By TIOL News Service

MUMBAI, AUG 14, 2018: THE Appellant imported 'bitumen' which is claimed to be natural and declared to be classifiable under CTH 2714 90 with duty of 10% and which was allowed provisionally pending receipt of test report of Deputy Chief Chemist.

Though the Deputy Chief Chemist had ascertained the goods to be 'natural bitumen', less-charge demand was issued for recovery of duty of Rs. 39,35,661/- on the ground that 'petroleum bitumen' is classifiable under CTH 2713 20 and liable to basic customs duty of 30%.

Following further investigation, a detailed show cause notice was issued, as addendum, enclosing the test report of Central Revenue Control Laboratory, New Delhi which opined vide letter dated 23rd January 2001 that the goods are 'petroleum bitumen'.

Furthermore, the letter of M/s Geochem Pvt Ltd dated 13th October 1999 addressed to M/s Bitucorp Trading Pvt Ltd opining that 'natural bitumen' is found only in Trinidad and that none of the countries in the Middle East mined or exported 'natural bitumen', which was distinguishable from 'petroleum bitumen' by ash content and insoluble matter.

Furthermore, appellant was also put on notice that the Commercial Director of National Iranian Oil Refining Company had certified that the bitumen production and export from Iran was governed by the said entity and that they had been exporting only 'petroleum bitumen' and not 'natural bitumen'.

By the impugned order the Commissioner of Customs (Import) confirmed the differential duty of Rs.19,67,830.50, confiscated the goods; imposing redemption fine of Rs.40 lakhs besides penalty of Rs.10 lakhs on the Director and Rs.4 lakhs on the Technical officer.

All of them are in appeal before the CESTAT.

It is submitted that the adjudicating authority had discarded, both the report of the Deputy Chief Chemist and the Central Revenue Control Laboratory, the former for not having been in conformity with the latter and the latter for lack of credibility following the cross-examination of the author of that report. Furthermore, reliance placed on the correspondence with third party is improper considering that the import documents clearly indicate that the goods have been sourced from Iran and no other evidence of non-production of 'natural bitumen' in Iran had been brought forth.

The AR submitted that none of the documents submitted along with the bill of entry qualify the imported 'bitumen' as natural and that the Technical Officer had also given a statement to the effect that they agree with the findings in the investigation.

The Bench considered the submissions and inter alia observed -

+ We do not find any flaw in the findings of the adjudicating authority that the two test reports namely, that of the Deputy Chief Chemist and of the Central Revenue Control Laboratory being in conflict with each other, will not suffice for deciding upon the classification.

+ However, the primacy accorded to certain reports of M/s Geochem Laboratories Pvt Ltd as well as that of the National Iranian Oil Refining Company which are neither authenticated nor certified for expertise is improper. + We ourselves are aware that asphaltite (natural bitumen) is available in many countries and, that too, in conjunction with existence of other hydrocarbons. Undoubtedly Pitch Lake in the Republic of Trinidad and Tobago with contents of over 10 million tonnes is the largest single source. At the same time, 'bitumen' occurs naturally in Canada, Venezuela, Russia, Indonesia and a number of other locations including the Kermanshah province of Iran. There is reference to 'bitumen' in the ante-diluvean Epic of Gilgamesh set in the Sumerian Civilization of the second millennium BC.

+ It is, therefore, strange that a chemical laboratory arrogating to itself the expertise of denying Iran as a source of natural bitumen has been accorded such credence in the adjudication order and with no support to substantiate the contents thereof.

Concluding that the demand for differential duty and the penal provisions stand on foundations that are shaky, or do not exist, and, therefore, without the sustenance that law accords, the impugned order was set aside and the appeals were allowed.

(See 2018-TIOL-2519 -CESTAT-MUM)