Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Customs vs M.B.I. Chemicals on 27 June, 2003
Equivalent citations: 2003(159)ELT986(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. These Revenue appeals arise from a common Order-in-Appeal Nos. C.Cus. 965 to 967, dated 19-8-98 passed by the Commissioner (Appeals), Chennai holding that the imported item is crude iodine with 99.5 % content and 99.8% content and that they are not pure iodine. He has granted the benefit of Notification No. 23/94 (Sl. No. 3 of the Table) which extends the benefit to crude iodine. The Commissioner had earlier remanded the matter to the Asstt. Commissioner for reconsideration by Order-in-Appeal Nos. M.Cus. 1136 to 1138/96, dated 16-7-96. He had noted several points to distinguish the item "crude iodine" with "resublimed iodine" and had directed the authorities to reconsider the evidence produced by the importer to the effect that the imported item was crude iodine and not resublimed iodine and the crude iodine has a minimum percentage of iodine content to the extent of 99.5% to 99.8%. The crude iodine contains Sulphate to the maximum extent of 0.01%; Chloride and Bromide to the maximum extent of 0.003% and Iron to the maximum extent of 0.005%. It also tends to volatise into violet vapour at room temperature and its appearance is solid-laminated grayish black while resublimed iodine is in the form of small crystals with metallic lusture. These features had not been noted by the Custom House Laboratory and, therefore, the Commissioner (Appeals) directed the original authority to re-examine the issue afresh in the light of the technical evidence including the evidence culled out from the Encyclopaedia of Chemical Technology by Kirk Othmer, Volume 13, page 657, wherein it has been stated that crude iodine is packed in double polyethylene-lined fiber drums containing 45-90 kgs., whereas resublimed iodine is shipped in 11.3 kg. lined fibre drums and in 0.11, 0.45, and 2.26 kg. bottles. The importers had imported 1000 Kgs. of crude iodine in bulk and in drums and, therefore, the mode of packing indicated that it was a crude iodine and not resublimed iodine. The Commissioner also noted in the remand order that all the documents i.e. shipping documents, invoices and packing list clearly indicated the item to be crude iodine and there was no contest raised by the Revenue with regard to the declaration of the item as crude iodine.
2. On de novo consideration, the original authority rejected the importer's plea that the item is 'crude iodine' solely on the report of Central Revenues Control Laboratory, New Delhi (CRCL) to treat the purity of iodine at 99.5% to 99.8% as "other than crude iodine". It was also noted that as per the Indian Pharmacopoeia, the iodine to be considered as "Standard" (Pharmacopical Grade) if it is not less than 99.5% and not more than 100.5%. Solely on the basis of the opinion of CRCL, New Delhi taken in the conference of Heads of the Customs & Central Excise Laboratories, the original authority decided that the item is not crude iodine. However, he has not examined the point on which it was remanded and, therefore, the Commissioner (Appeals) in the impugned order, after due consideration of all the pleas, held that the imported item is crude iodine and not resublimed iodine. The findings recorded by the Commissioner is noted herein below :-
I find that the lower authority has not analysed the facts with reference to criteria distinguishing crude from resublimed iodine spelt out in the earlier order of remand. He has overlooked the fact that even if the goods conform to pharmaceutical standards, Indian or other, they could nevertheless be crude in view of the overlapping standards of purity. No details on impurities in the goods imported are available. The chemist's reports did not evaluate the samples to rule out that the goods were not crude. The conclusion that all iodine conforming to pharmaceutical standards are not crude is incorrect in the light of technical literature available to show that with high purity, crude iodine may as well pass the pharmaceutical grades. Minutes of the meeting of The 'Heads of Customs & Central Excise of Laboratories' reads, "6. CRUDE IODINE :
Deputy Chief Chemist, Madras raised this issue. He pointed out that Iodine imported (Chapter 2801.20) was eligible for exemption under Notification 149/86, dated 1-3-86. The samples received passes the specifications pharmacopaeial grade in respect of purity and accordingly, the report on such samples was Iodine other man crude iodine.
It was pointed out in the meeting that as far as possible, the laboratory report in such case should be more specific. If iodine conforms to the pharmacopaeial specifications, it should be mentioned in the report".
Thus, it would appear that the meeting wanted test reports to be more specific. Further, it wanted the fact of conformity to "pharmaceutical grade" mentioned in the report.
From these observation it does not follow automatically that all iodine of pharmaceutical grade are per se not crude. In the present case, the laboratory reports are not specific even though they categories the iodine to be of BP grade. In other words, the reports do not mention the type and percentage of impurities, if any. Thus, they lack the data on the basis of which the lab has arrived at the conclusion that the goods are not crude iodine. The technical issues raised by the appellants have not been met. Further, the test reports finding the goods to be in the form of dark gray flakes and grayish purple plates and powder would indicate that goods were not resublimed iodine which would be crystals with metallic lustre. Packings in 50 kgs. indicate the crude nature. In any case it is not the case of the lower authority that the appellants misdeclared the goods to be 'crude' with a view to avail the concessional rate and evade higher duty. The lower authority has not adduced any reason to reject the certificate of origin. The orders of the lower authority are bereft of data to distinguish that the goods are resublimed and not crude as declared.
The orders are set aside and the appeals are allowed.
3. Revenue has contested this finding on the ground that the technical opinion taken in the meeting of Heads of Central Excise & Customs Laboratories held at New Delhi on 27/29-4-1993, that the iodine with purity between 99.5% and 100.5% is required to be considered as "other than crude iodine" by the authorities for denying the benefit of the exemption. It is stated that in terms of the report of CRCL, the item is of "pharmacopical grade" requiring the item to be treated as "other than crude iodine". Further, reference is made to the test report of Dy. Chief Chemist, Chennai, which indicates that the item in question is in the form of 'Gray Flakes' and it conforms to any pharmocopical standard and it is not in crude form. It is stated that it is admitted that the item though does not conform to the US pharmacopoeia which specifies the iodine content should not be less than 99.8% for pharmacopical standards, however, it is stated that the Indian Pharmacopoeia prevail over the US Pharmacopoeia. It is also admitted in the grounds of appeal that the Encyclopaedia of Industrial Chemical Analysis (Vol. 14, Page 590) indicates that crude iodine is subject to manufacturer's specification and generally exceeds 99% purity (pharmaceutical 'standards' differ from country to country).
4. We have heard Shri A. Jayachandran and Shri P. Devaludu, learned JDRs for the Revenue and Shri N. Venkatraman, ld. Advocate accompanied by Shri A. Vijayaraghavan, ld. Consultant for the respondent-importer.
5. Ld. DR contended that the opinion of CRCL should prevail to consider the item to be "other than crude iodine". It satisfies the Indian Pharmacopoeia in view of its percentage and in terms of the ruling rendered by the Government of India in the case of United Exports - 1993 (68) E.L.T. 709 (GOI), the Indian standards should prevail upon the foreign one in the event of doubt between the Indian and Foreign standards. He submitted that as the Indian pharmacopoeia have laid down the purity for crude iodine at 99.5% to 99.8% , and as the import documents clearly indicates its percentage, therefore, it should be considered as an item "other than crude iodine". He also submitted that the Apex Court in the case of Amrutanjan Ltd ` CCE - 1995 (77) E.L.T. 500 (S.C.), held that when the letters "IP" are affixed on an article, it demonstrates that it is of pharmaceutical quality and is usable in medicinal preparations. Ld. DR contended that once the purity is established, then the opinion of the CRCL, New Delhi is required to be accepted to treat the item as "resublimed iodine" and "other than crude iodine".
6. Ld. Counsel in reply referred to the order of remand wherein the Commissioner had clearly given directions to the authorities to examine the technical literature on record. He submits that the authorities below did not look into this aspect but merely on the basis of opinion of Heads of Laboratories Meeting held at CRCL, New Delhi has considered the item to be 'other than crude iodine' in the absence of an evidence of test report or any evidence placed by the Revenue. He submits that documents of import clearly indicates that the importer had imported crude iodine and its purity at 99.5% to 99.8% does not make it 'resublimed iodine'. He referred to the technical literature from the extracts of Encyclopaedia of Industrial Chemical Analysis (Vol. 14, Page 590), wherein the specification of commercial grade and that of crude iodine has been given. He pointed out that the packing of commercial crude iodine is done in double polyethylene lined fibre drums containing 45 to 90 kgs., whereas they had imported 1000 kgs. in packings of 50 drums. While page 657 of the Encyclopaedia Chemical Technology by Kirk Othmer, Vol. 13 clearly indicates that resublimed iodine is shipped in 11.3 Kgs. lined fire drums and in 0.11, 0.45, 2.26 Kg. bottles. He pointed out the difference in the specifications and standards between these two items from this literature and from the evidence on record and submitted that it is not resublimed iodine but it satisfied the norms for crude iodine. He submitted that the authorities had not examined the issue and nor got the test results done in this light. He further referred to page 25 of extract of US Pharmacopoeia with regard to iodine wherein also it clearly indicated all the difference between the crude iodine and pure iodine. Further, it referred to the manner of packing and storage. He referred to the certificate issued by M/s. ISE Chemicals Corporation, Tokyo, Japan which clearly indicated that iodine is obtained from brines in Japan, which occurs naturally. He pointed out that the item has been imported from Japan and they were crude iodine. He also referred to the technical opinion of Head of the Department of Chemistry, IIT Madras vide letter dated 20-4-1993 who have certified that the Pure Iodine should contain iodine assay greater than 99.99% and should be free from nonvolatile matter and chloride and bromide. It further states that any iodine containing these impurities is considered as crude iodine. He pointed out to the invoice which clearly indicated that the item is crude iodine imported to the extent of 1000 Kgs. The packing list also indicated the item to be crude iodine imported from Japan in 50 kgs. fibre drums. The invoices also indicated clearly the item to be crude iodine. He submits that there is clear price difference between crude iodine and resublimed iodine. He submits that the item was imported for the purpose of salt iodation and in view of practical difficulty faced by the importer, the Government has amended the notification and has removed the word "crude" by Notification No. 15/95. He also referred to the Extract of British Pharmacopoeia and the Extract of Pharmacopoeia of India to strengthen his arguments. He referred even to the test memo which clearly described the item as crude iodine and there was no indication that it was having purity of resublimed iodine. There was no indication that it was free from all impurities. There was no categorical finding by the Chemical Examiner that it was a resublimed iodine. There was a question of impurities raised by the importer which has not been answered by the Chief Chemist. He referred to the back of the Bill of Entry which clearly referred the item as "Iodine Crude purity 99.5%" 'as marked on drums'. He submits that there was no charge or allegation of mis-representation or mis-declaration of the item and Revenue has not proved that the importer attempted to avail of the benefit of notification by mis-declaration. He also submitted that there was clear difference in the value of pure iodine and crude iodine. He submitted that the Commissioner in the impugned order has noted the difference of value to a range of $ 18 to $ 20. He also referred to the judgment of the Tribunal rendered in the case of Sesu International v. CC, Calcutta - 1997 (96) E.L.T. 610, wherein the Tribunal in the light of Apex Court judgment rendered in Hico Products ltd. v. Collector - 1994 (71) E.L.T. 339 (S.C.) held that merely because a product satisfies the standards of identity, purity and strength prescribed in a recognised pharmacopoeia and is capable of being used as a drug, it does not by itself follow that the product is a drug ousting its other uses to which the said product is put to. The Tribunal further held that a finding whether a product under consideration is a drug or chemical has to be arrived at after taking into account all other attendant facts and circumstances available in a case. He also submitted that the Apex Court judgment rendered in the case of Amrutanjan Ltd. v. CCE (supra) was not against the importer but in fact supports his plea. He contended that the Apex Court referred to use of letters "IP" though of pharmaceutical quality yet it was usable in Ayurvedic medicine and it required to be accepted as Ayurvedic product. He submits that likewise in the present case merely because the item has got 99.5% purity it does not satisfy the test of resublimed iodine.
7. We have carefully considered the submissions made by both sides and have perused the records. The Commissioner has already arrived at the conclusion based on the evidence of scientific nature as well as on the basis of import documents that the item is crude iodine. The percentage of purity 99.5% to 99.8% has not influenced the Commissioner to reject the item as "Other than crude iodine". Further, the very import documents itself clearly indicated that crude iodine is imported from Japan and the present item has been imported in quantity of 1000 kgs. The same has been packed in 50 Kgs. net fibre drums and the documents including the packing list, Bill of Entry, invoices clearly indicated that the item is crude iodine packed in 50 Kg. net fiber drums. It has been demonstrated from the technical literature, of Encyclopaedia Kirk Othmer that crude iodine is packed in 45-90 Kgs. while resublimed iodine is shipped in 11.3 Kg lined fiber drums and in 0.11, 0.45 and 2.26 Kg. bottles. The Commissioner in the impugned order had clearly directed the authorities to draw fresh samples from the similar items which have been imported in view of sample not being available and no specific finding given with regard to purity. On the test memo, specific question was raised with regard to impurities. The Chief Chemist has not indicated impurities present in the samples. The item has been described as crude iodine by Chief Chemist in the test report but he has not given the details of the impurities. The technical opinion obtained from the Head of the Department of Chemistry, IIT, Madras shows that if there are non-volatile matter like chloride and bromide then it has to be treated as crude iodine. The Revenue has not raised any allegation of misdeclaration of the item in the shipping documents. Neither they have shown that the value of the imported item was undervalued. The department has also accepted the valuation in respect of this item. The respondent-importer have demonstrated before the Commissioner that the difference in value between crude iodine and resublimed iodine is to the extent of $ 18-20. This point has not been contested in the grounds of appeal. The grounds of appeal proceeded on the basis that the conference of Heads of Central Excise & Customs Laboratories Meeting held at CRCL, New Delhi took the view that iodine of purity of 99.5% to 99.8% should be treated as 'other than crude iodine'. This is a general opinion but the attendant circumstances and factors and technical opinion and the literature cannot be brushed aside. It has been demonstrated by the importer that the item in fact satisfied all the norms of impurities and the manner in which it has been packed and imported, proved the item to be crude iodine. The difference in value has also not been challenged. The Tribunal in the case of Sesu International v. CC, Calcutta (supra) has clearly noted that merely because of a product satisfies the standards of identity, purity and strength prescribed in a recognised pharmacopoeia and is capable of being used as a drug, it does not itself follow that the product is a drug ousting its other uses to which the said product is put to. Ld. DR relied on the judgment of Amrutanjan Ltd. v. CCE (supra). This judgment is of no help to the Revenue. In fact it merely lays down that a IP can be used both for medicinal and ayurvedic purposes. Likewise, in the Government of India decision rendered in United Exports (supra) in the event of doubt and difference between foreign standards and Indian standards, it is the Indian standard which should prevail. The technical literature clearly indicated that crude iodine also is of 99.5% to 99.8% purity but the nature of the product is required to be seen and the manner of its packing and its impurities. The importers have shown that the item has got impurities and it is packed in drums and that the technical literature clearly indicates that the imported item is 'crude iodine'. From the Pharmacopoeia of India-3rd Edition-Vol. I, it is seen that iodine is heavy, bluish-black, brittle, rhombic prisms or plates with a metallic lustre; odour, characteristic; volatile at ordinary temperatures while the crude iodine as in the present case is solid laminated grayish black ones. The test report also clearly indicates that the item is in the form of crude iodine. Revenue has not contested this material evidence and also has not shown that the importer had misdeclared in the shipping documents for availing the benefit of exemption notification. The declarations have been accepted so also the valuation. In a circumstance like this, the finding arrived at by the Commissioner is legal and proper and there is no infirmity in the same. The said finding is required to be accepted by rejecting the appeals filed by Revenue. Ordered accordingly.