TMI Blog2013 (8) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of goods – Confiscation Of Goods – Redemption Fine – Penalties u/s 111(a) - Whether there was a mis-declaration on the part of the appellants inviting confiscation, redemption and imposition of penalties upon the assesses under Customs Act, 1962 – Held that:- The penalties imposed upon the appellants under Section 111(a) of Customs Act, 1962 shall be restricted to the differential duty sought to be evaded after re-calculating the differential duty liability - The assesses had the knowledge of imported goods being good quality petroleum oil but the same was blindly accepted to be a crude oil condensate on the basis of statements given - all the assesses had knowledge of good quality petroleum oil which they agreed to be classifiable under CTH 2710 19 90 and accordingly confiscation of imported goods and imposition of penalties had been correctly made by the adjudicating authorities – When samples of imported goods were shown the same to be good quality petroleum oil and that they agree to pay differential duty - All other assesses who purchased the imported goods on high sea sale basis also admitted the wrong classification done and agreed to pay differential duty – Decided agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GAPL, reported that as against manifested quantity of 5221 MTs shown in IGM as well as Bills of Lading, only 4722.042 MT was received in the said tank and a protest to this effect was lodged by them with the master of the vessel. 3.3 The above goods were sold to the following buyers on high sea sale basis who sought clearance by claiming classification of imported goods under CTH 2709 00 00 of First Schedule to CTA, 1975 attracting basic Customs Duty of 10% + Rs. 50 per MT towards National Calamity Contingent Duty (NCCD). S. No. High Sea Sale Buyer Bill of Entry date Quantity as per Bill of Entry (MT) Quantity cleared (MT) Balance Quantity (MT) 1 Paswara Papers Ltd. F-95, dated 27-4-2004 172.040 750.000 Nil 2 Paswara Papers Ltd. F-144, dated 27-5-2004 500.000 102.660 69.382 3 Brahmand Chem. Allied Indus., Buldhana (Mah.) F-90, dated 27-4-2004 500.000 335.190 164.810 4 Brahmand Chem. Allied Indus., Buldhana (Mah.) F-133, dated 6-5-2004 500.000 Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpared to normal SKO. 3 FSL Gandhinagar 10-6-2004 The sample was a mixture of low boiling points of petroleum hydrocarbons and hydrocarbons of kerosene and high speed diesel. The sample was defined as petroleum hydrocarbons solvents as they contained mixtures of various hydrocarbons, density at 15 C gm/ml: 0.7971; colour: light yellow; distillation IB C: m54.0; FPB C: 455.0, flash C: fired at room temp. 4 Institute of Reservoir Studies, ONGC Ltd., Ahmedabad 2-6-2004 The sample was light yellow in colour; IBP C: 58.0; distillation upto 225 C was 2782% w/w; The sample was mixture of hydrocarbons; the analysis do not conclude the samples to be pure condensate or a mixture of condensate and kerosene; The distillation cuts collected at different temperature ranges does not match with either kerosene or the condensate, which were analyzed in their laboratory. 4. On 27-5-2004, the remaining goods lying with the custodian were seized and further investigations completed, leading to show cause notice dated 4-11-2004 which culminated into the adjudication order dated 27-12-2009. 5. Similar investigations were done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, in its 24th Session discussed the definition of Condensate while concluding, amongst others, that the same consists of C-4 to approx. C-20 hydrocarbons and classified the same under CTH 2709. (vi) That onus lies with the Department to classify the product for which reliance was placed on the following judgments : (a) Hindustan Ferodo Ltd. v. CCE, Bombay - 1997 (89) E.L.T. 16 (S.C.) (b) Madhu Wool Spinning Mills v. UOI - 1983 (14) E.L.T. 2200 (Bom.) (c) Arya Abhushan Bhandar v. UOI - 2002 (143) E.L.T. 25 (S.C.) (d) Oil India Ltd. v. CCE, Shillong - 2002 (148) E.L.T. 802 (Tri.) (vii) that no grounds were given to reject the first test report dated 20-5-2004 on the basis of which initial clearance was allowed. (viii) that the request of the appellants for granting opportunity to cross examine the representatives of the labs, who rendered subsequent reports, was not allowed by the adjudicating authorities. (ix) that as per the subsequent RTI information obtained by the appellants those laboratories where subsequent testings were done did not have the equipments to test the goods imported. Appellants relied upon the judgment of Oil India Ltd. v. CCE, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the imported goods is correctly enhanced on the basis of contemporary import. (viii) that confiscation of imported goods and imposition of penalties have been correctly made by the adjudicating authorities. (ix) that as per the Final Order No. A/951-957/WZB/AHD/2011, dated 28-1-2011/6-6-2011, in the case of M/s. Pushpal Exports Pvt. Ltd. Others v. CC, Kandla, the orders of Commissioner are required to be upheld. 10. Similar appeals No. C/798 to 800/2006 were filed by M/s. Modern Chemicals, Paswara House, Meerut and others against OIO No. KDL/COMMR/17/2006, dated 31-3-2006 issued on 4-4-2006. These appeals were also argued by Senior Advocate on the same lines as in other appeals fled by M/s. Paswara Impex Ltd. others. As the issue involved in all the above appeals filed is the same, therefore, they are being taken up together through this common order. 11. The first issue required to be deliberated is as to what should be the correct classification of the imported goods described as Crude Petroleum Product or Crude Petroleum Oil or Condensate . The appellants have claimed that their imported goods merit classification under CTH 2709 whereas the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which Tariff advice dated 17-11-1981 was also applicable. This fact is also clarified from the HSN explanatory notes under CTH 2709 relied upon by the ld. AR, which reads as follows : 27.09 Petroleum oils and oils obtained from Bituminous minerals, crude : This heading covers crude petroleum oils and crude oils obtained from bituminous minerals (e.g. from shale, calcareous rock, sand), i.e. natural products, whatever their composition, whether obtained from normal or condensation oil-deposits or by the destructive distillation of bituminous minerals. The crude oils thus obtained remain classified in this heading even when they have been subjected to the following processes : (1) Decantation (2) De-salting (3) Dehydration (4) Stabilisation in order to normalize the vapour pressure (5) Elimination of very light fractions with a view to returning them to the oil-deposits in order to improve the drainage and maintain the pressure (6) The addition of only those hydrocarbons previously recovered by physical methods during the course of above mentioned processes (7) Any other minor process, provided it does not change the essential chara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of description of natural gas condensates, the Secretariat feels that the Explanatory Note to the EC Combined Nomenclature can be used as a basis therefore. The Secretariat also feels that since this Note contains information only on the manufacturing process, it would be useful to add further information on the composition and characteristics of the products, so as to enable HS users to distinguish them from similar products of heading 27.10. The Chinese Administration has given technical information on the composition and characteristics of gas condensates. Based on the Note from the EC and the information from the Chinese Administration, the Secretariat wishes to put forward the following outline of the definition or description of natural gas condensates as a basis for discussion by the Sub-Committee. Natural Gas condensates - - are crude oils obtained from the stabilization, immediately on extraction, of natural gas. This operation consists of extracting the condensable hydrocarbons contained in the wet natural gas, mainly by cooling and depressurization. - Consist of [C4 to C20] hydrocarbons with no unsaturated hydrocarbons or only trace amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of gas condensates imported by the appellants has to be decided as per Rule 3(c) of the General Rules for the Interpretation of Customs Tariff Act, 1975. The same is reproduced below. 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows : (a) The heading which provides the most specific description shall be referred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff Petrochemicals, Mumbai, in his statement dated 25-5-2004, inter alia, admitted that he has never heard of condensate earlier and Shri Arvind of M/s. Paswara Impex Ltd., Meerut contacted him and offered to sell condensate to him. When samples of imported goods were shown to him, he found the same to be good quality petroleum oil and that he agree to pay differential duty. All other appellants who purchased the imported goods on high sea sale basis also admitted the wrong classification done and agreed to pay differential duty. From the above facts and the circumstantial evidences available on records, it is clear that all the appellants had the knowledge of imported goods being good quality petroleum oil but the same was blindly accepted to be a crude oil condensate on the basis of statements given by the representative of M/s. Modern Chemicals and M/s. Paswara Impex Ltd., both having their office address as Paswara House, Bhagpat Road, Meerut. In view of the above observations, all the appellants had knowledge of good quality petroleum oil which they agreed to be classifiable under CTH 2710 19 90 and accordingly confiscation of imported goods and imposition of penalties have bee ..... 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