Custom, Excise & Service Tax Tribunal
Cc (Export) Mumbai vs Marico Ltd on 18 January, 2019
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/547/2010
CROSS-OBJECTION NO: C/CO-176/2011
[Arising out of Order-in-Appeal No: 93/2010/MCH/AC/Gr.VII/2010
dated 29th April 2010 passed by the Commissioner of Customs
(Appeals), Mumbai-I.]
For approval and signature:
Hon'ble Shri C J Mathew, Member (Technical)
Hon'ble Shri Ajay Sharma, Member (Judicial)
1. Whether Press Reporters may be allowed to see the
Order for publication as per Rule 27 of the : Yes
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of
CESTAT (Procedure) Rules, 1982 for publication : Yes
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy
: Seen
of the Order?
4. Whether Order is to be circulated to the
: Yes
Departmental authorities?
Commissioner of Customs (EP)
Mumbai ... Appellant
versus
Marico Limited ...Respondent
Appearance:
Shri Ahibaran, Additional Commissioner (AR) and Shri Bhushan Kamble, Assistant Commissioner (AR) for appellant Shri Vipin Kumar Jain, Advocate with Shri Ramnath Prabhu, Advocate for respondent C/547/2010 2 CORAM:
Hon'ble Shri C J Mathew, Member (Technical) Hon'ble Shri Ajay Sharma, Member (Judicial) Date of hearing: 19/12/2018 Date of decision: 18/01/2019 ORDER NO: A/85125 / 2019 Per: C J Mathew This appeal of Revenue, against the approval, vide order-in- appeal no. 93/2010/MCH/AC/Gr.VII/2010 dated 29th April 2010 of Commissioner of Customs (Appeals), Mumbai-I, of the finalisation of provisional assessment by the original authority, is centred around the measurement, and the principle of 'rounding off', adopted by the lower authorities. Other than these two aspects, the grounds of appeal do not contain any reference to the disposal of the order by the first appellate authority.
2. The respondent, M/s Marico Ltd, had filed bill of entry no. 588667/20.7.05 for import of 'coconut oil' against advance licence under the 'Duty Exemption Entitlement Certificate' scheme in the Foreign Trade Policy notified under the Foreign Trade (Development & Regulation) Act, 1992 and the assessment, even as it was provisional under section 18 of Customs Act, 1962, did not impede the confiscation for having been imported in contravention of the policy restricting the entitlement to M/s State Trading Corporation, as C/547/2010 3 the canalising agency, for procurement of 'coconut oil'. With the Hon'ble High Court of Bombay affirming the decision of the Tribunal to modify the fine in lieu of confiscation as well as the penalty, the assessment was taken up for finalisation.
3. The original authority confirmed the classification of 'coconut oil' under the declared heading no. 15131900 of the First Schedule of the Customs Tariff Act, 1975. One of the aspects in that order, considered by the reviewing Commissioner to be lacking in legality and propriety, was the breach of restriction of quantum of 'free fatty acid,' with a range of 3% - 6% in the advance licence, based upon the official test report of the samples drawn at the time of import indicating the 'acid value' to be 5.9 and 'free fatty acid (lauric)' to be 2.1% that the original authority, instead of accepting as such, chose to convert, in the manner prescribed by the Manual of Methods of Analysis of Oils & Fats issued by the Director General of Health Services, Government of India, by a factor of 1.412 to arrive at the content of 'free fatty acid (oleic)'. Besides adverting to the literature furnished by the importer in which the 'acid value' of 6 distinguished 'raw' from 'refined', the original authority applied the conversion factor of 1.412 to the 'free fatty acid' content to confirm that the import conformed to specifications in the advance licence.
4. Instead of conceding the proposition of an aggrieved Revenue, first appellate authority upheld the correctness of the findings of the C/547/2010 4 original authority with more detail of computation. Confirming that the opinion of Assistant Director, Food & Drug Control Laboratory, Food and Drug Administration, Government of Maharashtra, based on the practice of determining 'free fatty acid' content in accordance with Manual of Methods of Analysis of Oils & Fats issued by Director General of Health Services, Government of India, advised that 'acid value' is the percentage of 'free fatty acid (oleic acid) multiplied by a factor of 1.99 and that the Indian Standard of Methods of Sampling and Test for Oils and Facts [IS: 548 (Part I)-1964] is 'To express in terms of free fatty acids as percent oleic, lauric or palmitic divide the acid value by 1.99, 2.81 or 2.19, respectively.' the impugned order was issued.
5. Apparently to test the validity of the 'acid value' and 'free fatty acid' content, the original authority applied the three factors to the 'acid value' and found that the 'free fatty acid' content reported by Deputy Chief Chemist as 2.1%, when factored by 1.99, obtained the 'free fatty acid (oleic) to be 2.97%. Justifying this conversion, the first appellate authority, extracting the definition of 'acid value', came to the conclusion that the acid value should remain unvaried, irrespective of the type of fatty acid, to approve the conversion of 'free fatty acid (lauric)' to 'free fatty acid (oleic)'. As the content was, as yet, below the threshold of the range prescribed in the advance licence, the first C/547/2010 5 appellate authority discarded the reliance placed by Revenue upon the decision of the Tribunal in Joshi Steel Industries v. Commissioner of Central Excise, Bhubaneswar [2004 (177) ELT 522 (Tri-Del)] which cited the specification in the same Manual deploying IS: 548 (Part I)- 1964 requiring the prescribed rules to be followed when rounding off. The first appellate authority then cited the decision of the Tribunal in Delton Cables Ltd v. Commissioner of Central Excise, Delhi [1997 (92) ELT 555 (Tribunal)] on 'rounding off' to affirm the finalisation of the assessment against the claim of Revenue.
6. Learned Authorised Representative contends that the discarding of the decision in re Joshi Steel Industries even after approval by the Hon'ble Supreme Court was erroneous.
7. The import was permitted as the lower authorities found the 'free fatty acid' in the imported 'coconut oil' to be at the threshold of the prescribed range after conversion of the 'lauric value' to 'oleic value' and upon rounding off that was in favour of the importer. The question, therefore, that remains to be resolved is whether, in accordance to the specifications in the advance licence, the import was to be allowed. Undoubtedly, the findings of the Tribunal in re Joshi Steel Industries, to the effect that '10.... The thickness of a product is a question of fact. 5 mm means 5 mm and not 5.5 mm. There was no provision for rounding off. The thickness had been admitted by the C/547/2010 6 appellants, had been ascertained through the reliable methods and no challenge had been made to the determination of the thickness.' was upheld by the Hon'ble Supreme Court. However, in the present dispute the claim for 'rounding off' has been made and in re Delton Cables Ltd, the Tribunal, distinguishing the judgement of Hon'ble High Court of Kerala in Aluminium Industries Ltd v. Union of India [unreported decision dated 16th September 1995], found the imperative of 'rounding off' to the prescribed decimal point sanctified by the authoritative rules for this purpose. Here again, the prescriptions of Bureau of Indian Standards was relied upon. We take note that the decision in re Joshi Steel Industries did not take cognizance of the earlier decision in re Delton Cables Ltd which has laid down the criticality of decimal point for recourse to 'rounding off' and was based on the documentation pertaining to thickness accepted by the buyer. The later decision, entirely upon facts, cannot be said to prevail over the earlier decision which laid down the principle. The reliance placed on the decision in re Delton Cables Ltd cannot be faulted.
8. Before the application of the rules for 'rounding off', the manner in which the conversion from 'lauric' to 'oleic', challenged by Revenue, must be dealt with. No justification is been offered in the grounds of appeal for placing reliance on the 'lauric value' other than the determination in the test report. The Manual referred to supra has C/547/2010 7 options for utilisation of factors for conversion of the three acids and emphasizes that the acid value would remain unchanged. Hence, it would appear that conformity with the threshold of the range prescribed in the license, with any one of the three in relation to the 'acid value', and which is not disputed, should suffice. It would appear that the most favourable is that of 'oleic' and that, in the absence of any other guidance factor in the license, or in the other authoritative text, cannot be denied to the importer. The ground of appeal does not also venture to contend anything to the contrary.
9. In the test report, there is no dispute that it is 'coconut oil' that has been imported. It is also not in dispute that the imported product is in 'raw' form. The license does not bar the import of 'raw coconut oil'; neither the license nor the grounds of appeal adduce any importance to the range of 3% to 6% mandated in the license. It would, therefore, appear that any derived conformity with the threshold of the range should suffice. The computation approved by the first appellate authority is not unreasonable.
10. In view of the above, we find no reason to interfere with the impugned order. Appeal of Revenue is dismissed. CO disposed off.
(Pronounced in Court on 18/01/2019)
(Ajay Sharma) (C J Mathew)
Member (Judicial) Member (Technical)
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