9911796707
TMI Blog2013 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... t discrimination and to allow the Petitioner to process the imported consignment of Crude Palm Oil (Edible Grade) under Bill of Entry Nos. 5580614 dated 27-12-2011 to conform to the standards laid down under Food Safety and Standards Act, 2006 and the applicable Regulations and upon such processing to permit the clearance thereof in such time and manner as may be permitted; (c) Injunction restraining the Respondents and each of their officers and subordinates from causing any delay or further delays in allowing the Petitioner to process the imported consignment under Bill of Entry No. 5580614, dated 27-12-2011 to conform to the standards laid down under the Food Safety and Standards Act, 2006 and the applicable Regulations and upon such processing in clearance thereof any further in any manner whatsoever; (d) Ad interim order in terms of prayer (b) and (c) above; (e) Costs of and incidental to this application be paid to the Petitioners by the Respondents; (f) Allow this Petition, directing the Respondent No. 1 to 4 to lift the detention order and give consequential relief. (g) Award costs. (h) Pass such further orders and grant relief and/or direction or directions be given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value. This is because during the process of refining higher acid value results in higher wastage. 3.7 Out of the total quantity imported by the Petitioner, 15,049.895 MTs was part of one parcel and was stored in Wings 2, 4 and 6 of the vessel in storage tank nos. 2P, 2S, 4P, 4S, 6P and 6S respectively. The said cargo, at the time of loading, had a Free Fatty Acid ('FFA') content of 4.07% which corresponds to Acid Value of 8.91% [Acid value = Percent fatty acid (as palmitic) x 2.19]. 3.8 The balance 2,000 MTs was part of another parcel weighing 15499.472 MTs also loaded at the same port on the same vessel in Wings 1, 3 and 5 in storage tank nos. 1P, 1S, 3P, 3S, 5P and 5S respectively. The FFA content of the said parcel was 4.74%, which corresponds to Acid Value of 10.38%. 3.9 The vessel arrived at Kandla Port on 25-12-2011 and discharged the cargo in the shore tanks belonging to M/s. Dhara Vegetable & Foods Co. and M/s. Agencies & Cargo Care Ltd. The first parcel of 15049.895 MTs belonging to Petitioner was discharged in Shore Tank Nos. 306, 310, 311 of Dhara Vegetable & Foods Co. The balance cargo of 2000 MTs from the second parcel was discharged in Shore Tank No. ACC-26 of Age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms had drawn samples of the entire consignment on board of the Ship and that there were multiple receivers/importers of the goods on the vessel. The Petitioners submitted that in such a case, the said chemical analysis report should not be relied upon and that the PHO and the Customs must draw exclusive samples of the goods imported by the Petitioner to determine the acid value as it is possible that the crude palm oil imported by other importers may have had acid value greater than 10 causing the acid value of the entire consignment on board the ship to exceed the acid value of 10. (c) that they had reason to believe that the chemical analysis conducted by the PHO also confirms to the fact that the cargo imported by them is eligible for exemption. (d) that Circular bearing F. No. 528/27/97-Cus. (TU) (Circular No. 29/97) dated 31-7-1997 issued by the Ministry of Finance, Department of Revenue, (Tariff Unit), New Delhi, clarified that the term 'vegetable oil of edible grade' as "......the terms "vegetable oils of edible grade" will cover vegetable oils which are fit for human consumption after further processing. The benefit of duty exemption is admissible so long as the oils ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Petitioner, vide letter dated 17-1-2012, 18-1-2012 and 20-1-2012, again requested the Respondent Nos. 3 and 4 to draw samples from the shore tanks for the purpose of testing and drew attention to the chemical analysis report at the load and discharge port in support of their submission that the acid value of the goods were less than 10 at the time of import. 3.19 The Petitioner did not receive any response to their submissions and letters and the subject goods of the Petitioner remained under detention. 3.20 The said goods have been imported following the procedures laid down by the Customs (Import of Goods at Concessional Rate of Duty for Manufacture) Rules, 1996 and the petitioner has provided a bond to the Respondent stating that the said goods are to be used for the manufacture of edible palm oil in India. Thus, the intention of the Petitioner is not to divert the goods away from its intended purpose and use it for industrial use. 3.21 The object and purpose of Laws relating to "Food" is that goods should not be permitted to come in the mainstream unless those are fit for human consumption and the same should not adversely affect the environment and health on consumption. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be refined before it is supplied for human consumption and the same shall conform to the standards laid down under Regulation 2.2.1(16). 3.24 The standard under Regulation 2.2.1 (16) is of Refined Vegetable Oil i.e. refined, bleached and deodorized and the conditions stipulated there-under are - (i) The name of vegetable oil from which the refined oil has been manufactured has to be clearly shown on the label of the container, and (ii) The Standards prescribed under the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 for the specified edible oils shall also apply except for Acid Value which shall be less than 0.5%. 3.25 Accordingly, in terms of the said provisions under Regulation 2.2.1(16), it is categorically and ex facie evident that the standards prescribed under the said rules i.e. under Regulation 2.2.1 and sub-headings 2.2.1(1) to 2.2.1(24) are for "edible oils" and that after manufacture of edible oil the requirement of packaging and labelling are also mandatory. In other words, the overall reading of Regulation 2.2.1(19) will clearly show that the imported Palm Oil has necessarily to be refined to conform to the Standards und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sist by the Government. The harmonious reading of the said two sets of laws/provisions will show that Government has permitted import of Crude Palm Oil (Edible Grade) having Acid Value 4 and above without any limit on higher side knowing fully well that Imported Palm Oil could not be sold in India for home consumption unless refined and before it conforms to the standard under Regulation 2.2.1(16) of the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011. Accordingly, the clearance of the subject consignment imported by the Petitioner shall not result into the entry of any adulterated food in the mainstream. 3.30 While being conscious and aware of the definition and standard of Palm oil prescribed under the Food Safety and Standards Act, 2006 and the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 the Government by Notification has permitted import of Crude Palm Oil (Edible Grade) with Acid Value 4 and above with no limit on higher side. 3.31 Under the Food Safety and Standards Act, 2006 and the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 the Government has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warrant a construction that the commodity should have been completely used up. Even putting the commodity to any type of utility within the territory of India will tantamount to "home consumption". Thus, since the intention of the Petitioner is to use the crude palm oil as refined vegetable oil after further refining the same, by no stretch of imagination can the declaration in the bill of entry for home consumption be alleged to reflect any wrong declaration. 3.36 On the face of the declaration that the same was crude palm oil intended to be converted into edible grade and that as it then stood, it cannot be construed or legitimately contended to conform to the standard of edible vegetable oil. 3.37 As appearing from Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011, the importation of crude palm oil is not prohibited but palm oil imported into the country or produced by solvent extraction shall be refined before it is supplied for human consumption and it shall conform to the standards laid down under Regulation 2.2.1(16). Additionally, it shall have Flash Point (Penske-Marten closed method) - Not less than 250ºC and the test for arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate authority under the said Act in accordance therewith but the Respondents will have nothing to do unless the importer i.e. the Petitioner has declared the item as one intended for immediate use for human consumption in the same form and the same is on examination found to be not in conformity with the guidelines given in the Act of 2006. 3.42 Such an arbitrary attitude of the Respondents has compelled the Petitioner to approach this High Court to intervene for directions to the respondents for lifting the detention order in light of the chemical analysis reports and information provided by the Petitioner as well as on the basis of the report of Port Health Officer ('PHO'). 3.43 The Petitioner has legally and under bona fide belief, followed the provisions and the notifications in a sincere, just and fair manner and all the disclosures were made as required under the law while bills of entry under Section 46 of the Act were filed. 4. This application has been opposed by the Revenue by filing affidavit-in-reply and the defence taken by the Revenue may be summed up thus : 4.1 Self Assessment in Customs has been implemented w.e.f. 8-4-2011 vide Finance Act, 2011 by suita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid importers. Since the goods are Edible Grade, clearance is to be allowed only after testing for determining whether the same conform to the standards laid down for edible grade goods under the Prevention of Food Adulteration Act and Rules. At the time of taking samples, neither the importers nor their Custom House agents informed that the Crude Palm Oil on the ship was of two types. Further, since similar declarations had been filed for both types of Crude Oil in the IGM, one composite sample was taken from the ship in the presence of the CHA. (c) The local Port Health Officer who is authorized to test the samples for the purposes of the aforesaid Act/Rules, issued test report which indicated that the acid value of the sample was less than 10. Some importers thereafter filed bills of entry claiming exemption from Customs duty under Notification No. 21/2002-Customs claiming that the goods being imported was of edible grade. The goods were accordingly permitted assessment at concessional duties on the basis of declaration of the importers and the test report of the port health officer. (d) In the meanwhile, intelligence was received that the acid value of the consignm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty @ 100% Crude Palm Oil of edible grade, if imported for actual use by edible oil refiners, attracts Nil Customs duty vide S. No. 30-II(B) of Notification No. 21/2002-Customs, dated 1-3-2002, as amended. (i) Sl.No. 30-II of Notification No. 21/2002-Customs, dated 1-3-2002 as amended reads as under : Sl. No. Chapter or Heading No. or Sub-heading No. Description of goods Stan-dard Rate Addi-tional duty rate Con-di-tion No. 30 15 II. The following goods, of edible grade namely,- (A) Crude palm oil falling under heading 1511, having an acid value of 4 or more and total carotenoid (as beta carotene) in the range of 250 mg/kg. to 2500 mg/kg., in loose or bulk form for manufacture of refined oil, refined palmolein, vanaspati, bakery shortening or inter-esterified fats (B) ---- (C) ---- Explanation. - For the purposes of this exemption, "Crude palm oil" means fixed vegetable oils, fluid or solid, obtained by pressure, if they have undergone no processing other than decantation, centrifugation or filtration, provided that, in order to separate the oils from solid particles only mechanical force, such as gravity, pressure or centrifugal force, has been employed, excluding any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms on the plea that the imports were not permissible as the goods were of non-edible grade. The Calcutta High Court in its order (page 34) stated that it would be incorrect to stop the import of edible oil with acid value of more than 10, as the import thereof have not been prohibited, at best duty may vary. Thus, the Court has stated that the goods should not be stopped from being imported, but at best benefit of exemption notification may not be allowed and higher duty may have to be charged. In this case, however, the department is not challenging the importability of the goods in question. The department has already permitted provisional release of the goods against bond and bank guarantee. The only question is whether these goods are entitled for exemption under the Customs Notification No. 21/2002. This question shall be decided during the adjudication proceedings. The importers have been requested to indicate whether they require a formal show cause notice, which shall be issued if they so desire, or shall waive the show cause notice in which case the case shall be adjudicated early. 4.3 The benefit of the notification was being claimed by the importer and the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned that any prudent shipper would store two different types of cargo separately i.e. Tank 1, 2, 3 would be filled with one type of cargo and tanks 4, 5, 6 with different type of cargo. In this case, however, the cargo has been filled up in alternate tanks. This coupled with the fact that both the exporter, the transporter and the major importer belonged to the same group of companies raises suspicion about the intention of the importer. 4.8 The entire cargo was being imported from M/s. Cargill International Pvt. Ltd., Singapore. There was only one CHA, M/s. Narendra Forwarders who was handling import formalities on behalf of the importers at the time of filing IGM or at the time of drawal of samples. Further, the IGM did not indicate that there were different types of Crude Palm Oil in the ship and similar declarations were filed for the entire cargo. The CHA also did not give description at the time of drawal of samples. Therefore, the petitioner has now come out with this contention when the entire cargo has been seized that half of the cargo had acid value less than 10. This contention appears to save himself from its declaration in respect of at least half of the cargo. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question is whether the goods are entitled for Customs duty exemption. 4.15 The Appendix B to PFA Rules (now Food Products Standard and Food Additives) Regulations, 2011 clearly state that the Palm Oil should have acid value not more than 10. This read with supplementary notes to Chapter 15 of the Custom Tariff Act indicates that Palm Oil of edible grade should have acid value not more than 10. As per this Note, this term "edible grade" has to be read according to Appendix B to the Prevention of Food Adulteration Rules, 1955 (PFA). According to the specification given in Appendix-B of the PFA Rules, the Palm Oil should have acid value less than 10. Thus, reading the Supplementary Note 1 of Chapter 15 along with Appendix B of the PFA Rules, indicates that Palm Oil of edible grade should have acid value less than 10 and that if it is more than 10, it cannot be treated as of edible grade. 4.16 The benefit of the concessional rate of duty is applicable for goods 'Vegetable oil of edible goods'. In the subject case, the goods are not of edible grade as the acid value is more than 10. The upper limit is not specified in the notification because the benefit is only for 'edible grade' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Commissioner of Customs (Port), Custom House, Kolkata has informed in letter F. No. S202GR-I(P)-24/2011A, dated 7-2-2012 that the Department did not appeal against the order passed by the Hon'ble Kolkata High Court in the matter of Gokul Refoils and Solvents Ltd. v. Union of India & Others. As regards the order passed by the Commissioner of Customs (Appeals) in the case of Gokul Refoils & Solvents Pvt. Ltd., it is not binding on the Commissioner of Customs, Kandla. However, it has been confirmed by the Assistant Commissioner of Customs (Port), Custom House, Kolkata in letter F. No. S202GR-I(P)-24/2011A, dated 7-2-2012 that the Order-in-Appeal No. KOL/CUS/ CKP/213/2011, passed by Shri V.K. Puri, Commissioner (Appeals), Kolkata has been accepted by the Committee of Commissioners. 6. After hearing the learned counsel for the parties and after going through the materials on record, we find that in the case of Gokul Refoil (supra), the question before the Calcutta High Court was primarily whether similar consignment of Crude Palm Oil (edible grade) having acid value of more than 10 was prohibitive goods. In the case before us, the specific defence of the Revenue is that it is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what is indicated in the notification should be strictly followed. In the exemption notification, under Serial No. 30, three specific items have been described as goods of edible grade under three different clauses viz. (A), (B) and (C). All those three goods fall under the Heading 1511 notwithstanding the fact that the heading 1511 contains no item of edible grade unlike Headings 1507, 1508, 1509, 1510, 1512, 1514, 1515, 1516, 1517 and 1518 of Chapter 15. Thus, the supplementary notes attached to Chapter 15 defining the edible grade applies only to those headings under the said Chapter where the phrase "edible grades" find place. The exemption notification, on the other hand, in spite of the fact that the Heading 1511 contains no item of edible grade, specifically recognizes three items of Heading 1511 as "edible grade" for the purpose of giving exemption only. 12. In the notification in question, crude palm oil falling under Heading 1511 having an acid value of 4 or more is fully exempted provided the total carotenoid (as beta carotene) is in the range of 250 mg/kg. to 2500 mg/kg. The aforesaid item has been described as edible grade only for the purpose of exemption by specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Calcutta High Court in the case of Gokul Refoils & Solvents Pvt. Ltd. (supra), the Customs authorities itself have found that the consignment in question having more than 10 acid value is fully exempted from duty. It appears that the Committee of Commissioners has decided not to challenge the said order. Such being the position, there is no justification on the part of the Revenue to take a different view in the consignment involved in these writ-applications. 18. As pointed out by the Supreme Court in the case of Commissioner of Customs (Preventive), Gujarat v Reliance Petroleum Limited reported in 2008 (227) E.L.T. 3 (S.C.), interpretation of an exemption notification depends upon the nature and extent thereof, and the terminologies used in notification have an important role to play. According to the said decision where exemption notification ex facie applies, there is no reason as to why purport thereof would be limited by giving a different construction. Applying the aforesaid principles to the facts of the present case, we are of the view that under the notification, as the limit of acid value has been given as 4 and above, there is no reason to construe the notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se cannot be said to be one of acceptance of a wrong order when the decision not to prefer the appeal is of the Committee of Commissioners and is a positive decision. 23. On consideration of the entire materials on record, we, therefore, hold that in the cases before us, there was no justification for detention of the goods and issue of show cause notice by the Revenue. We have already pointed out above that in the course of hearing of these writ-applications, the Revenue modified its earlier stance by accepting that they are not claiming that the goods in question is prohibited one but restricted their contention to the question of applicability of the exemption notification only. 24. We, therefore, hold that crude palm oil imported, which falls within Serial No. 1511 having acid value of more than 4, is entitled to get benefit of exemption of duty, and such exemption cannot be taken away by adding to the words in the notification as " between 4 and 10". 25. We, therefore, allow these writ-applications. By virtue of interim order granted during the pendency of these applications, a direction was given for releasing the goods on submission of bond. Since the writ-applications su ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
