TaxTMI 
TaxTMI 
2026 (8) TMI 1153
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....sioner (Appeals) and the Principal Commissioner dismissed the appeals of the Appellants, confirmed the demand of duty along with penalties, and also imposed a redemption fine on each of the Appellants. The particulars of the appeals are detailed herein-below in the following table: Appeal No. C/60035/2026 C/60036/2026 C/60041/2026 C/60042/2026 C/60045/2026 Party's name S.K. Brothers S.K. Brothers Sanjeevani Foods Pvt Ltd Sanjeevani Foods Pvt Ltd TLG Overseas Period involved Jan-Feb'2023 Nov'2022Jan'2023 Feb'2023 Dec'2022 Dec'2022Jan'2023 Amount (Rs.) 26,96,620/- 38,97,150/- 6,44,834/- 10,27,989/- 60,72,688/- Order-in-Original date 30.06.2025 30.06.2025 30.06.2025 30.06.2025 06.01.2026 Order-in-Appeal date 28.11.2025 28.11.2025 12.12.2025 12.12.2025 NA Since the issue involved in all five appeals is identical, and the impugned orders have been passed on the same lines of reasoning based upon a common test report, all five appeals are being taken up together for discussion and disposal. 2. For the sake of convenience, the facts are being drawn from Appeal No. C/60035/2026....
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.... 3. Heard both sides and perused the material on records. 4. The learned Counsel for the Appellants submitted that the impugned orders are not sustainable in law as the same have been passed without properly appreciating the facts and the law and the binding judicial precedents. 4.1 He further submitted that the Appellant had exported parboiled rice under Chapter Heading 10063010 vide various shipping bills. In order to verify the classification, representative samples were drawn and sent to the CRCL, New Delhi, for testing. The provisional assessments were made, and the goods were allowed to be exported under Section 18 of the Customs Act, 1962, upon the execution of bonds by the Appellant, subject to the following condition inter alia: "In the event of failure of cargo in the test report the exporter pays to the president the duty finally assessed in respect of the goods mentioned in the shipping bill below along with interest fine and/or penalty if any imposed for violation of Customs Act, 1962 and other allied acts." 4.2 He further submitted that from the language of bonds itself, it is evident that the Appellant undertook to pay the duty finally assessed in....
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....his fact is clear from the reports themselves. As per the test reports, the samples merely possess the characteristics of non-parboiled rice. The reports do not definitively conclude what kind of rice had actually been exported or the same was non-parboiled rice. He argued that the difference between parboiled rice and non-parboiled rice is razorthin; therefore, it is natural for a sample to exhibit overlapping characteristics at times. 4.5.1 Further, he submitted that as per the department, the rice exported by the Appellant is an agricultural product and is identified by its length and shape, i.e. long-grain, medium grain and short-grain & the aroma. Parboiling is a hydrothermal process in which the crystalline from of starch present in the paddy rice is changed into an amorphous one. This is accomplished by soaking or steaming, drying and milling the rice. The parboiling process produces physical, chemical and organoleptic modifications in the rice, with economic and nutritional advantages. The major objectives of parboiling are to, (i) increase the total and head yield of the paddy (ii) prevent the loss of nutrients during milling (iii) salvage wet....
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....e further submitted that the goods in question were never seized under Section 110 of the Customs Act, 1962, nor were they provisionally released; therefore, the subsequent confiscation is completely unsustainable in law. 4.6.3 Further, he argued that the department cannot legally impose a redemption fine on the Appellant because a fine under Section 125 of the Act is intended to be an option given to the exporter. When the department imposes a mandatory fine on goods that are unavailable, it leaves no actual option for the Appellant. Under Section 125 of the Act, if the Appellant were not to accept the option of redemption fine, the goods can be seized. As the Department has stated, the goods are not available for confiscation, therefore the fine under Section 125 of the Act cannot be imposed. Since the goods are not available for confiscation, redemption fine is not imposable. To support this contention, he relied upon the judgment of the Hon'ble jurisdictional High Court of Punjab & Haryana in the case of Commissioner of Customs, Amritsar vs. M/s Raja Impex (P) Ltd - 2008 (229) E.L.T. 185 (P&H). 4.6.4 He further submitted that no mala fide intention has been attributed to ....
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....ed in respect of the goods, along with interest, fine, and penalty, if any. A close examination of the bonds available on record clearly demonstrates that they were executed by the exporter strictly under Section 18 of the Customs Act, 1962. Once the bonds have been executed under Section 18, it is evident that the goods were permitted for export on the basis of a provisional assessment only. The plain and unambiguous language of the bonds makes it clear that the Appellants had merely undertaken to pay the differential duty that would arise upon final assessment. Therefore, the department's argument that these were not provisional assessments is not sustainable. 7.2 We also find that once a provisional assessment has been made and the goods are allowed to be exported, the assessment is required to be finalized in accordance with the Customs (Finalization of Provisional Assessment) Regulations, 2018, notified vide Notification No. 73/2018-Customs (N.T.) dated 14.08.2018. As per Regulation 5 of the said Regulations, the proper officer is mandated to finalize the provisional assessment within two months from the date of receipt of the test reports. However, in the present case,....
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....ich in terms of sub-section (3)(ii)(b) of Section 11A of the Act (which is applicable in the instant case) in a case where duty of excise is provisionally assessed under the Act or the Rules made there-under, the date of adjustment of duty after the final assessment thereof. A proceeding under Section 11A of the Act cannot, therefore, be initiated without completing the assessment proceedings. 7. Since the present proceedings were initiated under Section 28 before finalization of the assessment, the same is not maintainable at this juncture. However, the Department is at liberty to take appropriate measures after finalization of the bills of entry in question. 8. In view above, we do not find any merits in the impugned order. Accordingly, after setting aside the same, we allow the appeals in favour of the appellants" The above view has been fortified by the Hon'ble Supreme Court in the case of Commissioner vs. ITC Ltd. (supra). 7.3 Besides this, we note that the department issued a letter dated 05.10.2023 seeking certain information and calling upon the Appellant to deposit the export duties. In the said letter, the department itself mentioned that the Appel....
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....reference must be made to the Customs Tariff, the General Rules for the Interpretation of the Customs Tariff, and the HSN Explanatory Notes, which serve as statutory guides. This exercise has not been undertaken in the present case. Furthermore, it is a well-settled principle that a test report is merely an expert opinion. While it serves as a guiding tool to understand the technical nature of a product, it does not have a binding effect on the final classification of goods. The quasi-judicial function of determining the proper classification rests solely with the jurisdictional adjudicating authority, to be decided strictly in accordance with the law. This has not been done in the present case. Additionally, the Appellant's specific request for the cross-examination of the Chemical Examiner, made vide letter dated 10.10.2023, was also denied by the department. Therefore, we are of the considered view that deciding the classification simply on the basis of an inconclusive test report is legally unsustainable. Nevertheless, in the present case, we are not recording any final finding on the absolute merits of the classification of the impugned goods. We are confining our decision....