By TIOL News Service

AHMEDABAD, NOV 02, 2016: THE facts are that on the basis of an enquiry initiated by the Customs authorities for non payment of duty on slop/waste Oil of foreign origin, in relation to vessel MT Jag Padma, it was revealed that the Assessee had imported a total quantity of 1362.600 MT of slop/waste oil during the period January 2006 to July 2006, allegedly involving customs duty of Rs.15.69 lakhs.

SCN was issued on 29.06.2007 and in adjudication, taking into consideration the evidences on record, the Commissioner dropped substantial amount of duty observing that major quantity of the said slop/waste oil i.e. 930.60 MTs were of indigenous origin. He confirmed duty of Rs.4,97,597/- for the balance quantity of 432.00 MTs observing it is of foreign origin and imposed equal amount of penalty u/s 114A of Customs Act, 1962, but dropped the other proceedings like confiscation of the goods and barge, as proposed in the Notice.

Both, Assessee as well as Revenue, have appealed against the order passed by the original authority.

Revenue has challenged the order on the ground that the Commissioner has not directed confiscation of goods and the barge, whereas the Assessee has come in appeal, challenging the recovery of duty and imposition of penalty.

The appellant assessee-submitted that samples of slop/waste oil was sent for chemical analysis by the Department and even though the Chemical Examiner of Customs House Laboratory at Kandla categorically stated in his report that they did not have the facility for testing the sample at their laboratory and suggested for further testing, but no further finding on the said report has been recorded in the Order. Further more, the AA, while confirming part of the demand, though referred to the classification of the product 'waste oil' had not examined the issue of marketability of product as envisaged by the judgment of Supreme Court in the case of CCE Patna Vs Tata Iron & Steel Co. Ltd - 2004-TIOL-25-SC-CX. So also, even though the Master of Vessel had informed that only 41 KLs was of foreign Origin, the Commissioner had not considered the same.

The AR fairly accepted that samples had been collected and sent for testing at Departmental Laboratory;however, the test reports and its implications in classification and dutiability of the product has not been discussed by the AA and, therefore, he had no objection if the matter was remanded.

The Bench observed -

++ We find that the Commissioner, after analysing the evidences on record, observed that the total quantity of oil imported against nine vessels, only the slop/waste oil discharged by the Assessee against three vessels are of foreign origin and accordingly liable to duty.

++ Besides the evidences which have been referred to by the Commissioner, in confirming the duty in arriving at the quantity of slop/waste oil and which have been disputed by the Assessee-appellant, but, the vital issues that has been raised is about the dutiability of the product vis-a-vis the test report and the judgment of Supreme Court in the case of CCE Patna Vs Tata Iron & Steel Co. Ltd.

++ Commissioner at Para 36 of the impugned order, after analysing the relevant tariff heading, though observed that waste/slop oil is classifiable under CTH 2710, however, has not recorded/analysed the implication of the chemical test carried out by the Department in its laboratory on the sample of slop/waste oil collected and the applicability of the said judgment to arrive at the conclusion whether the said slop/waste oil leviable to Customs duty.

++ We are of the view that it is prudent to remand the matter to the Commissioner to examine the said issues afresh, after giving an opportunity of hearing to the Assessee.

++ In relation to the Revenue's Appeal, we find that the Commissioner while dropping the proceedings initiated for confiscation of slop/waste oil and barge, recorded detailed findings at Paras 37.1 to 40 of the impugned Order. We do not find any contrary evidence has been brought on record by the Revenue warranting interference.

Conclusion:

The Assessee's appeal is allowed by way of remand.

Revenue's appeal, being devoid of merit, is rejected.

(See 2016-TIOL-2842-CESTAT-AHM)