M.P. Industries vs Commissioner of Cus. (Port), Kolkata>2002(06)LCX0055

2002(06)LCX0055

IN THE CEGAT, EASTERN BENCH, KOLKATA

Smt. Archana Wadhwa, Member (J) and Shri V.K. Agrawal, Member (T)

M.P. INDUSTRIES

Versus

COMMISSIONER OF CUS. (PORT), KOLKATA

Order Nos. A/711-712/KOL/2002, dated 24-6-2002 in Appeal Nos. C/117-118/2002

Cases Quoted

Ciba Speciality Chemicals Ltd. v. Commissioner — 1999(03)LCX0116 Eq 2000 (119) ELT 0358 (Tribunal)— Referred [Para 2.2]

Commissioner v. Cellulose Products of India — 1991(01)LCX0122 Eq 2000 (124) ELT 1133 (Tribunal)— Followed [Paras 2.2, 4]

Reliance Cellulose Products Ltd. v. Commissioner — 1997(07)LCX0045 Eq 1997 (093) ELT 0646 (S.C.) — Followed [Paras 2.2, 4]

Sandip Agarwal v. Collector — 1992(07)LCX0012 Eq 1992 (062) ELT 0528 (Cal.) — Referred............................. [Para 2.2]

Advocated By : Shri Sudhir Mehta, Advocate, for the Appellant.

Shri T.K. Kar, SDR, for the Respondent.

[Order per : V.K. Agrawal, Member (T)]. - The issue involved in these two appeals, arising out of a common Adjudication Order No. KOL/CUS/ Port/09/2002, dated 7-2-2002 is whether the coated fabric imported by M/s M.P. Industries, is classifiable under sub-heading 5903.90 of the first Schedule to the Customs Tariff Act (CTA) as claimed by them or under sub-heading 5407.44 of C.T.A. as confirmed by the Commissioner of Customs.

2.1 Shri Sudhir Mehta, ld. Advocate, submitted that Appellant, an export oriented unit, imported acrylic coated fabric and silver coated fabric and filed Bill of Entry on 28-4-2001; that the goods were assessed by the proper officer under sub-heading 5903.09 and were allowed to be utilized for the purpose of consumption in the unit for export; that after obtaining permission part of the impugned goods were cleared in Domestic Tariff Area (DTA) on payment of duty; that the impugned goods were seized by the officers of the Directorate of Revenue Intelligence on the ground that the fabric did not have coating visible to naked eye as required in sub-heading 5903.90 and the goods merited classification under sub-heading 5407.44 of C.T.A.; that the Chemical Examiner of Customs House, Kolkata opined in his Test Report that samples are coated and coating is visible to naked eye; that though there was no reason to disbelieve the said Report, the goods were even then sent for examination to Textile Committee, Kolkata which opined that there was a coating on the acrylic coated materials but the same could not be seen with naked eye ; that the samples were also got tested by Textile Committee, Mumbai which opined that coating was not visible through naked eye; that Adjudicating Authority classified the impugned goods under sub-heading 5407.44 of C.T.A. as the majority of the opinions were against them.

2.2The ld. Advocate, further, submitted that the identical goods were imported by M/s. Vaibhav Textile which were also seized by the officers of the Directorate of Revenue Intelligence on the same ground that fabric did not have coating visible to naked eye; the samples of fabric imported by Vaibhav Textile were also tested by Chemical Examiner, Kolkata and both the Textile Committees at Kolkata and Mumbai and the reports were same as in the case of the Appellants; that, however, in the case of Vaibhav Textile, the fabric had been classified under sub-heading 5903.90 of C.T.A. under Adjudication Order No. KOL/CUS/Port/41/2001, dated 24-12-2001 holding that no reasons had been given in the show cause notice as to why opinions given by the Departmental Laboratories should be ignored and opinions of an outside agency should be considered as final; that reliance was also placed on the decision in the case of CCE v. Cellulose Products of India, 1991(01)LCX0122 Eq 2000 (124) ELT 1133 (T) wherein the Tribunal has held that test report of Departmental Chemist/Chief Chemist and Technical authorities are to be preferred to opinion of outside agencies while classifying the product. The ld. Counsel contended that there is no dispute that the impugned goods and the goods imported by Vaibhav Textile were same; that the supplier is same; that the Adjudicating Authority has not controverted these assertions made by them; that he distinguished the case only on the ground that in the case of Vaibhav Textile, there was also a report from the CRCL, New Delhi which was not available in the case of the Appellants; that he has passed the impugned order by counting of reports. The ld. Advocate emphasised that even in Vaibhav Textile case there was no majority as there were two reports in favour of the importer and two reports against the importer; that the proceedings were dropped not on the basis of quantum of reports but on the basis that no reason had been mentioned as to why the report of Customs House Laboratory was incorrect; that in the present matter the Adjudicating Authority had gone by the majority of opinions and relied upon Textile Committees’ Reports which were rejected by him in the case of Vaibhav Textile. The ld. Advocate also mentioned that the samples of the impugned goods were also sent to C.R.C.L, New Delhi, which opined that coating could be seen with the naked eye; that on clarification sought by the DRI, the C.R.C.L. had sent a detailed reply stating therein the basis on which the report was submitted; that the method of testing was also stated therein; that the report in their case has not been brought on record; that in Vaibhav Textile, the same was brought on record in a Writ proceedings. Finally, the ld. Advocate relied upon the following decisions :-

(i) Reliance Cellulose Products Ltd. v. C.C.Ex., Hyderabad - 1997(07)LCX0045 Eq 1997 (093) ELT 0646 (S.C.) wherein it was held that the Department cannot be said to have erred in relying upon the reports given by the Chemical Examiner and the Chief Chemist that the views expressed by them cannot be lightly brushed aside on the basis of some private persons.

(ii) Ciba Speciality Chemicals Ltd. v. C.C.Ex., Goa, - 1999(03)LCX0116 Eq 2000 (119) ELT 0358 (T);

(iii) Sandip Agarwal v. Collector of Customs - 1992(07)LCX0012 Eq 1992 (062) ELT 0528 (Cal.) wherein it was held by the Calcutta High Court that the Customs Authorities are bound by their own precedents.

3. Countering the arguments, Shri T.K. Kar, ld. D.R., besides reiterating the findings as contained in the impugned Order, submitted that the decision in the case of Vaibhav Textile is not applicable in the present matter inasmuch as the Adjudicating authority has not given a specific finding that the goods imported by the Appellants and the goods imported by M/s. Vaibhav Textile are same.

4. We have considered the submissions of both the sides. It is not in dispute that the goods in question were subjected to test by the Chemical Examiner, Customs House who gave his report to the effect that “the coating is visible with naked eye”. Once the test laboratory of the Customs House gave a categorical report that the coating is visible to the naked eye, there was no need to refer the samples to the Textile Committee unless and until some collusion was charged. We do not find any reason given in either show cause notice or in the impugned order for referring the samples for re-test to the Textile Committee. Further the Textile Committee itself has reported, under letter dated 9-10-2001 “Visibility to the naked eye is the subjective test only, which we visually see under the light; and for that no instrument or chemical are being used in the Laboratory.” It is settled law that test reports of Departmental Chemist/Chief Chemist are to be preferred to opinion of outside agencies while classifying a product. Tribunal has held in the case of C.C.Ex., Ahmedabad v. Cellulose Products of India - 1991(01)LCX0122 Eq 2000 (124) ELT 1133 (T) that “the classification of the products manufactured by the assessee in these appeals should be decided in accordance with the test reports of the Departmental Chemist/Chief Chemist..... and not on the basis of the opinion expressed by certain outside agencies.” The Hon’ble Supreme Court has also held in the case of Reliance Cellulose Products Ltd. (supra), that the views expressed by the Chemical Examiner and the Chief Chemist cannot be lightly brushed aside. We agree with the submissions of the ld. Advocate that the Adjudicating authority cannot determine the classification of any product on the basis of the majority of opinions. It is also settled law that in interpreting the taxing statute, liberal interpretation is to be applied. We are of the view that the matter should have been decided on the basis of test reports given by the Chemical Examiner which have been brushed aside without giving any cogent reasons. The Adjudicating Authority cannot go by the majority of the opinions. We also observe that it has been agreed by the Adjudicating Authority in the impugned Order that the Appellants had pointed out that the Department should have followed the established practice and sent the samples to the C.R.C. L., New Delhi, if there was any necessity for a second opinion. The Adjudicating Authority, however, has given his findings that the Appellants should have insisted for the opinion of the C.R.C.L. This finding does not find favour with us as the determination of proper classification is to be done by the Department and the reports of the Chemical Examiner were in favour of the Appellants. It was for the Department to approach the Chief Chemist, C.R.C.L., New Delhi as was done in the case of M/s. Vaibhav Textile. In view of this, we are of the view that the benefit of doubt should be extended to the Appellants.

5. The Appellants have also contended that their matter is identical to the imports made by M/s. Vaibhav Textile as the fabric imported by them is identical to the fabric imported by M/s. Vaibhav Textile. The supplier is same which has been confirmed by M/s. Tun Wa Industrial Co. Ltd. in their letter dated 11-1-2002. The ld. Advocate has emphasised rightly that no where the Department has controvered this fact. In the case of M/s. Vaibhav Textile, the fabric has been classified under sub-heading 5903.90 of the Customs Tariff Act by disregarding the opinions given by the Textile Committees which opined in that matter also that the coating was not visible to the naked eye. In view of all these facts and circumstances, the fabric imported in the present matter deserves to be classified under sub-heading 5903.90 of C.T.A.. The Appeals are accordingly allowed.

Equivalent 2002 (145) ELT 0448 (Tri. - Kolkata)