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TMI Blog2020 (6) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... laboratory for testing. The customs laboratory gave its report on 11.02.2005. There is a difference between the test report by the Port Health Officer and the test report of the customs laboratory which lies at the root of these appeals. Crude palm oil falls under customs tariff heading 1511 and attracts duty at a rate of 100% of the tariff value. However, Notification No. 21/2002-Cus as amended, gives concessional rate of duty on palm oil of edible grade subject to certain conditions. The assessee imported palm oil and filed five Bills of entry declaring it to be of edible grade. In respect of two bills of entry on 28.01.2005 and 29.01.2005 they claimed concessional rate of 75% of the tariff value under exemption Notification No. 21/2002-Cus. The relevant entry in the exemption notification is as follows: Sl.No. Chapter Heading Description of the goods Standard rate Additional duty rate Condition No. 34. 15.11 Crude palm oil and its fractions, of edible grade, in loose or bulk form 75% - - Thus with respect to these two bills of entry there was no condition in the exemption notification except that the palm oil which was imported must be of edible grade. 2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal who, by its order dated 21.12.2010 also remanded the matter to the original authority with same directions. 5. The original authority by his denovo order dated 27.07.2011 confirmed the demand in respect of all Bills of Entry on the ground that the imported oil is not of edible grade and hence concessional rate of duty is not applicable since the acid value of the imported palm oil is more than 10. On appeal, the First Appellate Authority, by the impugned order, allowed the appeal in respect of three bills of entry filed after 04.02.2005 but rejected the appeal in respect of the first two bills of entry. The assessee's appeal is against the rejection in respect of the two bills of entry while the Revenue's appeal is with respect to the allowance of the benefit of exemption notification in respect of the two bills of entry. 6. Learned Counsel for the appellant assessee asserts that the Commissioner (Appeals) has wrongly rejected their appeal in respect of the two bills of entry which must be given to them. He would assert that the Port Health Officer is the correct authority to determine whether or not the oil is of edible grade and therefore the department should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Port Health Officer is a Government Officer who has drawn samples and has tested them and given reports which are in favour of the assessee. The Department has also drawn samples in the presence of the importer and sent them to the chemical examiner of the customs department for testing. The reports of the chemical examiner show that what was imported not of edible grade. Both are Government Chemists one favouring the assessee, the other favouring the Revenue. He would assert that exemption notification is an exception to the General Rule (that tax must be paid) and hence it must be strictly considered against the assessee. He would submit that several views were taken by various Judicial fora including by the Hon'ble Apex Court as to how an exemption notification should be constructed and interpreted. In view of the conflicting judgments the matter was referred to Five Member Constitutional Bench of the Supreme Court in the case of Dilip Kumar and Company & Others [2018 (361) ELT 577 (SC)] and it has been held as follows: "52. To sum up, we answer the reference holding as under - 1) Exemption notification should be interpreted strictly; the burden of proving applicabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vails over the PHO report inasmuch as the PHO report is for ascertaining and binding with regard to importability or otherwise of the goods and whereas the Chemical Examiner's Report clearly brings out the acid value/ carotenoid value of the subject goods. Further, in the case of Kedia Overseas Ltd. vs CCE Vishakapatnam II reported in 2006 (205) ELT 576 (TriBang), the Hon'ble Tribunal has upheld the demand of differential duty on the imports of Crude Palm oil, basing on the test results/ reports of the chemical Examiner which shows the acid value is more than 10. In the instant case, the Chemical Examiner's report states that the acid value of the subject imported goods is 10.8 which is more than the standard value of 10 as prescribed under A 17.19 of PFA Rules, 1955. I further find that, the subject goods failed to match the description/definition of edible grade as given in the sub-note 1 of supplementary notes to Chapter note of Chapter 15. The Chapter note is relevant for classification of the goods and their eligibility to concessional rate of duty under notification no. 21/2002- Cus, dated 1.3.2002. Hence, the impugned goods cannot be considered as 'Crude Palm oil of edible g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already refined and sold it. 14. We fully agree with the Revenue that any exemption notification must be strictly construed against the claimant and in case of any doubt the benefit of doubt must go to the Revenue and against the assessee. This is the law laid down by the Constitutional bench of Hon'ble Supreme Court in the case of Dilip Kumar (supra). Earlier, this bench had, in the case of Kimmi Steels (supra) decided where there was a conflict between two reports that the benefit of doubt must go to the Revenue and this decision has, on appeal, been upheld by the Hon'ble Apex Court. However, that case involved only test reports to determine the eligibility of the exemption notification. It had no other implications. 15. The present case is different inasmuch as it involves testing for the purpose of assessment. Assessment by Customs involves determining: a) Classification of the goods; b) Importability of the goods with respect to restrictions under Section 11 of the customs Act, Foreign Trade Policy as well as several other laws framed by various Ministries but enforced by the Customs officers: c) Determining whether licences, permissions, authorisations, etc., if any, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule made thereunder. 20. The term adulterated is defined in Section 2 (ia) of the Act as follows: (ia) "adulterated"-an article of food shall be deemed to be adulterated- (a) if the article sold by a vendor is not of the nature, substance or quality demanded by the purchaser and is to his prejudice, or is not of the nature, substance or quality which it purports or is represented to be; (b) if the article contains any other substance which affects, or if the article is so processed as to affect, injuriously the nature, substance or quality thereof; (c) if any inferior or cheaper substance has been substituted wholly or in part for the article so as to affect injuriously the nature, substance or quality thereof; (d) if any constituent of the article has been wholly or in part abstracted so as to affect injuriously the nature, substance or quality thereof ; (e) if the article had been prepared, packed or kept under insanitary conditions whereby it has become contaminated or injurious to health; (f) if the article consists wholly or in part of any filthy, putrid, , rotten, decomposed or diseased animal or vegetable substance or is insect-infested or is otherwise unfit for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers of officers of customs - (1) Subject to such conditions and limitations as the Board may impose, an officer of customs may exercise the powers and discharge the duties conferred or imposed on him under this Act. (2) An officer of customs may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of customs who is subordinate to him. (3) Notwithstanding anything contained in this section, Commissioner (Appeals) shall not exercise the powers and discharge the duties conferred or imposed on an officer of customs other than those specified in Chapter XV and section 108. SECTION 110. Seizure of goods, documents and things - (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. -------- SECTION 111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty 11[not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest. 22. From the above, the legal position is evident as follows: a) If the imported food (palm oil in this case) does not meet the standards of A.17.19 it is 'adulterated' as per the Prevention of Food Adulteration Act even if it is not injurious to health; b) Therefore, import of such oil is prohibited under Section 5 of the Prevention of Food Adulteration Act; c) All provisions of the Customs Act apply to such cases and Customs officers are empowered to Act with respect to such imported consignments under Section 6 of the Prevention of Food Adulteration Act; d) In terms of Section 111 (d) of the Customs Act, such oil is liable to be confiscated for being imported in contravention of the prohibition under Section 5 of the Prevention of Food Adulteration Act; e) Such oil can be seized under Section 110 of the Customs Act by the proper officer of Customs f) Any person concerned with such import is also liable for pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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