Customs, Excise and Gold Tribunal - Mumbai
Amrit Banaspati Co. Ltd. vs Commissioner Of Customs (Import) on 14 February, 2007
Equivalent citations: 2007(116)ECC186, 2007ECR186(TRI.-MUMBAI)
ORDER T. Anjaneyulu, Member (J)
1. Heard both sides.
2. This appeal assails an order of confiscation of goods under Section 11(d) of the Customs Act, 1962 with an option to redeem on payment of fine of Rs. 1 lakh for the purpose of re-export and penalty of Rs. 25,000/- on the importer in terms of Section 112(a) of the Customs Act, 1962, passed by the Commissioner of Customs (Import).
3. The brief facts of the case are that the appellant is engaged in the business of manufacture and trade in hydrogenated vegetable oil (vanaspati ghee). In their normal course of business. They placed an order dated 5.12.2005 to M/s Accor Industries Pvt. Ltd. Sri Lanka for purchase of 340.200 MT of vanaspati for shipment by 25.12.2005. Accordingly the goods were consigned by their vendors accompanying by certificate of quality i.e. to say the goods are in conformity with the PFA standards. The appellants have filed five bills of entry bearing No. 654954 dated 24.12.2005, No. 656522 dated 27.12.2005, No. 657184 dated 27.12.2005, No. 657183 dated 27.12.2005, No. 668654 dated 10.1.2006. Samples were drawn by the respondents for the purpose of testing, compliance with the prescribed standards in each case and sent for testing to the Central Food Laboratory (CFL), Pune. The Central Food Laboratory, Pune on testing the samples issued a certificate in respect of the goods covered by bills of entry No. No. 654954 dated 10.02.2006. No. 656522 dated 27.12.2005, observing that the samples are not confirming to the standards of vanaspati as per the Prevention of Food Adulteration Rules, 1955, as the goods having failed on the baudoin test. Another certificate was also issued by the Central Food Laboratory (CFL), Pune in respect of goods covered by bills of entry No. 657184 dated 27.12.2005, No. 657133 dated 27.12.2005, observing that the samples are not conforming to the standards of vanaspati as per the Prevention of Food Adulteration Rules, 1955, since they failed on the melting point test. Another certificate dated 2.2.2005 Issued in respect of 80.20 MT of the goods covered by bill of entry No. 668654 dated 10.1.2006 showed that they failed on the melting point test. Based on these certificates the Customs department refused to permit the clearance of the said goods for home consumption.
4. By a letter dated 16.1.2006, the appellants requested for re-sampling and re-testing of the goods in question. Thereafter the appellants requested the Port Health Officer, Nhava Sheva to draw fresh samples from the goods covered by all the five bills of entry. Customs department admitted that it had no objection for drawl of fresh samples and re-testing. The appellants have also challenged the correctness of the test reports issued by the Central Food Laboratory, Pune before the Delhi High Court by way of writ petition. By an order dated 8.5.06, in Writ Petition No. 7431 of 2006, the Hon'ble High Court ordered the drawal of fresh samples and the testing thereof by a laboratory other than Central Food Laboratory, Pune. Accordingly the samples were drawn afresh and sent for testing to Central Food Laboratory, Kolkata. The Central Food Laboratory. Kolkata by its certificate of analysis dated 13.6.2006 held that the goods do not conform to the standards for vanaspati under Prevention of Food Adulteration Rules. 1955 and they failed in melting point test. In respect of the goods covered by the bill of entry No. 654954 dated 24.12.2005 and No. 656522 dated 27.12.2005, Central Food Laboratory, Kolkata's findings differ with the findings of Central Food Laboratory, Pune. The reports of the two laboratories are contradictory in nature to each other.
5. Meanwhile the appellants were issued a show cause notice dated 28.4.06, proposing to confiscate the goods and imposition of penalty in respect of goods covered by bill of entry No. 668654 dated 10.1.2006. The appellants have given reply to the show cause notice on 9.6.06, while challenging the CFL test report. They also raised alternative plea for permission to clear the goods under bend for re-processing and as a secondary alternative for a permission to re-export the goods. Without deciding the appellants request for permission for reprocessing, the Commissioner of Customs (Import) passed the impugned order. Hence this appeal.
6. The Id. Counsel for the appellants contends that confiscation of the goods is ex-facie, illegal and arbitrary and contradictory to the judgments of the Hon'ble Bombay High Court and other High courts. According to him, the imported goods are neither adulterated food nor mis-branded one, within the meaning of Section 5 of the Prevention of Food Adulteration Act, 1954 and the goods are imported in accordance with the licence issued. Further, it is contended that the certificate issued by the CFL only shows that the goods failed the test of baudouin and melting point test but they fulfilled all other qualities. The test mentioned above are curable with minor reprocessing methods. Even proviso to Section 18 of the Prevention of Food Adulteration Act, 1954 permits clearance of the food articles for reprocessing, in order to meet the PFA standards at the time of sale to the public. As a matter of fact the Customs department: has been permitting the goods in several other cases for reprocessing and whereas the denial of permission in this particular case is discriminatory and arbitrary. The appellants unit is also capable of reprocessing any lot of vanaspati so as to lower its melting point and consequent upon such reprocessing, the shelf life of the product gets renewed for a further period of six months. The appellants have also filed a certificate issued by Ganesh Scientific Research Foundation, Rajpura, Punjab which is an approved food laboratory by the Government of India. Now the point for determination is that, "whether the imported goods can be permitted for reprocessing so as to meet PFA standards."
7. On perusal of analysis report, issued by the CFL, Pune, dated 10.1.06 shows negative result for the baudouin test whereas the melting point test is within the range. Thus the opinion is that the sample does not conform to the standards of vanaspati as per the PFA Rules, 1955. For another sample the range of the melting point is found to be 42.40 C. though baudouir test shows positive. The prescribed range for the melting point is 31.0 C to 41.0 C. Thus 1.4 C is found to be excess in melting point. For another sample the melting point measured at 43.0 C, whereas the sample tested by the CFL, Kolkata, as per the request made by the appellants, shows positive for baudouin test and melting point measured is excess than the prescribed one. Therefore, it is opined that the sample is adulterated only for the reason that the melting point exceeded the prescribed limit. In the report of the CFL, Pune it is opined that the sample is not conforming to the standards of vanaspati as per the PFA Rules, 1955 but there is no mention of adulteration. None of the reports do show the presence of any foreign substance in the samples. The sample are not attracting the definition of the word "adulterated" or misbranded as shown in Section 2(ia) of the PFA Act, 1954. As rightly pointed out by the appellants, if an article of food is capable of being made to conform to prescribed standards for human consumption after reprocessing, the same maybe returned to the owner, subject to executing bond, for being sold, after reprocessing, as per the proviso to Section 18 of the PFA Act.
8. The Hon'ble Bombay High Court by an order dated 12.4.2006 permitted clearance of a consignment of hydrogenated palm kernel oil holding that unless the consignment is shown to be adulterated or unfit for home consumption, the fact that the consignment may have failed to clear the baudouin test would not make the goods fall foul of Para A. 19 under the PFA Rules, 1955, more so when the specified tests for adulterants such as argemone oil, added colour, rancidity, animal fact have all been cleared.
9. In a similar situation, the Hon'ble High Court of Calcutta by order dated 22.2.06 in Writ Petition No. 158 of 2006, ordered the department to permit the importer to clear the goods for home consumption, subject to the importer reprocessing the said goods and to clear for domestic market.
10. This tribunal by order No. A1/29-30/WZB/2007/C-I/CSTB dated 12.1.2007, while following the decision of the Calcutta and the Gujarat High Court in case of Teej Impex Pvt. Ltd. has allowed the same commodity for reprocessing against execution of a bond. Whereas the ld. DR relied upon the decision of the Tribunal at Delhi, reported in case of Shell Chand Agroils Pvt. Ltd. v. Commissioner of Customs, Noida 2006 (199) ELT 247 (Tri. - Del.) which held, confiscation as sustainable. In that case also the melting point measured 42.5C and the adjudicating authority has confiscated the goods on the ground that the sample of the vegetable oil is adulterated and does not conform to the standards of the vanaspati as laid down in the PFA Rules, 1955. This decision did not consider any of the cases of the Bombay High Court, the Gujarat High Court: or the Calcutta High Court. Moreover, the disputed goods in that case were found, to be adulterated. Even otherwise if the melting point measures excess and the same is treated as adulterated one, the Hon'ble High Court of Bombay, makes it clear that a food article, failure to conform the standards of PFA Rules (A. 19) does not mean that it is adulterated or unfit for home consumption. Therefore, in my considered opinion, the decision rendered by the Delhi Tribunal in not following the pronouncements by the various High Courts cited supra is no way good law. Thus following various decisions cited before me and that of the recent decision of the Tribunal at Mumbai, I am of the opinion and feel it expedient to remand the matter back to the adjudicating authority with a direction to permit the appellants to clear the goods for home consumption after reprocessing the same and on attaining the standards of PFA Rules, as per the certificate issued by the CLF, Pune and Port Health Officer. The reprocessing shall be done at the earliest possible time and on finding fit for human consumption, the goods may be released to the domestic market. In the result the appeal is allowed in remand in above terms. Order accordingly.
(Pronounced on 14.2.2007)