods, crude or edible grade". In the present case, it is not even the case of the respondents that the goods imported by the petitioners do not answer the said description. The case of the respondents is solely based upon the end use of such goods, which is a condition that is not provided under the said exemption notification. Thus, in essence and substance, the ....
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....utory remedies, is not affected, especially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. The said decision would apply on all fours to the present case. Accordingly, the contention that the petition is not maintainable does not merit acceptance. 13. As regards the decision of the Supreme Court in the case of Union of India v. Guwahati Carbon Ltd. (supra) on which strong reliance has been placed by the learned counsel for the respondent, the same does not lay down any absolute proposition of law that in no case, viz. even where by the facts make out a case where the exercise of powers by the authorities is without jurisdiction or where the concerned authority has usurped jurisdiction without any legal foundation, the High Court should not exercise its plenary jurisdiction under Article 226 of the Constitution of India. Each case has to examined on its own facts, and if on facts a case is made out for exercise of powers under Article 226 of the Constitution in the light of the principles propounded by the Supreme Court in this regard, the availability of ....
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....e appeal filed by the Revenue against the judgment and order passed by this Court quashing and setting aside Circular No.40/2001. 9. It was submitted that the petitioners have been regularly importing crude palm kernel oil of edible grade availing benefit of Nil rate of duty as per Notification No. 21/2002-CUS dated 01.03.2002 (Sr.No.33A) and Notification No. 12/2012-CUS (Sr. No.57) which reads as under : Sr. No. Chapter of Heading or Sub-heading or tariff item Description of goods Standard rate Additional duty rate Condition no. 33A of Notfn. 21/2002 1508 1509 1510 1512 1513, 1514 or 1515 ALL goods, crude and edible grade Nil 57/12 of Notfn. 12 /2012 1508 1509 1510 1512 1513, 1514 or 1515 ALL goods, crude and edible grade Nil 10. Learned Senior Advocate Mr. Joshi invited the attention of the Court to Supplementary Note 1 to Chapter 15 of the Customs Tariff Act, by which expression "edible grade" has been defined as under: "1. In this Chapter, 'edible grade', in respect of goods (i.e. edible oil) specified in Appendix B to the Prevention of food Adulteration Rules, 1955 ....
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....ms Tariff or the fact that the subject goods were conforming to the standards and provisions of palm kernel oil under Prevention of Food Adulteration Rules, 1955 or under Regulations, 2011. The Prevention of Food Adulteration Act, 1954 and the Rules made thereunder were repealed with effect from 05.08.2011 and Food Safety and Standard Act, 2006 and the Rules and regulations made thereunder have been notified. It was submitted that Regulation No. 2.2.1(21) of the Regulations, 2011 is same as Entry A.17.21 of the Appendix-B to the Prevention of Food Adulteration Rules, 1955. 15. 5. It was pointed out that search at the factory premises of the petitioners was conducted on 04.01.2013 at Mumbai and Panchnama was drawn at Kandla on 03.01.2013. The petitioners preferred Special Civil Application No.535 of 2013 for release of goods and by order dated 11.02.2013 passed by this Court, the goods were released on executing bond of full assessable value of goods and also furnishing bank guarantee of 5% value thereof. 16. It was submitted that samples drawn under the Panchnama were sent to Central Food Laboratory, Pune along with test memo dated 08.01.2013 to ascertain whether the same con....
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....similar condition was quashed and set aside. 19. Reference was made to Rule 69-A contained in Part-XV of the Rules, 1955 for solvent extracted oils and edible flour. It was pointed out that Rule 69-A of the Rules, 1955 provides for restrictions on use of solvent prescribing the tolerance limits. It was submitted that from the Hexane (Food solvent), the tolerance limit is mg.kg (ppm) of 5.00 for refined solvent extracted oils and fats. It was submitted that the standards prescribed in Rule 69-A is met by the goods imported by the petitioners. 20. Learned Senior Advocate Mr. Joshi thereafter referred to Appendix B to the Rules, 1955 para. A.17.15, which stipulates that "Refined Vegetable Oil" means any vegetable oil which is obtained by expression or solvent extraction of vegetable oil bearing materials, deacidified with alkali and/or physical refining and/or by miscella refining using permitted food grade solvents followed by bleaching absorbent earth and/or activated carbon and deodorised with steam. It was therefore, submitted that the petitioners have imported crude palm kernel oil and not refined vegetable oil which requires solvent extraction and therefore, reliance place....
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....of sale which is equivalent to condition no.13 of Rule 49 of the Rules, 1955. 25. Reference was also made to Blended Edible Vegetable Oil specifications issued by Bureau of Indian Standards which provides that without processing, crude edible oil is not fit for human consumption but it is still edible grade because others are chemical and they are not edible grade at all. 26. Reference was also made to The Pulses, Edible Oilseeds and Edible Oils (Storage Control) Order, 1977 wherein section 2(g) of the said Order defines "Edible Oil" means any oil used, directly or after processing, for human consumption and includes hydrogenated vegetable oil. It was therefore, submitted that the crude palm kernel oil imported by the petitioners is not "edible oil" but it is "edible grade" and to make it edible oil, it would require further processing. 27. Reliance was placed on the decision of Calcutta High Court in case of Supreme Oil Industries Limited & anr. v. Special Secretary, Finance (Taxation) Department, Government of West Bengal & ors. reported in 2007 SCC OnLine Cal 191 rendered in relation to rice bran oil of edible grade wherein Hon'ble Calcutta High Court has observed a....
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....rposes even after refining. XXX 20. In our view, there being no definition of edible oil within the four corners of the Scheme, the fact that a particular type of oil cannot be used for immediate direct human-consumption is immaterial for the purpose of interpreting the Scheme. Even the report of the Jawaharlal Nehru Technological University itself shows that Rice Bran Oil Grade-1 is edible oil. Therefore, the Special Secretary totally misread those observations made in the letter written by the Jawahar lal Nehru Technological University where Rice Bran Grade-1 Oil has been described as edible oil notwithstanding the fact that it is not fit for direct human- consumption." 28. Reliance was also placed on the decision of Hon'ble Supreme Court in case of Commissioner of Commercial Taxes and others v. Supreme Oil Industries Ltd. (Order dated 29.04.2009 passed in Civil Appeal No. 2924 of 2009) whereby decision of Calcutta High Court was confirmed by the Hon'ble Apex Court. 29. Learned Senior Advocate Mr. Joshi also relied upon the decision of Hon'ble Karnataka High Court in case of Vishista Solvent Oils Pvt. Ltd. v. Deputy Commissioner of Commercial T....
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....solvent extracted oil for direct human Oil, De-oiled Meal and Edible Flour (Control) Order, 1967 defines the solvent extracted oil as vegetable oil in any form obtained by the use of solvent. In the public interest, the Control Order prohibits the sale of such solvent extracted oil directly for human consumption unless it is refined. Even if the oil which is obtained from crushing of oil- seed, the Legislature may restrict to sell it unless it is refined. Hence some percentage of impurity always remains even in the oil which is obtained by the process other than the solvent extract process. The basic character of the oil which is obtained from crushing/expeller from the seed as well as the oil obtained from the oil cake remains the same, except, to the extent of impurity of hexane. It is for this reason that there is a prohibition for direct sale of such oil. Refining has been considered as not changing the basic character of the oil and as such, the solvent extracted oil cannot be considered as not falling within the proper category of edible oil." 30. Learned Senior Advocate Mr. Joshi referred to Explanation (2) of Notification No. 115/86-Central Excise- Tariff dated 01.03.198....
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....aspati, the term "edible oil" used in the explanation to the notification has to be understood as the oil which can be processed for edible purposes as distinct from that which is permitted for use in industrial purposes only." 32. Learned Senior Advocate Mr. Joshi therefore, submitted that the crude palm kernel oil edible grade would fall in Entry No. 33A attracting Nil rate of duty under the provisions of the Act of 1985 as per Notification No. 21/2002-CUS dated 01.3.2002 which is equivalent to Entry No. 57 attracting 2.5% of the duty as per Notification No. 12/2012-CUS dated 17.03.2012 instead of falling in Chapter XV - 15132110 attracting 100% duty. It was therefore, prayed that impugned show cause notice being without jurisdiction may be quashed and set aside. SUBMISSSIONS OF THE RESPONDENTS 33. On the other hand learned advocate Mr. Ankit Shah for the respondents submitted that the impugned show cause notice is not solely based upon Circular No.40/2001 but it also pertains to mis- declaration of the description of the imported goods by the petitioners to avail the wrongful exemption from customs duty. 34. It was submitted that crude palm kernel oil imported by the....
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.... 38. It was therefore, submitted that by no stretch of imagination it can be said that the goods imported by the petitioners is entitled to notification for concessional rate of duty. ANALYSIS: 39. Considering the submissions made by the learned advocates for the parties, short question which arises for consideration is whether the petitioners are entitled to the benefit of Notification No.12/2012 by which crude palm kernel oil edible grade imported by the petitioners for industrial purpose would be subject to levy of customs duty at Nil rate or reduced rate or not. 40. The customs duty is leviable as per the provisions of section 12 of the Customs Act, 1962 (for short 'the Act' ) on all goods imported into or exported from India. When such goods enter the territorial waters of India and the Act does not differentiate the taxable events for different purpose. As per section 12 of the Act, customs duty is levied at such rate as may be specified under the Tariff Act. The customs duty is chargeable upon the assessment or quantification of the amount of duty payable under sections 14 and 15 of the Act pertaining to valuation of goods for the purpose of assessment and ....
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....try No. 33A as amended by Notification No.21/2002. However by Notification No. 2/2013-CUS dated 23.01.2013, rate of duty is prescribed at 2.5% instead of Nil rate of duty. Therefore, the petitioners were paying the duty of 2.5% instead of 7.5% after 2013 instead of Nil rate of duty. 44. Section III of the Tariff Act includes Chapter 15 pertaining to Animal or Vegetable Fats and Oils and their Cleavage products; prepared edible fats; animal or vegetable waxes and Supplementary Note 1 in the said Chapter explains "edible grade" in respect of goods i.e. edible oil specified in Appendix B to the Prevention of Food Adulteration Rules, 1955 means the standard of quality specified for such goods in that Appendix. 45. As per the interpretation of the respondents, crude palm kernel oil would fall under CTH 15132110 attracting 100% rate of duty as it is not fit for human consumption though it may be of an edible grade. Therefore, it is necessary to refer to Appendix B to Prevention of Food Adulteration Rules, 1955 which is extracted here-in-above. 46. Para no. A.17.21 Appendix B pertains to palm kernel oil means oil obtained from sound palm kernel of the fruits of oil palm (Elaeis G....
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....considering the provisions of Prevention of Food Adulteration Act, 1954 and the requirement of end-use prescribed in para no. 6(c) of Circular No.40/2001 it was observed as under : "15 As can be seen from Notification No.17, the Government was conscious of the provision of Section 25(1) of the Act and has specifically prescribed condition in relation to some entries in column No.6 of the Table. It is not necessary for us to refer to various conditions specified in the Annexure to the Notification but by way of illustration entry at Sr. No.43 will be sufficient to show how provisions of Section 25(1) of the Act operate. In column 6 pertaining to conditions, condition No.6 has been prescribed for entry No. 43, which deals with " wine, for use as sacramental wine" and the rate of concessional duty is 35%. Condition No.6 in the annexure reads; " if the importer furnishes undertaking to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, that the wine shall be used as sacramental wine". Therefore, a condition pertaining to a stage after clearance has been imposed as provided in the section. Similarly, condition Nos. 12, 17, 18 and 40 are....
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....8 deals with Edible oils falling under heading viz. Ground-nut Oil, Palm Oil, Sunflower seed, Safflower or cotton seed oil, Coconut oil and others as mentioned in 15.13, Rape, colza or mustard oil and other fixed vegetable fats and oils. On the other hand, entry No.29 talks of All goods (other than Edible oil) falling under various heads mentioned in entry No. 28 as well as headings dealing with Soya-bean oil, Olive oil and other oils obtained solely from olives. If we compare entry No. 34 dealing with crude palm oil and its fraction of Edible grade in loose or bulk form and column No. 2 of the Table which shows sub- heading 1511.10 it can be observed that the said sub-heading 1511.10 is absent in entries 28 & 29. In view of this situation it is apparent that entry No. 34 carves out an exception to Entry No. 28 and has no relevance with Entry No. 29. Entry No.28 deals with Edible oils falling under various headings and sub-headings and one of the headings is 15.11 which deals with Palm oil and its fractions whether or not refined but not chemically modified, while sub-heading 1511.10 deals with Crude oil i.e. Crude palm oil. When one reads entries 28 and 34 in juxta position, it is....
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....l was of edible grade or not. It is not necessary for our purpose to deal with the various technical aspects laid down in Appendix "B" for the simple reason that it is an admitted position between the parties that when the imported goods entered territorial waters of India, the Boarding Officer had drawn samples of the product for test in the presence of the representative of the Master of Vessel, the Shipping Agent and representative of the Importer; and such samples had been sent for testing to the Chemical Examiner, Customs House, Kandla, who has opined that the same does not conform specification for Crude Palm oil (Edible grade) as per IS- 8323-E-1977. It appears that the said sample was also forwarded through the Referal Hospital & Community Health Centre, Mundra- Kutch, to the Public Analyst, Food & Drug Laboratory, Vadodara for opinion. He has opined to the effect that the sample conforms to the standards and provisions laid down under the Prevention of Food Adulteration Rules, 1955, for Palm Oil and cannot be used as such for human consumption. Therefore, once the competent authority who is technically qualified to tender opinion in relation to the technical standards pres....
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.... to uniformly assess persons importing oils for industrial use only and to prevent misuse of imported oils being used for edible purpose after processing, on payment of concessional rate of duty. According to him, in case of a trader, if the goods are sold to 'A' and further 'A' sells those goods to 'B', 'B' to 'C', 'C'to 'D' and so on, the importer trader shall have to produce the end-use certificate from the last such purchaser in the chain and the certificate shall have to be from the Assistant/Deputy Commissioner of Central Excise having jurisdiction over last such purchaser. It is beyond our comprehension as to how can a trader be expected to follow the goods which he has already sold off and which might change hands in series of transactions. To expect such an importer trader to produce a certificate of end-use from an officer of Central Excise, having jurisdiction over the purchaser who is the last in the chain of transaction is casting a burden which if not impossible is impracticable to say the least. At least such a requirement/condition cannot be read in Notification No.17 by virtue of the impugned Circular No.40/20....
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.... 6. We entirely agree with the view taken by the High Court that the department could not, by issuing a circular subsequent to the notification, add a new condition to the notification thereby either restricting the scope of the exemption notification or whittle it down." 51. In view of above settled legal position, the respondents could not have assumed the jurisdiction to issue the impugned show cause notice on the same subject matter considering the end-use of the goods imported by the petitioners which was struck down by the Court being part of the Circular No. 40/2001. As held by this Court and upheld by the Hon'ble Apex Court, the Revenue was not held to be justified for treating the goods falling under Entry 29 equivalent to Entry 33A and Entry 57 in facts of the case and made liable to concessional rate of duty should be treated as entry falling under CTH 15132110 applying 100% of the customs duty as the petitioners have admittedly imported the goods which is not fit for human consumption as crude palm kernel oil edible grade which requires further processing and refining to make it edible and unless the petitioners establish the end-use to the satisfaction of t....
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....e learned Senior Counsel Mr. Joshi for the petitioners referred to the provisions of Prevention of Food Adulteration Act, 1954 and the Rules which is substituted by Food Safety and Standard Act, 2006 and Rules and Regulations, 2011 as well as Indian Standard pertaining to blended edible vegetable oils- specifications and the Pulses, Edible Oilseeds and Edible oils (Storage Control) Order 1977 to demonstrate that crude palm kernel oil imported by the petitioners is of edible grade as per specifications prescribed in para no. 2.2.1(21) of the Regulations, 2011 as compared to para 2.2.1(16) which refers to refined vegetable oil which includes palm kernel oil at item No. (xix). It was pointed out from the record that crude palm kernel oil imported by the petitioners is obtained by the method of expression or solvent extraction and method of expression is as per Indian Standard Blended Edible Vegetable Oils- Specifications which provides definition of edible oil and means any oil used, directly or after processing for human consumption and includes hydrogenated vegetable oil. However, it was pointed out that edible oil is different than crude edible grade oil which may be subject to the....
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....Raw Grade-I" manufactured by it formed part of "Edible Rice Bran Oil" and as such it was entitled to ninety per cent refund in respect of tax collected on sale in terms of the said Scheme. The dispute ultimately came before the High Court by way of Writ Petition as the Special Secretary, Finance Department, Government of West Bengal rejected Grade- applimanufactured respondent No. 1 herein holding that "Rice Bran Oil Grade-1, manufactured by respondent No. 1 herein was not "Edible Rice Bran Oil" as the manufactured product required further processing before it became fit for human consumption. The learned Single Judge set aside the order of the Special Secretary and directed the matter to be heard de novo in accordance with law. The view earlier taken by the Special Secretary came to be re-iterated vide Order dated 16th September, 2002 which made respondent No. 1 herein to move the High Court in Writ Petition No. 2170 of 2002, which came to be dismissed. The dismissal of the writ petition was reversed by the Division Bench of the High Court vide the impugned judgment, hence this Civil Appeal is filed by the Department. 3. Apart from the reasons given by the Division Bench,....