Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Customs vs K.T.V. Oil Mills on 13 December, 2004
Equivalent citations: 2005(182)ELT376(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. This application filed by the Revenue (Appellant) seeks stay of operation of the impugned Order of the Commissioner (Appeals). After examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of. Accordingly, after rejecting the application, we proceed to deal with the appeal.
2. The respondents imported what they declared as "Crude Palm Kernel Oil" and filed a Warehousing Bill of Entry on 3-3-2004 for removal of the goods to Warehouse. Samples of the goods were drawn on 3-3-2004 itself and sent to the departmental Chemical Laboratory, Tuticorin for assay of Free Fatty Acid (FFA) content. This was necessary as the rate of Customs duty payable by the importer depended on FFA content. If FFA percentage assessed in terms of Palmitic Acid was less than 0.5, duty was recoverable on the goods at the rate of 85%, and if it was 0.5 or more, the appropriate rate of duty was 75%. The respondents claimed FFA content to the extent of 2.99% in terms of Lauric Acid, which claim was based on an overseas test report. This claim was not accepted by the Dy. Commissioner of Customs, who proposed to assess the goods to Customs Duty at 85% on the basis of the test report furnished by the Asstt. Chemical Examiner, Tuticorin, who reported that the FFA content in terms of Palmitic Acid was less than 0.5. The assessee wanted a re-test of the remnant sample. This request was turned down by the Deputy Commissioner, who finalized his assessment for Customs duty @ 85%. This decision of the Dy. Commissioner was taken in appeal to the Commissioner (Appeals) and the latter passed the impugned Order, whereby the assessee was allowed to pay duty provisionally @ 75% on execution of bond and the assessment was directed to be finalized after obtaining test report on samples to be drawn afresh. Ld. Commissioner (Appeals) directed that fresh samples be tested in the Customs House Laboratory Chennai or in the Central Revenue Control Laboratory (CRCL), New Delhi "as per the hierarchy". It appears from the records that fresh samples of the imported goods were drawn pursuant to the Order of the Commissioner (Appeals) while the consignment was done on 24-3-2004, the date on which the oil was cleared from Warehouse.
3. The Revenue has challenged the Order of the Commissioner (Appeals) mainly on the ground that there was no provision for drawings fresh sample for chemical test and what was permitted by the Appraising Manual was only retesting of remnant sample. Ld. DR submits that neither Section 144 of the Customs Act nor any provision of the Appraising Manual permitted fresh sampling for chemical test after the original sample was tested and reported on. Ld. DR also refers to certain correspondence between the Customs House and the Laboratory. One of these letters is one dated 4-6-2004 of the Director (Revenues Laboratories), Central Revenues Control Laboratory, New Delhi, addressed to the Asstt. Commissioner (Import), Custom House, Tuticorin. This letter, inter alia, states that no purpose would be served by testing duplicate sample for FFA content after three months from draw of the sample. A subsequent letter dated 10-11-2004 of the Asstt. Chemical Examiner, Customs House Laboratory, Tuticorin addressed to the Asstt. Commissioner (Import) has also been referred by learned DR. This letter reports the Acid Value (as FFA in terms of Palmitic Acid) of the sample originally tested as 0.4 per cent by weight. Ld. DR has also referred to a more recent letter (25-11-2004) of the Asst. Commissioner (Review), Customs House, Tuticorin addressed to the JCDR attached to this Bench. In this letter, the Asst. Commissioner refers to a letter dated 25-11-04 of the Asst. Chemical Examiner and shows that FFA content in Palm Kernel Oil, determined in terms of Palmitic Acid, could be converted to FFA in terms of Lauric Acid by multiplying the former by 0.78125. This letter further states that the fresh sample drawn on 24-3-04 was not sent to the CRCL. Ld. DR submits that, in the absence of specific provision for drawing fresh sample and getting it tested directly by the Control Laboratory at New Delhi, the direction contained in the impugned Order for resampling and re-testing is not correct.
4. Ld. Consultant for the respondents submits that, if re-testing of the remnant sample or testing of a fresh sample is found to be not permissible or feasible for any reason whatsoever, the only option to the department is to finalise the assessment of the subject goods in view of the overseas test report coupled with the report of the Central Food Laboratory, Mysore. It is submitted that the Central Food Laboratory is the competent authority to test and report on Edible oils. According to their report, the Acid Value in terms of Palmitic Acid is 3.0. The overseas test report showed 2.99 as the FFA in terms of Lauric Acid, which, if converted by multiplication with the relevant factor (1.28), would yield FFA content of 3.83 in terms of Palmitic Acid. Ld. Consultant has submitted that there is no reason whatsoever to doubt the authenticity of the report issued by the Central Food Laboratory and, therefore, the assessment on the subject goods is liable to be finalised on the basis of this report.
5. After carefully considering the rival submissions, we find that, in the facts and circumstances of the case, any testing of the fresh samples drawn on 24-3-04 would not yield any reliable results inasmuch as it has already been clarified by the Central Revenues Control Laboratory, New Delhi that any analysis after a period of 3 months from the date of draw of sample would not serve any purpose. This expert opinion cannot be ignored. The fresh sampling was done on 24-3-2004 and, already, a period of 9 months has elapsed since then. There is no point in getting these samples tested. The situation is worse insofar as the remnant sample is concerned. In the circumstances, the direction issued by the Commissioner (Appeals) for re-test is not capable of being carried into effect. What remains to be done in this case is to permit finalisation of assessment on the basis of the report of the Central Food Laboratory, Mysore. The competence of this authority has not been questioned even by the Revenue. The report of this laboratory is that the Acid Value of the Palm Kernel Oil imported by the respondent is 3.0. This report also says that the sample conforms to the standards laid down for Palm Kernel Oil under the Prevention of Food Adulteration Act and Rules thereunder and, further, that the oil shall be refined before it is supplied for home consumption. This report virtually certifies the goods to be Crude Palm Kernel Oil. In view of the FFA content reported by the Central Food Laboratory, the Crude Palm Kernel Oil shall be assessed to duty at the rate of 75%.
6. In the result, the Order of the Commissioner (Appeals) directing assessment of the goods to duty at 75% is affirmed but such assessment shall be treated as final. His direction for re-sampling and re-testing is set aside. The Order will stand modified accordingly. The appeal is disposed of.