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2015 (9) TMI 817 - CESTAT CHENNAI

2015 (9) TMI 817 - CESTAT CHENNAI - 2016 (334) E.L.T. 566 (Tri. - Chennai) - Import of crude palm oil of edible grade - Classification of goods - Classification under Chapter 15119090 or under Chapter Heading 15111000 - Benefit of exemption notification at Sl.No.29 of Notification No.21/2002-Cus. dt.1.3.2002 - Held that:- Classification of imported goods should strictly be made as per the chapter note, section note and the description of specific sub headings read with HSN Explanatory Notes. Mai .....

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onsumption. When the imported goods conform to the specific description under Ch 15111000 as crude Oil and there is no specific chapter note or HSN Explanation specifying criteria of acid value or carotenoid content for classifying the crude oil, therefore the goods imported are appropriately classifiable under Chapter 15111000 of CTH and any specific description given under Sl.No.34 of notification 21/2002 for the purpose of exemption cannot be taken as criteria for classification of the produc .....

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shore tank directly but which are transferred to the barges and loaded into the tankers. The actual weighment of the tankers is done at the port and it is the quantity which should be taken for assessment - The Hon’ble Supreme Court in the case of Garden Silk Mills Ltd. (1999 (9) TMI 88 - SUPREME COURT OF INDIA) held that import is complete only when the goods are delivered. This plea is reiterated by the Tribunal in the case of Nilkhil Refineries Ltd. (2011 (7) TMI 843 - CESTAT, BANGALORE) whe .....

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- Final Order No.41159-41160/2015 - Dated:- 10-9-2015 - Shri R. Periasami, Technical Member and Shri P.K. Choudhary, Judicial Member, JJ. For the Petitioner : Shri Raghavan Ramabhadran, Advocate For the Respondent : Shri M. Rammohan Rao, DC (AR) ORDER Per R. Periasami Both assessees appeal and Revenues appeal are taken up together as the issue is arising out of common OIO passed by Commissioner of Customs, Chennai. 2. The brief facts of the case are that appellant-assessee is an oil industry for .....

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ter Heading 15111000 and claimed benefit of exemption notification at Sl.No.29 of Notification No.21/2002-Cus. dt.1.3.2002 which is chargeable to 85% advalorem. The adjudicating authority while finalising the provisional assessment, classified the goods under Chapter 15119090 at Sl.No. 434 of the Notification No.21/2002-Cus. which is chargeable to 90% advalorem. Accordingly, the adjudicating authority demanded differential duty of ₹ 65,96,167/- in respect of 3 PD assessments on account of .....

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the order and remanded the matter to the adjudicating authority with a direction to follow principles of natural justice. In his de novo order, the Commissioner after issuing of SCN and personal hearing passed the adjudication order dt. 13.6.2007 and classified the goods under Chapter 15111000 under Sl.No. 29 of the Notification No.21/02-Cus. and also dropped demand of differential duty and also held that appellant-assessee are eligible for the refund of ₹ 64,44,882/- on the re-classifica .....

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missioner (Appeals) in the impugned order dt. 15.5.2009 partly allowed Revenues appeal on the classification issue. He allowed the Revenue appeal and held that imported crude palm oil is classifiable under Sl.No. 434 of Notification No.21/02-Cus. under chapter heading 15119090 and rejected the refund of ₹ 64,44,882/- granted by the AC. However, he upheld the OIO dt. 13.6.2007 in so far as the quantity issue involving demand of ₹ 24,47,014/-. Hence both the assessee and Revenue are ag .....

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issued by the Port Health Officer where both the authorities have confirmed that the imported goods were crude palm oil of edible grade. He referred to the legal provisions for classification of goods imported to be determined as per general Interpretative Rules for classification. He submits that there is no section note or chapter notes of chapter 15 defining crude oil. He drew our attention to HSN Explanatory Notes of sub heading 1511.10 and as per HSN the goods are rightly classifiable unde .....

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g on the specification given in entry 34 classified their goods under 15119090 without legal basis. He relied the following case laws :- (i) Gujarat Ambuja Exports Vs CC Kandla 2011 (269) ELT 239 (Tri.-Ahm.) (ii) Tata Tea Ltd. Vs CCE Kochi 2004 (164) ELT 315 (Tri.-Del.) (iii) TTK Health Care Ltd. Vs CCE Aurangabad 2008 (231) ELT 273 (Tri.-Mumbai) (iv) CCE Navi Mumbai Vs Amar Bitumen & Allied Products Pvt. Ltd. 2006 (202) ELT 213 (SC) (v) Garden Silk Mills Ltd. Vs UOI 1999 (113) ELT 358 (SC) .....

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brought to the port from the vessels at outer anchorage through barges. The oil is pumped into tanker lorries in the presence of customs officers and the quantity loaded on each tanker is weighed in the Port and thereafter transported to the private bonded warehouse. Therefore, the actual quantity imported into India is the quantity which left the port as per the actual weighment in the presence of custom officers. Departments relying on Boards circular No.96/2002-Cus. dt. 27.12.2012 is not appl .....

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se. He submits that department has accepted and adopted the tariff value for the imported crude palm oil where the tariff value was fixed under chapter heading 15111000 of Notification No.21/02. 7. On the other hand, Ld. A.R. appearing for the Revenue for assesseees appeal submits that Commissioner (Appeals) has rightly classified the goods correctly under Chapter heading 15119090 of CTH. He submits that Notification No.21/2002 provides exemption of crude oil under three different serial numbers .....

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te, the government has power to define the item either in the notification or circular. Therefore both notification and the tariff should be read together for the purpose of classification. He relied the following decisions :- (i) Cargill India Pvt. Ltd. Vs UOI 2013 (289) ELT 209 (Guj.) (ii) Aflon Engineering Corpn. Vs UOI 1992 (61) ELT 246 (Guj.) (iii) UOI Vs Aflon Engineering Corporation 2000 (122) ELT 334 (SC) 8. On the Revenue appeal, he reiterated the grounds of appeal. The quantity actuall .....

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he private bonded warehouse does not refer to the actual quantity. He referred to para-7 Boards circular dt.27.12.2002 where the Board has categorically clarified that Ullage quantity should be taken. In this regard, he relied the following case law :- (i) Mangalore Refinery &Petrochem Ltd. Vs CC Mangalore 2006 (205) ELT 753 (Tri-Bangalore) (ii) CCE Vs Nikhil Refineries Ltd. - 2011 (272) ELT (Tri.-LB) Ld. AR submits the Garden Silk Mills case relied by assessee is not applicable to this case .....

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d submits that if there was a shortage, it was the difference between the quantity declared in the Bill of Lading and its final discharge. The importer is not liable to duty for the short-landed goods whereas the master of the vessel is accountable and liable for action under Section 116 of the Customs Act. 10. We have carefully considered the submission of both sides and perused the records. The issue before us in both assessee appeal and the revenue appeal is (i) whether the imported crude pal .....

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d as per HSN Explanatory Notes and the same was rightly classified under CTH 15111000 by the original authority under Sl.No.29 of Notfn 21/2002 as no criteria of any acid value or carotenoid content prescribed in the Tariff for classification of crude palm oil. Whereas the revenue s contention that classification of crude palmolein should be as per 2.8 of CODEX Standard prescribed for vegetable oil and as per notification at Sl.No.34 of 21/2002 and relied Board s circular No.85/2003 dt. 24.9.200 .....

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teria for classifying the goods under Customs Tariff. In this regard, the Tribunal s co-ordinate Bench in the case of Gujarat Ambuja Exports Vs CC Kandla (supra) on an identical issue of classification of import of crude palmolein has dealt the issue in depth and discussed the Board s circular and referred HSN Explanatory Notes and held that imported goods classifiable under CTH15111000 not under CTH15119090. The relevant paragraph of Tribunal s order is reproduced as under :- "4. We have c .....

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rst is 1511 10 00 which covers Crude Palm Oil and second 1511 90 which covers Palm Oil other than Crude Oil. The second category has been further divided into three sub-categories. First, if the Oil is refined, bleached and deodorized, then it is to be classified under Heading 1511 90 10 or 1511 90 20 depending on whether the oil is Palm or Palmoleine. If a non crude oil is not covered under 1511 90 10 or 1511 90 20, then the same is classifiable under heading 1511 90 90. Therefore, the basic is .....

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rce, such as gravity, pressure or centrifugal force, has been employed, excluding any adsorption filtering process, fractionation or any other physical or chemical process. If obtained by extraction oil shall continue to be considered as crude, provided it has undergone no change in color, odor or taste when compared with corresponding oil obtained by pressure. 7. The above discussion about the tariff heading leads us to conclusion that the palm oil produced by mechanical extraction shall be con .....

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ination was conducted as per the ISI standard and he has not carried out any test to find out whether decantation process, centrifugation or filtration, had been undertaken in respect of the sample, since it is not mentioned in the ISI. He also agreed that it would not be possible to find out whether the sample is obtained by extraction method or any other method. On a question by Dy. Commissioner as to whether the samples in question can be considered as Crude Palm Oil, the Chemical Examiner ha .....

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a position to say whether any of the process as which according to HSN, would take the palm oil out of the description of the crude palm oil, have been carried out or not. We find considerable force in the argument advanced by the learned advocate that the imported product has to be classified under CTH 1511 10 00 only. 9. The only ground on the basis of which the Revenue has classified the Crude Palm Oil imported by them in 2003 under CTH 1511 90 90, as the circular issued by the Board on 24-9- .....

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ners held at Mumbai on 21st and 22nd August, 2003, minutes of which have been issued vide F.No. 401/86/2003-CUS-II, dated 4-9-2003. 3. According to the Explanatory Notes to the HSN, under heading 15.07, fixed vegetable oils, fluids or solid obtained by pressure are to be considered as Crude if they have undergone no processing other than decantation, centrifugation of filtration, provided that, in order to separate the oils from solid particles only mechanical force, such as gravity, pressure or .....

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ined. 5. With effect from 1st August, 2003, for the purposes of duty assessment, Crude Palm Oil and its fractions (which includes palmolein) have been given a more specific definition vide Notification No. 120/2003-Cus, dated 1-8-2003, (which amends Notification No.21/2002-Cus, dated 1-3-2002). As per this definition, Crude palm oil/palmolein should have acid value of 2% or more and total carotenoid (as beta carotene) in the range of 500- 2500 mg/kg. in loose or bulk form. 6. The above carotenoi .....

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ould be classified under sub-heading 1511 90 10 of the Customs Tariff. 9. If any grade of palm oil/palmolein cannot be categorised as crude palm oil/palmolein or as RBD palm oil/palmolein as per specification mentioned above, it will fall under the residuary category of other-other, under sub-heading 1511 90 90. 10. The next issue is regarding assessment of imports which have taken place prior to 1-8-2003. It is observed that prior to 1-8-2003, the item Crude Palm Oil/Palmolein was neither defin .....

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lmolein, the assessment should be finalized under sub-heading 1511 90 10. 11. However, if the test reports do not contain indications as mentioned above, the matter will have to be examined as to whether provisions of Section 28A of the Customs Act, 1962 can be invoked in this case or not based on the general practice of assessment in the past. For this, a report is being sought separately from the Commissioners. 12. In respect of warehoused goods which are cleared for home consumption after 1-8 .....

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ara 7 & 9 of the Circular in support of his view that the Circular issued clarification regarding classification of Palm Oil and it is not issued only for the purpose of particular notification, but for the purpose of classifying the imported palm oil. We find in Para 5 of the Circular it is clearly stated that for the purpose of duty assessment, Crude Palm Oil has been given a very specific definition. It is to be noted that the definition of Palm Oil has been given in an exemption notifica .....

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ed in the schedule to the Customs Tariff Act, enacted by the Parliament. The question that arises is as to whether the description given in the tariff heading can be narrowed down or widened by issue of notification by giving definition in the notification and by issue of a circular. The answer is No. If the Government intended that the definition of Crude Palm Oil for the purpose of assessment should be taken as given in the notification, the proper procedure was to amend the tariff by adding c .....

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nly by adding a chapter note or by changing in the tariff heading. We have to hold that the reliance of the Commissioner on the circular is mis-placed and the product imported by the appellant has to be held as Crude Palm Oil only....." 12. The above decision is squarely applicable to the present case as the department chose to classify the imported goods under Chapter 15119090 based on the acid value and carotenoid content as per description given under Sl.No.34 of the Notfn 21/02 and as p .....

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and test reports, we find there is no dispute on the fact that the goods imported are Crude Palmolein (Edible Grade). It is also not disputed in the impugned order that the appellant is a manufacturer of refined oil and the imported crude palmolein is further refined after clearance and sold for human consumption. When the imported goods conform to the specific description under Ch 15111000 as crude Oil and there is no specific chapter note or HSN Explanation specifying criteria of acid value or .....

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acceptable. The citation relied by the revenue in the case of Orient Weaving Mills (P) Ltd. Vs UOI (supra) where the Hon ble Supreme Court held that Central Excise Rules and notification issued by government are part of statute is with reference to granting exemption for co-operative society notification issued under Rule (8) of Central Excise Rules whereas the present case is on classification of goods therefore the Hon ble Supreme Court decision is distinguishable and not applicable to the pr .....

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sification of goods under chapter 15119090 is liable to be set aside. 13. On the quantity of crude palm oil whether duty paid as per actual quantity or as per ullage survey report, revenue challenged the decision of LAA on the ground that ULLAGE survey report should be taken for the purpose of determining the quantity for assessment. We find that LAA has discussed this issue of quantification in detail at paras 2 to 6 of OIA and also relied Hon ble High Court s order in the case of Godrej Indust .....

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by the vessel at the port of discharge i.e. Pondicherry Port. It is a fact that Pondicherry port did not have facility to discharge liquid cargo to any shore tanks. The vessel was brought to outer anchorage and the imported crude palm oil was transferred to barges and brought to the port and then loaded to the tanker lorry. As rightly contended by the assessees, the tankers were weighed at the port in the presence of customs officers before it is cleared from the port to private warehouse. There .....

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