Custom, Excise & Service Tax Tribunal
Birbhum Oil Industries Pvt Ltd vs Commissioner-Kolkata(Prev) on 21 May, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.1
Customs Appeal No.75201 of 2020
(Arising out of Order-in-OriginalNo.23/CUS/CC(P)/WB/2019-20 dated25.02.2020
passed by Principal Commissioner of Customs (Prev.), West Bengal.)
M/s.Birbhum Oil Industries Pvt.Ltd.
(Village Nandora, P.O. Parulia, P.S. Mayureshwar, District: Birbhum, West Bengal,
Pin-731218.)
...Appellant
VERSUS
Commissioner of Customs (Preventive), West Bengal, Kolkata
.....Respondent
(15/1, Strand Road, Custom House, Kolkata-700001.)
APPEARANCE
Shri Ankur Upadhyay, Advocate for the Appellant (s)
Shri S.Debnath, Authorized Representative for the Revenue
CORAM:HON'BLE SHRI R. MURALIDHAR, MEMBER(JUDICIAL)
HON'BLE SHRI RAJEEV TANDON, MEMBER(TECHNICAL)
FINAL ORDER NO. 76475/2025
DATE OF HEARING :21.05.2025
DATE OF DECISION :21.05.2025
Per :R. MURALIDHAR :
The Appellant has imported 100 MTs of "Crude Rice Bran Oil"
from Bangladesh. They have classified the goods under H.S. Code
No.15159099 and 15159000. They have claimed the benefit of
exemption under Notification No.21/2002-Cus dated 01.03.2002 as
amended by Notification No.42/2008 dated 01.04.2008 (Sr.No.33A).
After importation of the said goods a Show Cause cum Demand Notice
was issued to the Appellant on the ground that the acid content was
more than 20% and hence the goods was not treated to be edible. After
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due process, the Adjudicating authority confirmed the demand of
Rs.60,75,203/-. Being aggrieved, the Appellant is before the Tribunal.
2. The Ld.Counsel appearing on behalf of the Appellant submits that
the issue is no more res integra and an identical issue had come up
before the Kolkata Bench in the case of Kalyani Solvent Pvt.Ltd. vs.
Commissioner of Customs (Preventive), Kolkata [Final Order
No.76036/2025 dated 30.04.2025 in Customs Appeal No.75372 of
2020]. The Kolkata Bench has allowed the Appeal by setting aside the
impugned order. The Ld.Counsel submits that the issue is identical and
prays that the present Appeal may be allowed as per the ratio laid
down in this case law.
3. The Ld.AR for the Revenue reiterates the findings of the lower
authorities and submits that the acid content was more than 30%
because of which the oil cannot be treated as edible oil. He prays that
the Appeal may be dismissed.
4. Heard both sides and perused the records.
5. After going through the facts of the case, we find that the facts of
the present case are identical to that of cited case law of Kalyani
Solvent Pvt.Ltd., cited supra, wherein this Bench has held as under:-
6.3. In the impugned order it has been held that the acid content of the
crude oil imported is above 20% in most of the cases and hence the
imported crude oil cannot be considered as of 'edible grade'. We
observe that nowhere in the Notification 21/2002 Cus. dated
01.03.2002 has it been mentioned that the benefit of the said
notification would be available to the goods imported only if the crude
oil is edible at the time of its import. What is required is the crude oil
imported should be of 'edible grade' and it is used for edible purpose
after refining. We find that this point has been clarified by the Board by
means of various Circulars. In this regard, we find it apt to refer to the
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Supplementary Note (1) to Chapter 15 of the Customs Tariff Act, 1975,
which is reproduced below: -
"Supplementary Notes: 1. In this Chapter, "edible grade", in
respect of a goods (ie, edible oil) specified in Appendix B to the
Prevention of Food Adulteration Rules, 1955, means the standard
of quality specified for such goods in that Appendix."
6.3.1.Further, we also observe in this regard that the Regulation 2.2 of
the Food Safety and Standards (Food Products Standards and Food
Additives) Regulations, 2011 stipulates that the oil imported into India,
whether obtained by solvent extraction or otherwise, shall be supplied
for human consumption only after refining. The relevant extract of the
said Regulation is reproduced below: -
"Further, if the oil is obtained by the method of solvent extraction
and the oil imported into India whether obtained by solvent
extraction or otherwise, it shall be supplied for human
consumption only after refining and shall conform to the
standards laid down under regulation 2.2.1(16). The oil so
refined shall not contain hexane more than 5.00 ppm."
6.4. We observe that Board has clarified the issue vide Circular no.
29/97 dated 31 July 1997. For ready reference, the contents of the said
Circular is reproduced below:
Circular No. 29/97-Cus., dated 31-7-1997
[From F. No. 528/27/97-Cus. (TU)]
Government of India
Ministry of Finance (Department of Revenue)
(Tariff Unit) New Delhi
Subject : Scope of the term „vegetable oils of edible grade‟ in Sl.
No. 15 to Notification 11/97-Cus. - Regarding.
In terms of Sl. No. 15 to Notification No. 11/97-Cus., dated 1-3-
1997 „vegetable oils (other than coconut oil, RBD palm oil, RBD
palm kernel oil and palm stearin) of edible grade, in loose or bulk
form‟ are liable to concessional duty of customs @ 20% ad
valorem. Prior to 1-3-1997 these oils were liable to concessional
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duty in terms of Notification No. 8/95-Cus., dated 2-3-1995, and
Sr. No. 7 to Notifications No. 36/96-Cus., dated 23 7-1996.
2. A doubt has arisen regarding scope of the term „Vegetable oils
of edible grade‟ appearing in the said notification i.e. as to
whether this term will cover only those vegetable oils which are
fit for human consumption as it is imported or it will also include
the vegetable oils which are not fit for human consumption at the
time of import but will be fit for human consumption after further
processing.
3. The matter has since been examined in consultation with the
Ministry of Food, Department of Food, Directorate of Vanaspati,
Vegetable Oils and Fats, Ministry of Civil Supplies, Consumers
Affairs and Public Distribution and Department of Economic
Affairs. It is clarified that the term „vegetable oils of edible grade‟
will cover vegetable oils which are fit for human consumption at
the time of import as also the vegetable oils which are fit for
human consumption after further processing. The benefit of duty
exemption is admissible so long as the oil imported is used for
edible purposes, even after refining. Pending cases of
assessment may be finalised on the basis of above clarification.
************
6.5. From the above, we observe that the said Circular has clarified that the 'edible grade' need to be examined after the refining process and the oil which are used for refining and for making edible grade would qualify for the benefit of exemption notification. 6.6. We also observe that another clarification has been issued by Board vide Circular 40/2001, wherein it has been clarified that so long as the imported oil is used after refining for edible purposes, it will be eligible for the benefit of the exemption notification. For ready reference, the relevant paragraphs of the said Circular are reproduced below:
2. The issue has been examined in the Board and the circumstances in which the aforesaid Board‟s circular was issued also looked into. Further, consultations also have been made with the Ministry of Food & Directorate of Vanaspati. It is observed 5 Customs Appeal No.75201 of 2020 that Notification No. 17/2001-Cus., dated 1-3-2001 inter alia prescribes effective rate of duty for various categories of vegetable oils and in terms of Sl. No. 34 of the table annexed to the notification crude palm oil and its fractions of edible grade in loose or bulk form - attract customs duty at 75%. However, in terms of the same notification, Sl. No. 29 of the said table, goods (other than edible oils) falling under Heading Nos. 15.07 to 15.15 are liable to a concessional duty of 35%. Doubts arise as to the exact scope of terms other than edible oils and edible grade which are not defined in the said notification for the purposes of extending the lower duty or charging higher duty for palm oil. It is observed that in "Edible Oils Packaging (Regulation) Order, 1998" issued under Essential Commodities Act by the Ministry of Food and Consumer Affairs (Department of Sugar and Edible Oils) vide Notification G.S.R. 584 (E), dated 17-9-1998, the term edible oil means vegetable oils and fats and includes any margarine, vanaspati, bakery shorting and fat spread as specified in the Prevention of Food Adulteration Act, 1954 and rules made thereunder for human consumption. The PFA Act, 1954 has laid down the standards of crude palm oil and prescribed the maximum limit of the acid value for crude palm oil as 10.0.
3. Considering this definition one of the food and drugs laboratory after taking samples from a consignment of the imported crude palm oil -- which showed acid values varying from 13% to 18%, has opined that the samples do not conform to the standards of edible grade palm oil prescribed under PFA rules and is not edible as such. In another case, a chemical examiner relying upon the Board‟s 1997 Circular, even though the sample had acid values of more than 13%, took the view that it may be considered as edible oil as after processing it could be made fit for human consumption. The discussions with the officers of Department of Food and a critical look at the Board's Circular of 1997 reveals that when the question of extending concessional rate for edible oils was examined in consultation with the Ministry of Food in 1997, for granting concessional rate for edible oils, it is the end use which was finally stressed. The 6 Customs Appeal No.75201 of 2020 definition of edible oil in "Pulses, Edible Oilseeds and Edible Oils (Storage Control) Order, 1977" also is worth noting in this regard and it says edible oil means any oil used directly or after processing for human consumption and include hydrogenated vegetable oils.
4. It may be observed that this definition does not make every crude palm oil straightway to be termed as edible oil for the purposes of the aforesaid order. It is to be noted that the oil should not only be capable of being used after processing for edible purposes but the definition also contemplates that such oil after refining should be used for edible purposes. In fact, in the Board‟s Circular this aspect had been clearly mentioned and highlighted in the last para when clarifying the scope of the term vegetable oils of edible grade in Serial Number 15 to 11/97-Cus., dated 1-3 1997, for giving the concessional rate. In other words, the benefit of the concessional rate for edible oils was to be given so long as the oil imported was used for edible purposes even after refining.
5. In the context of the existing tax structure in terms of Notification No. 17/2001-Cus., Government has consciously provided for a concessional rate of 35% duty for oils used other than for edible purposes. Thus if it can be established by the importing industry/trade that the oil imported as such is not fit for human consumption, (and needs to be refined before it can possibly be made fit for human consumption) and actually it is not being subjected to refining for edible use but on the other hand it is used for industrial purposes, it will not be proper to deny the benefit of lower concessional rate of 35%. The onus of proving the actual final use could be put on the importer of such crude palm oil wherever he claims that the consignment of crude palm oil which does not satisfy straightaway the conditions of edible grade crude palm oil under PFA Act, 1954, will not be refined for edible use but is actually used for industrial purpose after Customs clearance. In fact, if it is viewed that crude palm oil containing free fatty acids, acid value higher than the limits prescribed under the PFA Act, 1954 falls in the category of the 7 Customs Appeal No.75201 of 2020 edible grade, because it can be subsequently refined to make it fit for human consumption, then the concessional rate provided under serial number 29 of the table annexed to the Notification 17/2001 may be redundant and would defeat the intention of the Government for giving the concessional duty for crude oils used for industrial purposes and not for edible purposes.
6.7. Thus, we observe that as per the clarifications issued by the Board, the crude oil imported by the appellant would be eligible for the benefit of the exemption Notification No. 21/2002-Cus. dated 01.03.2002 as amended by Notification No. 42/2008-Cus. dated 01.03.2008 and Notification No. 12/2012 dated 17.03.2012, if it is used for edible purpose after refining. Since there is no dispute in this case that after refining the goods imported by the appellant were used for edible purposes, we hold that the appellant is eligible for the benefit of the exemption as provided under Serial No.33A of the Notification No. 21/2002-Cus., as amended. Accordingly, we hold that the denial of exemption to the appellant in the impugned order is legally not sustainable and hence the demand of customs duty confirmed in the impugned order is also not sustainable.
6.8. We observe that this view is supported by the decision of the Tribunal in the case of 3F industries Limited versus Commissioner of Customs reported in 2014 (304) E.L.T. 449 (Tribunal - Bangalore). The relevant paragraphs of the said decision are reproduced below:
"3. The learned authorized representative on behalf of the assessee-importer submitted that the report of the Chemical Examiner was not at all provided to the appellant even though a request was made and he draws our attention to the record of personal hearing at page No. 168 of the appeal memorandum. The Central Revenue Control Laboratory report was not at all provided to the appellant and after request was made by them during the personal hearing it was [provided on 2 7-2013]. In the meanwhile since the appellant did not have the CRCL report and report of Food Analyst was against them, the appellant had requested for sample test by the CFL which also ultimately came 8 Customs Appeal No.75201 of 2020 against them. The original adjudicating authority as well as the appellate authority have relied upon the reports of Food Analyst and CFL and CRCL report has been ignored. He relied on the decision of this Tribunal in the case of Asst. Commissioner of Cus. &C.E. v. Nikhil Refineries (P) Ltd. to submit that the Revenue cannot ignore CRCL report. Further it was also submitted that relying upon the decision of the Hon‟ble High Court of Calcutta in the case of Gokul Refoils Solvents Pvt. Ltd. v. Union of India & Ors. reported in 2012 (278) E.L.T. 433 (Cal.) and the decision of the Hon‟ble High Court of Gujarat in the case of Cargill India Pvt. Ltd. & Ors. v. Union of India reported in 2013 (288) E.L.T. 209 (Guj.) that even if the acid value is more than 10, the imported oil cannot be treated as non-edible oil since the oil is allowed to be cleared subject to the condition that it should be refined and thereafter only sold. The relevant paragraphs of the decision of the Hon‟ble High Court of Gujarat wherein the regulation under ppm cited above has been considered is reproduced below :
"3.25 Accordingly, in terms of the said provisions under Regulation 2.2.1(16), it is categorically and ex facie evident that the standards prescribed under the said rules i.e. under Regulation 2.2.1 and sub-headings 2.2.1 (1) to 2.2.1(24) are for "edible oils" and that after manufacture of edible oil the requirement of packaging and labelling are also mandatory. In other words, the overall reading of [Regulation 2.2.1(19)] will clearly show that the imported Palm Oil has necessarily to be refined to conform to the Standards under Regulation 2.2.1(16) and 2.2.1(19) except with regard to Acid Value to be less than 0.5% before the same can be sold for human consumption."
Taking note of the regulations and also taking note of the fact that appellants are expected to refine the oil and thereafter only release the oil into the market and therefore at the stage of import, the oil cannot be considered as a non-edible crude, Hon‟ble High Court of Gujarat as well as the Hon‟ble High Court of Calcutta held that exemption benefit under Notification No. 9 Customs Appeal No.75201 of 2020 21/2002 has to be allowed. The present notification is a successor notification of the earlier notification and the conditions remain the same. At this stage the learned AR submits that the fact that it has to be refined and thereafter only it should be released and after refining itself would show that at the time of importation, the oil is not of edible crude and therefore does not become eligible for exemption. We are unable to consider this submission in view of the decision of the Hon‟ble High Court of Gujarat taking a view that exemption would be available under this heading.
4. In view of the above observations, we consider that the appellant is eligible for the benefit of notification and accordingly the appeal is allowed with consequential relief, if any, to the appellant."
6.9. In view of the discussions above and by relying on the Board Circulars and the decisions cited above, we hold that the goods imported by the appellant are eligible for the benefit of Serial number 33A of the Notification No. 21/2002-Cus. dated 01.03.2002. Accordingly, we hold that the demand of differential customs duty confirmed in the impugned order is legally not sustainable and hence we set aside the same.
7. The appellants have contested the demands confirmed in the impugned order on the ground of limitation also. We observe in this regard that the appellant has filed the Bills of entry by classifying the goods imported under the CTH 15159091. Out of the 104 bills of entry, 45 bills of entry were filed for the purpose of assessment under Section 17 of the Customs Act, before self assessment came into operation with effect from 8th April 2011. The rest of the bills of entry were self assessed and reassessed to duty after 08/04/2011. The assessing officer assessed/reassessed the Bill of entry under CTH 1515 9091 after the chemical test by the Customs laboratory certified that the goods were in conformity with Food Standard. For the sake of ready reference the contents of the Test Report are reproduced below:
10Customs Appeal No.75201 of 2020 "The sample is in the form of light brown oily liquid and it conforms to the characteristics constants of rice bran oil as per IS 3448: 1965".
7.1. From the Test Report reproduced above, we observe that the report has categorically indicated that the goods imported by the appellant satisfies the Food Standard. The Ld. adjudicating authority has allowed the benefit of the exemption Notification No. 21/2002-Cus., as amended, after satisfying himself that the goods imported was of 'edible grade'.
7.2. During the course of hearing, the Ld. Authorized Representative of the Revenue submitted that the Test Reports received from CRCL in respect of 24 Bills of Entry have been tabulated in paragraph 10.6 of 11 Customs Appeal No.75201 of 2020 the impugned order which indicates that acid content of the crude oil imported were above 20% in most of the cases. We observe that even though the acid content above 20% has been mentioned in respect of 24 Bills of entry, there is no document evidence available on record to support this claim. We observe that the acid content in the crude oil stage is not a relevant factor for availing the exemption provided under Notification No. 21/2002 Cus., as amended. Hence, we observe that the appellant cannot be held to have suppressed this information while filing the bills of entry to invoke extended period to demand customs duty.
7.3. We observe that the assessing officer has rightly extended the benefit of Notification No. 21/2002-Cus. dated 01.03.2002 as amended by Notification No. 42/2008-Cus. dated 01.03.2008 and Notification No. 12/2012 dated 17.03.2012, after analysing the Test Reports received from CRCL. Thus, we observe that the appellants have not suppressed any information from the Department and hence we hold that the demands confirmed in Page 17 of 17 Appeal No.: C/75372/2020-DB the impugned order by invoking extended period of limitation is not sustainable and hence we hold that the demand is liable to be set aside on the ground of limitation also."
6. By respectfully following the detailed reasoning given in the above case law and the ratio laid down therein, we set aside the impugned order and allow the Appeal filed by the Appellant. The Appellant would be eligible for consequential relief, if any, as per law.
(Dictated and pronounced in the open Court.) Sd/ Sd/ (RAJEEV TANDON) (R. MURALIDHAR) MEMBER (TECHNICAL) MEMBER (JUDICIAL) sm