TMI Blog2022 (9) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... better clarity as to how the expert held a view contrary to other technical literature. Therefore, it is found that the reliance on the expert opinion of CRCL not correct in this factual matrix. It is also found that prior to the issue of show cause notice there was an order of the Tribunal holding that Melamine qualifies as Syntan. The Additional Director of DRI and the adjudicating authority effectively said that the Tribunal was not correct. If it be their opinion, it was open for them to assail the order of the Tribunal before a higher judicial forum. Instead, the Additional Director DRI and the Assistant Commissioner have arrogated to themselves the role of a superior authority over the Tribunal and ignored the judicial precedent which is not only highly irregular, but is also in violation of judicial discipline. The lower authorities have confirmed the demand ignoring the order of this Tribunal in COMMISSIONER OF CUSTOMS, NHAVA SHEVA VERSUS DIMPLE OVERSEAS LTD. [ 2002 (3) TMI 636 - CEGAT, MUMBAI] , ignoring all the technical literature which state that Melamine can be used directly for tanning leather, relying on the opinion of CLRI contrary to the published literature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g it to be Syntan. Later, the Additional Director of DRI, Lucknow initiated an enquiry and issued a show cause notice dated 28.02.2014 alleging that Melamine is not a Syntan. According to the show cause notice, DRI received information that the appellant had mis-represented Melamine as Syntan and wrongly availed the benefit of exemption notification under the DFIA licence. DRI conducted enquiries with the importer who have pointed out in the case of Dimple Overseas Ltd., the Tribunal has held that Melamine is a Synthetic Tanning Agent or Syntan. 3. However, the Additional Director has effectively decided that the decision of the Tribunal was not correct and, therefore, proceeded to issue the show cause notice on the ground that Melamine was not a Syntan and hence the exemption was wrongly claimed. The relevant paragraphs of the show cause notice with his observations regarding the Tribunal s order are below :- 6. From the perusal of the above mentioned CEGAT order, it is seen that the said order was in the context of DFRC Scheme. The said order was based on two observations : i. General understanding of the melamine taken as tanning agent in the light of the GG Hawley s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RC (DFIA) Scheme . 7. From the above, the Additional Director has, in the show cause notice observed that Melamine cannot be treated as a Syntan which is permitted for import under the DFIA licence and accordingly issued a demand of duty and proposed imposition of penalty under Section 117 of the Customs Act. The appellant opposed the show cause notice and had asserted that Melamine, is a Syntan as held by the Tribunal in Dimple Overseas Ltd. and, therefore, prayed the demand may be dropped. The appellant also contended that as per the judgment of the Supreme Court in Commissioner of Customs, Calcutta versus G.C. Jain [ 2011 (269) E.L.T. 307 (S.C.) ], in the DFIA licence, the materials given in the exemption notification covers both raw materials and intermediates and even entities which are not directly used in the export product, but are indirectly used would be eligible for exemption. Therefore, on this ground also even if Melamine is considered to be used indirectly after making it condensate with other materials as Tanning Agent, Melamine qualifies for duty free import under the DFIA licence. 8. The expert opinion of the CLRI was that Melamine cannot be used as Syntan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Raw Stock : Pickled goatskins, rebrined, horsed, and drained overnight Formula : Skins, drained pickle weight . 50 lb Water at 80 F 2 gal Salt . 2.5 lb Run 15 min. pH 2.5 Melamine .. 2.5 lb 5% Run 30 min. pH 5.9 Formaldehyde (36% by weight) 5 lb 10% Run 3 hr. pH 4.7. Shrink test 166 F Temperature of liquor 82 F Run 6 hr more and shut down overnight Next Day : Run 15 min. pH 4.3. Shrink test 194 F Washed and fatliquored. Windus believes that this procedure is convenient for several reasons : The disagreeable and time-consuming operation of heating a solution of formaldehyde is avoided. No polymerization of the monomer can take place before tanning and there is no solution which must be used promptly. The limited solubility of the melamine provides an automatic regulator of the rate of tanning and yet the solubility is adequate to permit tanning is the normal time. When melamine is used on pickled skins the alkalinity is often sufficient to act as a depickling agent and the pH is controlled within the range of 4.0 to 5.0 for tanning and fatliquoring . He says further : Such a method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The licence was issued for import of Syntan and it had imported Melamine declaring it as Melamine in the Bills of Entry and has not declared in any other name. The Bills of Entry were processed and the goods were cleared by the Proper Officer accordingly ; (ii) In Dimple Overseas Ltd., Tribunal had already held that Melamine was a Synthetic Tanning Agent. This was brought to the notice of the Additional Director during investigations and enquiries as has been recorded in paragraph 5 of the show cause notice. There is nothing on record to show that the order of this Tribunal in Dimple Overseas Ltd. has been overturned by any superior judicial forum. (iii) Having recorded the Tribunal s decision, the Additional Director decided on his own that the Tribunal s order was not correct and proceeded to issue the show cause notice which is not correct because the Additional Director, DRI cannot over-rule the order of the Tribunal. If Revenue was aggrieved by this order, they could have appealed against to any higher authority ; (iv) The scope of the DIFA Scheme and the goods which can be imported under the scheme were clarified by the policy Circular of DGFT dated 10.10.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch may not have actually been used in the manufacture of the export products can be imported. 17. He, therefore, prayed that the impugned order may be set aside and the appeal may be allowed with consequential relief. 18. Learned Departmental Representative submits that the case of Dimple Overseas Ltd. pertained to DEEC licence whereas the present case pertains to Duty Free Import Authorization licence. In Balaji Action Buildwell versus Commissioner of Customs, New Delhi [ 2019 (366) E.L.T. 922 (Tri. Del.) ], this Tribunal had distinguished the decision of Dimple Overseas Ltd. and held that Melamine cannot be used, as such, and whether processing as Syntan and, therefore, is not covered under DFIA licence and for Syntan. 19. He further submits that Melamine is covered under HSN 29336100 whereas Syntans are covered under HSN 32021000. He further submits that the expert opinion by Government lab cannot be simply brushed aside. He relied on the order of the Tribunal in Commissioner of Customs, Vijayawada versus Kimmi Steels Pvt. Ltd. [ 2019 (368) E.L.T. 92 (Tri. Hyd.) ] upheld by Supreme Court in Kimmi Steels Pvt. Ltd. versus Commissioner [ 2019 (368) E.L.T. A40 (S.C.) ]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, such an approach cannot be sustained. Learned Authorized Representative has argued that the expert opinion by Government Chemist cannot be brushed aside. We agree. However, if the expert opinion is contrary to some other technical literature and when the assessee seeks a cross-examination of the expert it must be provided before the expert s report can be relied upon. On cross-examination, perhaps, there would be better clarity as to how the expert held a view contrary to other technical literature. Therefore, we find the reliance on the expert opinion of CRCL not correct in this factual matrix. 23. We also find that prior to the issue of show cause notice there was an order of the Tribunal holding that Melamine qualifies as Syntan. The Additional Director of DRI and the adjudicating authority effectively said that the Tribunal was not correct. If it be their opinion, it was open for them to assail the order of the Tribunal before a higher judicial forum. Instead, the Additional Director DRI and the Assistant Commissioner have arrogated to themselves the role of a superior authority over the Tribunal and ignored the judicial precedent which is not only highly irregular, but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the order of the Tribunal in the case of Balaji Action Buildwell. We find that before the Tribunal in that case was only the expert opinion of CLRI, Chennai which stated as follows Melamine cannot be used, as such, in leather processing as Syntan . It does not appear from the order that any of the technical literature contrary to this opinion of CLRI were produced in that case by appellants before the Tribunal. It is not recorded that Melamine can be used directly, as such, on leather as a Syntan as has been the assertion of the appellant in this case from the very beginning itself. 28. We further find that in that the judgment of the Supreme Court in the case of G.C. Jain holding that the materials need not be used directly, but can be used after some processing and will still qualify for exemption under licence was not brought to the attention of the Tribunal. Thus, both on the substantial question of law, which was laid down by the Supreme Court in G.C. Jain and the technical literature were not placed before the Tribunal in that case. In this context that the Tribunal had passed the order. 29. The present case is distinguishable inasmuch technical literature has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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