Custom, Excise & Service Tax Tribunal
Commissioner Of Customs, Amritsar vs M/S. Maya Enterprises on 5 December, 2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017
COURT NO. I
Appeal No. C/60461, 60463/2013-DB
Date of Hearing : 14.09.2017
Date of Decision : 05.12.2017
[Arising out of Order-in-Original No. OIO-03-CUS-ASR-2013 dated 26.06.2013 passed by the Commissioner Customs, Amritsar]
For approval and signature:
Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. Devender Singh, Member (Technical)
Commissioner of Customs, Amritsar : Appellant
vs.
M/s. Maya Enterprises : Respondent
and Commissioner of Customs, Amritsar : Appellant vs. Shri Anil Kumar, Proprietor : Respondent Appearance:
Shri Tarun Kumar, AR for the Appellant- Revenue None for the Respondent(s) CORAM:
Honble Mrs. Archana Wadhwa, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Final Order No. 62118-62119 / 2017 Per : Devender Singh The Revenue has filed these appeals against the impugned order of Commissioner.
2. The brief facts of the case are that, on the basis of intelligence received by DRI that during the period October 2005 to December 2005, certain Indian importers including the appellant, were importing palm acid oil, palm fatty acid distillate and palm stearin from Malaysia and other countries and had misdeclared the same as mixed acid oil or mixed fatty acid and mis-classified the same under chapter 38 of the Customs Tariff. Based on the inputs, investigation was initiated against the appellant in the process of which the consignment was subjected to chemical testing and statements of various persons including the indenters-cum-brokers from Malaysian suppliers and the proprietor of appellant were recorded. A show cause notice dated 05.01.2009 was issued to the appellant proposing enhancement of the value from Rs. 8,26.156/- to Rs. 16,21,974/-, confiscation of the goods under Section 111(d) and (m) of Customs Act and penalties under Section 112 and 114A of the Customs Act. The matter was adjudicated and in the adjudication order the ld. Commissioner came to a conclusion that the offence of misdeclaration of description of the goods was not established and the charge of undervaluation was also not sustainable. Accordingly, he dropped the proceedings in the show cause notice. Aggrieved from the same, the Revenue has filed these appeals.
3. Ld. AR for the Revenue submits that the adjudicating authority did not verify the reasons for the ambiguous stand of experts and went by implied inferences. He explained the difference between the Mixed Fatty Acid and PFAD and stated that the appellants themselves admitted in their defence that their product Mixed Fatty Acid was obtained as a by-product from refining the crude palm oil and accordingly with reference to the range given in Baileys Industrial Oil and Fat Products, the subject goods were PFAD. He also referred to the report from Malaysian Palm Board available on open source. Ld. AR further argued that though the product has been declared as Mixed Acid Oil, the CRCL Chemist and CRCL Joint Director have held that this product is not Acid Oil, the specification of which is given in IS:12029-1986. Therefore, he contended that the product was misdeclared, particularly since the FFA content is in the range of 13.41% to 39.57%, which appeared to be waste product arising from refining of oil. He also contended that the appellant did not adduce any report/ documentary evidence contrary to the report given by CRCL. His plea was that the goods ought to be re-tested instead of dropping the proceedings on the basis of incomplete report.
4. After having heard the ld. AR, we find that there are two issues which required to be answered in the present appeals. The first issue is, whether there was any misdeclaratin of the description of imported goods. In this regard, we find that the samples drawn from the consignment were got tested from CRCL New Delhi. The report of CRCL is as under:-
In this regard, it is stated that the Test Reports forwarded pertaining to T. M. Nos. Cus/A-292/06 to Cus/A-297 to Cus/A-301 with the description as Mixed Acid Oil, the Acid Oil which is obtained by neutralizing the Soap stock by mineral acids during the refining of Crude Oils has relatively high free fatty acids content along with neutral oils. In the above test reports the free Fatty Acid content is reported between 13.41% to 40.18%, Acid Value 29.40 to 80.05, lodine Value 35.99 to 70.65, Saponification value 141.89 to 182.96 and showing the presence of Nickel in some cases.
The reports issued by this laboratory are self explanatory. However, on the basis of the test conducted none of the products under reference conforms to the specification of Acid Oil per the IS 12029 : 1986 nor it meets the requirements of any single vegetable oil, Vanaspati or fatty acid. Each is composed of vegetable oil/ vegetable oil with partial hydrogenation, free fatty acid and unsaponifiable matter. On the perusal of the literature and analytical reports, it appears that such products are generated as residues from the treatment of fatty substances or refining as indicated in the HSN 15.22 (B) We also find that from the above chemical test report, there was a cross-examination of the Chemical Examiner as well as the Joint Director. The samples of the goods were also got tested by the Revenue from Sri Ram Institute for Industrial Research, New Delhi. We find that the ld. Commissioner has correctly analysed the findings in the test report who carried the examination. The ld. Commissioner observed as under:-
32. The noticees imports included a live consignment of impugned goods which was seized by the DRI, apart from those which had already been cleared in the past and perhaps disposed off. The live consignment had been declared as mixed acid oil; was suspected to be stream by the DRI; but was reported by the CRCL to be residue, resulting from treatment of fatty substances. Though categorically ruling out the impugned goods to be acid oil, for these did not conform to the ISI standard for acid oil, the CRCL Jt. Director (Retd.) admitted during his cross-examination that there was no ISI standard for mixed acid oil. During his cross-examination, the CRCL chemical examiner went a step further he expressed his ignorance as to whether there was any difference between mixed acid oil and residue and whether there was any ISI standard for the residue. Clearly, the charge of misdeclaration stood weakened. Further, while furnishing initial test reports, the CRCL had advised ascertainment of some other facts, including end use of the impugned goods and their source, before final assessment. However, those facts were never ascertained. Also, though in their clarificatory report the CRCL opined that such products are generated as residues from treatment of fatty substances or refining as indicated in the HSN 15.22(B) at the time of his cross-examination the CRCL examiner refused to classify the impugned goods under HSN/Customs Tariff, admitting that he had no expertise/jurisdiction to do that.
33. Thus, the DRIs suspicion that the impugned goods were stearin (Para 13 supra) was found to be incorrect. Similarly, the CRCLs clarificatory report that the impugned goods were perhaps residues of CH 15.22 turned out to be far from convincing following the answers given during their crossed examination by the two CRCL officers - one who had tested the samples (chemical examiner) and the other who had counter-signed the test reports (Jt. Director). They could/did not explain logically why in their view, the sampled goods were residue and why these were not mixed acid oil. In fact they could not differentiate the one from the other. The charge of misdeclaration of description of impugned (seized) goods against the notice in these circumstances made no sense at all.
34. The story with respect to the past imports is no different either. The show cause notice has, as noted in Para 15 supra, regarded all consignments of palm fatty acid imported in the past, in respect of which samples had been drawn/tested, and the test reports showed free fatty acid (FFA) content of 70% or above and iodine value of 50-55, as the PFAD. The logic given was that these parameters conformed to the ISI standard for PFAD. However, what the ISI standard for PFAD was and why the goods in question were not palm fatty acid as declared by the importer has been left unanswered. Notably, the CRCL had not declared the samples as PFAD. The Minimum that was required to be done was to define the parameters/standards of palm fatty acid as well as PFAD, bring out the difference between the two and show how and why the test results favoured classification of the goods as PFAD and not as palm fatty acid. That having not been done, I wonder how the notice can be charged with misdeclaration of the goods. With regard to the reasoning given by the ld. Commissioner that experts of CRCL has not conclusively stated whether the samples of the goods were residue and why these were not Mixed Oil. In view of the above analysis, we find that the charge of misdeclaration against the importers is not sustainable.
5. We also find that on the issue of undervaluation, in a similar consignment imported as Mixed Acid Oil by another importer M/s. H.K. International, which was investigated by the DRI. In the said case, this Tribunal examined the valuation aspect of that consignment in which the evidence consisted inter-alia the statements of Shri Rakesh Kumar and Shri Anil Kumar Arora, both are indenter and broker, as in the present case. In the said case also the Revenue had relied upon the Export Price Bulletin prices issued by Malaysian Palm Acid Board, as in the present case. In those set of facts, the Tribunal has held that there is no direct evidence indicating that the price reflected on the invoices is not the correct transaction value. We find that the ld. Commissioner has rightly relied on the above said case. In this regard, Para 8 to 10 of the said order are relevant to the present case, are extracted below:-
8.?After going through the evidences relied upon by the Commissioner, we fully agree with the learned advocate for the appellant that the said evidences are in the nature of general evidences and not relatable to the import made by the appellant. The statements of the two indenting agents are general in nature indicating that the landed price of the fatty acids is around US$ 440. In neither of the statements the said indenting agents have admitted that the goods imported by the appellant were invoiced on the lower side. On the other hand the appellants have strongly contended that they entered into negotiation with the supplier of the goods, who agreed to supply the same at US$ 185 PMT. There is no evidence recording any extra payment to the supplier. We also do not find any investigations made by the Revenue at the suppliers end. In these circumstances, it is difficult to uphold the contention of the Revenue.
9.?The Tribunal in the case of Jindal Strips Ltd. v. CC, New Delhi reported in 2001 (133) E.L.T. 570 (Tri.-Del.) has held that the transaction value has to be accepted as the correct assessable value unless there is an evidence to the contrary. It was also observed that the London Metal Exchange Bulletin prices cannot be accepted as basis of valuation in the absence of corroborative evidence of contemporaneous imports. The said decision stands approved by the Honble Supreme Court, when the appeal filed by the Revenue thereagainst was rejected, as reported in 2003 (156) E.L.T. A385. Similarly in the case of Pawan Goel v. CC, New Delhi reported in 2001 (135) E.L.T. 1425 (Tri.-Del.), it was held that theoretical price based on LME bulletin cannot be made basis without corroborative evidence. We find that the legal position is well-settled and we do not find any need to multiply the precedent decisions.
10.?Inasmuch as in the present case, there is no direct evidence indicating that the price reflected on the invoice is not the correct transaction value, we do not find any justifiable reasons to uphold the charge of the Revenue. Accordingly the impugned order is set aside and appeal is allowed with consequential relief to the appellant.
6. In view of the above, we find that there is no merit in the appeals filed by the Revenue and the same are liable to be dismissed. In the result, the appeals are dismissed.
(Order pronounced in the court on 05.12.2017)
Archana Wadhwa Member (Judicial)
Devender Singh
Member (Technical)
KL
7
Appeal No. C/60461, 60463/2013