Foods Fats & Fretilisers Ltd. Vs Commissioner of Customs (CESTAT Hyderabad)
Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Hyderabad, has dismissed an appeal filed by M/s Foods, Fats & Fertilisers Ltd. (now 3F Industries Ltd.), upholding the Deputy Commissioner of Customs’ decision to deny a customs duty exemption on imported crude shea butter. The tribunal concluded that the imported shea butter, due to its high Free Fatty Acid (FFA) content, was not of edible grade, thus ineligible for concessional duty under relevant customs notifications.
The case revolved around a Bill of Entry dated March 30, 2011, for the clearance of 187.140 MT of shea butter, intended for manufacturing shea stearin for export. The appellant initially classified the goods under CTH 1515 9099, which was found to be correct. However, the dispute arose over the eligibility for duty exemption. The appellant initially sought benefit under Serial No. 33B of Customs Notification No. 21/2002 and later claimed eligibility under Serial No. 33A of the same notification, arguing that their goods were of edible grade.
The Customs Department, in its assessment, referred to the supplementary note to Chapter 15 of the Customs Tariff Act, 1975, which defines “edible grade” for certain goods based on standards in Appendix B of the Prevention of Food Adulteration (PFA) Rules, 1955. It was noted that while Appendix B specifies standards for various food articles, there were no specific standards prescribed for shea butter at that time. The Department also considered a certificate from the Central Food Laboratory regarding a separate import through Chennai Port, which confirmed the shea butter samples conformed to PFA Act standards. However, the Plant Health Officer (PHO) had reported that shea butter was not an article of food and thus outside the PFA Act’s purview. It was also generally acknowledged that shea butter is widely used in cosmetics and occasionally in the chocolate industry.
