Classification of ‘Qatar LSC Crude oil’.

PJ/CASE LAW/13-14/2064

Case:-M/s ESSAR OIL LTD T SRINIVAS Vs COMMISSIONER OF CUSTOMS, JAMNAGAR

Citation:-2013-TIOL-1553-CESTAT-AHM

Brief Facts:-These stay application have been filed against OIO No.11/Commissioner/2012 dated 28/02/2013, passed by Commissioner of Customs, Jamnagar. The issue involved in this case is regarding the correct classification of 61683.178 MT of imported cargo declared as 'Qatar LSC Crude Oil', (QLSC), whether under 27090000 or under 27101990. Appellants M/s. Essar Oil Limited claimed the classification under 27090000 as 'Qatar Low Sulphur Condensate (crude oil)'. Samples of the imported cargo were drawn on 30/12/2009 and sent for chemical test. In its first test report dated 29/01/2010, Chemical Examiner, Custom House Laboratory, Kandla reported, inter-alia, that sample is in the form of a pale yellow oily liquid and is composed of mixture of mineral Hydrocarbon oils flashing below 25 C. It was also mentioned by the Chemical Examiner that it is other than Petroleum crude oil and that the literature etc. of the consignment may be submitted for further examination. The provisional assessments were finalized, as per letter F No.VIII/48-4/FIN/2003 Pt. III dated 25/02/2010, by Superintendent of Customs, Custom House Vadinar; after receipt of first chemical test report dated 15/01/2010. By a further report dated 15/06/2010, Chemical Examiner, Custom House, Kandla Laboratory; after going through the literature furnished by the Custom House, Vadinar certified the cargo to be Crude Petroleum Condensate classifiable under 2709 of HSN. On query from DRI by a further letter dated 05/08/2010, Chemical Examiner finally gave an opinion that from the tests conducted by them the exact nature of cargo cannot be conclusively inferred.

Appellant Contention:-The appellants argued that as per the contract entered between Essar Oil Ltd. and seller Vitol Asia Sulphur Condensate (QLSC) the port of QLSC of delivery is RAS LAFFAN, State of Qatar. The price agreed is comparable to the low quality QLSC crude oil prevalent at the relevant time. As per the certificate of quality furnished by Dolphin Energy Ltd. the product type is Qatar LSC. Shri Jain also relied upon a report dated 8/10/1999 of the World Customs Organization Harmonized System Committee (24th Session) on classification of 'Gas Condensate' and argued that as per this committee report also there is no practical way of distinguishing between the similar products of heading 27.09 & 27.10.

Respondent Contention:-Respondenthas given a clear-cut opinion that the cargo imported by the appellant is refined product of CTD 27.10 and accordingly demand has been correctly confirmed and penalties rightly imposed upon the appellant.

Reasoning of Decision:-It is the case of the Revenue that as per the chemical test reports of the Chemical Examiner, Kandla, the imported cargo in the present case was a refined product of CTH 27.10. However, on careful examination of the said reports/opinions given by the Chemical Examiner, Kandla, it is seen that the said test reports/opinions made by the Kandla, Laboratory are not the conclusive opinion on the classification of the cargo imported by the appellant. Further in view of the report dated 8/10/1999, of the Harmonized System Committee of World Customs Organization, on classification of 'Gas Condensates' also the chemical composition and physical characteristics of gas condensate of CTH 27.09 and similar synthetic products of CTH 27.10 are very similar and over-lapping. It is further expressed by the committee in this report that there is no practical way of distinguishing between the two groups of product. Appellant has reasonably explained with the help of contracts, value of comparable goods, journals and other literature available on the subject that imported cargo is Qatar Low Sulphur Condensate (crude oil). The assessments of the imported cargo were also finalized by the assessing officer on 25/02/2010 after receipt of the first test report from Chemical Examiner, Kandla. The order finalizing the provisional assessments has not been appealed against by the Revenue. Appellants have, therefore, made out a prima-facie case for complete waiver of confirmed duties and penalties.

Decision:-Stay granted.

Comment:-The essence of this case is that when a product is of such a nature that it is capable of being classified under more than one sub-headings, the classification should be resorted to keeping in mind the literature, contracts and journals available and not by merely relying on the chemical test report wherein there is also no clear cut classification of the said goods. As the importer furnished sufficient and appropriate evidences in support of their classification, stay application was allowed.

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PJ/CASE LAW/13-14/2064

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