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TMI Blog2021 (11) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified in the said notification. 1.1 The DRI has carried out investigation samples that were sent to Kandla Customs House Laboratory for testing certain parameters of the imported goods. The Customs House Laboratory, Kandla vide test report No. 06 dated 27.07.2015 submitted its report wherein only Aniline point, density, Flash point were reported with note that "the Kinematic viscosity is not in agreement with IS: 15078:2001. Petroleum based process oil for the rubber industry but vide letter dated 30.10.2015 the Joint Director, Customs House Laboratory Kandla reported in respect of "Shell Flavex oil 595 B" as under:- "It is stated that the analytical parameters such as 1 Viscosity Gravity Constant (VGC)-0.916 2 Composition by Gel-Clay analysis Polar Compound =25% Saturated Hydrocarbon =20% Aromatic Content=55% given in technical data sheet for Shell Flavex oil 595 B is in agreement with value mentioned in the standard specification of DIN 51378 for VGC and Composition by gel/clay agreement with ASTM D2226/93 "Classification and characterization oil for rubber compound" type 101 used in extending, process of styrene, butadine rubber i.e. Rubber process oil". The investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 1.3 Being aggrieved by the order-In-Original revenue filed the present appeal. 2. Shri T.G Rathod, Learned Additional Commissioner (AR) appearing on behalf of the revenue reiterates the grounds of the appeal. He submits that the advance authorizations were issue showing description of import goods as "Miscellaneous Chemicals: Plasticizers". However, on investigation on he basis of test report issued by the Custom Lab at Kandla it was revealed that goods were Rubber Process Oil. He submits that the Exemption notification No 96/2009-Cus dated 11.09.2009 granted conditional exemption as per condition No.(iii) of the notification provided that the material imported correspond to the description and either specifications where applicable mentioned in the authorization and the value and quantity thereof are within the limits specified in the said authorization. Since goods were not found corresponding to the description mentioned in the authorization, the exemption cannot be extended in respect of condition that there was misdeclartion. He submits that the rubber process oil was misdeclared as plasticizers and in support of such misdeclaration and to suppress actual description, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical infraction as the goods have not been diverted but it was admittedly used for manufacture of export products and this fact has even been confirmed by the jurisdictional Central Excise Authorities. He submits that that it is a settled position in law that duty cannot be exported and denial of exemption would result in taxing the exports. Without prejudice, he also submitted that demand of duty in the present case is not sustainable by application of Doctrine of Revenue Neutrality as the notice is otherwise also entitled for duty drawback, therefore, the duty so demanded would have to be refunded in the form of drawback as it is the policy of the government to zero rate of exports. 3.1 He submits that the use of export products has been verified by AC, CE-letter dated 13.08.2015. He further submits that for all 27 authorizations, EODC has been issued by DGFT. Bonds have also been discharged by the Customs. Irrespective of classifications, the imported material has been used by the importer for manufacture of export product. He submits that the Adjudicating Authority has also observed that the definition of raw material in the FTP and Notification No. 96/2009- CUS is wide and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposed in the SCN is otherwise hit by limitation in as much as there is no corroborative evidence to invoke grounds for extended period of limitation. Without prejudice, if department wishes to change stand regarding classification the same can only be with the prospective effect. In this regard he placed reliance on the Hon'ble Supreme Court Judgment in the case of Myosre Electrical Industries Ltd - 2006 (204) ELT 517 (S.C). 3.6 The SCN is dated 30.08.2017 whereas the date of last bill of Entry is 01.05.2015 which is past the normal limitation period of two years. Hence, the entire demand is hit by limitation. He submits that as regard the reliance placed by the department in the case of Ginni Filaments- 2005(181) ELT 0145, he submits that definition of material as used in Notification No 96/2009-Cus has been read by the Adjudicating Authority in isolation, The same has been read with FTDR Act further read with FTP. Notification 96/09 is an enabling notification to implement the Advance Authorization Scheme prescribed under FTP. The said notification is more in the nature of a subordinate legislation. In case of any ambiguity in interpreting the notification, it is a settled leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of the present case. 3.10 He submits that it is incorrect to state that the demand has been dropped by the adjudicating authority on presumption that the importer was free to get an Advance Authorization for import of subject goods and would have been allowed by DGFT while ignoring at the time of import goods were not covered by the Advance Authorization scheme and hence not eligible for exemption. He submits that goods were always covered in the Advance Authorization as the description as well as CTH matched with the description found in the test report and also as finally assessed by the Customs Authorities. There was no divergence. The ground that there is no finding that the gods imported were technically covered by the general description of the item mentioned in the Advance authorization is without any legal force. There is positive categorical finding that the import goods have been used as plasticizer for manufacture of export products as has been verified by jurisdictional central excise authorities vide their letter dated 13.08.2015. There is another finding that except the "Classification issue, there is no other issue involved. 3.11 He further submits tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any legal force and should be dismissed. With his above submission, he prays to uphold the impugned order and dismiss the revenue's appeal. 4. We have carefully considered the submission made by both the sides and perused the records. We find that the case of the department is that since the appellant has mis - declared the import goods as "Miscellaneous Chemical: Plasticizer " under CTH 38122090 whereas on test of the product it was found to be rubber process oil classifiable under 27079900 therefore the appellant are not eligible for exemption notification No . 96/2009-Cus dated 11.09.2009 issued under Advance Authorization Scheme, merely for this reason it was proposed in the SCN for confiscation of goods demand of Custom Duty and Consequently fine and penalty. As per the impugned order the learned Adjudicating Authority has decided the classification as Rubber Processing oil under CTH 27079900 however, maintaining the benefit of Notification No 96/2009-Cus dropped the proceeding of the SCN. We find that even though the classification of the goods has been changed from 38122090 to 270799000 but the goods imported by the appellant even though as per the test report due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the Bills of Entry in order to evade payment of custom duty. The Hon'ble CESTAT referred to the decision of Hon'ble Apex court in the case if Northern Plastic Ltd- 1998 (101) ELT 549 (SC) and held that classification of steel under CTH 7208 cannot be considered as mis- declaration . The relevant extract from the decision of CESTAT is reproduced below: "15. Next issue for consideration before us is whether appellants have made a wilful misdeclaration on the Bills of Entry in order to evade payment of customs duty or to take any undue financial benefits. In this regard it is the case of the Revenue that the act of all the importers by declaring CTH 7208 in the Bills of Entry amounts to wilful misdeclaration with intention to evade duty. It was also the case of the Revenue that some of the Certificates of Origin were indicating the CTH as 7225 which was thus known to the importer appellants. Further with respect to imports made by M/s. Welspun Corporation Limited it was strongly argued by the learned Special Counsel appearing on behalf of the Revenue that this importer gave certificates of the imported steel from manufacturer indicating the same as "Nonalloy steel‟ and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normally expected to be given at the time of presentation in the relevant column of the Bill of Entry to enable allocation of the Bill of Entry to proper Group/Appraiser and to expedite its processing. In case the Customs Tariff Heading or Central Excise Tariff Heading under which the party feels his goods will be covered are not finally accepted by the Deptt. appropriate classification under the Customs & Central Excise Tariff would be made in the Appraising Group without any action against the Importer. The Board considers that Section 29 S.C.A. (Now Sections 17 and 46 of C.A.‟62) are not a sufficient authority for requiring importers to furnish the Tariff classification although there is no obligation in asking them how their previous imports were classified and ascertaining from them the details regarding the use and composition of the articles imported. (F. No. 70 (12)-Cus.I/53. C.B.R., New Delhi, dated 22-8-1953)" 15.1 It is evident from the above Para of the Appraising Manual that a classification head can be given by the importer so that it is helpful to send the import documents to the concerned Appraising Group. Such a classification declared in Bills of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steel as CTH 7208 in the Bills of Entry, cannot be considered as wilful misdeclarations with intention to evade customs duty, in the absence of any other corroborative evidence" The ratio of the judgment in PSL case squarely applicable to the facts of the present case. The judgment of the tribunal in PSL case has been affirmed by the Hon'ble Supreme Court and also the review petition filed by the revenue was dismissed. In the present case also there is no dispute about the use of the import goods under Advance Authorization for manufacture of the export goods. It is also a fact that even though there is a change in parameter of aromatic Constituents but the goods were used as a plasticizer therefore, applying the ratio of PSL case in the respondent's case also the eligibility of notification No 96/2009 under Advance Authorization cannot be denied merely because there is a change of custom tariff heading of the product. Accordingly, the Learned Adjudicating Authority rightly extended the benefit of exemption notification despite the change in classification. It is also observed that even though the SCN was issued, EODC were issued and Customs Bond have been discharged, it clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorization is admissible in view of the definition of raw material in the FTP and Notification No 96/2009-CUS, which is wide and not linked with the classification under a particular heading. 26. Further, the Noticee has also contended that on the basis of exports made by them against the Advance Licenses, the DGFT has issued EODC in all cases and accordingly, the Bonds executed by them at Custom Hose, Mundra, for duty free import have also been discharged/released. The Noticee has further submitted that the impugned goods i.e, "Shell Flavex Oil 595" has been used by them in the tyre manufacturing process as a plasticizer and not as a processing oil and that Rubber Processing Oil when used specifically to aid in the dispersion of fillers in known as plasticizer, that the test of eligibility to import cannot change at the time of issuance of the Advance Authorization and at the time of assessment; that the denial of exemption on the ground of alleged mis-declaration is not sustainable as the same can be merely a technical infraction as the goods have not be diverted but used for manufacture of export products and this fact has even been confirmed by the jurisdictional Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to all the goods falling in the Schedule of the Customs Tariff Act . Therefore , the importer was always free to get an Advance Authorization issued for import of the subject goods duty free as " Process Oil falling under CTH 2707 " and the same would have been allowed by the DGFT . Therefore , I am of the view that there could not have been any intention on the part of the importer to mis - classify the goods since the imported goods were always eligible for the exemption notification as raw material under the particular scheme , irrespective of being classified under CTH 3812 or 2707 . 30. The basic aim of duty free exemption schemes under the Foreign Trade Policy is to enable importers to import duty free inputs which are used in the manufacture of finished goods which are subsequently exported without payment of duty. All the duty exemption schemes are operated with the objective of Zero Tax Exports. There are a number of provisions / procedures available under the Foreign Trade Policy to achieve Zero Tax Exports, Advance Authorization scheme being one of them. The background for such export incentive schemes cannot be to burden the export products with additional customs du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were dismissed by the Supreme Court [ 2016 ( 331 ) ELT . A89 (SC) ) . Hence, the said case law has attained finality and required to be followed in order to adhere to judicial discipline. 32 . In view of the above , I find that the Notices has not violated the conditions of duty free import under Advance Licenses and therefore , the proposal for confiscation of 56,11,160 Kgs of " Shell Flavex Oil 595 having assessable value of Rs. 34,26,25,952/- imported by them under various Advance Authorizations ( as listed in Annexure - A to the Show Cause Notice ) , under Section 111 ( m ) & 111 ( o ) of the Customs Act , 1962 , is not legally sustainable . Moreover , as there is no allegation of diversion of duty free imported goods , therefore the demand for Customs duty leviable thereon does not survive . 33. Interest & Penalty ; In view of discussions and findings contained in the foregoing pars , I find that the duty demand proposed in the Show Cause Notice is not sustainable . Consequently, the demand of interest and penalty would not stand. " 5. On reading of the above finding we do not find any infirmity therein. Therefore, the impugned order is liable to be sustained. 6. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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