Custom, Excise & Service Tax Tribunal
Victory Trading Company vs Commissioner Of Customs-Nhava Sheva-I on 25 February, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
REGIONAL BENCH - COURT NO. I
CUSTOMS APPEAL No. 85549 of 2024
(Arising out of Order-in-Appeal No. 927(Gr. I & IA)/2023(JNCH)/Appeals dated
13.09.2023 passed by the Commissioner of Customs (Appeals), JNCH, Mumbai Customs
Zone-II, Nhava Sheva)
Victory Trading Company .... Appellants
Shop No.29, Hi-Life Mall, P.M. Road
Santacruz, Mumbai - 400 054.
Versus
Commissioner of Customs .... Respondent
Nhava Sheva - I Customs Commissionerate
Jawaharlal Nehru Custom House (JNCH)
Nhava Sheva, Taluk Uran, District Raigad
Maharashtra - 400 707.
Appearance:
Shri Ramachandran Mattiyil, Advocate for the Appellant
Shri Ranjan Kumar, Authorized Representative for the Respondent
CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL)
FINAL ORDER NO. A/85264/2025
Date of Hearing: 30.08.2024
Date of Decision: 25.02.2025
PER: M.M. PARTHIBAN
This appeal has been filed by M/s Victory Trading Company, Mumbai
(herein after, referred to as 'the appellants'), assailing Order-in-Appeal No.
927(Gr. I & IA)/2023(JNCH)/Appeals dated 13.09.2023 (herein after,
referred to as 'the impugned order') passed by the Commissioner of
Customs (Appeals), JNCH, Mumbai Customs Zone-II, Nhava Sheva.
2.1 The brief facts of the case are that the appellants had imported
'Mixed Hydrocarbon Oil' classifying it under Customs Tariff Item (CTI)
27011990, by filing Bill of Entry (B/E) No.4226990 dated 17.01.2023
seeking clearance of goods from Customs authorities at the port of import.
On the basis of information received by the Nhava Sheva Preventive Unit
(NSPU) that the appellants-importer had imported one consignment of gas
oil/automotive diesel oil, by mis-declaring the imported goods as 'mixed
2
C/85549/2024
hydrocarbon oil', the imported goods covered under B/E No. 4226990
dated 17.01.2023 were put on hold. Subsequently, the goods covered
under the subject B/E were examined under Panchnama dated 27.01.2023
and ten representative samples of imported goods were drawn by NSPU
from each of the ten containers of imported consignment. These samples
were forwarded to the Joint Director, Central Revenue Control Laboratory
(CRCL), NCH, Mumbai vide letter dated 30.01.2023 with a request to test
and chemically analyze the samples of imported goods on the following
parameters:-
(i) Whether the sample under reference meets the IS standard of
Solvent (IS 1745), Motor Gasoline (IS 2796, IS 17021 or IS
17076), Aviation Gasoline (IS1604), Kerosene Intermediate,
Kerosene (IS 1459), Aviation Turbine Fuel (IS 1571), Gas Oil (IS-
17789), Vacuum Gas Oil (IS17792), Light Diesel Oil (IS 15770),
Automotive Diesel Fuel (IS 1460), High Flash High Speed Diesel (IS
16861) or waste oil.
(ii) Overall chemical composition including Sulphur, Cetane no. &
oxygen and physical composition of the sample under reference.
2.2 The Chemical Examiner, CRCL Laboratory, New Custom House,
Ballard Estate, Mumbai vide letter F.No. S/23-30/2023Lab/75 dated
03.02.2023 had forwarded ten (10) Test Reports under Lab No. 60 to
69/R&I/Mumbai/30.01.2023. The Test Reports inter alia mentioned about
the sample as under:-
"The sample as received is in the form of pale yellow coloured oily
liquid. It is composed of mixture of mineral hydrocarbon oil more
than 70% by wt having following constants Density at 15°C 0.8255
gm/ml Based on above tested parameters, the sample u/r is
mixture of mineral hydrocarbon oil mainly containing diesel
fraction.
It does not meet the requirements of IS standards of solvents
(IS:1745), Motor Gasoline (IS:2796, IS 17021 or 17076), Aviation
Gasoline (IS 1604), Kerosene intermediate, Kerosene (IS:1459),
Aviation turbine fuel (IS:1571), Gas oil, Vacuum gas oil, Light
Diesel oil (IS:15770), Automotive Diesel fuel (IS:1460), High flash
high speed Diesel(IS: 16861) and Waste Oil."
On the basis of CRCL test reports indicating that the imported goods
were mixture of mineral hydrocarbons oil mainly containing diesel fraction,
the NSPU officers conducted further investigation by recording statements
from the persons concerned including Shri Yash Ram Gangwani, Partner of
the appellants-importer, and had come to a conclusion that the imported
goods should have been correctly classified under CTI 27101944.Further,
3
C/85549/2024
since as per the import policy under ITC-HS, such goods covered under CTI
2710 1944 are permitted to be imported only through IOC subject to para
2.20 of the Foreign Trade Policy except through for the companies who
have been granted rights for marketing of transportation of fuels in terms
of MoP&NG notification, the department had proposed for re-classification
of imported goods and for confiscation of the same under Sections 111 (d)
and (m)of the Customs Act, 1962 and also proposed for imposition of
penalty on the appellants under Section 112(a) ibid.
2.3 On the basis of above investigation, the original authority had
adjudicated the case by passing an Order-in-Original dated 20.04.2023 in
re-assessment of the goods covered under B/E No. 4226990 dated
17.01.2023 having declared value of Rs. 69,61,664/- under CTI 2710 1944
by amending the description of goods as "Automotive Diesel Fuel" under
Section 17(5) of the Customs Act, 1962 and its confiscation under Section
111(d), 111(m) ibid and offering an option to redeem the goods for re-
export upon payment of a redemption fine of Rs.6,00,000/-under Section
125 ibid and imposed penalty of Rs.4,00,000/- on the appellants-importer
under Section 112(a) ibid. In an appeal filed by the appellants against such
original order dated 20.04.2023, the Commissioner (Appeals) had upheld
the order of the original authority and rejected the appeal by the
appellants. Feeling aggrieved with the said Order-in-Appeal dated
13.09.2023, which is impugned herein, the appellants have filed this
appeal before the Tribunal.
3.1. Learned Advocate for the appellants submitted that the imported
goods were duly examined by the jurisdictional Customs authorities who
had also drawn representative samples of such goods and subjected the
same for testing. By relying upon the CRCL test reports of such goods
which clearly stated that the imported samples did not meet the
requirements of IS 1460- IS standard prescribed for Automotive Diesel Oil,
and that these are mixture of 'Mineral Hydrocarbon Oil', clearly proved that
the appellants-importer have correctly declared the imported goods.
However, the adjudicating authority had re-assessed the goods by
changing the classification and its description on the basis of statements,
documents recovered from the premises of the appellants. No show cause
notice was issued to the appellants and inasmuch as the statements
obtained from the persons are not voluntary, learned Advocate claimed
that the Department had not discharged the burden to show that such
4
C/85549/2024
statements have been recorded by them are voluntary in nature and not
obtained by an inducement, threat etc.
3.2 Learned Advocate further submitted that test reports given by CRCL
laboratory of New Custom House, having clearly stated that the imported
goods did not the requirements of the IS standards for Automotive Diesel
fuel (IS:1460), it is not feasible for the customs authorities to classify the
imported goods contrary to such test reports. Therefore, he claimed that
the department's views on re-classification of imported goods are not duly
supported by any evidence/document and they had not been given an
opportunity to defend their case properly by issue of SCN. Hence, he
pleaded that the impugned order is not legally sustainable.
3.3 In addition to the above, learned Advocate stated that such disputed
issues were already addressed by the Tribunal and it was held that such
orders for re-classification, imposition of fine & penalty are not sustainable.
In support of their stand, learned Advocate had relied upon following
decisions of the Tribunal in the respective cases mentioned below:
(i) Hindustan Ferodo Limited Vs. Collector of Central Excise Bombay
- 1996 (12) TMI49 (S.C.)
(ii) H.P.L. Chemicals Ltd. Vs. Commissioner of C. Ex. - 2006 (197)
E.L.T. 323 (S.C.)
(iii) Commissioner of Customs & C.Ex. Vs.D.L. Steels- 2022 (381)
E.L.T. 289 (S.C.)
(iv) Commissioner of Customs, Nhava Sheva-III Vs. Jeen Bhavani
International - 2023 (385) E.L.T. 338 (S.C.)
4. Learned Authorised Representative (AR) reiterated the findings made
by the Commissioner of Customs (Appeals) in the impugned order and
submitted that issue of classification of impugned goods, has been
examined by the authorities below based on test reports. Thus, learned
AR justified the action in the impugned order, for re-classifying the goods
subjecting it to confiscation and for imposition of penalty on appellants.
5. We have heard the learned Advocate appearing for the appellants and
the learned Authorized Representative of the Department and perused the
case records.
6. The dispute between the appellants-importer and the department lies
in the correct classification of imported goods and thereafter applicability of
5
C/85549/2024
the relevant import conditions prescribed under ITC-HS policy of FTP. The
appellants has declared the goods as 'Mixed Hydrocarbon Oil' by classifying
it under Customs Tariff Item (CTI) 27011990,whereas the department had
contended that the said goods are classifiable as 'Automotive Diesel Fuel
falling under CTH27101944, of the First Schedule to the Customs Tariff Act,
1975, which is restricted for import as specified in ITC-HS.
7. Before we consider the submissions made by both sides, it is
important to note that the undisputed facts with the respect to the factual
matrix of the case are as follows:
(i) All the representative samples of imported goods contained in
ten containers have been tested and the test results obtained;
(ii) The test reports of CRCL laboratory had given the overall
composition of the goods and specific report as to whether such
goods confirm to the IS standards prescribed for Solvents, Motor
Gasoline, Aviation Turbine Fuel, Light Diesel Oil, Automotive Diesel
Fuel, High Speed Diesel, as sought by the customs department;
(iii) Reliance has been placed on documents and certain devices
such as 3 mobile phones, 3 lap tops which appeared to be
incriminating at the time of recovery by the department. However,
on forensic analysis of such electronic devices by the Central
Forensic Lab of the DRI, Mumbai Zonal Unit, it has been reported
that the retrieval of data from all the six devices showed nothing
incriminating.
(iv) Imports made by B/E No. 4226990 dated 17.01.2023, for
which goods the dispute is in appeal before the Tribunal are yet to
be cleared from Customs control;
8.1 The adjudicating authority, for re-assessment of the imported goods
and in coming to a conclusion for re-classifying it under CTI 27101930 as
'High Speed Diesel Oil' had given the following findings:
"24. I find that the Chemical Examiner, DYCC Lab, New Custom House,
Ballard Estate, Mumbai vide letter F. No. S/23-30/ 2023Lab/75 dated
03.02.2023 forwarded 10 Test Reports under Lab No. 60 to 69/R&l/
Mumbai/30.01.2023.
"The DYCC, NCH, Mumbai in their test reports reported that the RSS
is mixture of mineral hydrocarbon oil mainly containing diesel fraction.
It is further reported that the goods does not meet the requirements
of IS standards of solvents (IS: 1745), Motor Gasoline (IS:2796, IS 17021 or
17076), Aviation Gasoline (IS 1604), Kerosene intermediate, Kerosene
(IS:1459), Aviation turbine Fuel (IS:1571), Gas oil, Vacuum gas oil, Light
Diesel oil (JS: 15770), Automotive Diesel Juel (IS: 1460), High flash high
speed Diesel(IS: 16861) and Waste Oil."
32. I also find that the DYCC, NCH vide letter dtd. 28.03.2023
informed that the percentage of Diesel and other contents cannot be
6
C/85549/2024
ascertained in their laboratory and for exact determination of percentage
of Diesel and other contents; they suggested forwarding the sample to
Indian Institute of Petroleum, Dehradun, Uttarakhand. As discussed
elaborately in the above paras and as hold that the goods are
"Automotive Diesel Fuel", I do not find any rationale in sending the
sample for further test considering the confession of the Importer,
evidence found during Investigation & submission of the Importer that
theShipper has wrongly shipped the impugned goods.
ORDER
(i) I reject the self-assessment made under Section 17(1) of the Customs Act, 1962 with respect of Bill of Entry No. 4226990 dated 17.01.2023and the declared goods as "Mixed Hydrocarbon Oil for Industrial Use".
(ii) I order for reassessment of the impugned goods covered under Bill of Entry No. 4226990 dated 17.01.2023 under section 17(5) of the Customs Act, 1962. 1 order re-classification of the goods under CTH 27101944 with amendment in description as "Automotive Diesel Fuel".
(iii) I confiscate the goods imported vide B/E No. 4226990 dated 17.01.2023with total declared value of Rs. 69,61,664/-(Rupees Sixty Nine lakhs Sixty One thousand Six hundred Sixty Four only) under Section 111(d) & Section 111(m) of the Customs Act, 1962. However, I give an option to the importer to redeem the goods for re-export on payment of Redemption Fine of Rs. 6,00,000 (Rupees Six Lakhs only) under Section 125 of the Customs Act, 1962. If the redemption fine is not paid within 120 days of the issue of this Order, the option given for redemption shall become void in compliance of Section 125(3) of the Customs Act, 1962, unless an appeal against this order is pending. Re- export is allowed subject to non-availment of any export benefit and compliance with other laws as may be applicable."
8.2 Learned Commissioner (Appeals) had also examined the issue of classification and gave the following findings in upholding the original order dated 20.04.2023. The relevant paragraphs of the impugned order dated 13.09.2023is extracted below:
"30. I find from DYCC test reports that the Chemical Examiner, DYCC Lab, New Custom House, Ballard Estate, Mumbai vide letter F. No. S/23- 30/ 2023Lab/75 dated 03.02.2023 forwarded 10 Test Reports under Lab No. 60 to 69/R&/ Mumbai/30.01.2023. The DYCC, NCH, Mumbai in their test reports reported that the RSS is mixture of mineral hydrocarbon oil mainly containing diesel fraction.
xxx xxx xxx Later, the Importer confessed in his statements dtd. 07.02.2023 and 20.02.2023, stating that the goods covered in Bill of Entry No. 4226990 dated 17.01.2023 were high speed diesel fraction with certain additives which were required to be shipped to Indonesia and they had not ordered the subject goods and the supplier had mistakenly sent the subject goods to them. The Importer further stated that the representative of the supplier informed them telephonically that he had confirmed from his Kuwaiti source and learnt that the said goods were a mixture of Petrol (3%) & Diesel (97%) only. The Importer agreed that the 7 C/85549/2024 goods covered under Bill of Entry No. 4226990 dated 17.01.2023 are not the same that they had ordered and therefore they requested to re- export the goods to the supplier.
The Investigating unit referred open source information available on the internet i.e.https://www.researchgate.net/publication/ 273695189 Flash_points_and_volatillity_characteristics_of_gasolinediesel_blends and it is induced from this source that mixing of diesel fraction with petrol fraction is done to lower the flash point of the diesel below 40 degree so that the said product does not meet the IS standard of any canalized petroleum products. The said goods are giving the essential characteristics to the subject goods.
In view of the above, as per DYCC reports the goods are mainly diesel fraction and further from the statement of the Importer Appellant, I find that the goods is a mixture of 97% of high speed diesel and 3% of petrol, therefore I agree with the Original Authority's opinion that the subject mixture would classified under CTI 27101944 of the ITC (HS), the same is canalized for specific importers as mentioned in condition No. 5 of Chapter 27 of the ITC (HS)"
9.1 In terms of the legal provisions under Section 2(2) and Section 17 ibid, the phrase "assessment" would mean determination of the dutiability of imported goods including inter alia in arriving at the appropriate tariff classification of such goods as determined in accordance with the provisions of the Customs Tariff Act, 1972. Further, in order to address the above issue of classification of imported goods, we would like to refer the relevant legal provisions contained in Section 12 of the Customs Act, 1962; the Customs Tariff Act, 1975 and rules framed thereunder for consideration of proper and appropriate classification of the subject goods under dispute.
"Section 12. Dutiable goods. -
(1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India.
(2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government."
"Section 1. Short title, extent and commencement. -
(1) This Act may be called the Customs Tariff Act, 1975.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
Section 2. Duties specified in the Schedules to be levied. -
8C/85549/2024 The rates at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), are specified in the First and Second Schedules.
xxx xxx xxx xxx
THE FIRST SCHEDULE - IMPORT TARIFF
(Refer Section 2)
THE GENERAL RULES FOR THE INTERPRETATION OF IMPORT TARIFF Classification of goods in this Schedule shall be governed by the following principles:
1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:
2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled.
(b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.
3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable.
(c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.9
C/85549/2024
4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin.
5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein:
(a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character;
(b) Subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use.
6. For legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub headings and any related sub headings Notes and, mutatis mutandis, to the above rules, on the understanding that only sub headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.
THE GENERAL EXPLANATORY NOTES TO IMPORT TARIFF
1. Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "- -", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-". where the description of an article or group of articles is preceded by "---" or "----", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" or "--".
2. The abbreviation "%" in any column of this Schedule in relation to the rate of duty indicates that duty on the goods to which the entry relates shall be charged on the basis of the value of the goods as defined in section 14 of the Customs Act, 1962 (52 of 1962), the duty being equal to such percentage of the value as is indicated in that column.
3. In any entry, if no rate of duty is shown in column (5), the rate shown under column (4) shall be applicable.
ADDITIONAL NOTES In this Schedule,--
(1)(a) "heading", in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all sub- headings of tariff items the first four-digits of which correspond to that number;
10C/85549/2024
(b) "sub-heading", in respect of goods, means a description in the list of tariff provisions accompanied by a six-digit number and includes all tariff items the first six-digits of which correspond to that number;
(c) "tariff item" means a description of goods in the list of tariff provisions accompanying eight digit number and the rate of customs duty;
(2) the list of tariff provisions is divided into Sections, Chapters and Sub- Chapters;
(3) in column (3), the standard unit of quantity is specified for each tariff item to facilitate the collection, comparison and analysis of trade statistics."
9.2 From plain reading of the above legal provisions, it transpires that in order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff Act, 1975 in accordance with the provisions of the Customs Tariff Act by duly following the General Rules for Interpretation (GIR) and the General Explanatory notes (GEN) contained therein. The First Schedule to the Customs Tariff Act, 1975 specifies the various categories of imported goods in a systematic and well-considered manner, in accordance with an international scheme of classification of internationally traded goods, i.e., 'Harmonized Commodity Description and Coding System' (HS). Accordingly, goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the First Schedule to the Customs Tariff Act, 1975. Rule 1 of the GIR provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus, gives precedence to this while classifying a product. Rules 2 to 6 provide the general guidelines for classification of goods under the appropriate sub- heading. In the event of the goods cannot be classified solely on the basis of GIR 1, and if the headings and legal notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. Further, while classifying goods, the foremost consideration is the 'statutory definition', if any, provided in the Customs Tariff Act. In the absence of any statutory definition, or any guideline provided by HS explanatory notes, the trade parlance theory is to be adopted for ascertaining as to how the goods are known in the common trade parlance for the purpose of dealing between the parties.
11C/85549/2024 9.3 In the case before us, the contending classification of imported goods discussed in the impugned order are either under CTI 27101944 or CTI 27101990 of the First Schedule to the Customs Tariff Act. Thus, it is clear that at the Chapter, heading and sub-heading level, there is no difference of opinion among the department and the appellants. The dispute in classification therefore lies in the very narrow compass of analysis of the two entriesof the Customs Tariff items under which the impugned goods are to be coveredas per the facts of the case,forproperly classifying the impugned product. Now, we may closely examine the scope of the contending classification for determining correct classification of the imported goods.
"CHAPTER 27 Mineral fuels, mineral oils and products of their distillation;
bituminous substances; mineral waxes NOTES :
1. This Chapter does not cover:
....
2. References in heading 2710 to "petroleum oils and oils obtained from bituminous minerals" include not only petroleum oils and oils obtained from bituminous minerals but also similar oils, as well as those consisting mainly of mixed unsaturated hydrocarbons, obtained by any process, provided that the weight of the non-aromatic constituents exceeds that of the aromatic constituents....
xxx xxx xxx xxx SUPPLEMENTARY NOTE : In this Chapter, reference to any standard of the Bureau of Indian Standards refers to the last published version of that standard.
Illustration : IS 1459 refers to IS 1459: 2018 and not to IS 1459: 1974
(a) "motor spirit" means any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 250C and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines. "Special boiling point spirits (tariff item Nos. 2710 12 11, 2710 12 12 and 2710 12 13 )" means light oils, as defined in Sub- heading Note 4, not containing any anti-knock preparations , and with a difference of not more than 600C between the temperatures at which 5% and 90% by volume ( including losses) distil;
(b) "natural gasoline liquid (NGL)" is a low-boiling liquid petroleum product extracted from Natural Gas;
(c) "superior kerosine oil (SKO)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS :
1459-1974 (Reaffirmed in the year 1996);
(d) "aviation turbine fuel (ATF)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS :
1571:1992:2000;12
C/85549/2024
(e) "high speed diesel (HSD)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS:
1460:2005;
(f) "light diesel oil (LDO)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS:
15770:2008;...."
Tariff Item Description of goods
2710 PETROLEUM OILS AND OILS OBTAINED FROM BITUMINOUS
MINERALS, OTHER THAN CRUDE; PREPARATIONS NOT
ELSEWHERE SPECIFIED OR INCLUDED, CONTAINING BY WEIGHT 70% OR MORE OF PETROLEUM OILS OR OF OILS OBTAINED FROM BITUMINOUS MINERALS, THESE OILS BEING THE BASIC CONSTITUENTS OF THE PREPARATIONS; WASTE OILS
- Petroleum oils and oils obtained from bituminous minerals (other than crude) and preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, other than those containing biodiesel and other than waste oils:
2710 12 -- Light oils and preparations:
--- Naphtha:
2710 12 21 ---- Lihgt - Naphtha
xxx xxx xxxxxx
2710 19 -- Other:
--- Gas oil and oils obtained from gas oil:
2710 19 41 ---- Gas oil
2710 19 42 ---- Vacuum gas oil
2710 19 43 ---- Light diesel oil conforming to standard IS 15770
2710 19 44 ---- Automotive diesel fuel, not containing biodiesel,
conforming to standard IS 1460
xxx xxx xxxxxx
2710 19 90 --- Other
xxx xxx xxxxxx"
9.4 From plain reading of the above tariff extract, it transpires that in
order to determine the classification of the goods, particularly in respect of the goods specified in Supplementary Note 1 to Chapter 27, Natural Gasoline Liquid (NGL), Superior Kerosine Oil (SKO), Aviation Turbine Fuel (ATF),High Speed Diesel (HSD), Light diesel oil (LDO) etc. are required to fulfil the characteristics of goods as per the Standard of Measures prescribed by Bureau of Indian Standards (BIS).As the same IS standard provide for product specifications on various criteria/parameters, on the basis of which the same can be classified under a particular entry, conformity with specific IS standard parameters is of paramount importance to classify the goods under that specific tariff item. The disputed entries in the present case are of Automotive diesel fuel, not 13 C/85549/2024 containing biodiesel or 'High Speed Diesel Oil', conforming to standard IS 1460 as claimed by the department under CTI 2710 1944; and 'Mixed Hydrocarbon oil' falling under CTI 2710 1990. Indian Standard for 'Automotive Diesel Fuel' is IS 1460:2005 and it provides the specification for ADF for the vehicles meeting Bharat Stage IV/Euro IV Vehicular Emissions Norms based on the Auto Fuel Policy, issued by the Ministry of Petroleum and Natural Gas, Government of India, and the same has been incorporated in Annex C to IS 1460:2005 providing for twenty one (21) parameters to be tested for their conformity to IS standards. Once all parameters are fulfilled, the product can be called as 'Automotive Diesel Fuel'. However, for 'other' residuary goods' including 'Mixed Hydrocarbon oil' there is no specific IS standard prescribed in the tariff; but they have to qualify the general Section Note 2 which specify that those shall be consisting mainly of mixed unsaturated hydrocarbons, obtained by any process, provided that the weight of the non-aromatic constituents exceeds that of the aromatic constituents to be treated as petroleum oils and oils obtained from bituminous minerals and other similar oils.
9.5 We have perused the extract of test reports given at paragraph 8 of the Order-in-Original dated 20.04.2023, which is extracted below:
"The sample as received is in the form of pale yellow coloured oily liquid. It is composed of mixture of mineral hydrocarbon oil more than 70% by wt having following constants Density at 15°C 0.8255 gm/mlBased on above tested parameters, the sample u/r is mixture of mineral hydrocarbon oil mainly containing diesel fraction.
It does not meet the requirements of IS standards of solvents (IS:1745), Motor Gasoline (IS:2796, IS 17021 or 17076), Aviation Gasoline (IS 1604), Kerosene intermediate, Kerosene (IS:1459), Aviation turbine fuel (IS:1571), Gas oil, Vacuum gas oil, Light Diesel oil (IS:15770), Automotive Diesel fuel (IS:1460), High flash high speed Diesel(IS: 16861) and Waste Oil."
From the above specific report of the samples of the impugned goods, it transpires that the imported goods under dispute are mixture of hydrocarbon oil, though containing diesel fraction, does not fulfil the standard requirements as specified under IS:1460:2005 to be considered as Automotive Diesel Fuel. In view of the above specific factual record establishing that the classification of impugned goods cannot be categorised under CTI 2710 1944, inasmuch as these goods do not fulfil the criteria mentioned for Automotive Diesel Fuel as per IS:1460:2005, the 14 C/85549/2024 conclusion arrived at in the original order and which is confirmed in the impugned order, by the authorities below does not stand the scrutiny of law.
10.1 We also find force in the argument advanced by the learned Advocate for the appellants that statements given by the appellants- importer alone cannot form the basis to confirm the charge of mis- classification and to re-classify the goods from 'Mixed Hydrocarbon oil' to 'Automotive Diesel Fuel'. The law is well settled in these matters as the Hon'ble Supreme Court in the case of H.P.L. Chemicals Limited (supra) have held that classification of goods is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify the goods under a particular heading or sub-heading or tariff item different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof. We find that the present case the said burden has not been discharged at all by the Revenue. On the one hand, from the test report given by the CRCL laboratory and from relevant tariff entries in First Schedule to the Customs Tariff Act, it is quite clear that the goods are classifiable as 'other' residuary goods' including 'Mixed Hydrocarbon oil' under CTI 2719 1990 and not as 'Automotive Diesel Fuel' under CTI 2710 1944. Department's own Chemical Examiner of CRCL laboratory after examining the chemical composition of the representative samples of imported goods has said that it is not fulfilling the requirements of Automotive Diesel Fuel. On the other hand, after examining the chemical composition he has opined that the impugned is to be treated as mixture of hydrocarbon oil.
10.2 It is also a settled position of law that merely because an assessee has, under the stress of investigation, signed a statement admitting tax liability, it cannot lead to self-assessment or self-ascertainment. In the case of Vinod Solanki Vs. Union of India[2009 (233) E.L.T. 157(S.C.)], the Hon'ble Supreme Court has ruled that the initial burden to prove that the confession was voluntary is upon the department andthat evidence brought by confession if retracted, must be corroborated by other independent and cogent evidence. The Hon'ble Madras High Court in the case of Senior Intelligence Officer, Director General of Goods and Services Tax Intelligence v Shri Nandi Dhall Mills India Private Limited [2022 (3) TMI 444 (Mad)] held that merely because an assessee has, under the stress of investigation, signed a statement admitting tax liability and has also made a few payments as per the statement, cannot lead to self-assessment or 15 C/85549/2024 self-ascertainment. Though, the judgement was pronounced in respect of GST, it goes to indicate that acceptance by the appellant during the course of recording the statement is not just enough and the same has to be confirmed by adducing independently corroborative evidence.
11. In view of the above discussions and analysis, it is made clear that none of the evidences relied upon by the department, to allege the mis- classification and mis-declaration of the description resorted to by the appellants, stand the scrutiny of Law. We are of the considered opinion that the department failed to substantiate the allegations by cogent and legally admissible evidences. Hence, under the facts and in the circumstances of the case, we have no hesitation in allowing the appeal in favour of the appellants by setting aside the impugned order.
12. In the result, the appeal is allowed by setting aside the impugned order dated 13.09.2023.
(Order pronounced in open court on 25.02.2025) (S.K. MOHANTY) MEMBER (JUDICIAL) (M.M. PARTHIBAN) MEMBER (TECHNICAL) Sinha