Customs, Excise and Gold Tribunal - Delhi
Oil Dale Trading Pvt. Ltd. Ltd. vs Collector Of Customs on 1 January, 1983
Equivalent citations: 1983ECR1207D(TRI.-DELHI), 1983(14)ELT1835(TRI-DEL)
ORDER
S. Venkatesan, Sr. Vice-President
1. This is a revision application (hereinafter called "appeal") filed before the Central Government which under Section 131B of the Customs Act, 1962, stands transferred to this Tribunal to be disposed of as if it were an appeal presented before the Tribunal.
2. The case was originally taken up on 4-4-1983 before a Bench with a composition different from the present Bench. On that occasion a point arose that the Bill of Entry in this case was in the name of M/s. Liberty Footwear Company and the refund application was also in their name, whereas the appeal to the Appellate Collector and the Revision Application to Government were made by M/s. Oil Dale Trading (P) Ltd. The question, therefore, arose as to whether M/s. Oil Dale Trading (P) Ltd., had a locus standi to file the revision application and to be heard in the matter. The learned Counsel for the appellants sought time for furnishing certain correspondence and material to establish the locus standi of the present appellants. This request was allowed, and an opportunity was also given to the learned Representative of the Department to file his reply on the written submissions of Shri Nankani on the question of locus standi. Accordingly, Shri Nankani filed his written submissions under his letter dated 19-4-1983, and Shri Sundar Rajan filed his reply in a note dated 13-6-1983.
3. The matter came up again on 22-6-83 before the present Bench, which proceeded to hear it de novo.
4. The question of locus standi was first taken up. Shri Nankani argued that the import licence for the goods had been issued to M/s. Liberty Footwear Company, who were an export house. In terms of the relevant provisions in para 107 of the Import Policy for April 1977-March 1978, they were permitted to dispose of the goods to actual users. Shri Nankani cited Clause 5(3) of the Import (Control) Order, 1955 which provides that the imported goods should be the property of the licensee at the time of import and thereafter upto the time of clearance through customs. However, there was a proviso that this condition would not apply in relation to licences issued to eligible export houses for import of goods meant for disposal to actual users under the Import Policy for registered exporters. Shri Nankani submitted that these provisions were intended to permit the sale of the goods covered by the licence to actual users on the high seas, and that this was what had been done in the present case. He produced copies of correspondence to show that the goods had been sold on the high seas by the licensee, M/s. Liberty Footwear Company to M/s. Oil Dale Trading (P) Ltd., the present appellants, and that, although the Bill of Entry was in the name of M/s. Liberty Footwear Company, they had endorsed the Bill of Lading in favour of the appellants and that payment of clearing charges etc., as well as the import duty was made by the present appellants. He, therefore, submitted that the appellants had the necessary locus standi to pursue the matter.
5. In addition, Shri Nankani pointed out that at the initial stage refund applications were filed separately both by M/s. Liberty Footwear Company and the present appellants. In the letter accompanying their refund claim, M/s. Liberty Footwear Company had informed the Assistant Collector that the goods were sold by them to the present appellants on high seas basis and also requested that the refund should be issued direct in favour of the present appellants. The Assistant Collector thus had two refund applications before him. Ultimately, in the order by which he rejected the refund claim the Assistant Collector had referred to the application filed by the present appellants, implying that he recognised their locus standi. Against this rejection they had filed an appeal to the Appellate Collector, who had entertained it (though he upheld the original assessment), without questioning their locus standi. Shri Nankani submitted that in these circumstances the locus standi of the present appellants should not be questioned at this stage.
6. For the Department, Shri Sundar Rajan argued that the present appellants had no locus standi and that they did not come within the meaning of the expression "person aggrieved" under Sections 128 and 131 of the Customs Act (prior to amendment). In this connection, he cited a number of judgments dealing with the significance of the expression "person aggrieved". He also referred to an Order No. B-294/83 of the Tribunal reproduced in 1983 ECR 773D (CEGAT). On a question of fact he submitted that the appellants had not produced a sale deed or its equivalent to show that they had purchased the goods on the high seas from M/s. Liberty Footwear Company.
7. From the evidence furnished by Shri Nankani it is obvious that the goods were subject of a "high seas" sale to the appellants, who had paid the duty, the refund of which now is being claimed. It could have been expected that they would have filed the Bill of Entry in their own name, in which case no doubt regarding their locus standi would have arisen. But even otherwise it is clear that the appellants have cause to be aggrieved by the orders of the authorities below. This case is clearly distinguishable from those which were the subject-matter of the authorities cited by the learned Representative of the Department. Apart from this, when separate claims were filed by the appellants and by M/s. Liberty Footwear Company it was the Department which chose to deal with the claim filed by the present appellants. The Appellate Collector also entertained and disposed of their appeal to him. If they could be accepted as "persons aggrieved" for an appeal under Section 128, it would be contradictory and unjust to hold that they were not "persons aggrieved" for the purpose of a revision application. In the circumstances we hold that the appellants have the necessary locus standi in the matter.
8. Shri Nankani then turned to the merits of the case. The question involved is whether the Customs authorities were justified in levying countervailing (additional) duty on the goods, with reference to Item 11A of the Central Excise Tariff Schedule. In this connection, Shri Nankani pointed out that the Order-in-Original did not discuss the merits of the assessment. In the Order-in-Appeal, it has been held that the goods, described variously as Petrolatum, Petroleum Jelly or White Protopet I-S (proprietary name) are covered by the term "Greases" under Item 11A of the Central Excise Tariff, but no reasons have been given for holding that the substance is a grease. Shri Nankani referred to the description of "grease" as contained in the Encyclopaedia Britannica, which shows that it is basically meant for lubrication, as distinct from "petrolatum" or "petroleum jelly" which has been separately dealt with in the same work. The latter substance is said to be used principally as a protective dressing or ointment and as a substitute for fats in cosmetics and other ointments. It has been further stated that petrolatum is also used in many types of polishes and in lubricating greases, rust preventives, and modelling clay. Shri Nankani submitted that it was quite clear from these entries that petrolatum was not itself a grease. He also cited Webster's Third New International Dictionary, where again petrolatum was shown separately from grease, and its uses shown as similar to those listed in the Encyclopaedia Britannica.
9. Shri Nankani placed strong reliance on a Tariff Advice of the Central Board of Excise and Customs (T.A. No. 36/82 dated 13-7-82) according to which "white petroleum jelly I.P. would merit classification under T.I. 68 of CET". He referred to the technical literature relating to the goods imported by the appellants, namely "White Protopets I-S", to show that this was petrolatum satisfying the requirements of the U.S.P. Since the U.S.P. should be deemed to be at least equivalent to the I.P., he argued that the imported goods were classifiable for purposes of countervailing duty under Item 68 CET in terms of the Board's Tariff Advice. He further argued that the goods could be considered as a drug or a drug intermediate and therefore covered by the specific exemption for such goods under Item 68. However, it was observed that if the goods were classifiable under Item 68, they were in any case not liable to countervailing duty at the time of importation (on or about March 1978) since at that time no countervailing duty with reference to Item 68 CET was leviable on any imported goods.
10. A point was also raised as to whether petrolatum is directly derived from the refining of crude petroleum. This is not material for deciding the present case and need not, therefore, be further referred to.
11. On behalf of the Department, Shri Sundar Rajan asserted that petrolatum was a "grease" and, therefore, fell within item 11 A. He was asked what the definition of a grease was and how petrolatum could be held to fall within that definition. Shri Sundar Rajan had no specific submissions in this regard.
12. Shri Sundar Rajan was asked whether in view of the Board's Tariff Advice No. 36/82 he wished to dispute that the goods would be classifiable under Item 68 GET. Shri Sundar Rajan asserted that they would not fall under that item. He argued that in order to justify classification under Item 68 the goods should have been covered by a licence from the Drugs Controller of India. He also argued that the appellants had never claimed that the goods were a pharmaceutical product. (Shri Nankani fairly conceded that it was not his case that the goods had been used for pharmaceutical purposes. However, according to him classification under Item 68 did not require that the end use should be for pharmaceutical purposes). Shri Sundar Rajan referred to the endorsement on the Bill of Entry to the effect that the goods were "not medicated or perfumed". According to Brady's "Materials Handbook", petrolatum could be used as ointment when highly refined. The test report of the Custom House Laboratory on the goods only showed that they had the characteristics of petroleum jelly. Nothing was said about the degree of purity etc. Therefore, according to him the goods could not be considered to be of pharmaceutical grade, and their classification for Central Excise purposes under Item 11A CET was correct.
13. We have carefully considered the arguments advanced by both sides. As pointed out by Shri Nankani, there is no reasoning in either the Order-in-Original or the Order-in-Appeal to show why the goods were held to be a "grease". The extracts furnished by Shri Nankani on the Encyclopaedia Britannica and Webster's Dictionary support his contention that petroleum jelly is. not in itself a grease.
14. It is also relevant to note that the Central Board of Excise and Customs has considered white petroleum jelly I.P. to be classifiable under Item 68 CET. The goods in question are white petroleum jelly of U.S.P. standard, which must be considered as at least equivalent to I.P. standard. No doubt the Board's Tariff Advice is not binding on us, but it does have persuasive value, particularly when we find that no grounds worth the name have been advanced by the authorities below for classifying the goods as "grease" under Item 11 A. We are not convinced by the arguments advanced by Shri Sundar Rajan against applicability of Board's Tariff Advice to these goods. In referring to "I.P.", that Tariff Advice seems to proceed on the basis that goods of pharmaceutical grade and purity would be taken out of the scope of Item 11 A; it does not follow that they must necessarily be used for pharmaceutical purposes. Taken to its logical conclusion, Shri Sundar Rajan's argument would mean that an additional condition should be added to the Board's Tariff Advice that assessment of petrolatum under Item 68 will be allowed only where the importers had a licence from the Drugs Controller for manufacturing or importing drugs. We see no justification for importing such a condition into the Board's Tariff Advice. So far as the Customs Laboratory Test Report is concerned, it appears that the question posed to the Laboratory was whether the goods answered to the description of petroleum jelly, and the reply was in the affirmative. The Laboratory was not asked about the degree of purity of the goods, or whether they conformed to I.P. or U.S.P. standards, and no adverse inference can be drawn because the test report did not refer to these aspects.
15. In the result, we find that the goods, namely white petroleum jelly of U.S.P. grade, were correctly classifiable for countervailing duty purposes under Item 68 of the Central Excise Tariff Schedule. At the relevant time no countervailing duty was leviable on goods falling under the said item. The levy of countervailing duty on these goods was, therefore, not correct. In the result we allow the appeal and direct that the countervailing duty charged on the "goods in question be refunded.