Customs, Excise and Gold Tribunal - Delhi
Super Tech Agro Oils Pvt. Ltd., Shri ... vs Cc on 8 June, 2007
Equivalent citations: 2007(216)ELT618(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. These four appeals are directed against a common adjudication order.
2. The appeals and stay applications relate to confiscation of imported Hydrogenated Vegetable Oil (HVO) consignments and imposition of penalties on the appellants. When the stay applications, which seek waiver of requirement of pre-deposit, were heard, it was found that the appeals themselves can be disposed of in the facts of the case. Accordingly, I proceed with the appeals after dispensing with the requirement of pre-deposit.
3. Material facts may be recalled. Appellant M/s Super Overseas Inc. purchased Hydrogenated Vegetable Oil under an invoice dated 31/5/06 from M/s Health Food Products Pvt. Limited, Sri Lanka. According to the invoice the Hydrogenated Vegetable Oil (HVO) was "edible grade". The consignment was loaded in 15 containers and sent to ICD, Ludhiana. While in transit, goods in 10 containers, were sold to appellant M/s Super Tech Agro Private Ltd.
4. Both the appellants filed bills of entry on 17/6/06 before the Customs at Ludhiana for the clearance of the consignments 3 containers were released to M/s Super Tech Agro Oils Pvt. Ltd. Subsequently, another 5 containers were also released (4 containers to Super Tech and 1 container to Super Overseas) on 18/9/06, in terms of the order dated 12/9/06 of the Hon'ble High Court of Punjab and Haryana. The remaining 7 container load remains confiscated under the impugned order.
5. While show cause notice dated 19/10/06 alleged violation of DGFT Notification dated 02/6/06 as well as violation of Sub-sections (d), (m) & (o) of Section 111 of the Customs Act, in view of the subsequent DGFT Notification dated 11/9/06, the objection in terms of DGFT Notification has been dropped and the confiscations made in terms of Section 111 (d), (m) & (o) of the Customs Act in the adjudication.
6. The finding in the impugned order is that the samples of HVO from the containers were tested and the test reports of Sriram Institute of Industrial Research, New Delhi and laboratory of CRCL, New Delhi found the goods to be not confirming to the specifications for Vanaspati as per serial No. A-19 of Appendix B to the Prevention of Food Adulteration Rule 1965. More specifically, the samples did not conform to 'melting point and or quantity of Synthetic Vitamin A.'
7. The submission of the learned Counsel for the appellants is that the finding regarding quality is not correct at all. It is being pointed out that samples from the same consignment had been analyzed in Punjab Food Laboratory, Chandigarh, the authorized governmental authority for testing of food samples, and the test reports specifically state that the samples satisfied both the requirements.
8. Adjudicating authority rejected the report of Chandigarh laboratory with the observation that Punjab Food Laboratory has not maintained the individual standardwise observation so as to ascertain whether the samples satisfied the norms as laid down at Serial No. A 19 of Appendix B. Further, in case of Vitamin A, the test report merely mentions the result as positive without indicating the quantum actually found in the samples. The learned Counsel would contend that these objections of the Commissioner are entirely improper and incorrect. As regards, the maintenance of individual standardwise observations, it is being pointed out that the Commissioner had made no verification as to whether such records were being maintained. It is the learned Counsel's contention that a report cannot be rejected merely because it states only findings and details of tests are not enclosed with the findings. In regard to Vitamin A, the learned Counsel would point out that the requirement under serial No. A-19 is that the sample should test positive. The learned Counsel would submit that in the present case all test reports including the ones relied upon for passing the order had confirmed that the samples tested positive for Vitamin A. The submission of the learned Counsel is that in regard to Vitamin A, the requirement is that the result should be 'positive'.
9. The learned Counsel also has a contention that even if the consignments were not in conformity with the requirement for use as food, there would be no violation of Section 111 (d) of the Customs Act, since non-edible grade vanaspati is eligible for import for use in industrial products. The learned Counsel would point out that the only difference in regard to Sri Lankan imports is with regard to rate of duty and no prohibition under law is involved.
10. As regards the test reports, the submission of the learned Counsel is that it is well settled that test reports of an authorized government laboratory cannot be rejected. Reliance, in this connection is placed on the judgment of the Hon'ble Supreme Court in case of Reliance Cellulose Products Ltd. v. Collector of C. EX., Hyderabad as , wherein the Hon'ble Supreme Court held as under:
12. These orders are now under challenge before this Court. We were referred to a number of test reports obtained by the appellant from various persons and on the basis of these opinion, the reports of the Departmental Chemical Examiner and also the Chief Chemist were assailed. We are of the view that the Assistant Collector cannot be said to have erred in relying upon the reports given by the Chemical given case, the report of the Chief Chemist may be demonstrated to be palpably wrong. In such a case, the Court may direct re-examination of the whole issue. But that is not the case here. It has not been shown that the Chemical Examiner or the Chief Chemist were in error in their analysis in any way. The views expressed by the Chief Examiner and Chief Chemist of the Government cannot be lightly brushed aside on the basis of opinion of some private persons obtained by the appellant.
11. Reliance is also being placed on the judgments of the Hon'ble Supreme Court in the case of Polyglass Acrylic Mfg. Co, Ltd. v. CC, Vishakhapatnam as reported in 2003 (153) E.L.T. 276 (S.C.), wherein the Court observed as under:
9. We have carefully considered the material on record and the contentions advanced on behalf of the parties by their learned Counsel. In our view the impugned order passed by the CEGAT is not sustainable and is therefore liable to be set aside. The Tribunal has rejected cogent evidence produced by the appellant on grounds which are not germane for the issue under consideration. The reasoning of the CEGAT is contradictory in as much as it accepts the report of the CRCL while ignoring a report from the IIT, New Delhi which was also obtained at the instance of the department. The reports in favour of the appellant by Government departments have been rejected on superfluous grounds. The reports produced by the appellant which it had obtained from official source clearly establish that there is no mis-declaration of goods and the imported goods are regenerated second grade MMM.
10. The Commissioner of Customs had given due weightage to the experiment conducted in his presence by the IIT Professor produced before him alongwith laboratory equipment by the appellant. This was however rejected by the Tribunal stating "how Commissioner ventured into such an exercise, there is nothing on record to show that he is a scientist competent to take any analysis". One need not be a scientist to appreciate a test report based on a test conducted in his presence by an expert from a prestigious institution like the IIT, New Delhi. The test was conducted in the presence of the departmental representatives and the Commissioner of Customs during the course of hearing. From the said test it has been opined that the goods in question were regenerated second grade MMM. The department neither objected to the test nor pointed out any defects in the test. Another reason for which the test conducted in presence of the Commissioner was decried by the CEGAT was that by the time the test was conducted on 10/12/1997 the sample would have polymerized. This was said in view of the report of GSFC Ltd., which had given similar opinion regarding a sample sent to it at a late stage. In our view this reasoning of the Tribunal is not correct. If the test was not possible, the testing authority could have said so rather than going ahead with the test. The test was conducted in the presence of the Commissioner and other departmental representatives. It shows that the test was possible. The Tribunal has not given any cogent reason for rejecting the reports submitted on behalf of the appellant according to which the goods in question are established to be regenerated second grade MMM. In fact, it was vehemently argued before us that identical goods were allowed to be cleared by the Customs Department at other ports/ICDs as regenerated second grade MMM. This argument remained unrefuted and undisputed.
12. An important fact overlooked by the Tribunal is that because of an earlier report of the CRCL with respect to the Delhi consignment to the effect that it was unable to test the samples for regenerated second grade MMM, the department had sent samples from the Delhi consignment to the IIT, Delhi and the IIT, Delhi vide its report dated 18-7-1996 had opined that the goods were of regenerated second grade quality. This report had been placed on record. The CEGAT accepted the fact that the goods forming part of the Delhi consignment were identical to the goods in question that is goods of were identical to the goods in question that is goods of the Ludhiana consignment. This IIT report left no scope to sustain the stand of the department. In our view the report obtained at the instance of the department itself had great force and it should not have been ignored.
12. The learned Counsel would also point out that the clearance of 8 out of the 15 containers, after being satisfied that the goods are edible grade, also shows that the appellant had not ordered or was being supplied with non-edible grade Vanaspati. He would point out that a mere disagreement among laboratories in regard to details of composition is no ground for holding that a consignment is offending.
13. The learned Counsel would further point out that there was no ground whatsoever in the facts of the case for invoking 111 (m) and 111 (o) of the Customs Act. It is being highlighted that the notice and the adjudication nowhere questions, the purchase price so as to attract provisions for 111 (m) or of any conditions regarding use so as to attract the provisions of 111 (o).
14. As regards penalties, the contention of the learned Counsel is that person liable to penalty under Section 112 is any person who does or omits to do any act which act or omission would render imported goods liable to confiscation under Section 111 of the Customs Act. The contention of the learned Counsel is that in the present case, there is no evidence that the appellant had done any act or omitted take any steps which rendered the goods liable to confiscated. He would emphasise that the goods were purchase on a bonafide belief that the consignment was edible grade and on test by the authorized food testing laboratory, it was found to so also.
15. As regard the penalties imposed on the appellants, the submission is that while no penalty was justified on the importing firms/company, the question of penalty could not arise at all against any officers of the importing firm/company as they have not been found involved in any offence. It is also being pointed out that separate penalty is not imposable on a firm and its partner.
16. Learned SDR would contend that the appellant had accepted the impugned order which granted them permission to release the goods for export. It is his contention that after having accepted such a conditional redemption opportunity, they cannot challenge the confiscation in appeal. He would rely on the decision of the Larger Bench of this Tribunal in the case of Hemant Bhai R. Patel v. CC, Ahmedabad as in support of his contention.
17. As already noted, the confiscation in the present case is for violation of the provisions of Section 111 (d), (m) and (o) of the Customs Act. The violation found is that the HVO consignment did not conform to the requirements under Food Adulteration Act. That finding is entirely suspect. The authorities had cleared 3 containers without any test at all. Subsequently, samples were sent to 3 laboratories and all the 3 laboratories had agreed in regard to the quantities loaded in 5 containers. In relation to the remaining 7 also, the analysisin Punjab Food Laboratory, Chandigarh had found the samples to be answering the requirements. And this is a laboratory specifically set up by the Government to test food samples. That laboratories report remains rejected in favour of the test report of Sriram Institute of Industrial Research and Central Revenue, Chemical Laboratory.
18. A reading of the reports and the finding of the Commissioner would show that the report of the Chandigarh Laboratory has been rejected quite improperly. The first ground is that it did not maintain individual standardwise observations. Such a finding has been reached without summoning the record of laboratory and without examining the testing experts. A laboratory cannot be expected to enclose its work sheets along with every report. Therefore, a report cannot be rejected for the reason that its work sheets did not accompany the report. There is also no allegation or finding that the record of the laboratory had been suppressed or the report is any way favouring the appellant. The second observation that the report did not indicate the quantum of Vitamin A is not relevant in as much as the requirement under the specification is only that the sample should answer 'positive' to test.
19. The learned Counsel for the appellant has brought out the legal position as regards the certificates of Government laboratories. Suffice it to say, these are not to be rejected except for compelling reason. No such reason is forthcoming. The present is a case, where laboratory reports differ. The issue that arises is whether, in such a case of disagreement, the decision should be in favour of the assessee or the Government. Where the evidence is not conclusive, the benefit should go to the citizen. In the present case, there are other factors also. In regard to 8 containers of the same consignment of 15 containers, goods were earlier released. There is no evidence that any of the goods so released were subsequently found to be adulterated in any manner or that any harm came on their consumption. This also goes to show that this is merely a muddle created by difference of opinions, rather than any offence committed by the appellant. Experts differ, trade and consumers suffer.
20. While the above is the position in regard to Section 111 (d), clearly, there is no material to support confiscation under 111 (m) & (o). 111 (m) relates to where imported goods do not conform to the declared value. There is no finding that the transaction value was not at the (sic) value. Therefore, this sub-section was not attracted. The import was not subject to any post import condition. Therefore , Sub-section (o) also is not attracted.
21. In view of what is stated above, I am clearly of the opinion that there was no violation of Section 111 (d), (m) or (o) in regard to the imported goods by the appellants. In this view of the matter, confiscation of the imported goods is not sustainable. When confiscation is not sustainable, penalties also become not sustainable.
22. In the result, the confiscation and penalties under the impugned order are set aside and the appeals are allowed with consequential relief to the appellant. The appellants shall be entitled to the return of the redemption fine paid.
(Dictated and pronounced in open court)