TaxTMI 
TaxTMI 
2026 (10) TMI 483
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....hority further held the disputed goods liable to confiscation under Section 111(m) and 111(o) of the Customs Act, 1962, imposed redemption fine of Rs. 2,00,00,000/- under Section 125, imposed penalty of Rs. 3,36,89,272/- under Section 114A and a further penalty of Rs. 35,00,000/- under Section 114AA of the Act. 4. The dispute relates to the description, classification and eligibility to concessional Basic Customs Duty in respect of 2304.029 MTs of Palm Oil forming part of a larger Cargo of 4764.253 MTs imported by the appellant. 5. The facts in brief are that the appellant filed warehoused Bill of Entry Nos. 5092829 and 5093075, both dated 18.08.2021, declaring the imported goods as "Crude Palm Oil - Edible Grade in Bulk" under Custom Tariff Item 1511 1000. The goods were subsequently cleared under ex-bond Bill of Entry Nos. 5455505, 5456058, 5455638 and 5455878, all dated 15.09.2021. The appellant claimed the concessional rate of Basic Customs Duty (BCD) under Serial No. 57 of Notification No. 50/2017-Customs dated 30.06.2017. 6. During investigation, the Department obtained the Vessel's Loading time log, ship's ullage report, tank calculations, e-mail correspondence, com....
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....d that it was described as RBD Palmolein in the Ship's documents. However, since it was allegedly mixed or diluted with Crude Palm Oil during discharge, it was classified under Customs Tariff Item 1511 9090 as "Others". On this basis, the Adjudicating Authority denied the concessional rate claimed under Serial No. 57 of Notification No. 50/2017-Customs and confirmed the differential duty, interest, confiscation, redemption fine and penalties. 11. Learned Counsel for the appellant submits that the entire imported Cargo was Crude Palm Oil falling under Customs Tariff item 1511 1000 and was eligible for the concessional rate of Basic Customs Duty. It is submitted that, after the amendment made by Notification No. 01/2020-Customs dated 02.02.2020, the explanation prescribing acid value and total carotenoid parameters was omitted from the exemption notification. The Department could therefore not re-introduced those omitted conditions while determining eligibility for the concession. 12. Learned Counsel argues that the test reports could not conclusively establish that the goods were not Crude Palm Oil. Beta-carotene content deteriorates with passage of time, temperature, transpor....
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....ed upon the e-mail dated 07.08.2021, which recorded that the Vessel was carrying approximately 2500 MTs of Crude Palm Oil and 2300 MTs of RBD Palmolien for discharge at Kakinada. 22. Learned AR submits that the documentary evidence was corroborated by tank-wise sampling and the reports of three Government Laboratories. Some samples met the standards of Crude Palm Oil while several other samples did not. According to the Department, the Visakhapatnam Laboratory reports related only to samples drawn from two tanks and were therefore not representative of the entire Cargo. The reports from the other Laboratories covered samples from a larger number of tanks and supported the documentary evidence. It is submitted that the test reports were not sole basis of the demand. They were relied upon only as corroborative evidence supporting the Loading Time Log, Ullege Report, e-mail correspondence and commercial documents. 23. The Department further submits that classification is governed by the Customs Tariff Act, the General Rules for Interpretation (GRI), the relevant Chapter Notes and the Harmonized System of Nomenclature (HSN). Standards prescribed under the Food Safety Legislation ....
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....to in the impugned order. 30. The following issues arise for determination: (a) Whether the disputed quantity of 2304.029 MTs was Crude Palm Oil classifiable under Customs Tariff item 1511 1000; (b) Whether the said quantity was eligible for the concessional rate under Serial No. 57 of Notification No. 50/2017-Customs; (c) Whether the Loading Time Log, Ullage report, e-mail correspondence, statements and laboratory reports could be relied upon; (d) Whether the classification adopted under Customs Tariff item 1511 9090 is sustainable; (e) Whether the differential duty has been correctly quantified by applying the appropriate Basic Customs duty rate; (f) Whether the extended period, confiscation, redemption fine and penalties are sustainable. 31. The appellant declared the entire quantity of 4764.253 MTs as Crude Palm Oil. The contemporaneous Leading Time Log and Ship's Ullage report, however, indicate that the vessel carried two separately identified products. The documents record that 2304.029 MTs of "RBD Palmolein in Bulk" was loaded in tanks 1S, 1P, 2S, 2P, 3S and 3P. The balance quantity was recorded as Crude Palm Oil a....
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....umulative evidence available in the present case. The Show Cause Notice and the impugned order are not founded exclusively upon Beta-Carotene content. The Department also relied upon the acid value, tank-wise loading records, the Ullage report, commercial correspondence and the description of the Cargo in contemporaneous documents. The Adjudicating Authority has recorded that the samples tested by CRCL, Mangalore were examined within a comparatively short period after drawl. In the reports obtained subsequently, both Beta-Carotene and acid value were found below the relevant range in some samples. The appellant has not produced any independent technical opinion establishing that the particular variations found in the samples necessarily occurred solely because of delay, transportation or storage. Moreover, the laboratory reports are corroborative and not the sole evidence relied upon by the Department. The objection regarding delay in testing therefore does not demolish the Departmental case founded upon the contemporaneous tank-wise loading records. 33. We agree with the Department that standards prescribed under the Food Safety Legislation do not, by themselves, determine clas....
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.... eligibility to the concessional rate in respect of the disputed quality. The principle in Novapan India Ltd., and Dilip Kumar and Company, supra, applied at the stage of determining eligibility to the exemption. A person claiming exemption must first establish that the goods fall within the description covered by the notification. We therefore, uphold the denial of the benefit of Serial No. 57 of Notification No. 50/2017-Customs in respect of 2304.029 MTs. 35. The appellant submits that the e-mail correspondence and third-party records were inadmissible due to non-compliance with the statutory requirements relating to electronic evidence. It is not necessary to distinguish between the authenticity of a document and the procedural mode by which it is formally proved. In the present case, the disputed e-mail was not relied upon in isolation. It was corroborated by the Loading Time Log, Ullage report, tank calculations, statements and laboratory reports. The Department has also pointed out that the recipient of the e-mail acknowledged its receipt and contents during investigation. The appellant has not produced any material showing that the e-mail was fabricated, altered or relate....
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....aining entries. The Customs Tariff Act provides the statutory framework for such classification. Since the contemporaneous evidence establishes that the disputed goods were RBD Palmolein and not Crude Palm Oil, their classification under the entry applicable to Palm Oil and its fractions other than Crude Palm Oil is sustainable. We accordingly, uphold the classification of the disputed quantity under Customs Tariff item 1511 9090, but for the reason that the goods were RBD Palmolein at the time of importation and not because they allegedly lost their identity upon mixing during discharge. 37. The appellant has specifically contended that even if the goods fall under Customs Tariff Item 1511 9090, the applicable Basic Customs duty rate was 32.5% and not 37.5%. The applicable rate must be determined with reference to the notification and tariff rate in force on the relevant date of importation. The Adjudicating Authority cannot apply a higher rate unless it is supported by the statutory notification operative on that date. The material reproduced before us does not contain a complete examination of the competing notifications and rate changes on the relevant date. The issue concer....
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.... be RBD Palmolein and not Crude Palm Oil, the goods did not correspond with the material description declared in the Bills of Entry. Confiscation under Section 111(m) is therefore sustainable. The goods were also imported by claiming a conditional concessional rate applicable to Crude Palm Oil. Since the disputed quantity did not ensure that description, the conditions governing the concession were not fulfilled. Confiscation under Section 111(o) is also sustainable. 40. The Adjudicating Authority imposed redemption fine of Rs. 2,00,00,000/-. Redemption fine is intended to neutralise the economic advantage derived from an improper import while permitting redemption of the goods. Nevertheless, the amount of fine must bear a reasonable relationship to the value of the goods. The margin of profit and the gravity of the contravention. The Adjudicating Authority has already restricted the demand to less than 1 ½ of the total Cargo. The disputed goods were edible Palm Oil and were not prohibited goods. The dispute relates primarily to their correct description, classification and rate of duty. Having regard, nature of the goods, the quantity involved and the circumstances of th....
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....ime log, ship's ullage report, tank calculations and e-mail correspondence establish that 2304.029 MTs of RBD Palmolein was loaded in specified tanks for dispatch at Kakinada. The laboratory reports, though not uniform in respect of every sample, corroborate the existence of two distinguished categories of Palm Oil in the Cargo. The appellant has not produced persuasive contemporaneous evidence establishing that the disputed quantity was Crude Palim Oil. The omission of the explanation from the exemption notification did not convert refined or processed Palmolein into Crude Palm Oil and did not dispense with the requirement that the goods must answer the tariff and commercial description of Crude Palm Oil. We therefore, uphold the denial of the benefit of Serial No. 57 of Notification No. 50/2017-Customs and the classification of the disputed quantity under Customs Tariff Item 1511 9090. However, the classification is upheld on the basis that the disputed goods were RBD Palmolein at the time of importation and not on the basis of any alleged post-import mixing or dilution. 43. The applicable Basic Customs Duty rate shall be verified and the differential duty re-computed. Confisc....