Commissioner of Customs (Port) Vs Maxtone Petrochemicals (CESTAT Kolkata)
CESTAT Kolkata held that for the purpose of sub heading 27101920, the “light oils and preparations” are those of which 90% or more by volume (including losses) distil at 210 degree Celsius. Goods not meeting the requirements as specified under Chapter Note 4 of Chapter 27 cannot be classified under CTH 27101920.
Facts- DRI, New Delhi has issued an Alert Circular No.02/2020-CI dated 23.03.2020 regarding “Violations of Petroleum Act, 1934 and Petroleum Rules, 2002 in import of “Low Aromatic While Spirit/Hydro Carbon Solvent and other Petroleum Class A,B and C grades”. The Circular indicated that some importers are importing Low Aromatic White Spirit (LAWS) classifiable under sub-heading 27101920, but misdeclaring the same under the sub heading 27101990, thereby violating provisions of Import Policy.
Accordingly, the Special Investigation Branch (SIB), Port, Custom House, Kolkata has initiated an investigation against the goods declared as ‘Low Aromatic White Spirit’ (LAWS) imported by the Respondent (Importer) under Bill of Entry NO.9391372 dated 31.10.2020. The quantity of the imported goods is 97,280 KG (Net Weight), in 608 drums i.e. 1,19,611 Litres (w.r.t. the density as 0.8133 gm/cc or KG/Litre (at 15 degree C) . The impugned goods were detained by the SIB officers on 17.02.2021 u/s. 110(1) of the Customs Act, 1962.
A Show Cause Notice was issued to the Respondent proposing to reject the classification of 27101990 claimed by them and reclassify the same under 27101920,in respect of the impugned goods imported vide Bill of Entry No.9391372 dated 31.10.2020 as well as the two past imports.
The Notice was adjudicated vide Order-in-Original dated 27.07.2021, wherein the adjudicating authority confiscated the goods imported vide Bill of Entry No 9391372 dated 31.10.2020, but allowed re-export of the goods on payment of redemption fine of Rs 2,00,000 and imposed penalty of Rs 3,00,000 in the event of failure to re-export the same within 120 days. In respect of the past two Bills of Entry, he imposed Redemption fine of Rs 2,00,000 and penalty of Rs.5,00,000.
CIT(A) modified the Order-in-Original. Accordingly, being aggrieved, revenue has preferred the present appeal.
Conclusion- It is evident that for the purpose of sub heading 27101920, the “light oils and preparations” are those of which 90% or more by volume (including losses) distil at 210 degree Celsius, but the test report is silent about it. As per the Test Report, the FBP is 218, which means 100% of the goods will evaporate at 218 degree Celsius itself whereas for classification of the goods as ‘solvent 125/240’ under CTH 27101920, the requirement as per Note 4 is that only a maximum of 90% should evaporate at 240 degree celsius. Since the entire 100% of the goods evaporate at 218 degree celsius itself, the goods are not meeting the requirements as specified under Chapter Note 4 of Chapter 27, accordingly we hold that the impugned goods cannot be classified under CTH 27101920as claimed by the Revenue.
FULL TEXT OF THE CESTAT KOLKATA ORDER
DRI, New Delhi has issued an Alert Circular No.02/2020-CI vide F.No.DRI/HQ-CI/C-CELL/29/XI/16/2019/2051 dated 23.03.2020 regarding “Violations of Petroleum Act, 1934 and Petroleum Rules, 2002 in import of “Low Aromatic While Spirit/Hydro Carbon Solvent and other Petroleum Class A,B and C grades”. The Circular indicated that some importers are importing Low Aromatic White Spirit (LAWS) classifiable under sub-heading 27101920, but misdeclaring the same under the sub heading 27101990, thereby violating provisions of Import Policy.
2. Accordingly, the Special Investigation Branch (SIB), Port, Custom House, Kolkata has initiated an investigation against the goods declared as ‘Low Aromatic White Spirit’ (LAWS) imported by the Respondent (Importer) under Bill of Entry NO.9391372 dated 31.10.2020. The quantity of the imported goods is 97,280 KG (Net Weight), in 608 drums i.e. 1,19,611Litres (w.r.t. the density as 0.8133 gm/cc or KG/Litre (at 15 degree C) . The impugned goods were detained by the SIB officers on 17.02.2021 under section 110(1) of the Customs Act, 1962.
3. Upon scrutiny of the ICES system, it was noticed that the Respondent has imported the same item in the past, which has been already cleared from Customs. The details of such consignments is tabulated as below:-
Table-1
