COMMISSIONER OF CUSTOMS, MANGALORE Vs. TERAPANTH FOODS LTD.

JUDGEMENT

(1.) The revenue has preferred this appeal challenging the order passed by the CESTAT which has declined to review the earlier order passed, where they have remanded the matter to the Commissioner to take fresh decision after a sample of the consignment already drawn is got tested by CRCL, New Delhi. The assessee exported 22,000 Mts. of Iron Ore fines declaring iron content below 62% after drawing samples as per procedure vide S.B. No. 898 dated 20-8-2007. The Shipping Bills assessed provisionally and they paid export duty at Rs. 50/- PMT with Cess Rs. 1/- PMT as per Notification No. 62/2007 dated 3-5-2007. The sample was sent to the Chemical Examiner, Cochin and test result revealed that the iron content of the sample was 62.1%. As the exporter declared the iron content of the exported Iron Ore fines was 62% and below and the test revealed 62.1%, the authorities came to the conclusion that the exporter has mis-declared the iron content at the time of export and short paid export duty at Rs. 50/- PMT - Cess Rs. 1/- PMT, instead of Rs. 300/- PMT + Cess Rs. 1/- PMT vide Notification No. 25/2007 dated 1-3-2007. They further recorded a finding that the exporter deliberately misdeclared percentage of iron content to evade custom duty. Therefore, a show cause notice came to be issued calling upon them to show cause why a sum of Rs. 55 lakhs being the differential duty payable should not be levied on them.

(2.) On receipt of the show cause notice the assessee filed a reply disputing the said claim and he disputed the correctness of the report conducted by the Chemical Examiner. They contended that the samples have been analysed in their in-house laboratories to determine iron content before purchase of material and M/s. SGS India Pvt. Ltd., had drawn samples as per IBS 1405 standards during the loading. As per certificate dated 24-8-2007 issued by the SGS India Pvt. Ltd., the iron content of the consignment was 61.93%. As per the certificate dated 28-9-2007 issued at the destination port, the iron content of the consignment was 61.44%, the difference between load port and destination port being 0.49% which is within accepted norms. The samples analysed by the Chemical Examiner at Cochin have shown iron content as 62.1% and the high variation in results is indicative of some error in sampling and testing. They requested the counter sample to be sent to CRCL, New Delhi for re-testing. Accordingly, the sample was sent to CRCL, New Delhi for re-testing. However, the CRCL, New Delhi pleaded their inability to give their opinion after testing on account of the fact that the samples were in torn condition stating that the request for testing of the duplicate sample needs to be approved by the Commissioner of Customs and it was also informed by the CRCL, New Delhi that the sample was received by them in torn condition. Therefore, the sample appears to have been damaged in transit.

(3.) On receipt of the said communication the Commissioner of Customs, Mangalore arrived at the conclusion that since the sample was received back in torn condition, there was no guarantee that it was not substituted or altered and therefore, took a decision not to send the same for testing after re-sealing and decided the issue based on the test report furnished by the Chemical Examiner, Cochin and levied the differential duty and appropriated the same out of Bank Guarantee and refunds. Aggrieved by the said order the assessee preferred an appeal to the Tribunal. The Tribunal was of the view that the Commissioner should have allowed the request of the exporter to take retest of the sample drawn by the CRCL, New Delhi. The order has been passed in violation of the principles of natural justice and therefore, they remitted the matter to the Commissioner to take fresh decision after a sample of the consignment already drawn is got tested by the CRCL, New Delhi. Aggrieved by the said order the revenue preferred an application for modification of the said order contending that since the second sample is received back in torn condition its integrity remains in doubt and hence it appears that the same cannot be sent for retest. The results of the first sample may be considered and an opportunity may be given to the exporter for cross examination of the Chemical Examiner as held by the Apex Court and therefore they wanted modification of the earlier order. The said application also came to be dismissed. Aggrieved by the same the revenue is in appeal.