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2023 (7) TMI 774 - CESTAT MUMBAIClassification of imported goods - Mineral Spirits falling under CTH 27101990 of the Customs Tariff Act, 1975 or Diesel Oil-High Speed Diesel (HSD) falling under CTH 27101930 of the Tariff Act? - period May 2017 to April 2018 - Allegation of mis-declaration of goods - smuggling of diesel - Reliance upon the statement, diary and CPU seized during investigation - HELD THAT:- On perusal of the test report annexed to the Appeal Memorandum, it is noted that the Joint Director, in both the test reports, after testing the samples on 6 parameters has concluded that “the samples under reference is other than Mineral Spirit. Each of the two samples may be considered as Diesel Oil.” The use of term ‘may be’ goes on to show that the report issued by the Custom House is not conclusive and is a mere opinion. As per Britannica Dictionary, meaning of words ‘may be’ means ‘possibly but not certainly, or perhaps’. Further, as per Macmillian Dictionary, word ‘may be’ is used for showing that one is not sure whether something is true or whether something will happen. The adjudicating authority has committed an error to re-classify the goods imported vide the 3 bills of entry on the basis of a test report which on the face of it is non-conclusive. It is settled principle of law that classification is a departmental function. It is also a settled law that onus to prove a fact is on the person who asserts the same. In the present case, the department has relied upon a test report, which does not conclusively show that the goods imported merit classification under heading proposed by the revenue. The stand of the department that language used in the impugned test report is a general practice, itself is objectionable inasmuch as no documentary evidences were adduced for deciding the issue of classification contrary to the classification claimed by the appellants in respect of the impugned goods. For a product to be considered as Diesel Oil, the same requires to fulfil all 21 parameters mentioned in IS 1460:2005. In the present case, the Custom House Laboratory vide aforesaid test reports have tested only 6 parameters. Hence, in other words, the Custom House Laboratory has not tested all the 21 parameters required in terms of IS 1460: 2005 - without testing all the parameters, the test reports cannot be considered to reclassify the imported goods as Diesel Oil. The case of the department for the live consignment and for the past consignment should fail, as the primary evidence in the form of test reports cannot be relied upon by the department as held in the preceding paragraphs - With respect to the goods imported by 51 bills of entry, the same in any event are well supported by independent test reports, which conclusively prove that the goods are Mineral Spirit. Neither have the department challenged the contents of the said Test Report nor have they provided any contrary test report to the one produced by the Appellant. In view thereof, the Appeals of the Appellants deserve to be allowed. Retraction of statement - It was not open for the adjudicating authority to simply brush aside the retraction and follow the retracted statements without any corroborative evidence - there are merits in the arguments of the Appellants that the adjudicating authority has erred in the impugned order by placing reliance on the invoices of Gulf Petrochem FZC to hold that the goods imported under live consignments were not mineral spirit but HSD - it is found that these invoices cannot be relied upon to hold that the goods were mis-declared by the Appellants. Reliance on Invoice issued by the Third party in Gulf - On perusal of the records, it is found that there is no invoice relating to sale of these ‘Gas Oil’ or ‘Ultra Low Sulfur gas oil’ from Skynet to Appellants nor is there any invoice from Skynet to Appellants for sale of HSD. The Department neither questioned Gulf Petrochem FZC nor Skynet to ascertain as to whether they supplied ‘Gas oil’ or Ultra Low Sulfur gas oil’ to the Appellants instead of Mineral Spirit - in absence of any invoice from Skynet showing sale of goods other than Mineral Spirit and also in absence of aforesaid supplier being questioned, the invoices issued by Gulf Petrochem FZC cannot be relied upon to hold mis-declaration and consequent confirmation of the duty demand. On reliance placed by the adjudicating authority on the diary of 2016 as it stated Dubai payment/Dubai hawala to hold that the Appellants received HSD from Dubai, on perusal of the said dairy, it is found that the same nowhere mentions about receipt or sale of HSD by the Appellants. Furthermore, the foreign supplier of the Appellants is Skynet and as per their invoices, all payments were made in favour of the supplier in Singapore and not Dubai - the said Diary cannot be relied upon to dispute the classification of goods. The classification of goods imported under the 3 live bills of entry and 51 past Bills of Entry have been wrongly rejected. The question of valuation will have to be allowed in favour of the Appellant as the same was disturbed by the department on the ground that goods imported were Diesel Oil and not Mineral Spirit. It is made clear that none of the evidences relied upon by the department, to allege the mis-classification and under valuation resorted to by the appellants, stand the scrutiny of Law - It is opined that the department failed to substantiate the allegations by cogent and legally admissible evidences. Hence, under the facts and in the circumstances of the case, there are no hesitation in allowing the appeals in favour of the appellants. Appeal allowed.
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