Commissioner of Customs (Post) Vs JJR Associates (Supreme Court of India)
The Supreme Court considered the Revenue’s Civil Appeals arising from the dispute concerning imported consignments of machinery oil/machinery lubricant oil. The underlying proceedings involved 41 Bills of Entry for consignments imported during July 2012 to October 2014. The Commissioner of Customs (Port), Kolkata had rejected the declared assessable value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and re-determined the value under Rule 5 on the allegation that the goods declared as machinery oil/machinery lubricant oil were actually base oil. The order also resulted in confiscation under Section 111(m) of the Customs Act, 1962, redemption fine of ₹50 lakh under Section 125, differential duty of ₹2,32,95,676, penalty of ₹20 lakh under Section 112(a)(ii) and ₹50 lakh under Section 114AA, with ₹95 lakh deposited during investigation ordered to be appropriated towards the duty demand.
Read CESTAT Judgment in this case: CESTAT Kolkata: Base Oil Classification Rejected as CRCL Report Said “May Be”
The importer challenged the order. It submitted, among other things, that the assessments relating to the 41 Bills of Entry had not been finalized under Section 18(2) of the Customs Act and therefore the differential-duty demand was not maintainable. It relied upon the decision in Jaju Petro Chemicals Pvt. Ltd. Vs. Commissioner of Customs (Port).
The matter reached the Calcutta High Court, which by order dated 18.11.2022 remanded the matter to the Tribunal for fresh consideration on merits based on the available test reports. The High Court observed that the Tribunal was the last fact-finding authority and was required to examine the experts’ reports and decide the classification issue. It also expressly stated that it had made no observation on the merits and that both parties could canvass their respective points before the Tribunal.
Before CESTAT Kolkata, the importer contended that the CRCL, Kolkata report did not classify the goods as base oil and the CRCL, New Delhi report merely stated that the samples “may be” base oils of various grades. It argued that these reports could not establish misdeclaration or justify reclassification. It also disputed the finding that base oil had been supplied to Balmer Lawrie & Co. Ltd. from the imported consignments, submitting that separate purchases of base oil had been made for such supplies and documentary evidence, including Central Excise invoices and certification by the Central Tax authorities, supported this position.
The importer further challenged reliance on statements of Rahul Jhajharia, stating that they had been retracted, and contended that there was no basis for confiscation, redemption fine or penalties. It also challenged rejection of the declared transaction value under Rule 12 and re-determination under Rule 5, relying on the Supreme Court decisions in Commissioner of Customs, Mumbai Vs. Mahalaxmi Gems and Commissioner of Customs, Mumbai Vs. J.D. Orgo Chem Ltd.
CESTAT Kolkata found no merit in the impugned order. It held that the test reports did not establish that the imported goods were base oil and that the attempt to classify them as base oil was unsupported by the reports. It also found the basis concerning supplies to Balmer Lawrie & Co. Ltd. to be erroneous. On valuation, the Tribunal noted the absence of material showing that the declared transaction values were not the actual transaction values. Relying on the cited authorities, including Golden Enterprises Vs. Commissioner of Central Excise & S. Tax, Ludhiana, it set aside the impugned order and allowed the appeals with consequential relief as per law.
The Revenue thereafter approached the Supreme Court. The Supreme Court, after condoning the delay and hearing the appellant’s counsel, held that no substantial question of law arose and found no reason to interfere with the orders under challenge. It accordingly dismissed the Civil Appeals, with pending applications also disposed of.
Thus, the Supreme Court did not interfere with the result under challenge, and the CESTAT decision setting aside the customs order and allowing the importer’s appeals therefore remained undisturbed.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Delay condoned.
Heard learned counsel for the appellant.
No substantial question of law arises.
We do not find any reason to interfere with the order(s) impugned in these appeals.
The Civil Appeals are, accordingly, dismissed.
Pending applications, if any, shall stand disposed of.
In terms of the signed order, the Civil Appeals are dismissed.
Pending applications, if any, shall stand disposed of.
