(1.)Anil Choudhary, Member (J)
(2.)THE appellant, M/s. Liberty Oil Mills, is in appeal in the batch of appeals arising from various orders as follows: -
The issue involved in the present appeals is whether the appellants are eligible for benefit of Exemption Notification No. , dated 1 -3 -2002 as amended by Notification No. , dated 1 -8 -2003 in respect of Crude Palm Oil (CPO for short) imported by it. The appellant company is inter alia engaged in the business of manufacture of refined/hydrogenated vegetable oils at its factory situated at Village Bamne, District - Thane. One of the inputs required for the manufacture of refined/hydrogenated vegetable oils is Crude Palm Oil, classifiable under Chapter Heading 15111000 of the Schedule to the Customs Tariff Act, which the appellant imports. Sometime in May, 2004, consignments of CPO was imported by the appellant vide various Bills of Entry for clearance of the said goods, under claim for exemption in terms of Entry No. 34 in the Table annexed to Notification No. as amended by Notification No. 120/2003. The said entry 34 in the exemption notification is reproduced hereunder for ready reference: -
1.1 To claim the benefit of exemption notification, the appellant produced test -report of the load port issued by internationally acclaimed independent test laboratory, M/s. SAYBOLT (M) SDN BHD, set out the Carotene content in the said cargo being over 500 mg/kg. Test reports were also produced at the discharge port of a private agency of international repute. The Revenue also drew samples in presence of representative from the appellant company. As per report of the private test agency, the carotenoid content was above 500 mg/kg, whereas the Dy. Chief Chemist of Govt. laboratory found the carotenoid content to be lower than 500 mg/kg. Hence, exemption was denied.
1.2 The appellant preferred appeal before the Commissioner (Appeals) but to no avail and is now before this Tribunal. This Tribunal vide its earlier order dated 23 -2 -2007, in the earlier round of litigation in the same matter, had remanded the matter back to the adjudicating authority with a direction that he should allow the cross -examination of the Dy. Chief Chemical Examiner and thereafter give an opportunity of hearing to the appellant and pass a fresh order in accordance with law.
1.3 By order dated 25 -2 -2009, the Assistant Commissioner reconfirmed the less charge demand, being the differential duty under Section 28 of the Customs Act along with interest as applicable. The appellant had preferred appeal before the Commissioner (Appeals), wherein the appellant had urged similar grounds including that the carotenoid content in CPO dropped with passage of time and therefore it was extremely important to note the date of drawl of samples and date of test as well as the method of drawl of sample and storage of the sample. However, the Commissioner (Appeals) rejected the appeals of the appellant in the second round of litigation giving rise to the present appeals.
The learned Counsel for the appellant, among others, urged that the Commissioner (Appeals) has erred in holding that the purpose for having set the standard of 500 mg/kg limit for carotenoid in the said Notification is so that the consumers are able to enjoy oil with a higher carotenoid content. He further urged that the Commissioner (Appeals) has failed to appreciate that upon clearance of the CPO from the port, there is no law to say that the same must be made available to the ultimate consumer within a time frame, when the oil still retains its high carotenoid content. Thus, it could never have been the intent of the Government to determine carotenoid content in the wake of its volatile nature. He further urged that the Commissioner (Appeals) has failed to go by the evidence on record and based his findings on his personal opinion, therefore, the findings are perverse. Further, other extraneous premises considered by which went to the Commissioner (Appeals) are evident in his observation - that the temperature in Mumbai have never been so high as to effect the volatile nature of carotenoid. The Commissioner (Appeals) has gone to the extent of observing and declaring that the high humidity in Mumbai is likely to suppress evaporation of carotenoid and he further relied on some News article and held that carotenoid is not volatile enough. The appellants have specifically adduced evidence in the form of an excerpt from the Bureau of Indian Standards which specifies that samples of CPO is to be stored at the temperature less than -20 °C. As the Commissioner (Appeals) has failed to refer to the documents and evidence on records, his findings are vitiated. Further, the Commissioner (Appeals) has failed to take notice of facts on record, being the cross -examination of the Dy. Chief Chemical Examiner, who has admitted and candidly stated that not only is carotenoid not volatile, but is also not sensitive to light and does not deteriorate under normal conditions. The Commissioner (Appeals) further erred in holding, that report of the Dy. Chief Chemist, who did not even know of any prescribed method existing, to draw samples for testing, has more credibility then the detailed report of the Geo -Chem labs, a reputed agency having its presence in more than 27 countries.
2.1 The learned Counsel also submits that the Commissioner (Appeals) erred in placing reliance on an interim order of the Tribunal in the case of Britania Industries v. Commissioner of Customs (Export) -, 2008 (226) E.L.T. 257 which is mis -placed, being only a prima facie view of the Tribunal, more so, in view of the fact that appeal of Britania Industries was still pending final decision by the Tribunal. Further, the Commissioner (Appeals) has erred in not considering the ruling in the case of Ruchi Soya Industries v. Commissioner of Customs (Prev.) -, 2006 (206) E.L.T. 827, which is a final order of the Tribunal and relied upon by the assessee. In the case of Ruchi Soya, this Tribunal has held that beta carotene level does not remain the same and with lapse of time and temperature variation, there is a deterioration of beta carotene content. It was also observed by this Tribunal in the Ruchi Soya case that scientific findings given by reputed research institute cannot be ignored. The Commissioner (Appeals) is in error for ignoring the binding precedent, thereby vitiating the impugned order.
2.2 It was further urged that the benefit of exemption notification cannot be denied as relevant 'Entry 34' in the original Notification dated 1 -3 -2002 was 'substituted' by subsequent Notification No. , dated 4 -2 -2005, whereby minimum requirement of carotene value was reduced to 250 mg/kg instead of 500 mg/kg. On account of such substitution, the condition regarding carotene value would relate back to the date of parent/main notification i.e. Notification No. , dated 1 -3 -2002. As the requirement was modified by way of substitution and/or clarification, under the rules of interpretation, it always relates back to the date of introduction of condition as to the minimum carotene content. In any view of the matter, even if the report of the Dy. Chief Chemist is taken correct for the argument sake, then also the result has to meet requirement specified for the reason that according to the Dy. Chief Chemist, none of the sample tested above was less than 250 mg/kg. It is further urged by the appellant that the reports of the Dy. Chief Chemist, Custom House, Mumbai showing the carotene value lower than 500 mg/kg is unreliable on account of gross error in the method of drawing sample and storage of the same. It is further urged that learned Commissioner (Appeals) has failed to appreciate that the entire imports were covered by the clarificatory amendment to the exemption Notification in question, as the carotene value was always found above 250 mg/kg by the Govt. Laboratory. Further the goods in question were cleared for home consumption, in accordance with law.
2.3 The learned Sr. Counsel for the appellant also relies on the ruling of the Hon'ble Supreme Court in the case of Govt. of India v. Indian Tobacco Association - : 2005 (187) E.L.T. 162 (S.C.), wherein it was held that when the word "substitution" is used, the same is to be distinguished from supersession or mere repeal or an amendment and in such a case, 'substitution' would have retrospective effect, i.e., it relates to the date of original notification. It is further noteworthy as pointed out by the learned Counsel that in spite of amendment to the original notification dated 1 -3 -2002 vide Notification No. 120/2003 -Cus., the substitution was made vide the Notification No. , making substitution in the original Notification No. , which mean thereby that the substitution have occurred from beginning when the original notification was issued on 1 -3 -2002.
2.4 The appellant further draws our attention that the notification of 2005, substituting the Entry 34, nowhere specified that the new condition and/or the substituted condition was not applicable retrospectively, and accordingly, the appellant is entitled to the benefit of the notification.
2.5 It is further urged that all the six test reports, which were issued by Mr. Nitin Nagmote and remaining 5 has been issued by Mr. K.S. Murthy. The test, reports are not relevant for the reason that the sampling was not done in accordance with the prescribed standard laid down in IS: 548 (Part -I) -1964. The samples were stored in the 'plastic bottle' instead of 'steel container' and thus, the storage of the same also did not comply with the prescribed standard. Further, there was inordinate delay in testing of the sample, longest being 84 days. Further, Mr. K.S. Murthy has used the wrong apparatus for the test i.e. Levi Bond and Tintometer instead of 'Spectro Photometer' as required under BS: 684.
2.6 The contention is further raised that the proviso of Section 164 of the Customs Act which deals with power of drawing samples, which empowers the proper officer while the goods are present in the Customs area, to take sample of the said goods in presence of the owner for examination and testing, or for obtaining the report or for any other purpose under the Act. Thus, the proper officer was under statutory obligation to draw the sample correctly as required by the relevant standards, prescribed for the goods in question. The contention of the Revenue that no objection was raised by the appellant representative at the time of drawing the samples, does not support the case of the Revenue as it is the obligation of the proper officer to draw the sample in accordance with the prescribed standard. Further, no objection raised by the owner or the representative at the time of drawing of sample, does not waive the requirement of prescribed standard for drawing of the sample and its storage.
2.7 The appellant further relies on the ruling of the Tribunal in the case of Adani Exports Ltd. v. CC - : 2010 (249) E.L.T. 93 (Tri. -Ahmd.), wherein it has been held that if the sample is not drawn correctly, the test report is not reliable. In view of the glaring evidence on record that the samples were not drawn in accordance with the IS standards which have also been confirmed by the aforementioned two Chemists in the cross -examination, the reports of the Govt. laboratory are not at all reliable. Thus, the impugned orders are vitiated as reliance has been placed on the reports of the Govt. laboratory. Further, the Commissioner (Appeals), has erred in totally ignoring the issue as to be applicability of IS standards, as the impugned order is silent on the same.
2.8 It is further urged by the learned Counsel that the drawl of sample is also defective for the reason that the appellant had imported the CPO for home consumption in bulk quantity, which was loaded in different tanks in the ship and therefore, sample is required to be drawn from each and every tank and then mixed to arrive at the sample, which was then required to be properly stored and tested as per the prescribed standard. It have further come out in the cross -examination of the Chemist that he was not aware of any prescribed standard for the drawl of sample and that the sample was received for testing in plastic bottle and it is further admitted by the Chemist that he was not aware that the sample is required to be maintained at the temperature of -20 °C.
2.9 It is further urged that the carotene value stands reduced according to the exposure to oxygen and light. Reference has been drawn to technical authorities/books from: -
(i) Bailey's Industrial Oil and Fat Products, 5th Edition, Vol. 2
(ii) Journal of Science and Technology - Extraction of Heat Treated Palm Oil and their Stability on beta -carotene during storage.
Further, four test reports out of six are also unreliable for the defective method in test as the Chemist has used the Tintometer instead of Spectrophotometer. Tintometer is used for determination of colours by comparison with levibond glasses of known colour characteristics as explained in para 13 of the IS: 518 (Part -I), 1964, whereas Spectrophotometer is used for testing the basic characteristics (carotene content) in oil as illustrated in BS: 864, para 5.
2.10 The reference is drawn to show, in British Standard in the Codex, as per Circular No. , dated 24 -9 -2003 issued by the C.B.E. & C., the method of testing carried out is provided under Codex standard for named vegetable oils CODEX STAN 210 -1999. The Codex in para 5.1 refer to British Standard 684, which in turn in para 5.1 provides for apparatus of testing shall be the spectrophotometer.
2.11 Therefore, the learned Counsel urges that this Tribunal be pleased to reject the test report of the laboratory of the Customs House, Mumbai relying on which, the lower authorities have drawn erroneous conclusion and further urges that this Tribunal may be pleased to hold that the substitution in the original notification in the year 2005 substitutes the condition with retrospective effect from the date of the original notification and accordingly, the requirement of minimum carotene content value is reduced from 500 mg/kg to 250 mg/kg and accordingly, the appellant fulfilled the condition as laid down in the exemption notification and it may be further held that the appellant is entitled to the benefit of the exemption notification as amended.
(3.)HEARD the learned AR, who relies on the impugned order. The learned AR relies on the provisions of Section 159A of the Customs Act. It provides that rule, regulation, notification or order made or issued under this Act or any Notification or order issued under such Rule and Regulation, as amended and repealed, superseded or rescinded, then, unless a different intention appears, such amendment etc., shall not - (a) revive anything not in force or existing at the time at which the amendment, repeal, supersession or rescinding takes effect; or (b) affect the previous operation of any rule, regulation, notification or order so amended, repealed, superseded or rescinded or anything duly done or suffered thereunder or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule, regulation, notification or order so amended, repealed, superseded or rescinded; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed under or in violation of any rule, regulation, notification or order so amended, repealed, superseded or rescinded; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rule, regulation, notification or order, as the case may be, had not been amended, repealed, superseded or rescinded.
3.1 It is further submitted that ruling in the case of Indian Tobacco Association (supra) of the Hon'ble Supreme Court is not applicable. Further, in the said ruling, the Hon'ble Apex Court has held that Foreign Trade Policy is applicable when there is no equivalent law like Section 159A. It is further pointed out that in the notification before the Apex Court, there was a mistake which was corrected by a clarificatory amendment, whereas there was no mistake in the exemption Notification No. specifying carotene content not less than 500 mg/kg. As Section 159A provides that any amendment which have not affected the provisions or operation of the un -amended notification, unless it is made retrospective, the impugned orders are correct and the appeals are fit to be dismissed.
3.2 As to the import consignments in the question were imported prior to the substitution made on 4 -2 -2005, vide Notification No. , the provisions are applicable prior to 4 -2 -2005 will be applicable and the substitution will not have the retrospective effect. Further, as the appellant's representative, who was present at the time of drawing the sample did not object, the appellant can later on not be permitted to raise objection of drawing samples or its storage in spite of the fact that the same does not confirm to IS standards. The burden lies on the importer to show why the carotene value was found reduced to 350 mg/kg in the testing.
3.3 The learned AR further states that the appellant have failed to discharge onus to show that the goods are covered under the Exemption Notification. Further, where more than one interpretation is possible, the interpretation will be accepted which is suitable to the Revenue. Reliance is placed on Tata Chemical in support of his contentions that the test reports are valid.