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5. Ld.Counsel appearing on behalf of the appellant, after taking us through the entire case record would submit that the adjudicating authority has erred in coming to a conclusion that there was mis-declaration on the part of the appellant. He would take us through the Order-in-Original and submit that the products which were imported by the appellant had been declared by them as acid oil and not as palm acid oil. It is his submission that the conclusion of the chemical examiner as has been relied upon by the Department is also in his favour in as much as the said the report state that the product is other than pam acid oil which is irrelevant as the appellant has never declared the product as palm acid oil. After taking us through the BIS standard for acid oil, he would submit that the standards as laid down by BIS has been complied with by imported products as tested by the chemical examiner. It is his submission the appellant had never declared their product as palm acid oil or PFAD. It is his submission that the chemical examiner has also come to a conclusion that the goods which are imported are not PFAD but are having characteristics of PFAD and such a conclusion supports the declaration made by the appellant that the products are acid oil. The submission of the ld.Counsel is that the conclusion of the chemical examiner therefore does not establish any mis-declaration on the part of the appellant.

7. In rejoinder, ld.Counsel would draw our attention to the applications made by the appellant to DGFT authorities. He would submit that the advance licence which is in question in this case has not been cancelled and the said application specifically declare that if the contents of Behemic / Euricic acid is found short in the goods imported, it would be made good from the process carried out from indigenous sources, hence there is no mis-declaration. It is his submission that Kreiss test which indicate the colour of the product does not state specifically as to that the product can be of palm origin or PFAD; it is a test only to determine whether the colour of the imported goods noticed is due to what reason. He would refer to very same technical literature on which ld.Commissioner (AR) has relied upon and bring to our notice that the said Kreiss test is also used to determine oxidation of any oil. He would then refer to BIS standards and submit that the said standards indicate that palm based oil generally tend to get coloured due to long storage and time taken for transportation in the tank. He would again emphasize that the additional documents which are brought on record today by the ld.D.R., are of no consequence in as much as these documents were never filed by the appellant if in one and these documents were recovered from the appellant during the visit which was conducted at the time of investigation. It is his further submission that the chemical examiner had never stated in his report that the product imported and declared by the appellant as acid oil was not an acid oil but something else. He would submit that the samples show the characteristics of PFAD and they are not palm acid oil. He would submit that the appellant has never declared or imported palm acid oil or PFAD.

10.3 It is not in dispute that, Acid Oil is a by-product that arises in the process of chemical refining of any oil. On the other hand, Palm Acid Oil is specie in the genus of Acid Oil and covers only such Acid Oil which arises in the chemical refining of palm oil. As such the test results and the opinion of the Chemical Examiner are totally irrelevant to the dispute in hand as the same have been issued on the mistaken presumption that what was required to be examined was whether the goods imported were Palm Acid Oil or not. The adjudicating authority has in the impugned order refused to take cognizance of this error on the ground that the Appellant had raised the said contention only in the course of adjudication and not during investigation. We find this reason to be totally unacceptable as the Commissioner of Customs., Kandla while adjudicating the case was not acting as an Appellalte authority but as an adjudicating authority. A defense set up by a noticee cannot be rejected or brushed aside merely for a reason that the same was not put forth before the investigating agency. The stage of investigation is not a stage for making submissions. The stage of adjudication is the first stage where a noticee is called upon to make his submissions and to produce evidence in support of his submissions. The adjudicating authority is under an obligation to take on record the submissions made by the noticee as also the evidence produced by him and then come to a conclusion after examination in entirety along with evidence on record. The adjudicating authority cannot shut out or reject a defense merely because the investigating agency was not appraised of such a defense. On this short ground alone the order of the Commissioner needs to be set aside as there is, in effect no answer to be found to the appellants defense that the evidence on record does not dispute that the goods imported answer the description Acid Oil, as declared in the Bill of Entry. None of the reports or opinions relied upon in the notice say categorically that the goods imported were other than Acid Oil. An opinion that they were other than Palm Acid Oil is totally irrelevant as the Appellants never declared or claimed the goods to be Palm Acid Oil. The further opinion that the goods were found to have characteristics of PFAD is irrelevant as it is knowledge that Acid Oils and PFAD have the same characteristics. The chemical examiner, whose opinion forms the bed rock of Revenues case has himself considered that PFAD and Palm Acid Oil (which is one type of Acid Oil) are the same products obtained through two difference processes . It is therefore obvious that these two products will have the same characteristics. In the impugned order, it is noticed that the adjudicating authority has held that the report of chemical examiner has stated FFA content in terms of Palmetic, hence the Acid Oil imported could be Palm Acid Oil. In our view, this finding of adjudicating authority is baseless and incorrect in as much as from the technical literature produced, it is very clear that FFA content in oil is measured in terms of Palmetic or Steeric. The technical literature produced do not state that the measurement of FFA in terms of Palmetic is confirmatory of the oil being palm based. The show cause notice in the very first paragraph records and accepts that PFA and Acid oil fall under the same tariff classification and attract then same rate of duty. This being the accepted position, the conclusion in the opinion of the chemical examiner that the goods in question were other than palm acid oil and that they had the characteristic of PFAD are both irrelevant and both insufficient for drawing an inference that the goods were other than Acid oil as declared on the bill of entry and as covered by the advance licence. The finding of mis-declaration and the further finding that the goods imported were not covered by the description of the licence are therefore unsustainable.

10.7 The Learned Commissioner AR has also contended that Appellant could not have used any product of Palm origin for manufacture of Euricic Acid as oils of Palm Origin do not contain any Euricic Acid. What the Appellant had ordered for and imported was Acid Oil and not Palm Acid Oil as has been presumed. The Managing Director of the Appellant Company has in his statement, which the notice itself has relied upon, clearly stated that the Acid Oil exported from Malaysia was likely to be a mixture of different Acid Oils which are stored together in a common storage tank. It is for this precise reason that while applying for licence on ad-hoc norm basis, the Appellant categorically stated that indigenous material may be used for fulfilling the export obligation for Euricic Acid, depending upon the Euricic Acid content in the Acid Oil imported.