Power u/s 18 of Customs Act cannot be exercised arbitrarily without a good reason to subject goods to any test – SC

Brief of the case:

• The Hon’ble Supreme Court in the case of Tata Chemicals Ltd. held that the power given to custom authorities u/s 18 of Customs Act,1962 can be exercised only when the proper officer deem it necessary to subject the goods to further tests.
• Thus, such power cannot be exercised in every case and only exercisable when the officer has put forward any material to challenge the validity of assessment made by the assessee.

Facts of the case:

• The assessee imported cooking coal for the manufacture of coke. The cooking coal was taxed at concessional rate of 5% basic duty and full exemption from additional & auxiliary duties provided it contain ash content less than 12% in terms of Notification No. 35/90 .
• It hired M/s Cargo Superintendents Co.(Asia) P. Ltd. (CASCO) to test the ash content of cooking coal and provide a certificate on the basis of its test & analysis.
• The testing done by CASCO was in line with the India Standards (IS 436 & 1350).As per the report of CASCO the ash content of the said coking coal was 9.8%.
• On the arrival of goods at the port of import the proper officer drew sample randomly in the presence of Shri K.M. Jani alleged to be the employee of assessee company.
• The samples were sent to Central Fuel Research inst. and Central Revenue Control Lab wherein the testing conducted revealed that the cooking coal has an ash content more than 12%.
• On the basis of such reports show cause notice was issued demanding differential duty.
  

Contention of the Assessee: