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2016 (9) TMI 976 - CESTAT CHANDIGARH

2016 (9) TMI 976 - CESTAT CHANDIGARH - 2016 (341) E.L.T. 293 (Tri. - Chan.) - Demand of differential duty - imposition of penalty - Declaration of consignments - Pressed Distillate Oil - Base Oil - chemical examination of the consignments - no clear statement by chemical examiner. Only indication that the samples have the characteristics of Base Oil - denial of Cross Examination of the chemical examiner before the Adjudicating Authority - principles of natural justice - Held that: - In the absen .....

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wo characteristics, viz, sulphur % and saturates in his report. Reference has been made only to one of the three parameters mentioned in API. This limited approach to decide the mis-declaration is incorrect. At the most, the viscosity index may raise doubt in our minds that the imported goods may be base oil. However, to conclude that the imported goods were not PDO but ‘base oil’ and allege mis-declaration on the part of the importer only on the basis of the chemical examiner’s report on one ou .....

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(Judicial) and Mr. V. Padmanabhan, Member (Technical) Shri Naveen Bindal, Advovate for the appellant Shri R.K. Sharma, D.R. for the Respondent - revenue ORDER The present appeal is directed against the Order dated 23.02.2016 passed by the Commissioner of Central Excise (Appeals), Ludhiana. In the impugned order, the Adjudicating Authority held that the imported goods which were declared as Pressed Distillate Oil (PDO) were infact Base Oil . Considering this a mis-declaration, he proceeded to en .....

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goods were not PDO. The chemical examiner has only indicated that the material has the characteristic of base oil . On this basis, the imported goods cannot be said to be mis-declared, since the PDO, which arises prior to base oil, would have some characteristics of base oil . (ii) The Commissioner has not permitted Cross Examination of the chemical examiner. In the absence of cross examination, the report of chemical examiner is not admissible. (iii) The CRCL, where the sample was tested, in e .....

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rough ICD, Ludhiana vide B.o.E. No. 9072511 and 9072508, both dated 19-01-2013 declaring the goods as PDO. Suspecting mis-declaration, the Directorate of Revenue Intelligence forwarded samples of the goods from both the consignments to CRCL Laboratory for testing with a request to confirm whether the goods were PDO. The CRCL in their report dated 19-01-2013 forwarded the following reports. Report : The sample is in the form of pale yellow viscose oily liquid. It is composed of mineral hydro carb .....

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has the characteristics of base oil. Note:- As per technical in the available in this laboratory no product in this name of pressed distillate was found. 5. The Commissioner in the impugned order relied on the chemical examiner reports which stated that the samples have the characteristics of base oil . He further referred to the Technical Literature from the American Petroleum Institute (API), which apparently has developed a base oil classification system. The API classified base oil into five .....

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mples of the imported goods match with the specifications for base oil as per the API above. Consequently, he concluded that the imported goods were not PDO, but was Base Oil. Considering this as mis-declaration on the part of the importer, the Commissioner proceeded to disregard the declared value of the imported goods in both the B.o.E. @ US$ 250 /MT of PDO. The Value of the imported goods in both b.o.e. s was steeply enhanced to US$ 940/MT, on the basis of the price at which base oil was impo .....

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he characteristic of base oil . From the note appended at the bottom of the reports, it appears to us that the chemical examiner were not in possession of any technical literature about the product PDO. The memo sent by the DRI to the chemical examiner requested him to confirm whether the goods were PDO or not. From a perusal of the test reports we get impression that the chemical examiner has not categorically given his finding or answer to the memo. He has only indicated that the goods have th .....

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indicates that the PDO is a product known in the petroleum refinery industry PDO is said to be an intermediate product arising in the manufacture of base oil which is subject to further process for making lubricating base oil. To this effect, the appellant has produced relevant pages of the book of Petroleum Refinery Engineering by W. L. Nelson. They have also enclosed technical opinion of (i) Shri s. K. Chhibber, Consultant, (Scientist F. Retired), Indian Institute of Petroleum, Dehradun and ( .....

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oups based on three parameters. (i) Sulpher % (ii) Saturates % (III) Viscosity Index 10. From the examiner s test reports, we find that the viscosity index of the two samples (93 and 92.58) fall within the characteristic of base oil , as per API classification system. However, the chemical examiner has not indicated the first two characteristics, viz, sulphur % and saturates in his report. The imported goods have been held to be base oil in the impugned order on the basis of the API classificati .....

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