Take notes as you read a judgment using our Virtual Legal Assistant and get email alerts whenever a new judgment matches your query (Query Alert Service). Try out our Premium Member services -- Free for one month.\n\nCustom, Excise & Service Tax Tribunal\nJaymco Polymers P Ltd vs Commissioner Of Customs -Nhava Sheva - I on 9 May, 2022\n                                              1\n\n\n\n\n    CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL\n                        MUMBAI.\n\n                      Customs Appeal No. 86184 of 2021\n\n(Arising out of Order-in-Appeal No.407 to 409 (Gr.I & 1A)/2021(JNCH)/Appeals dated\n19.05.2021 passed by the Commissioner of Customs (Appeals), JNCH, Nhava Sheva, Dist.\nRaigad, Maharashtra]\n\nShri Jethanand Rohra,                                       Appellant\nDirector of M/s. Jaymco Polymers Pvt.Ltd.,\nPlot No.16, Additional Ambernath,\nAnand Nagar, MIDC,\nAmbernath-421 506.\n                                         VERSUS\n\nCommissioner of Customs (Import)                           Respondent\nNS-I, JNCH, Nhava Sheva,\nDist.-Raigad-400 707.\n\n\n                                             AND\n\n                      Customs Appeal No. 86185 of 2021\n\n(Arising out of Order-in-Appeal No.407 to 409 (Gr.I & 1A)/2021(JNCH)/Appeals dated\n19.05.2021 passed by the Commissioner of Customs (Appeals), JNCH, Nhava Sheva, Dist.\nRaigad, Maharashtra.]\n\n\nM/s Jaymco Polymers Pvt. Ltd.                               Appellant\nPlot No.16, Additional Ambernath,\nAnand Nagar, MIDC,\nAmbernath-421 506.\n                                         VERSUS\n\nCommissioner of Customs (Import)                            Respondent\nNS-I, JNCH, Nhava Sheva,\nDist.-Raigad-400 707.\n\n\n\n\nAPPEARANCE:\n\nShri N.D. George, Advocate for the appellant\nShri Manoj Das, Authorised Representative for the respondent\n\nCORAM:\n\nHON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL)\nHON'BLE MR. C.J. MATHEW, MEMBER (TECHNICAL)\n\n\n              FINAL ORDER NOS. A/85436-85437/2022\n\n                                                   DATE OF HEARING:18.02.2022\n                                                   DATE OF DECISION:09.05.2022\n                                       2\n\n\n\n\nANIL CHOUDHARY:\n\n       The appellant, M/s. Jaymco Polymers Pvt. Ltd. carries on business of\n\nmanufacture, import, and trading of various Mixed Mineral Hydrocarbon oil,\n\netc. The other appellant, Jethanand Rohra is the director of the appellant\n\ncompany.\n\n2.     The facts in brief are that the appellant in the normal course of\n\nbusiness upon import filed     5 bills of entry during the period December,\n\n2019     and Jan. 2020 for clearance of goods declared as "Mineral\n\nHydrocarbon Oil" CTH 27101988/Mixed Mineral Hydrocarbon Oil - CTH\n\n27101990, as freely importable. One of the raw materials, the appellant\n\nimports for final products is Mineral Hydrocarbon Oil, which is a solvent. The\n\nconsignment /containers were put on hold for drawing samples as Revenue\n\nsuspected mis-declaration. Initially, the Customs Authorities took a sample\n\nfrom import consignment      with respect to the Bill of Entry No. 6110507\n\ndated 17.12.2019 on Ist check basis and sent the same for testing to Dy.\n\nChief Chemist, JNCH vide Test Memo No.1059045 dated 17.12.2019. Vide\n\nreport dated 27.12.2019, it was opined as under:-\n\n       "The Sample is in the form other than light oil and preparations,\n\n       Kerosene (SKO) and Diesel (HSD)".\n\nThe appellant paid duty on 31.12.2019 as the goods were found as declared.\n\nHowever, the said goods were not allowed to be cleared and put on hold by\n\nthe Department. Thereafter, the sample was once again drawn on\n\n07.01.2020    and again forwarded to the Dy. CC, JNCH for retesting. The\n\nsame Dy.CC, JNCH vide his test report no.18/GIIB(I) dated 21.01.2020\n\nopined as under:-\n                                       3\n      "The above tested parameters is in the range of diesel oil.\n\nIt is other than the light oil and preparations solvent (125/240), Kerosene\n\n(SKO) and Vacuum Gas Oil".\n\nThereafter, samples were drawn under Panchnama for other 4 Bills of entry\n\nand forwarded to the DYCC, JNCH for testing. As per test report, it appeared\n\nto Revenue that the goods are Superior Kerosene Oil (SKO) -                    CTH\n\n27101910 with respect to the three bills of entry and High Speed Diesel\n\n(HSD) of CTH 27101930 in case of 2 bills of entries, import of which is\n\nrestricted and allowed only by the State Trading Enterprises. Thus, it\n\nappeared that the import made by the appellant in absence of specific\n\nauthorisation by DGFT, is prohibited and as such, the same is in\n\ncontravention of FTP, violating the provisions of Section 111 (d) & (m) of\n\nthe Customs Act and thus, liable to confiscation. Show cause notice dated\n\n14.10.2020 was issued and the goods were seized. The details Bill of entry\n\nwise are as follows:-\n\n                                    Table- A\n\nImporter                                  M/s.Jaymco Polymers Pvt.Ltd.\n\nIEC                                       0310057744\n\nBill of Entry                             6356219 dated 04.01.2020\n\nIGM No.                                   2243189 dated 2.1.2020\n\nCountry of Origin                         Kuwait\n\nDescription of Goods & CTH                Mixed     Mineral      Hydrocarbon   Oil-\n\n                                          CTH27101988\n\nQuantity                                  85370 Kgs.\n\nInvoice No. & Date                        MEDUKW032040 dated 04.12.2019\n\nDeclared Invoice Value (C&F)              50365.35 USD\n\nExchange Rate                             1.00 USD = 72.15 INR\n\nSupplier                                  M/s. Babji International, Kuwait\n                                        4\n\n\n\n\nContainer Nos.                             CAI6215630, FCIU5874098, GLDU5286813,\n                                           MSDU1184242 and TEMU1377294.\n\n\nGoods- as classified by Revenue            Diesel CTH27101944\n\nDeclared Assessable Value                  3636213\n\nRe-determined value @Rs.43.14/Ltr.         4419434.16\n\n\n\n                                     Table- B\n\nImporter                                   M/s. Jaymco Polymers Pvt. Ltd.\n\nIEC                                        0310057744\n\nBill of Entry                              6227454 dated 25.12.2019\n\nIGM No.                                    2242451 dated 24.12.2019\n\nCountry of Origin                          Kuwait\n\nDescription of Goods                       Mineral Hydrocarbon Oil-CTH27101990\n\nQuantity                                   167490 Kgs.\n\nInvoice No. and Date                       KW-SMB-INV-126 dated 03.12.2019\n\nDeclared Invoice Value (C&F)               99656.55 USD\n\nExchange Rate                              1.00 USD = 71.90 INR\n\nSupplier                                   M/s. SMB Golden General Trading Co. ,\n                                           Kuwait\nContainer No.                              CAIU6217886,            FCIU4319784,\n                                           GLDU5499608,           MEDU2231059,\n                                           MEDU5444103,           MEDU5461950,\n                                           MEDU5586197,           MEDU5599379,\n                                           MEDU6772513 and MSDU1085208.\n\nGoods as classified by Revenue             Kerosene CTH 27101910\n\nDeclared Assessable Value                  71,69,963\n\nRe-determined Value @Rs.37.23/Ltr.         79,81,635.46\n\n\n                                     Table- C\n\nImporter                                   M/s. Jaymco Polymers Pvt.Ltd.\n\nIEC                                        0310057744\n\nBill of Entry                              6110507 dated 17.12.2019\n\nIGM No.                                    2241551 dated 13.12.2019\n\nCountry of Origin                          Kuwait\n\nDescription of Goods                       Mixed   Mineral        Hydrocarbon    Oil-\n                                           CTH27101988\n                                         5\n\n\n\n\nQuantity                                    73090 Kgs.\n\nInvoice No. and Date                        KW-SMB-INV-121 dated 13.11.2019\n\nDeclared Invoice Value (C&F)                43123.10 USD\n\nExchange Rate                               1.00 USD = 72.40 INR\n\n\nSupplier                                    M/s. Babji International Co. Kuwait.\n\nContainer No.                               MEDU5654814,           MEDU5861745,\n                                            MEDU6929217 and TGHU0968761\n\nGoods as classified by Revenue              Diesel CTH 27101944\n\nDeclared Assessable Value                   31,24,128.44\n\nRe-determined Value @ Rs.43.14/Ltr.         37,83,723.12\n\n\n                                      Table- D\n\nImporter                                    M/s. Jaymco Polymers Pvt.Ltd.\n\nIEC                                         0310057744\n\nBill of Entry                               6024354 dated 10.12.2019\n\nIGM No.                                     2241215 dated 10.12.2019\n\nCountry of Origin                           Qatar\n\nDescription of Goods                        Mineral Hydrocarbon Oil-CTH27101990\nQuantity                                    160300 Kgs.\n\nInvoice No. and Date                        QT-SMB-INV-100 dated 02.12.2019\n\nDeclared Invoice Value (C&F)                95378.50 USD\n\nExchange Rate                               1.00 USD = 72.40 INR\n\n\nSupplier                                    M/s. SMB Golden General Trading Co.,\n                                            Kuwait.\nContainer No.                               CAIU2271662,           GLDU3898070,\n                                            MRSU0280314,           MSKU2315450,\n                                            MSKU3569491,           MSKU4125357,\n                                            MSKU7994523,            TCKU1625713,\n                                            TTNU1078568 and TTNU1248474.\n\nGoods as classified by Revenue              Kerosene CTH 27101990\n\nAssessable Value                            69,09,859\n\nRe-determined                               76,39,000.32\n Value @Rs.37.23/Ltr.\n                                        6\n\n\n\n\n                                     Table- E\n\nImporter                                   M/s. Jaymco Polymers Pvt. Ltd.\n\nIEC                                        0310057744\n\nBill of Entry                              6025517 dated 10.12.2019\n\nIGM No.                                    2241215 dated 10.12.2019\n\nCountry of Origin                          Qatar\n\nDescription of Goods                       Mineral Hydrocarbon Oil-CTH27101990\n\nQuantity                                   169150 Kgs.\n\nInvoice No. and Date                       QT-SMB-INV-99 dated 02.12.2019\n\nDeclared Invoice Value (C&F)               100644.25 USD\n\nExchange Rate                              1.00 USD = 72.40 INR\n\n\nSupplier                                   M/s. SMB Golden General Trading Co.,\n                                           Kuwait.\nContainer No.                              HASU1434878,           MRKU7389958,\n                                           MRKU7663800,           MRKU7853020,\n                                           MRKU8039574,           MRKU8138561,\n                                           MRKU8241332,           MRKU8411491,\n                                           MRKU8499163 and MRKU9748419.\n\n\nGoods as classified by Revenue             Kerosene CTH 27101990\n\nAssessable Value                           74,37,174\n\nRe-determined                              80,60,741.76\nValue @Rs.37.23/Ltr.\n\n\n\n3.    The appellant importer's request to retest the samples, particularly for\n\ngoods of Bill of Entry no.6024354 and 6025517, both dated 10.12.2019\n\n(which were tested as Kerosene), as per Circular No.30/2017 dated\n\n18.07.2017. However the request was denied by the Adjudicating Authority,\n\nrelying on para 2 (g) of the said Board's Circular.\n\n4.    Statement of the Director/Jethanand Rohra, was recorded under\n\nSection 108 of the Act, wherein he, inter alia, stated that he had never\n\nvisited any customs House or Bombay Test House and all the documents\n                                           7\n\n\n\n\nwere handled by the Customers Broker/ IOCC Shipping Company including\n\nthe managing of the documents from            Bombay Test House. He       further\n\nstated that Shri Taranjeet Singh Rathore          is the person in the Customs\n\nbroker firm, handling all the customs clearances.\n\n5.        It appeared to Revenue that the appellants       have been importing\n\nKerosene /diesel by mis-declaring the same as MHO/MMHO and IMRO in\n\nconnivance with the supplier and the Customs Broker. It further appeared\n\nthat the appellants have admitted to the import of prohibited goods by way\n\nof mis-declaration and to get the same cleared for home consumption.\n\n6.        As the provisional release was not being given, the appellant had also\n\napproached the Hon'ble Bombay High Court for directions to allow proper\n\nstorage of the consignment being inflammable and had also prayed for\n\nprovisional release to be allowed by the Revenue. Thereafter, Revenue\n\npassed order dated 31.08.2020 for provisional release, subject to the\n\nconditions:-\n\n (i)      Execution of bond of Rs. 2,90,36,082/-;\n\n (ii)     Security deposit of Rs.3,77,32,753/- on account of differential duty,\n\n          fine and penalty that may be levied at the time of adjudication; and\n\n(iii)     Payment of self-assessed duty, where it is not paid.\n\n7.        The appellant objected to taking of assessable value of Rs.80.11/- per\n\nlitre, determined by the Department for the purpose of provisional release,\n\nand in fact, the customs duty has been applied twice. The Hon'ble Bombay\n\nHigh Court, while       passing the final order in respect of the Writ Petition\n\nNo.2451/2020, observed as follows:-\n\n     i.     Petitioner is granted liberty to file appeal before the CESTAT under\n\n            Section 129-A(1)(a) of the Customs Act against the order dated\n\n            31.08.2020.\n                                             8\n     ii.      If such appeal is filed within a period of four weeks from today and\n\n              an application is made for early hearing, CESTAT shall decide the\n\n              appeal   within a period of four weeks thereafter considering the\n\n              limited nature of the grievance of the petitioner.\n\n     iii.     In so far adjudication process is concerned let the Adjudicating\n\n              Authority    initiate the adjudication process by issuance of show\n\n              cause notice under Section 124 of the Customs Act, and take the\n\n              proceedings     to its logical conclusion one way or the other by\n\n              following the due procedure and principles of natural justice within\n\n              a period of four weeks from the date of receipt of a copy of this\n\n              order.\n\n     iv.      Petitioner    is also granted liberty to file application before the\n\n              respondents for sale for the seized goods and if such application is\n\n              filed, respondent shall take a considered decision thereon in\n\n              accordance with law, within a period of two weeks from the date of\n\n              receipt of the application with due intimation to the petitioner.\n\n     v.       All contentions are kept open and we have not expressed any\n\n              opinion on merit or otherwise."\n\n8.          In compliance to the direction issued by the Hon'ble Bombay High\n\nCourt, appellant had filed an appeal bearing no. C/86035/2020 before the\n\nHon'ble Tribunal challenging the Order-in-original dated 31.08.2020 (on pro.\n\nrelease) by the Commissioners of Custom, (NS(V) alongwith an early\n\nhearing application. Show Cause Notice No. 519/2020-21/SIIB (I) JNCH\n\ndated 13.10.2020 was issued upon the appellant as to why the seized goods\n\nshould not be confiscated under Section 111(d) and (m) of the Customs Act,\n\n1962, and also as to why Penalty should not be imposed on the Appellant\n\nunder Section 112(a) and 114AA of the Customs Act, 1962. Personal hearing\n                                       9\n\n\n\n\nin respect of the said Notice was scheduled on 22.10.2020 and duly attended\n\nby the Appellant's authorized representative. Pursuant to the hearing, the\n\nAppellant   under cover of his email dated 23.10.20, filed its defence reply\n\ndated 22.10.2020 wherein categorically rebutted all the allegations and\n\ninsinuations levelled against it in the Notice, as also adduced cogent reasons\n\nand submissions alongwith binding precedents to show and establish that\n\nthe product in question was not kerosene / High speed diesel. Meanwhile the\n\nHon'ble Tribunal was pleased to allow the early hearing application and the\n\nmatter was ultimately scheduled for final hearing on 01.12.2020 on its\n\nspecific prayers with regard to harsh and unreasonable conditions imposed\n\nby the Commissioner of Customs, NS(V) while permitting the provisional\n\nrelease of the consignment in question. The Appellant was shocked and\n\nsurprised by the Adjudication Order dated 23.11.2020 passed by the\n\nAdjudicating Authority and thereafter apprised this Tribunal about the same,\n\nand withdrew its appeal filed before the Tribunal against the Order dated\n\n31.08.2020 (prov. release).\n\n\n9.   In the Order-in-Original No. 427/2020/ADC/NS-I/Gr. I&IA/JNCH dated\n\n23.11.2020, it was ordered:-\n\n\na.   Amendment of Description and CTH in the subject Bills of Entry and\n     re-assessment accordingly;\n\nb.   Rejected the declared value under Section 14 of the Customs Act,\n     1962 read with Rule 12 of Customs Valuation Rule and re-determined\n     the same;\n\nc.   Confiscation of the goods namely Keorsene (IS:1459) (changed\n     classification) covered under 03  Bills     of     Entry    No.\n     6227454/25.12.2019, 6022517/10.12.2019, 6024354/10.12.2019\n     having re-determined value of Rs. 2,36,81,377.54 u/s 111(d) and\n     111(m) of the Customs Act, 1962;\n\nd.   Confiscation of the goods namely HS Diesel (IS:1460) (changed\n     classification) covered under 02 Bills of Entry No. 6356219/04.01.2020\n                                          10\n\n\n\n\n      and 6110507/17.12.2019 having re-determined value of                         Rs.\n      82,03,157.28 u/s 111(d) and 111(m) of the Customs Act, 1962;\n\ne.    Gave an option to the importer to redeem the confiscated goods on\n      payment of Redemption Fine of Rs. 2,08,44,548/- under Section\n      125(1) of the Customs Act, 1962 and on payment of applicable duty in\n      addition to redemption fine and penalty;\n\nf.    Imposed a penalty of Rs. 64,00,000/- on the importer M/s Jaymco\n      Polymers Pvt. Ltd. under Section 112(a) of the Customs Act, 1962;\n\ng.    Imposed a penalty of Rs. 64,00,000/- on Shri Jethanand B. Rohra,\n      Director under Section 112(a) of the Customs Act, 1962;\n\nh.    Imposed a penalty of Rs. 48,00,000/- on Shri Jethanand B. Rohra\n      under Section 114AA of the Customs Act, 1962;\n\ni.    Imposed a penalty of Rs. 64,00,000/- on Shri Taranjeet Singh Rathore\n      under Section 112(a) of the Customs Act, 1962;\n\nj.    Imposed a penalty of Rs. 64,00,000/- on Shri Taranjeet Singh Rathore\n\n      (staff of CHA) under Section 114AA of the Customs Act, 1962;\n\n10.   Being aggrieved, the appellants preferred                  appeals before the\n\nCommissioner (Appeals), inter alia, on the grounds that --\n\n      A.   Onus is cast upon the Department to prove mis-declaration/ mis-\n\n      classification, had not been discharged in the instant case, rendering\n\n      the impugned order completely untenable. Reliance is placed on the\n\n      case laws:\n\n i.      HPL Chemicals Ltd. Vs. CCE 2006(197) ELT 324 (SC)\n\n           ii      Hindustan Ferodo Ltd. Vs CCE 1997 (89) ELT (SC)\n\n      B.   The Test reports issued by DYCC, JNCH does not cover all the\n      properties/parameters     as   enlisted        under    IS:1460   or   IS:1459,\n      rendering the same completely inconclusive and thus unreliable. The\n      consignment    imported    vide    Bill   of    Entry    No.   6024354   dated\n      10.12.2019,    6025517     dated     10.12.2019         and    6227454   dated\n      25.12.2019 is alleged to be Kerosene. The Appellant urged that the\n      DYCC, JNCH has failed to test material parameters such as burning\n      Quality and Colour, which are otherwise mandated under IS:1459, to\n      be satisfied for conforming whether a product is 'kerosene' or not.\n                                    11\nThe Appellant has relied upon settled law laid down by the Hon'ble\nApex Court in the case of CCE vs Sushma Textiles Ltd 2004 (167) ELT\n487 (S.C.)\n\nC.    The samples have not been drawn in accordance with the\nmethodology in the prescribed containers as required under the BIS\nSpecification IS 1447-1 rendering the Test Reports, a complete nullity.\n\nD.    Non-specification of method of testing in the Test Reports\nrenders the same completely unreliable.\n\nE.    Case laws relied by court below in the impugned order are\nirrelevant.\n\n i.       Reliance Cellulose Products Ltd. Vs CCE 1997 (93) ELT 646 (SC)\n\n      ii.      Anand Mohata Agro Indus P. Ltd. Vs C.C. Import 2019\n\n               (370) ELT 1656\n\n      iii. Collector of Customs, Madras and ors Vs D. Bhoormull\n\n               1983 (13) ELT 1546 (SC)\n\nF.    The issue in dispute is no longer res-integra and stands decided\nby the       Tribunal in favour of importer in the case of Swarna Oil\nServices Vs. CC in Final Order No. A/11026-11028/2020 dated\n01.06.2020\n\nG.    Denial of re-testing in the instant case is against direction in Cir.\nNo.30/2017, in violation of principles of N justice, hence completely\nuntenable and vitiates the impugned order.\n\nH.    No reliance whatsoever ought to have been placed on the\nAppellant's statement dated 31.12.2019 having been recorded            under\nforce and duress, which have been retracted immediately.\n\nI.    Denial of cross examination in the instant case is denial of right\nto a fair trial, in violation of mandate of section 138 B, hence\ncompletely illegal and untenable. Reliance is placed upon case law laid\ndown by the Hon'ble Madras High Court in the case of Thilagarathinam\nMatch Works VS CCE 2013 (295) ELT 195 (Mad)\n                                         12\n\n\n\n\n      J.    Non-furnishing of the documents, referred to and relied upon in\n      the show cause notice\n\n      K.    Re-determination of value in the instant case is completely\n      bereft of any merits\n\n      L.    There has been no violation of any policy condition and/or\n      provisions of the Foreign Trade Policy.\n\n      M.   The impugned order confiscating the consignments in question\n      under Section 111(d) and 111(m) of the Customs Act, 1962 is\n      completely untenable.\n\n      N.    Imposition of Redemption Fine under Section 125 of the Customs\n      Act, 1962 is bad.\n\n      O.   Imposition of Penalty upon the Appellant under Section 112(a) &\n      114 AA of the Customs Act, 1962 is bad.\n\n\n11.   The Director, Shri Jethanand Rohra had also filed appeal before the\n\nCommissioner (Appeals) on the following grounds:-\n\n      A.   The main Appellant has already laid down cogent reasons to\n      prove that the said reliance placed by the OA on Test Reports and the\n      consequent conclusions drawn thereto are completely untenable and\n      devoid of merits. He requested to rely       upon the said submissions\n      urged by the main appellant in their appeal memorandum.\n\n      B.   There   is   no   evidence    other   than   the   statement   dated\n      31.12.2019, which is relied upon in the instant case to impinge the\n      Appellant. The said statement was recorded under force and duress; it\n      was not voluntary and did not represent the correct factual position.\n      He had duly registered his retraction of the said statement dated\n      31.12.2019, under cover of his letter dated 01.01.2020. The Appellant\n      submits that it is a settled law that no reliance can be placed on a\n      statement unless the same is corroborated with some reliable and\n      independent evidence.\n\n      C.   There was no connivance between the overseas supplier and the\n      Appellant. The COO, Certificate of Analysis and other documents are\n      prepared by the overseas supplier and admittedly no proceedings have\n      been initiated against them.\n                                         13\n\n\n\n\n      D.    The findings of the Adj. Authority that the Appellant had\n      connived with the CHA in order to import prohibited goods is\n      completely bereft of any merits and not supported by any evidence. No\n      reliance ought to have been placed on the Statement of Shri\n      Tarachand Rathod, staff of CHA as Shri Rathod had retracted from his\n      statement   dated    21.08.2020        under   cover   of   his   letter   dated\n      24.08.2020. Shri Rathod has also filed an affidavit before the Hon'ble\n      Bombay High Court during the course of proceeding with regard to\n      provisional release of the goods, citing that his statement was\n      recorded under-force and duress. The said affidavit and letter of\n      retraction was duly filed before the OA.\n\n E.    Further the Cross examination of Shri Rathod was denied by the\n      OA. In this regard, the Appellant has relied upon the judgment of the\n      Hon'ble Madras High Court in the case of Thilagarathiam Match Works\n      Vs. CCE 2013 (295) E.L.T. 195 (Mad) wherein the Hon'ble Court had\n      held in no uncertain terms, that right to cross examine is a\n      fundamental principle of fair trial covered within the ambit of principles\n      of natural justice and Section 138 B of the Act.\n\n      F.    The Appellant cannot be penalized under Section 112(a) of the\n      Act as the appellant has not done any act or omitted to do any act,\n      which has rendered the goods liable for confiscation under Section 111\n      of the Act. Penalty under Section 114AA of the Act is imposable only\n      when a person knowingly or intentionally makes, signs or uses or\n      causes to be made, signed or used any declaration, statement or\n      document which is false or incorrect in any material particular in the\n      transaction of any business for the purposes of the Act. As the\n      Appellant was not concerned in making false statement or document,\n      the imposition of penalty on the appellant is unsustainable.\n\n12.   Against the same impugned order-in-original            dated 23.11.2020, the\n\nRevenue also filed appeal before the Commissioner (Appeals), inter alia, on\n\nthe following grounds :-\n\n      A.    Adjudicating Authority has ordered to release the goods on\n      payment of Redemption Fine of Rs. 2,08,44,548/- to the importer.\n                                       14\n      Hon'ble Supreme Court in case of Atul Automations Pvt. Ltd. has inter\n      alia held that - "A harmonious reading of the statutory provisions of\n      the Foreign Trade Act and Section 125 of the Customs Act will\n      therefore not detract from the Redemption of such restricted goods\n      imported without authorization, upon payment of the market value."\n\n      B.   The Adjudicating Authority did not take into consideration the\n      ruling of the Apex Court and allowed Redemption of the goods on\n      payment of redemption fine Rs. 2,08,44,548/- which was less than re-\n      determined assessable value of the goods i.e. Rs. 3,18,84,535/-\n\n      C.   Provided that where it is established to the satisfaction of the\n      Adjudicating Authority that any goods or materials which are liable to\n      confiscation under Rule 17(1) of the Foreign Trade (Regulation) Rules,\n      1993 had been imported for personal use and for any trade or industry\n      such goods or material, shall not be ordered to be confiscated. Under\n      Rule 17(2) of the said Rules, the Adjudicating Authority may permit\n      the redemption of the confiscated goods or materials upon payment of\n      redemption fine equivalent to the market value of such goods or\n      materials.\n\n      D.   The importer has violated the policy condition for import of\n      SKO/Diesel and therefore is liable for confiscation under Rule 17(1) of\n      the Foreign Trade (Regulation Rules, 1993). As per Rule 17(2) of the\n      said Rules,    the Adjudicating Authority was required to impose\n      redemption fine equivalent to the market value of the goods.\n\n13.   The Commissioner (Appeals) was pleased to uphold the order-in-\n\noriginal dated 23.11.2020, and dismissed all the 3 cross appeals by these\n\nappellants and Revenue.\n\n14.   Being aggrieved, the appellant is before this Tribunal, inter alia, on\n\nthe grounds urged before the Court below.\n\n15.   Ld. Counsel for the appellant further urges that the test reports issued\n\nby the DYCC/JNCH are not reliable for the reasons that firstly, the samples\n                                        15\n\n\n\n\nwere not drawn properly, as prescribed in IS 1447-1 and secondly, the test\n\nreports are not conclusive      as the DYCC/JNCH have not tested all the\n\nparameters suggested in Indian Standards for petroleum products. It is\n\nurged that test of all parameters prescribed is mandatory to conclusively\n\nestablish the identity of the alleged petroleum products (Diesel/Kerosene).\n\nSince the test reports   of the so called   representative samples       have not\n\nbeen carried out in respect of the certain characteristics, the test reports are\n\nunreliable. Hence, the orders of the court below, relying on the test reports\n\nare vitiated and fit to be set aside. Evidently, the Court Below has relied\n\nupon unreliable test reports and thus, have failed to discharge the burden of\n\nproof in support of their allegations of mis-declaration or mis-classification of\n\nthe goods under dispute.\n\n16.   Ld. Counsel relies on the ruling of the Apex Court in the case of\n\nSushama Textiles (supra),         wherein it is held that for want of test of all\n\nthe required parameters, the test reports are inconclusive and thus,\n\nunreliable to draw any adverse conclusion against the assessee. Ld. Counsel\n\nhave further assailed the test report bills of entry-wise as follows:-\n      (16.1) Bill of Entry No. 6227454 dated 25.12.2019 and Test Report No.\n             19 SIIB (I) dated 07.01.2020\n\n\n            16.1.1      Insofar as the consignment imported vide the Bill of\n            Entry No.6227454 dated 25.12.2019 is concerned, reliance has been\n            placed on the Test Report No. 19 SIIB (I) dated 07.01.2020 by the\n            Respondent to hold that the consignment imported is, one of kerosene.\n            In addition, the Respondent has also tabulated the following\n            parameters which according to him were tested and reported in the\n            said Test Report dated 07.01.2020. Thereafter, the Respondent has\n            held that "As per above Test Reports, I find that tests have been\n                             16\n\n\n\n\ncarried out as per specification mentioned in IS 1459/1460 and tested\nall 10 parameters and confirms to Superior Kerosene Oil/Diesel. "\n\n\n      i.   Density at 15°C             = 0.7888 g/ml\n     ii.   K. V. at 40°C               = 1.15 cst\n   iii.    Flash Point                 = 46oC\n    iv.    Acidity (inorganic)         = Nil\n     v.    Smoke Point                 = 23 mm\n    vi.    Ash Content                 = Nil\n   vii.    Initial Boiling Point       = 150.08oC\n  viii.    Volume distilled at 200°C   = More than 40%\n    ix.    90 % Distilled at           = 236.02oC\n     x.    Final Boiling Point         = 248.9oC\n\n 16.1.2.     The Appellant submits that the aforesaid reliance placed\n by the Respondent on the Test Report and the consequent\n conclusions drawn in the impugned order, to hold the product in\n question is kerosene, are completely untenable. The Appellant\n submits that the Respondent has erroneously assumed that the\n parameter of acidity (inorganic) has been tested and reported in the\n Test Report. The Test Report is, in fact, completely silent and has not\n reported the said parameter, clearly evidencing the callous approach\n of the Respondent. In view thereof, the Respondent has erred in\n holding that 10 parameters have been tested and reported in the Test\n Report as per the Specification IS 1459.\n\n 16.1.3       What the Respondent has failed to appreciate is that there\n are 8 parameters/properties under the IS 1459: 1974 which are\n required to be tested and reported for confirming whether a product\n is kerosene or not and not 10, as otherwise held by him. What the\n Respondent has further failed to appreciate, that though the Test\n Report has reported 9 parameters, however, in effect these are only 6\n parameters which have been tested and reported in the Test Report,\n as Initial Boiling Point, Final Boiling Point, Volume Distilled at\n 200°C and 90% distilled at, form part of a single parameter viz.\n Distillation Range.\n\n\n16.1.4 Further, what the Respondent has failed to take cognizance\nof the fact, out of the said 6 parameters, only 3 parameters viz. Flash\nPoint, Smoke Point and Distillation range, match the list of the\nparameters mandated under IS 1459: 1974. In other words, out of the\n                                17\n\n\n\n\n 8 parameters mandated under IS 1459: 1974, only 3 parameters viz.\n Flash Point, Smoke Point and Distillation range have been tested and\n reported, and the rest 5 mandatory parameters have not been tested\n and reported at all. The other 3 parameters tested and reported in the\n Test Report viz. density, ash content and kinematic viscosity have\n not been envisaged by the IS 1459: 1974, and accordingly are\n inconsequential to the case at hand.\n\n\n16.1.5       The mandatory 5 parameters/properties enlisted under IS\n1459: 1974, which have not been tested and reported in the Test\nReport are as under:\n\n      i.    Acidity (inorganic)\n     ii.    Burning Quality, which includes testing the Char Value,\n mg/kg of oil consumed and Bloom on glass chimney\n    iii.    Color (Sayabolt)\n    iv.     Copper strip corrosion for 3h at 50°C\n     v.     Total Sulphur, percent by mass\n\n16.1.6     In view of the aforesaid, inasmuch as the Test Report has not\ntested and reported the aforesaid 5 mandatory parameters/ properties,\nthe said Test Report is completely inconclusive to hold that the\nconsignment is one of kerosene. In view thereof, the said Test Report,\nby no stretch of imagination, could have been used as a reliable piece\nof evidence for seizing the consignment in question or draw any\nadverse inference/ conclusion against the Appellant. Thus, even if\nColor (Sayabolt) and Burning Quality test is not considered, still the\nRespondent has failed to show and establish the satisfaction of the\nother three mandatory parameters rendering the Test Reports\ncompletely inconclusive and thereby unreliable. The impugned order,\nthus, deserves to be quashed and set aside.\n\n\n16.1.7 The Appellant had categorically urged and brought on record\nthe aforementioned 5 mandatory parameters having not been tested,\n                                   18\n\n\n\n\n      reported and satisfied, however, the Respondent has chosen to ignore\n      the same, rendering the impugned order completely untenable.\n\n 16.2 Bills of Entry No. 6024354 dated 10.12.2019 corresponding Test\n      Reports No. 231 SIIB (I) dated 17.12.2019.\n\n Insofar as the Bill of Entry No. 6024354 dated 10.12.2019 is concerned,\n reliance has been placed on the Test Reports No. 231dated 17.12.2019 by\n the Respondent to hold that the consignment imported is Kerosene is bad\n and untenable for same reasons and errors, as enumerated in para 16.1.1 to\n 16.1.7.\n\n\n\n16.3 Bills of Entry No.6025517 dated 10.12.2019\n     and corresponding Test Report No. 232 SIIB (I)\n     dated 17.12.2019\n\n16.3.1 Insofar as the Bill of Entry No. 6025517dated 10.12.2019 is\nconcerned, reliance has been placed on the Test Reports No. 232 dated\n17.12.2019 by the Respondent to hold that the consignment imported is\nKerosene. In addition, the Respondent has, after tabulating the parameters\ntested and reported in the said Test Report dated 17.12.2019 held that "As\nper above Test Reports, I find that tests have been carried out as per\nspecification mentioned in IS 1459/1460 and tested all 10 parameters and\nconfirms to Superior Kerosene Oil/Diesel. "In this regards, the Appellant\nsubmits that the said reliance placed by the Respondent on the Test Report\nand the conclusions drawn thereon is completely untenable to say the least.\n\n\n\n16.3.2.      What the Respondent has failed to appreciate, there are 8\nparameters/properties under the IS 1459: 1974 which are required to be\ntested and reported for confirming whether a product is kerosene or not and\nnot 10 parameters, as otherwise held by him. What the Respondent has\nfurther failed to appreciate, that though the Test Report has reported 10\nparameters, however, in effect these are only 7 parameters which have been\ntested and reported in the Test Report as Initial Boiling Point, Final Boiling\n                                       19\n\n\n\n\n Point, Volume Distilled at 200°C and 90% distilled at, form part of a single\n parameter viz. Distillation Range. In view thereof, the Respondent has erred\n in holding that 10 parameters have been tested.\n\n\n\n16.3.3.   Further what the Respondent has failed to take cognizance of the\nfact that Out of the said 7 parameters, only 4 parameters viz. Flash Point,\nAcidity, Distillation range and Smoke Point match to those parameters which\nare required to be tested under IS 1459: 1974.      In other words, out of the 8\nparameters mandated under IS 1459: 1974, only 4 parameters have been viz.\nFlash Point, Acidity, Smoke Point and Distillation range have been tested and\nreported, and the rest 4 mandatory parameters have not been tested and\nreported at all. The other 3 parameters tested and reported in the Test Report\nviz. density, ash content and kinematic viscosity have not been envisaged by\nthe IS 1459: 1974 and accordingly are inconsequential to the case at hand.\n\n\n\n16.3.4       The mandatory 4 parameters/properties enlisted under IS 1459:\n1974, which have not been tested and reported in the Test Report are as under:\n\n              i.   Burning Quality, which includes testing the Char Value,\n                   mg/kg of oil consumed and Bloom on glass chimney\n             ii.   Color (Sayabolt)\n            iii.   Copper strip corrosion for 3h at 50°C\n            iv.    Total Sulphur, percent by mass\n\n 16.3.5 In view of the aforesaid, inasmuch as the Test Report has not tested\n and reported the aforesaid 4 mandatory parameters/ properties, the said Test\n Report is completely inconclusive to hold that the consignment is one of\n kerosene. In view thereof, the said Test Report, by no stretch of imagination,\n could have been used as a reliable piece of evidence for seizing the\n consignment in question or draw any adverse inference/ conclusion against\n the Appellant. In addition, the Appellant submits that even if Color\n (Sayabolt) and Burning Quality test is not considered, still the Respondent\n                                             20\n\n\n\n\n       has failed to show and establish the satisfaction of the other two mandatory\n       parameters rendering the Test Report completely inconclusive and thereby\n       unreliable. The impugned order, thus, deserves to be quashed and set aside.\n\n      16.3.6        The Appellant had categorically urged that the said 4 mandatory\n      parameters having not been tested, reported and satisfied, the Respondent has\n      erred in ignoring the same, rendering the impugned order completely\n      untenable.\n\n17.    It is further urged that the Revenue               have mis-directed itself by\n\npresuming that the product imported is kerosene and thereafter, proceeded\n\nto refer and relied upon some literature to discuss the properties, which\n\ndetermine the quality of kerosene. It is further urged that that the\n\nparameters of burning quality in IS 1459, has clearly stipulated the true\n\ncharacteristics, which are required to be tested and satisfied i.e. CHAR value\n\nbloom on glass chimney. Instead of testing these prescribed particulars, the\n\ntest report reports Flash Point,        which is completely illogical, unintelligible\n\nand devoid of any merit.\n\n18.    Although the adjudicating authority have referred to characteristics -\n\nCHAR value, bloom on glass chimney, but have failed to show how the said\n\ncharacteristics, which governed the parameters, - burning quality has been\n\nsatisfied.     Further,    Revenue     have      failed   to   appreciate   that   these\n\ncharacteristics       determine not the quality but the burning quality of\n\nkerosene, which is an important parameter for determination of kerosene.\n\nThe test reports being the only evidence relied upon by Revenue                    in the\n\ninstant      case    to   allege   mis-declaration/mis-classification,      are    wholly\n\ninconclusive and unreliable. It is further urged that the court below have\n\nerred in holding that the two characteristics viz. CHAR value and bloom on\n                                          21\n\n\n\n\nglass chimney are secondary in nature, which is contrary to the prescription\n\nunder IS1459. These characteristics            are of     prime     importance in\n\ndetermining - whether a sample of product is kerosene or not. Thus, the\n\nobservation of the Court Below that all the tests have been carried out as\n\nper the specification mentioned in IS 1459/1460 and tested all the 10\n\nparameters and confirms to Superior Kerosene Oil/Diesel,is evidently vague.\n\nThe test reports are evidently inconclusive as for diesel IS 1460 requires\n\ntesting, reporting and satisfaction of 22/21 parameters. Admittedly, in\n\nabsence of such test reports, reliance        placed by the Court below on the\n\nskeletal test report is vitiated.\n\n19.   Thus, the ld. Counsel further urges that two test reports dated\n\n07.01.2020 and 10.01.2020 issued in respect of the two bills of entry dated\n\n17.12.2020 and 04.01.2020 respectively are completely             inconclusive and\n\nunreliable. He further urges that the Bill of Entry-wise submissions is as\n\nfollows:-\n\n\n            19.1 Bill of Entry No. 6110507 dated 17.12.2019 and Test Report No.\n                18 dated 07.01.2020\n\n               The Appellant submits that it had, in its reply, categorically\n                 brought on record that with regard to the product/ consignment\n                 imported under Bill of Entry No.6110507 dated 17.12.2020, the\n                 Customs had initially drawn samples and forwarded the same to\n                 DYCC, JNCH for ascertaining the true nature of the consignment\n                 in question. It is submitted that DYCC, vide its Test Report No.\n                 2635 SIIB (I) dated 20.12.2019, had, after testing the parameters of\n                 "density, flash point (PMCC), kinematic viscosity, Ash content,\n                 temperature at 85% and 95% recovery, initial and final boiling\n                            22\n\n\n\n\n  point", clearly opined that the product is neither kerosene nor\n  diesel.\n\n19.2 It was submitted that even after obtaining the said Test Report,\nthe Customs, without assigning any reasons thereto, had forwarded\nfresh samples once again to DYCC, JNCH for testing and\nascertaining the nature of the consignment in question. It is\nsubmitted that the DYCC, JNCH thereafter, for the same\nconsignment, issued another Test Report No18 dated 07.01.2020,\nwhich forms the basis of the impugned order, wherein it, after testing\nsimilar parameters to that of its earlier Test Report dated 21.12.2019\nand finding almost identical values, opined that "the above tested\nparameters are in the range of diesel oil. It is other than light oil &\npreparation, solvent (125/240), kerosene and vacuum gas oil".\n\n\n19.3    In view of the aforesaid, it was submitted that inasmuch as\nthe same Lab, on testing similar parameters and arriving at almost\nidentical values, has arrived at two different conclusions, no reliance\nwhatsoever is to be placed on the Test Report dated 07.01.2020 to\ndraw any adverse conclusion or inference against the appellant. The\nRespondent ought to have appreciated the aforesaid submissions\nmade by the Appellant, which goes to the root of the matter,\nhowever, he has completely ignored the same, rendering the\nimpugned order completely untenable.\n\n\n\n 19.4   Even otherwise, what the Respondent has failed to appreciate\n is that the said Test Report does not lay down in concrete terms,\n that the product is diesel. It only lays down that "the above tested\n parameters are in the range of Diesel Oil." In view thereof,\n inasmuch as neither all the parameters have been tested and\n reported nor that the Test Report has arrived at any concrete\n                               23\n\n\n\n\n findings, the said Test Report is completely inconclusive, having no\n evidentiary value.\n\n\n\n 19.5       The Appellant submits that what the Respondent has\n further failed to appreciate is that even otherwise the said Test\n Report dated 07.01.2020 is inconclusive and thereby unreliable to\n determine as to whether the product is diesel oil or not. In this\n regard, it is submitted that under IS 1460: 2005, there are 22\n parameters which are required to be tested and reported in order to\n confirm whether a product is diesel oil or not. On a perusal of the\n Test Report dated 07.01.2020, it is observed that though the Test\n Report has reported 10 parameters, however, in effect these are only\n 6 parameters as IBP, FBP, temp. at 85%, 90%, 95% recovery form\n part of a single parameter viz. Distillation.\n\n\n19.6.    Further, what the Respondent has failed to appreciate is that\nout of the 22 parameters mandated under IS 1460: 2005, the said Test\nReport has tested and reported only these 6 parameters viz. Density,\nKinematic Viscosity, Flash Point, Ash Content, Cetane Index and\nDistillation (IBP, FBP, temp. at 85%, 90%, 95% recovery). The rest\n16 parameters mandated under IS 1460: 2005 have not been tested\nand reported, which have been enlisted herein below:\n    i.   Acidity, inorganic\n   ii.   Acidity, total, mg of KOH/gm\n  iii.   Carbon residue (Ramsbottom) on 10 percent residue\n  iv.    Cetane number\n   v.    Pour point\n  vi.    Copper strip corrosion for 3 h at 100°C\n  vii.   Sediment, percent by mass,\n viii.   Total contamination\n  ix.    Total Sulphur\n                                        24\n\n\n\n\n                x.   Water content, percent (vlv), Water content mg 1 kg\n               xi.   Cold filter plugging, point (CFPP)\n              xii.   Total sediments\n             xiii.   Oxidation stability, g/m"\n              xiv.   Polycyclic aromatic hydrocarbon (PAH), percent by mass\n              xv.    Lubricity corrected wear scar diameter(wsd 1.4) at 60°C\n              xvi.   Oxygen content, percent by mass\n\n\n             19.7       In view of the aforesaid analysis, in as much as the Test\n             Report has not tested and reported the aforesaid 16 mandatory\n             parameters/ properties, the said Test Report is inconclusive to hold\n             that the consignment is one of diesel oil. Thus the said Test Report,\n             by no stretch of imagination, could have been used as a reliable\n             piece of evidence for drawing any adverse inference/ conclusion\n             against the Appellant.\n\n20. Bill of Entry No. 6356219 dated 04.01.2020 and Test Report No. 30 SIIB\n    (I) dated 10.01.2020.\n     20.1   Insofar as the consignment/ product imported under cover of Bill of\n     Entry No. 6356219 dated 04.01.2020 is concerned, reliance has been placed\n     by the Respondent on the Test Report No.30 dated 10.01.2020 to hold the\n     consignment in question is one of diesel oil. In this regards, the Appellant\n     submits that the reliance placed by the Respondent is untenable.\n\n\n     20.2 The Appellant submits that what the Respondent has failed to\n     appreciate is the fact that there are 21 parameters/properties under the IS\n     1460 (as amended) which are required to be tested and reported for\n     confirming whether a product is diesel oil or not. On a perusal of the Test\n     Report dated 10.01.2020,it is observed that though the Test Report has\n     reported 10 parameters, however, in effect these are only 5 parameters IBP,\n     FBP, temp. at 85%, 90%, 95% recovery form part of a single parameter\n     viz.Distillation and that the Test Report has reported the parameter of Flash\n                                        25\n\n\n\n\n Point twice under two separate methods, whereas it was sufficient to report\n the same with any one such method.\n\n\n20.3   Further, what the Respondent has failed to appreciate that out of the\n21 parameters mandated under IS 1460 (as amended), the said Test Report\nhas only tested and reported 5 parameters viz. Density, Kinematic Viscosity,\nFlash Point, Cetane Index and Distillation (IBP, FBP, temp. at 85%, 90%,\n95% recovery). The rest 16 parameters mandated under IS 1460 (as amended)\nhave not been tested and reported, which have been enlisted herein below:\n             i.   Acidity, inorganic\n            ii.   Acidity, total, mg of KOH/gm\n           iii.   Ash, percent by mass\n           iv.    Carbon residue (Ramsbottom) on 10 percent residue\n            v.    Cetane number\n           vi.    Pour point\n          vii.    Copper strip corrosion for 3 h at 100°C\n          viii.   Sediment, percent by mass,\n           ix.    Total contamination\n            x.    Total Sulphur\n           xi.    Water content\n          xii.    Cold filter plugging, point (CFPP)\n          xiii.   Oxidation stability, g/m"\n          xiv.    Polycyclic aromatic hydrocarbon (PAH), percent by mass\n           xv.    Lubricity corrected wear scar diameter(wsd 1.4) at 60°C\n          xvi.    Oxygen content, percent by mass\n\n\n20.4     In view of the aforesaid analysis, inasmuch as the Test Report has\nnot tested and reported the aforesaid 16 mandatory parameters/ properties, the\nsaid Test Report is completely inconclusive to hold that the consignment is\none of diesel oil. In view thereof, the said Test Report, by no stretch of\nimagination, could have been used as a reliable piece of evidence for drawing\nany adverse inference/ conclusion against the Appellant.\n                                    26\n20.5    Even otherwise, what the Respondent has failed to appreciate is that\nthe said Test Report does not lay down in concrete terms that the product is\ndiesel. It only lays down that "on the basis of tested parameters, the sample\nunder reference may be considered as diesel." In view thereof, the\nRespondent ought to have discarded such an inconclusive and unreliable test\nreport, which, however, he has failed to do so. The impugned order, thus,\ndeserves to be quashed and set aside.\n\n20.6     Without prejudice to the above, the Appellant submits that it had in\nits reply categorically urged that no reliance whatsoever ought to be placed on\nthe letter dated 11.02.2020 issued by the Jt. Director (NFSG), JNCH,\nNhavaShava in respect of the Test Report dated 10.01.2020. The Appellant\nhad submitted that the Test Report and the conclusion drawn thereon are\ncompletely comprehensible and that there is no confusion as to the fact that\nthe DYCC, JNCH in its Report had concluded that it may be diesel oil. In\nview thereof, the Appellant had submitted that since the conclusion is not\nspecifically stating it is diesel oil, no adverse inference ought to be drawn\nagainst the Appellant. It is submitted that the Customs, on the other hand, has\narbitrarily tried to impinge onto such conclusion and has therefore referred to\nand relied upon the letter dated 11.02.2020       to allege that the product\nimported is diesel oil.\n\n20.7     It was therefore submitted that inasmuch as the said letter dated\n11.02.2020 is at complete divergence to the conclusions drawn by the\nChemical Examiner, DYCC, JNCH in its Test Report dated 10.01.2020, on\nidentical parameters and values, no reliance whatsoever ought to have been\nplaced on the said letter dated 11.02.2020. Accordingly, the Test Report\nopining that the product may be diesel oil is completely inconclusive and\nthereby unreliable to draw any adverse conclusion against the Appellant. The\nimpugned order, thus, deserves to be quashed and set aside.\n                                            27\n21.   It is further urged that both IS 1459 and 1460 require that\n\nrepresentative samples should be drawn in the manner prescribed under IS\n\n1447-Part-I. It is pointed out that with respect to the four bills of entry,\n\nRevenue had drawn samples from the flexy tank of one container each per\n\nbill of entry. The sample so drawn could be by no stretch of imagination be\n\nconsidered as the true representative sample meeting the requirement of IS\n\n1447-Part-I. Admittedly, the number of containers comprising each bill of\n\nentry vary from 4 to 10 and admittedly, Revenue has drawn samples from\n\nonly one container. Thus, the samples so drawn are not true representative\n\nsamples.\n\nThus, for want of drawing proper samples, the test reports are fit to be\n\ndiscarded. Further, as per the facts on record, the customs have drawn and\n\nstored the samples in plastic bottles, which is wholly contrary to IS-1447-I\n\nand thus, contrary to the requirements of IS 1459/1460. It is urged that IS-\n\n1447 in Part-I specifically prescribes that in no circumstances non-linear\n\n(conventional), polyethylene (plastic) containers shall be used to store the\n\nsamples of liquid Hydrocarbons. For reference, the containers prescribed for\n\ndrawing samples under IS 1447-Part I is reproduced as follows:-\n\n           4.1 Sample Containers\n           May be clear or brown glass bottles, or cans. The clear bottle is\n           advantageous because it may be examined visually for cleanliness\n           and also allows visual inspection of the sample for free water or solid\n           impurities. The brown glass bottle affords some protection from light.\n           The only cans permissible are those with the seams soldered on the\n           exterior surfaces with a flux of rosin in a suitable solvent. Such a flux\n           is easily removed with gasoline, whereas many others are very\n           difficult to remove. Minute traces of flux may contaminate the sample\n                                          28\n\n\n\n\n         so that results obtained on tests of dieletric strength, resistance to\n         oxidation, and sludge formation may be erroneous.\n\n         4.1.1 Plastic Bottles\n         Made of suitable unpigmented linear polyethylene may be used for\n         the handling and storage of gas oil, diesel oil, fuel oil and lubricating\n         oil. They should not be used for gasoline, aviation jet fuel, kerosene,\n         crude oil, white spirit, medicinal white oil and special boiling point\n         products unless testing indicates there is no problem with solubility,\n         contamination, or loss of light\n         ends.\n         NOTES\n         1 In no circumstances shall non-linear (conventional)polyethylene\n         containers be used to store samples of liquid hydrocarbons. This is\n         to avoid sample contamination or sample bottle failure.\n\n22.   In support of his contentions, ld. Counsel relies on the ruling of the\n\nApex Court in the case of Tata Chemicals Vs. CCE reported in 2015\n\n(320) ELT 45.      It is further urged, that the observations in the impugned\n\norder by the Court Below- that samples were drawn in presence of the CHA,\n\nwho are the authorised representative of the appellant and The said\n\nrepresentative did not object to at the time of drawing the samples, is of no\n\navail to Revenue. The Revenue cannot take               advantage of its wrong.\n\nFurther, such wrong committed goes to root of the matter, vitiating the Test\n\nreports. Thus, the very basis for the allegation of Revenue being un-reliable,\n\nthe impugned order is vitiated and fit to be set aside. It is further urged that\n\nwhen law prescribes a certain thing, to be done in a prescribed manner, it\n\nshould be done in that way or not done at all. It is not open to the Revenue\n\nto circumvent the statutory prescription for drawing samples.\n23.   Ld. Counsel further points out that the appellant had admittedly\n\nrequested the Revenue to draw fresh samples as prescribed, and thereafter\n\nsend the same for re-testing. However, without any cogent reasons, the said\n                                         29\n\n\n\n\nrequest was for arbitrarily rejected. Thus, the impugned order is also bad for\n\nnot following the principles of natural justice.\n\n24.    Ld. Counsel also urges that the test reports are also not reliable for\n\nthe reason that nowhere in the report the method of testing used by\n\nDYCC/JNCH has been mentioned, in arriving at the values reported. Thus,\n\nfor this patent defect also, no reliance can be placed on the test reports. For\n\ninstance, the standard/method prescribed for arriving at the reading of flash\n\npoint under IS 1459 : 1974 is P:20. Thus, if any other standard/method is\n\napplied for arriving at the reading of flash point, the said reading may be\n\nincorrect and will not reflect the correct flash point of the sample. Thus, no\n\nlogical conclusion can be drawn based on such test report. It is further urged\n\nthat in view of the glaring mistakes pointed out, the test report may be held\n\nerroneous and inconclusive. Further, the court below has erred by discussing\n\nthe individual values, which is wholly erroneous and leads to nowhere.\n\n\n\n25.         Accordingly, ld. Counsel prays for allowing their appeals with\n\nconsequential benefits.\n\n26.         Ld. Authorised Representative relies on the impugned order.\n\n26.1        Ld. Authorised Representative urged that due to price difference\n\nof HSD and SKO in India and other countries, there is frequent smuggling\n\ngoing on by way of mis-declaration. Further, urged that on the basis of the\n\ntest reports, it was established that        the subject 'Cargo" was not "Mixed\n\nHydrocarbon Oil/Mineral Hydrocarbon Oil as declared, but was HSD/SKO. It\n\nis further urged that request of the importer for re-test was rejected relying\n\non the directions in the Board's Circular No.30/2017-Cus. It is further urged\n\nthat the Director of the appellant company - Mr. J. Roda has, inter alia,\n\nadmitted his statement that they were resorting to mis-declaration and\n                                        30\n\n\n\n\nforging of documents for importing the restricted goods. It is further urged\n\nthat the appellant      in collusion with customs brokers were          getting\n\nmanipulated test reports issued from the office of the DYCC-JNCH by braving\n\nthe officers therein. It is further urged that in the retraction made by Mr. J.\n\nRoda, Director of the appellant company is of no avail and has been done\n\nonly on legal advice by way of afterthought.\n\n26.2        Similarly, Mr. Taranjeet Singh, G-Card Holder of the Customs\n\nBroker has also admitted such facts and has affirmed the statement of the\n\nDirector, Mr. J. Roda. It is further urged that HSD and SKO are the restricted\n\ngoods and importable only by State Trading Enterprises. Thus, the said\n\ngoods are prohibited for the appellants, as per definition in Section 2 (33) of\n\nthe Actof the Prohibited Goods. It is further urged that Revenue has rightly\n\nrelied on the principle of preponderance       of the probability in absence of\n\ncomprehensive test report. It is further urged that reliance placed by the\n\nappellant on the ruling of the Apex Court in the case of Sushma Textiles\n\n(supra) is misplaced as the said ruling is in relation to textiles.\n\n26.3        It is further urged that admittedly, all tests mentioned in IS\n\nStandard 1459 1460 have not been carried out, but submits that whatever\n\ntests have been conducted the results confirms to the specifications of the\n\nitems as alleged.\n\n26.4        Further, ld. Authorised Representative fairly admits that there\n\nhas been error on the part of the Revenue in the method of sample\n\ncollection. Such admission has also been made in their written submissions\n\nfiled before the Tribunal. It is urged that such ground taken by the appellant\n\nis by way of clever afterthought. It is further urged that prayer for retesting\n\nby the appellant was rejected as the Director of the appellant in his\n\nstatement recorded under Section 108 has admitted that they were\n                                            31\n\n\n\n\npractising      mis-declaration    etc.   for   importing   the   restricted   goods.\n\nAccordingly, he prays for dismissing the appeals.\n\n27.    Having considered the rival contentions, we find that the issue\n\ninvolved in these appeals is whether the Revenue was correct in re-\n\nclassifying the imported goods declared as "Mineral Hydrocarbon Oil-CTH\n\n27101988 and Mixed Mineral Hydrocarbon Oil-CTH 27101990" as diesel\n\nunder CTH 27101944 and as Superior Kerosene Oil under CTH 27101932.\n\n28.    It is admitted position of law that for a product to be classified under\n\nCTH 27101944/27101932 as SKO, it has to meet with the specifications in\n\nSupplementary Note - (C) under Chapter 27 which reads as under:-\n\n                "Superior Kerosene Oil (SKO)"      means Hydrocarbon Oil\n               conforming to Indian Standards Specification of Bureau of\n               Indian Standards IS 1459 : 1974(reaffirmed in 1996)."\n\n29.    Thus, the product          or material shall consist of refined petroleum\n\ndistillates.     It shall be free from visible water sediments and suspended\n\nmaterial. The material shall also comply with the requirements given in\n\nTable-I, when tested according to the appropriate method prescribed under\n\n'P' Series      of IS:1448, reference to which is given in Col.4 of the Table-I\n\n(provided at para-37 below).\n\n\n30.    It is also not the case of the Revenue that the said three parameters\n\ncan be established by any inferential process or otherwise. So far as sulphur\n\nis concerned, though no testing has been undertaken, we, for the sake of\n\ndiscussion, assume that the said parameter have been met, as the same\n\nforms a        part of the suppliers' test reports and is within the parameters\n\nspecified in IS 1459:1974.\n                                        32\n31.   However, in respect of the other two parameters regarding burning\n\nquality and colour, there is absolutely no evidence that the Revenue has\n\nproduced to establish that the said two parameters are met with. Thus,\n\nRevenue has failed to demonstrate how the other two said parameters were\n\nalso met.\n\n32.   It is also not in dispute that   for a product to be classified as diesel\n\nunder CTH 27101944, it has to               meet the    specifications as per\n\nSupplementary Note (e) to Chapter 27, which reads as under:-\n\n       "High Speed Diesel (HSD) means any Hydrocarbon Oil\n       conforming to the Indian specification/standard of BIS,\n       IS:1460:2005."\n\n33.   It is   further evident that as per aforementioned IS 1460:2005, the\n\nproduct has to meet the prescribed 21 parameters, wherein in the present\n\ncase, only six parameters have been tested. The Acidity, Ash%, Copper Strip\n\nCorrosion for 3 h at 50% C, total sulphur contents, etc. have not been tested\n\nso as to verify the product can be classified as diesel-HSD.\n\n34.   The law with respect to the burden of proof or classification is on the\n\nRevenue, is well settled by the Hon'ble Supreme Court          as held in HPL\n\nChemicals       Vs. CCE - 2006 (197) ELT 324,            wherein the Hon'ble\n\nSupreme Court has observed as follows:-\n\n\n              "29.This apart, classification of goods is a matter\n              relating to chargeability and the burden of proof is\n              squarely upon the Revenue. If the Department intends\n              to classify the goods under a particular heading or\n              sub-heading different from that claimed by the\n              assessee, the Department has to adduce proper\n              evidence and discharge the burden of proof. In the\n              present case the said burden has not been discharged\n              at all by the Revenue. On the one hand, from the\n              trade and market enquiries made by the Department,\n              from the report of the Chemical Examiner, CRCL and\n              from HSN, it is quite clear that the goods are\n                                                      33\n\n\n\n\n                classifiable as "Denatured Salt" falling under Chapter\n                Heading No. 25.01. The Department has not shown\n                that the subject product is not bought or sold or is not\n                known or is dealt with in the market as Denatured\n                Salt. Department's own Chemical Examiner after\n                examining the chemical composition has not said that\n                it is not denatured salt. On the other hand, after\n                examining the chemical composition has opined that\n                the subject matter is to be treated as Sodium\n                Chloride."\n\n35.    Similar view was also taken by the Apex Court in Hindustan Ferodo\n\nVs. CCE - 1997 (89) ELT page 16 (SC), wherein it was observed that, " it\n\nis not in dispute before us as it cannot be, that onus of establishing that the\n\nsaid rings fell within Item No.22 lay on the Revenue. Revenue has led no\n\nevidence. The onus was not discharged, therefore, the Tribunal was right in\n\nrejecting the evidence that was produced on behalf of the appellant, the\n\nappeal should nevertheless have been allowed."\n\n36.    We further, notice that the appellant had sought cross examination of\n\nthe persons, whose statements were relied upon by the Revenue in support\n\nof its allegations. But the cross examinations have been denied arbitrarily.\n\nThus the impugned order is bad for violation of principles of Natural justice\n\nas well as the mandate of sec. 138B of the Act.\n\n37.    We further notice that the issue of classification is well settled, as held\n\nby the Coordinate Bench of this Tribunal at Ahmedabad in Swarna Oil\n\nServices Vs. Commissioner of Customs -2020 (6) TMI 70 -CESTAT-\n\nAhmedabad, wherein it has been held as under:-\n\n      Quote\n\n\n      11. It can be seen from the said BIS that for a product to be classified as Kerosene, it has to meet\n      the following specifications1459:1974 "2.1 The material shall consist of refined petroleum\n      distillates. It shall be free from visible water, sediment and suspended matter. 2.2 The material\n      shall also comply with the requirement given in Table I, when tested according to the appropriate\n      methods prescribed under 'P' series of IS: 1448*, reference to which is given in column 4 of the\n      table."\n                                            34\n             TABLE 1 REQUIREMENT FOR KEROSENE\n\n\n\nSl.     Characteristic                Requirement             Method of\nNo.                                                           Test (Ref.to\n                                                              'P' Of\n                                                              IS:1448\n\n1.      Acidity, inorganic                 Nil                P:2\n2.      Burning Quality\n        a) Char value, mg/kg of oil\n        consumed, Max.\n        b) Bloom on glass chimney     not darker than grey.\n\n3.      Colour (Saybolt)+                   Min+10            P:14\n\n4.      Copper        strip           For 3h at 50oC          P:15\n        corrosion\n5.      Distillation:                                         P:18\n        a)Percent                     Min.200oC\n        recovered below 20\n        b) Final boiling              Min.300oC\n        point, 0C,\n\n6.      Flash point                             Min 35        P:20\n        (Abel),0C,\n7.      Smoke Point,mm,                         Min 18        P:31\n8.      Total,sulphur,percent                   0.25 Max      P:34\n        by mass\n\n\n\n\n      * Methods of test for petroleum and its products. + Where Saybolt\n      chromometer is not available. Lovibond colour of the sample kept in\n      an 18-in cell may be measured according to IS:1448 [P:13]-1960\n      'Methods of test for petroleum and its products, P:13 Colour by\n      Lovibond tintometer' in which case, the colour shall not be deeper\n      than Standard White (IP 4.0). For supplies to Defence, the smoke\n      point of the product shall be 21 mm, Min and for Railways it shall be\n      20 mm, Min.\n\n      For supplies to Defence, total sulphur content, percent by mass, of\n      the product shall be 0.20, Max From a perusal of the test reports of\n      CRCL Delhi and CRCL Kandla, assuming the same to be correct,\n      notwithstanding the difference in the test results between the two\n      qua the parameter regarding final boiling point. It is seen that out of\n      the 8 parameters on which the sample has to be tested for\n                                        35\n\n\n\n\n      determining whether or not the same meets with the specifications\n      of Kerosene, it is seen from both the test results that test have not\n      been undertaken with respect to the following 3 parameters.:\n\n             (i)       Burning quality\n\n\n                       (a) Char value, mg/kg of oil consumed, Max\n                       (b)Bloom on glass chimney\n\n\n             (ii)      Colour (Saybolt)\n             (iii)     Total, sulphur, percent by mass, Max\n\n\n\n\n      12.    It is also not the Revenue‟s case that the said three\n      parameters can be established by any inferential process or\n      otherwise. Insofar as sulphur is concerned, though no test have\n      been undertaken, we will for the sake of our discussion assume that\n      the said parameters have been met, as the same forms a part of the\n      suppliers test reports and is within the parameters specified in IS\n      1459:1974 (reaffirmed in 1996). However in respect of the other\n      two parameters regarding burning quality and colour there is\n      absolutely no evidence that the revenue has produced to establish\n      that the said two parameters are met with. The revenue has neither\n      through test results nor otherwise lead any evidence to show that\n      the said two parameters were also met with.\n\n                               Unquote\n\n\n\n38.    Under the facts and circumstances and the evidences on record, we\n\nfind that    in absence of evidences that the imported goods meet all the\n\nspecifications as laid down in Supplementary Note      (c ) to Chapter 27 for\n\nclassification of a product as Kerosene and Supplementary Note ( e ) so as\n\nto classify a product as diesel, the case made out by the Revenue cannot be\n\nsustained.\n\n39.    We also find that the test reports are vitiated and not reliable as\n\nsampling has been done improperly and not in conformity to the prescribed\n                                            36\n\n\n\n\nspecifications. We further find that there is miscarriage of justice by denying\n\nthe prayer for retest.\n\nWe further hold that in the facts of the present case there is no scope for\n\napplying     preponderance of probability or the principle of probability, as\n\nthere are explicit rules and or instructions laid down for classification. We\n\nalso hold that the Test reports relied upon by Revenue are inconclusive.\n\n40.    In    view of our findings        we allow the appeals and set aside the\n\nimpugned order. The goods under import are to be classified as per CTH\n\nheading claimed/declared by the appellant in the bills of entry. Accordingly,\n\nwe hold that rejection of transaction value is also bad and thus, declared\n\nvalue has to be accepted. Redemption fine and penalties on the appellants\n\nare also set aside.\n\n41.    As the goods are lying under seizure and subsequent confiscation by\n\nthe Customs Department for more than two years, for no fault of the\n\nappellant,    grant   of   waiver   of    detention   and   demurrage   charges   is\n\nappropriate and direct that the proper certificate shall be issued by the\n\nconcerned authority. We also direct that the goods in dispute be delivered to\n\nthe appellants forthwith, within a period of two weeks from the date of\n\nreceipt or service of this order.\n\n42.    Thus, the appeals are allowed with consequential relief.\n\n       [pronounced on 09/05/2022]\n\n\n\n\n(C. J. MATHEW)                                              (ANIL CHOUDHARY)\nMEMBER (TECHNICAL)                                          MEMBER (JUDICIAL)\n\n\nCkp.