Custom, Excise & Service Tax Tribunal
(Iv) & (V) The Commissioner Of Customs & ... vs (Iv) & (V) M/S. Asia Pacific Commodities ... on 2 December, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No: C/410-412/2008, C/Cross/312/2010 in C/572/2008 & C/424/2008 (Arising out of (i) to (iii) Order-in-Appeal No: 2 to 4/2008 (V-II) Cus. dated 13.2.2008; (iv) Order-in-Appeal No.31/2008 (V-II) Cus. dated 13.6.2008; and (v) Order-in-Appeal No. passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Visakhapatnam-IV.) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes (i) to (iii) M/s. Asia Pacific Commodities Ltd. (iv) & (v) The Commissioner of Customs & Central Excise (Appeals), Visakhapatnam. Appellant Vs. (i) to (iii)The Commissioner of Central Excise & Customs (Appeals) Visakhapatnam. (iv) & (v) M/s. Asia Pacific Commodities Ltd. Respondent
Appearance Shri A. K. S. Murthy, General Manager (authorized representative) for the appellants.
Shri K. S. Chandrasekhar, authorized departmental representative for the revenue.
CORAM SHRI P. G. CHACKO, HONBLE MEMBER (JUDICIAL) SHRI B.S.V. MURTHY, HONBLE MEMBER (TECHNICAL) Date of Hearing: 02.12.2010 Date of decision: 02.12.2010 FINAL ORDER No._______________________2010 Per Shri P. G. Chacko (Oral) There are three appeals filed by the assessee and two by the Revenue, all against the appellate Commissioners order whereby the cases were remanded to the original authority for re-quantification of duty etc. The assessee had imported palm oil which was declared in two bills of entry as crude palm oil edible grade and in other bills of entry as others palm oil edible grade. Altogether 14 bills of entry were filed during the period from May 2004 to February 2005, amongst which bills of entry No.97 and 99 dated 21.2.2005 (wherein the goods were described as crude palm oil edible grade) claimed the benefit of Sl. No.34 of Customs Notification No.21/2002 dated 1.3.2002 as amended. The remaining Bills of Entry claimed the benefit of Sl. No.434 of the same Notification. Clause - A of Sl. No.34 in the table annexed to the above Notification (as amended) described the goods thus: crude palm oil and its fractions, of edible grade, having an acid value of 2% or more and total carotenoid (as ? carotene) in the range of 500 - 2500 mg/kg, in loose or bulk form. The expression crude palm oil and its fractions was defined in the explanation to this entry. Sl. No.434 of the table annexed to the above Notification described the goods as all goods. This entry also indicated certain tariff headings including 1511 90. The assessee claimed the benefit of this entry, which unconditionally prescribed 70% as the effective rate of duty for 2004 and 75% for 2005. On the other hand, the effective rate of duty prescribed against Sl. No.34 (Clause-A) was 80% for the relevant period and the same was conditional, the condition being that the importer should comply with the end-user condition by following the procedure set out under the Customs (Imports of goods at concessional rate of duty for manufacture of excisable goods) Rules, 1996. The following table would summarise the claim of the assessee:
Bill of entry No. & Date Sl. No. in Notification No.21/2002 as amended Effective rate of duty Condition 49/28.01.05 434 75% Nil 50/29.01.05 434 75% Nil 88/17.02.05 434 80% Nil 97/21.02.05 34A 80% 5 99/21.02.05 34A 80% 5 04/01.01.05 434 75% Nil 05/03.01.05 434 75% Nil 11/06.01.05 434 75% Nil 15/08.01.05 434 75% Nil 16/10.01.05 434 75% Nil 17/11.01.05 434 75% Nil 20/12.01.05 434 75% Nil 264/29.05.04 434 70% Nil 265/31.05.04 434 70% Nil At the request of the assessing authority, the Port Health Officer drew representative samples of the goods for being tested at the State Governments Regional Laboratory, Visakhapatnam. At the same time, similar samples were drawn by the assessing authority and dispatched to the departmental laboratory, Visakhapatnam. The report received from the Regional Laboratory indicated the acid value of the samples to be less than 10%, whereas the report received from the Chemical Examiner of the department indicated the same parameter to be more than 10%. The Chemical Examiners report further indicated the carotenoid concentration (in mg per kg) to be in the range 433 to 460, i.e., beyond the permissible range for Sl. No.34 of the Notification. The assessing authority, after giving the assessee an opportunity of being heard, finalized assessments by classifying the goods as Crude Palm Oil (Other than edible grade) under sub-heading 1511 10 00 of the Customs Tariff Schedule and, accordingly, quantified the amount of duty to be paid by them at tariff rate (100%). The duty so quantified was demanded under Section 28 of the Customs Act. Against the orders of the Assistant Commissioner, the assessee preferred appeals to the Commissioner (Appeals). In a common order passed by the appellate authority, it was held that two factors required to be determined before a decision could be taken for allowing the benefit of concessional rate of duty to the assessee. The first factor related to the standards prescribed in item A-17.15 and item A-17.19 of the PFA Rules, which prescribed the requirements of edible grade vegetable oil. The second factor which was required to be determined, accordingly to the appellate authority, was the carotenoid concentration in the oil. The learned Commissioner (Appeals) found that the Chemical Examiners report offered an answer to this question and he accepted that report in the absence of any other report on the same question. On the question whether the goods conformed to the standards of item A-17.15 of the PFA Rules regarding edible character of the oil, the learned Commissioner (Appeals) required the assessee to produce necessary proof before the original authority. In the result, the assessees appeals came to be allowed by way of remand by the Commissioner (Appeals) who directed the lower authority to redetermine the duty liability, if any, after satisfying himself that the goods conformed to the statutory specifications for being classified as palm oil of appropriate grade for purposes of the Notification.
2. In the assessees appeals, one of the grievances of the appellant is that natural justice was denied to them inasmuch as no copy of any of the test reports had been supplied to them. Another grievance raised in their appeals is that the learned Commissioner (Appeals) travelled beyond the scope of the dispute by holding that the carotenoid concentration in the oil also needed to be ascertained. The assessee, in the prayer portion of their memorandum of appeals, has also described the appellate Commissioners remand order as not maintainable. In the Revenues appeal, the main ground raised by the appellant is that the learned Commissioner (Appeals) did not have the power of remand and hence passed the impugned order without jurisdiction.
3. Both sides have made submissions in support of the respective grounds. The authorized representative of the company has also informed us that an earlier appeal of theirs involving the same dispute was allowed by way of remand by this bench after noting that the appellate Commissioners order, which was impugned in that appeal, had been passed without jurisdiction. We have been given a copy of Final Order No.559/2009 dated 30.4.2009 in Customs Appeal No.659/2008 (M/s. Asia Pacific Commodities Ltd.). On a perusal of this order, we note that the lower appellate authority had passed a similar remand order in respect of crude palm oil imported by the same assessee and that the assessees appeal against that order was allowed by way of remand by this bench. In the order cited by the authorized representative of the company, this bench noted that the Commissioner (A) had no power of remand. Apparently, Final Order No.559/2009 was accepted by the department also and the matter remanded by this bench is pending before the Commissioner (Appeals).
4. It is not in dispute that the learned Commissioner (Appeals) did not have the power of remand when he passed the impugned order. However, there will be nothing wrong in ascertaining whether the reasons recorded by the Commissioner (Appeals) for a remand of the whole dispute to the original authority are valid or not. In this context, we find that the instant case is fit for remand to the original authority inasmuch as certain crucial aspects were overlooked by that authority while passing the Orders-in-Original. The original authority classified the goods under sub-heading 1511 10 00 of the Customs Tariff Schedule and proceeded to finalise the assessment on all the bills of entry overlooking the fact that the claim of the importer was not uniform in all the bills. In two of the bills of entry, the importer had claimed the benefit of Sl. No.34 of the table annexed to Customs Notification No.21/2002 while, in the remaining bills of entry, their claim was under Sl. No.434 of the said table. Classification was relevant to Sl. No. 434 only. Insofar as Sl. No.34 (A) is concerned, the question to be considered was whether the imported goods matched the description crude palm oil and its fractions, of edible grade, having an acid value of 2% or more and total carotenoid (as ? carotene) in the range of 500 - 2500 mg/kg, in loose or bulk form. This would indicate that it was necessary to ascertain the acid value as also to determine the carotenoid concentration. In other words, the authorities were within their jurisdiction to determine the carotenoid concentration in the oil. It cannot be said that the Commissioner (Appeals) travelled beyond the scope of the dispute. It was the Chemical Examiners report which offered the carotenoid concentration in the palm oil samples. This aspect was not examined by the State government laboratory. However, in this context, we have to take note of the apparent fact that the original authority did not supply a copy of the Chemical Examiners report to the assessee. Had it been supplied, the assessee would, perhaps, have thought of demanding retest by the Central Revenue Chemical Laboratory. We have also noted that any copy of the other report was also not given to the party. We are told that these reports were only shown to them by the original authority at personal hearing stage. The rules of natural justice demand that any document which the adjudicating authority wants to rely on against the assessee should be supplied to them so that they would be in a position to make an endeavour to show that the document is not reliable as evidence. In this case, therefore, natural justice was denied to the assessee to some extent as rightly pointed out by the authorized representative. This is one reason which impels us to remand the case.
5. It appears from the memo of appeals filed by the Revenue that the appellant is not inclined to accept the acid value reported by the State government laboratory. On the other hand, the Chemical Examiners report on carotenoid concentration is against the assessee. As we have already noted, the assessee should be given an opportunity of contesting the Revenues case after getting copies of both the reports, by taking recourse to such legal remedy as available to them. This is another context in which we feel the necessity to remand the case.
6. The assessee declared the goods as crude palm oil. Crude palm oil is squarely classifiable under sub heading 1511 10 00 of the Customs Tariff Schedule and the same would not attract Sl. No.434 of Customs Notification No.21/2002. However, the assessee cannot be denied the right to claim the benefit of an alternative entry of the same Notification. They did claim the benefit of Sl. No.34 of the said Notification in two of their bills of entry. In respect of other bills of entry also, they are entitled to claim the same benefit for valid reasons. Today, the authorized representative has claimed this benefit. Therefore, in our considered view, the original authority should pass fresh orders on all the bills of entry after considering the question as to whether the assessee satisfies the requirements of Sl. No.34 of Customs Notification No.21/2002. Needless to say that they should be given a reasonable opportunity of being heard.
7. In the result, we allow all the appeals by way of remand, after setting aside the appellate Commissioners order on the jurisdictional ground. The original authority shall pass fresh orders in the manner already indicated, as earlier as possible, at any rate within a period of three months from the date of receipt of a certified copy of this order.
(Pronounced and dictated in open Court) (B.S.V. MURTHY) Member (T) (P.G. CHACKO) Member (J) //rv// 10