2023 (9) TMI 535 - BOMBAY HIGH COURT

Refusal on the part of the Directorate of Revenue Intelligence to permit re-testing in a manner contrary to Circular 30/2017-Customs - kerosene oil or not - petitioner was of the view that what was imported was Mixed Mineral Hydrocarbon Oil, and made a request for re-testing of the samples - no such testing carried out - Confiscation of the goods imported by the petitioner - levy of penalty - HELD THAT:- The show cause notice issued to the petitioner on 22.03.2022 is entirely based on the report of the Vadodara Laboratory that states that the samples met the requirements of Kerosene as per IS:1459-1974. The show cause notice in clear terms states that the goods seized were containers of kerosene oil under the Bill of Entry dated 11.09.2021 and this was by virtue of mis-declaring the same as Mixed Mineral Hydrocarbon Oil. After the test report from the Vadodara Laboratory was received, a request for re-testing was made by the petitioner on 30.09.2021. This request was not accepted and the show cause notice came to be issued on 22.03.2022 - in the reply to the show cause notice, a clear stand was taken by the petitioner that the specific tests required to be done as per directions of the Senior Intelligence Officer were not undertaken by the Vadodara Laboratory. This aspect is clear on perusing the Test Memo dated 16.09.2021 and the test report of the Vadodara Laboratory. The Joint Commissioner of Customs in his order dated 21.06.2022 has not considered this relevant aspect and without dealing with the specific stand of the petitioner has proceeded to accept the test reports of the Vadodara Laboratory.

From the test report dated 03.04.2023 received from the Mumbai Laboratory as well as the re-testing report dated 19.05.2023 received from CRCL, New Delhi, we find that the entire basis for issuance of the show cause notice that was issued in view of the report of the Vadodara Laboratory indicating import of kerosene oil would not now survive. It is not in dispute that the report received from the Vadodara Laboratory is categorical in its finding that the samples met the requirement of kerosene. The subsequent testing and re-testing reports bely the initial report obtained from the Vadodara Laboratory - the show cause notice in its present form cannot survive since the testing and re-testing of the samples has been undertaken in accordance with Circular 30/2017-Customs as issued by the Central Board of Excise and Customs on 18.07.2017. Consequentially, the impugned order passed by the Joint Commissioner of Customs dated 21.06.2022 is liable to be set aside on this short ground.

The test report from the Mumbai Laboratory as well as the re-testing report from CRCL, New Delhi clearly indicate the samples to contain more than 70% Mineral Hydrocarbon Oil having characteristics of Base Oil. In view of these two consistent reports it is clear that the goods imported were neither restricted nor prohibited. In this factual backdrop when the show cause notice now does not survive, the confiscation of the goods under Section 111(d) and (m) would not be now sustainable. The goods in question are thus liable to be released.

Appeal allowed.