Rajkamal Industrial Pvt Ltd Vs C.C.-Kandla (CESTAT Ahmedabad)
CESTAT Ahmedabad held that enhancement of import value merely on the basis of consent letter of the importer without following due process of law as contemplated u/s. 14 of the Customs Act read with Customs Valuation Rules, 2007 is unsustainable in law.
Facts- Present appeals are preferred against the common impugned order passed by the Commissioner (Appeals), wherein, he upheld the classification of Rubber Processing Oil (RPO) under Chapter heading 27079900 of Custom Tariff Act and enhancement the value of imported RPO. Commissioner (Appeals) further upheld that the appellant mis-declared the country of origin in the bills of entry.
Conclusion- Held that the enhancement was made merely on the consent letters given by the directors of the appellant. In the present case neither any contemporaneous value was adopted nor any method as prescribed under Section 14 read with Custom Valuation Rules, 2007 was followed. Therefore, merely on the basis of statements of director valuation cannot be enhanced. Therefore, the enhancement of the value is not sustainable in the facts of the present case.
Held that Tribunal in the case of Agarwal Industrial has held that for incorrect mention of country of origin, the importer cannot be penalized. Accordingly, in the present case also considering overall facts and the fact of incorrect declaration, if any, regarding country of origin in the Country of Origin Certificate, the appellant is not liable for any penalty or fine.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This group of appeals are preferred against the common impugned Order-In-Appeal KDL/COSTM/000/APP/413-422-14-15 dated 03.12.2014 passed by the Learned Commissioner (Appeals) wherein he upheld the classification of Rubber Processing Oil (RPO) under Chapter heading 27079900 of Custom Tariff Act and enhancement the value of imported RPO. The Learned Commissioner (Appeals) further upheld that the appellant mis-declared the country of origin in the bills of entry. Consequently, the Learned Commissioner (Appeals) upheld the finding of the Adjudicating Authority and dismissed the appeal preferred by the appellant. Therefore, the present appeals.
1.2 The following four issues involved in the present appeals:-
(i) Whether the Rubber Processing Oil imported by the Appellant is classifiable under Chapter Heading No. 27101990 as classified by the Appellants or under Chapter Heading No. 27079900 as classified by the Revenue.
(ii) Whether the value of the imported RPO can be enhanced based on the consent letters given by the directors of the Appellants at the time of release of the goods, without following the due process of law as contemplated under Section 14 of the Customs Act read with Customs (Determination of Value of imported value) Rules, 2017
(iii) Whether the Appellants mis- declared the Country of Origin in the Bills of entry filed by them.
(iv) Whether the quantum of penalties and redemption fine imposed disproportionate to differential duty involved in the matter
1.3 The order of the Adjudicating Authority was based on the test report of Custom House Laboratory at Kandla. Few test reports of Custom House Laboratory, Kandla and the statements of the Director of the appellant M/s. Rajkamal Industrial Pvt Ltd and statements of CHA.
2. Shri Hardik Modh, Learned Counsel along with Shri Amit Laddha, Learned Advocate appearing on behalf of the Appellant submits that the Custom Department relied upon the Chapter Note 2 of Chapter 27 for rejecting the classification under Chapter Heading 27101990. He submits that the revenue has wrongly classified the RPO under Chapter Heading 27079900 as the identical issue arose in the case of Shah Petroleum Ltd vs. Commissioner of Customs- 2017 (358) ELT 483 (T) wherein the Hon’ble Tribunal held that the RPO is not classifiable under Chapter Heading No 27079900 but the same is classifiable under 2713. The said judgment of the Tribunal was upheld by the Hon’ble Supreme Court reported at 2018 (360) ELT A177 (SC).
2.1 Without prejudice to the aforesaid, he further submits that the appellant M/s. Rajkamal imported consignments of RPO through two bills of entry whereas the Appellant M/s. Bagwan Petroleum imported consignments of RPO through four bills of entry. Each bill of entry contains 15 containers, each container contains 80 tonnes. The investigating authority separated 10 drums randomly from each container and drew the samples from each of 10 drums. It appears from the proceeding that Kandla Custom House Laboratory sent only three test reports in respect of appellant M/s. Rajkamal Industrial and four test reports in respect of M/s. Bagwan Petroleum. It is his submission that the investigating authority ought to have sent all the samples drawn from the drums to the laboratory for testing. In failure to send all the samples for testing, the outcome of the test report is applicable to those samples which were sent for testing. It does not mean that the said test reports are applicable for all drums for which the goods were not tested. Further, each test report issued by Kandla Custom House Laboratory provides different grades of aromatic Constituents, this supports the case of the appellant that the investigating authority ought to have sent all the samples to Kandla Custom House Laboratory for examining contents of the goods. Since the investigating authority did not instruct the Kandla Custom House Laboratory to supply test reports of each of the samples drawn from the drums, results of samples are not applicable for the entire cargo. He takes support of the case of Shalimar Paints Ltd Vs. Commissioner of Central Excise- 2001 (134) ELT 285 wherein it was held that the test report can be the basis of classification only for those products for which the goods were tested.
2.2 Without prejudice to the above, he further submits that it is an obligation upon the Laboratory to provide a method of testing. In the present case none of the reports provides the testing method and therefore, the same is not applicable. In the following cases, it is held that whenever the method of testing is relevant, the method adopted ought to be mentioned in the test report. He takes support of the following judgments:-
