C/10277/2023 — NITCO LIMITED vs AHMEDABAD

Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench at Ahmedabad

REGIONAL BENCH-COURT NO. 3

CUSTOMS APPEAL NO. 10277 of 2023-DB (Arising out of OIO-AHM-CUSTM-000-COM-029-30-22-23 dated 25/01/2023 passed by Commissioner of CUSTOMS-AHMEDABAD) NITCO LIMITED ……..Appellant Nitco House Seth Govindram Jolly Marg Kanjur Marg East Mumbai, Maharasthra VERSUS

Commissioner of Customs-AHMEDABAD
……Respondent Custom House, Near All India Radio Navrangpura, Ahmedabad, Gujarat WITH

(i)
CUSTOMS Appeal No. 10278 of 2023-DB (MR UJWAL PHADTARE) (ii) CUSTOMS Appeal No. 10279 of 2023-DB (ANAGHA LOGISTICS PVT LTD) (iii) CUSTOMS Appeal No. 10280 of 2023-DB (PREM CHAND GUPTA) (iv) CUSTOMS Appeal No. 10286 of 2023-DB (Commissioner of Customs-AHMEDABAD) (v) CUSTOMS Appeal No. 10287 of 2023-DB (Commissioner of Customs-AHMEDABAD) (vi) CUSTOMS Appeal No. 10288 of 2023-DB (Commissioner of Customs-AHMEDABAD) (vii) CUSTOMS Appeal No. 10289 of 2023-DB (Commissioner of Customs-AHMEDABAD) (viii) CUSTOMS Appeal No. 10290 of 2023-DB (Commissioner of Customs-AHMEDABAD) (ix) CUSTOMS Appeal No. 10291 of 2023-DB (Commissioner of Customs-AHMEDABAD)

APPEARANCE: Narendra Kumar Pati, Chartered Accountant & Shri Girish Nadkarni, Advocate appeared for the Appellant-Assessee
Shri G Nair, Assistant Commissioner (AR), appeared for the Respondent-Revenue

CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR

    Final Order No.  12000-12009/2024 

DATE OF HEARING: 13.03.2024 DATE OF DECISION: 11.09.2024

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RAMESH NAIR The brief facts of the case are that the assessee M/s. NITCO Ltd are engaged in manufacture and trading of various types of ceramic tiles and registered with central excise department having their manufacturing factory at Silvassa and having corporate and registered office at Mumbai. The assessee has imported goods Rough Dolomite/Dolomite Blocks and
declared under classification 25181000 claiming exemption Notification No. 50/2017-CUS dated 30.06.2017 (Sr. No. 120) from basic custom duty and Notification No. 01/2017 Integrated Tax Rate dated 28.06.2017 from IGST. An intelligence was gathered by the officers of revenue intelligence zonal unit, Ahmedabad (hereinafter referred as DRI) indicated that M/s. NITCO was importing Rough Marble blocks classified under Custom Tariff Heading
No. 2515 by mis-declaring rough dolomite block/ dolomite block and mis- classifying the same under Custom Tariff Heading No.25181000 and availing the exemption from payment of BCD and IGST. Intelligence gathered further stated that the goods rough dolomite block were actually rough marble block and the same should be classified under
Custom Tariff Heading No. 25151210. Thus, the mis-declaration of the description and the classification is being done with intention to evade the payment of higher rate of custom duty including IGST applicable on Custom Tariff Heading No. 25151210 in comparison to Custom Tariff Heading No. 25181000.

1.2 Based on the above intelligence, a search was carried out at the factory premises of NITCO Ltd at Silvassa on 21.09.2020. During the search panchnama dated 21.09.2020 was drawn whereby the officers withdrew the documents related to import of dolomite blocks, stock register, production details etc. During the inquiry various other

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documents, emails and statements of employees of NITCO were taken . Thereafter, the representative samples were drawn from the similar cargo i.e. Rough Dolomite Blocks imported by other importers namely Stonex India Pvt Ltd , New Delhi under panchnama dated 26.09.2020, Monarch India Pvt Ltd, Gurgaon under panchnama dated 28.09.2020 and M/s. R.K Marble Pvt Ltd, Kishangadh under panchnama dated 31.10.2020 respectively. Against whom simultaneous investigation was also initiated
by the DRI. The said representative samples were forwarded to the Geological Survey of India, Western region, Jaipur vide test memos for testing. The Geological survey of India, Western Region, Jaipur submitted the test reports in different parameters/analysis along with response of queries raised by the DRI on various dates. On the perusal of the reports
and response to queries received, it appears that goods imported by the above importers has the following characteristics :- (i) The blocks are hard and compact in nature of white colour. (ii) The rock is essentially composed of calcined /dolomite (iii) The rock is a metamorphic rock. (iv) The specific gravity of rock is 2.068 to 2.77’ (v) Stone is formed from dolomite lime stone
(vi) Rock is hard and capable of taking polish and can be used as marble slab. (vii) As per the physical property based on petrography chemical composition specific gravity data, the sample meets the specification of marble. More precisely the rock is identified as dolomite marble.

1.3 As per the test reports of Geo Technical Laboratory , one of the petrology laboratory, chemical analysis of the samples and response of queries, the investigation was brief that it is confirmed that the samples drawn meets the specification of marble does it appears that the actual

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goods imported by all the three importers whose samples were drawn were blocks of rough marble. On the basis of the above test reports of said three importers and various documents, email, website information
collected by the investigating agency, show cause notices dated 24.06.2022 and 02.08.2022 were came to be issued to the assessee which detailed below:- (1) Show Cause Notice F.No. VIII/10-28/Commr./O&A/2021-22 dated 08.08.2022 issued by the Commissioner of Customs, Ahmedabad demanding the differential Customs Duty amounting to Rs. 1,29,15,992/- (covering 5 Bills of Entry) in respect of the imports at Adani Hazira port (INHZA1), Hazira, Strat and ICD Tumb(INSAJ6), Taluka- Umbergaon, Dist- Valsad, Gujarat. The details of the Bills of Entry involved in the said Show Cause Notice are as under: Sr. No. Bills of Entry No. & Date No. & Date Value of Goods of Imported (Rs.) Duty Paid (Rs.) Actual duty to be Paid (Rs.) Duty Short paid/to be recovered (Rs.) Ports/ ICDs of imports 1 2 3 4 5 6 7 1. 3103627 dated 04.09.2017 23,24,493

2,41,922 13,51,533 11,09,632

Adani Hazira Port (ΙΝΗΖΑ 1) 2. 3103627 dated 04.09.2017 51,85,821

5,39,714

30,15,244

24,75,530

3103656 dated 04.09.2017 28,09,258

2,92,374

16,33,415

13,41,042

3269532 dated 16.09.2017 88,89,574

9,25,182

51,68,754

42,43,572

5616596 dated 09.11.2019

74,17,517

7,99,237

45,45,454

37,46,217

ICD Tumb (INSAJ6)

Total 2,66,26,664 27,98,429 1,57,14,421 1,29,15,992

(2) Show Cause Notice No.103/2022-23/Pr.Commr./Gr. I& IA/CAC/JNCH dated 26.04.2022 issued by the Pr.Commissioner of Customs, Gr.I/IA, JNCH, Nhava Sheva-1 from F.No.S/26-Misc-2363/2021-22Gr.I/IA.JNCH & DRI/AZU/CI/ENQ-48/INT- 11/2020 demanding Customs Duty of Rs. 1,16,84,333/- (covering 4 Bills of Entry)in respect of the imports at Nhava Sheva Sea port (INNSAI). The said Show Cause Notice has been made

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answerable to the Commissioner of Customs, Ahmedabad vide Cor igendum dated 19.07.2022 issued from F.No.S/26-Misc-2363/2021-22 Gr.1/IA.JNCH &DRI/AZU/CI/ENQ-48/INT-11/2020 by the Pr.Commisioner of Customs, GR.I/IA, JNCH, Nhava Sheva-I. The details of the Bills of Entry involved in the said Show Cause Notice are as under: Sr. No. Bills of Entry No. & Date No. & Date Value of Goods of Imported (Rs.) Duty Paid (Rs.) Actual duty to be Paid (Rs.) Duty Short paid/to be recovered (Rs.) Ports/ ICDs of imports 1 2 3 4 5 6 7 1. 4580575 dated 21.08.2019. 31,14,710

3,35,610

19,08,694 15,73,084

Nhava Sheva Sea (INNSA1)

4580577 dated 21.08.2019. 70,89,779

7,63,924

43,44,616

35,80,693

5052142 dated 25.09.2019 96,86,094

10,43,677

59,35,638

48,91,962

5052288 dated 25.09.2019 32,44,419

3,49,586

19,88,180

16,38,594

Total 2,31,35,002 24,92,796 1,41,77,129 1,16,84,333

Since the Show Cause Notice at (2) above has been made answerable to the Pr. Commissioner/Commissioner of Customs, Ahmedabad in light of the provisions of Notification No.29/2022-Cus(NT) dated 31.03.2022 read with Notification No.28/2022- Cus(NT) dated 31.03.2022, both the the said Show Cause Notices were made answerable to the Pr. Commissioner/Commissioner of Customs, Ahmedabad.

1.4 The Adjudicating Authority after considering the submission of the assessee passed the Order-In-Original dated 25.01.2023. both the aforesaid show cause notices were adjudicated by the common
impugned order wherein the proceeding of show cause notice dated 24.06.2022 was dropped and in case of show cause notice dated 08.08.2022, out of the total demand of Rs. 1,29,15,992 except the demand of Rs. 42,43,572 in respect of bill of entry no. 3269532 dated 16.09.2017, remaining demand was dropped and demand of Rs.

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42,43,572 was confirmed and corresponding fine, penalty and interest was also confirmed. Being aggrieved by the Order-In-Original dated 25.01.2023, the revenue filed an appeal for the dropped demand
amounting to Rs. 2,03,52,753/- and corresponding penalty, confiscation etc. Against the common impugned order the assessee also filed an appeal against the confirmation of demand amounting to Rs. 42,43,572/- with corresponding interest, penalty and fine and other co-noticees also
filed appeals challenging the imposition of penalties.

Shri Narendra Kumar Pati, Learned Chartered Accountant with Shri Girish Nadkarni, Advocate appearing on behalf of the assessee in the appeals filed by the assessee submits as under:-
“The appellants, dissatisfied with the order, have filed this appeal, contesting the decision on various grounds and seeking reconsideration of the issues addressed by the adjudicating authority.

1. Impugned Order's Lack of Legal Standing:
   The appellant argues that the impugned order is illegal and unsustainable as it was passed without proper application of mind, using inconsistent standards for adjudicating the same issue across different consignments. The onus to prove that the goods were classifiable under CTH 2515 was upon the department. Unless the said onus is discharged beyond reasonable doubt, the duty cannot be demanded from the Appellant for want of negative evidence.
2. Selective Confirmation of Demand and Lack of Test Report as Basis for Demand:
   Out of nine consignments under adjudication, the demand was dropped for all except for one (Bill of Entry No. 3269532 dated 16.09.2017). The appellant emphasizes that the department accepted the appellant's submissions for eight other consignments under the same show cause notices. Therefore, confirming the demand for one consignment solely due to a missing test report or department's failure to provide a test report, is inconsistent and unjustified.

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The appellant argues that the absence of the test report does not justify the demand for differential duty. The goods were tested at the time of import, and the department's inability to produce the report at this stage should not result in penalties for the appellant. 3. Improper Reliance on Samples Tested from the Import Consignment of Third-Party:
The appellant argues that the department’s reliance on samples from third- party consignments to classify the imported goods as marble is legally unsustainable. It is settled position of law that each Bill of entry is a separate assessment and test report of one bill of entry cannot be made applicable to the goods imported under another bill of entry. Each consignment must be assessed separately, especially for natural mined rocks, where properties vary significantly. 4. Misinterpretation of Supplier's Report Merely on account of the nomenclature employed:
The appellant disputes the department's reliance on the M/s Marble Sachanas SA (‘Supplier’) report that labels the goods as marble. Nomenclature or trade name are not the material factors that decide the nature or classification of the goods imported. The material factor that has been i.e, the report's technical data, which shows a mineral composition of 93% dolomite and presence of MgO in the chemical composition, was ignored by the department, leading to an incorrect classification. 5. Incorrect Reliance on Supplier's Website and Third-Party Website:
The appellant contends that the department's reliance on general descriptions from the supplier's website, while ignoring detailed mineralogical composition data, is legally unsound. Further, the e- commerce website www.stoneconnect.com has been relied on establish Volakas Marble is a marble quarried in Greece and to therefore conclude that the goods imported by the Appellant are nothing but marble. Further it is settled position in law that information from websites cannot be relied as authentic source of information and thus do not support the case of notice, in any manner. 6. Misinterpretation of Emails:
The appellant argues that the department misinterpreted emails from Mr. Ujwal Phadtare, twisting the context to support their case. The emails merely clarified the correct customs classification for dolomite, not a misdeclaration of goods. The email has not communicated that the

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documents be amended for the purpose mis-declaration and that Marble be replaced with Dolomite. It merely states that the correct CTH for Dolomite was 25181000 or 25182000. Drawing adverse inferences for the said email is uncalled for and is not sustainable. 7. Reliance on Statements Without Legal Compliance:
In terms of Section 138(B) of the Customs Act, 1962, It has been provided that a statement made and signed by a person during any enquiry or proceeding shall be relevant, for the purpose of proving an offence, when the person, who made the statement, is examined as a witness in the case before the court. The appellant challenges the use of Mr. Phadtare's statements, arguing that they were not obtained in compliance with Section 138B, making them inadmissible as evidence. 8. Incorrect Inferences from Local Purchase Orders (PO):
The appellant disputes the department's inference that the goods supplied to M/s Godrej Green Homes Ltd. were marble, solely based on the purchase order. There is no evidence linking these goods/PO to the imported consignments.”

2.1 As regard the revenue’s appeal he made the following submission which is a part of cross-objection filed by the assessee:- “The Respondent Company have placed the following defence to the appeal raised by the Appellant in the present appeal:

1. Reliance on Samples drawn from the Import Consignment of Third- Party is incorrect:
   The Respondent Company states that the Department’s reliance on samples drawn from third-party consignments over a year later than the concerned BOE to classify the imported goods as marble is legally unsustainable. It is settled position of law that each Bill of entry is a separate assessment and test report of one bill of entry cannot be made applicable to the goods imported under another bill of entry. Each consignment must be assessed separately, especially for natural mined rocks, where properties vary significantly. Furthermore, the Appellant Authority have opted to ignore the composition provided in the test report. The Test Report categorically mentions the mineral composition to be 93% Dolomite. Moreover, the presence of MgO in the chemical composition, which itself is the factor that distinguishes Dolomite from Marble. Therefore, the specific gravity of the

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said goods with respect to CTH 2515 becomes immaterial as CTH 2515 concerns itself with only marbles, travertine, ecaussine and other calcareous monumental or building stone and not common-rock forming mineral such as Dolomite.

2. Misinterpretation of Emails:
   The Respondent argues that the department misinterpreted emails from Mr. Ujwal Phadtare, twisting the context to support their case. The emails merely clarified the correct customs classification for dolomite, not a misdeclaration of goods. It is further stated that a conclusion cannot be drawn merely from the subject of the email and the contents of the said email needs to be read along with the context of the same. The email has not communicated that the documents be amended for the purpose mis- declaration and that Marble be replaced with Dolomite. It merely states that the correct CTH for Dolomite was 25181000 or 25182000. Drawing adverse inferences for the said email is uncalled for and is not sustainable.

3. The Test Report of the sample drawn from the goods of the concerned BOE are conclusive in nature: The Test Report of the sample drawn from the goods of the concerned BOE were analysed by three distinct and independent government laboratory (Dy. C.C. Laboratory, JNCH, Nhava Sheva, CRCL, Vadodara and Geological Survey of India, Nagpur). The Test Reports from all the three labs conclusively stated that the goods were ‘Dolomite Block’ and not ‘Dolomitic Marble’. It is further stated that the Appellant Authority have themselves relied upon the test report issued by Geological Survey of India to support the claims, the same authority by who have tested the sample drawn from the goods of the BOE and concluded them to be ‘Dolomite Block’.

4. The Respondent Company have provided necessary evidence for the clearance of Dolomites: The Respondent Company submits that they are engaged in the manufacturing and processing of Marble Blocks into Slabs and also manufacturing and trading of Ceramic Tiles wherein the Dolomite Block is an important raw material, thereby necessitating it’s import. Further, it is submitted that the Respondent Company have provided necessary evidence for the clearance of Dolomites. The Respondent Company had applied for First Check Appraisement for correct determination of description of goods and ascertainment of appropriate Customs Duty payable on subject goods. The concerned officer of Customs upon examination, certified the said goods to be ‘Rough Dolomite Blocks’ and allowed the clearance of the

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subject goods under CTH 2518. Therefore, it was only after the approval of the concerned officer of Customs that the said Dolomite Block was cleared.

5. Reliance on Statements Without Legal Compliance:
   In terms of Section 138(B) of the Customs Act, 1962, It has been provided that a statement made and signed by a person during any enquiry or proceeding shall be relevant, for the purpose of proving an offence, when the person, who made the statement, is examined as a witness in the case before the court. The appellant challenges the use of Mr. Phadtare's statements, arguing that they were not obtained in compliance with Section 138B, making them inadmissible as evidence.”

Shri Girish Nair, Learned Assistant Commissioner (AR) appearing on behalf of the Revenue in respect of Assessee’s appeals reiterates the
finding of the impugned order. As regard the Revenue’s appeals he reiterates the grounds of appeal and submits that the Adjudicating Authority has decided the classification as Rough Dolomite Blocks as
declared by the assessee on the basis of test report whereas there are
ample of material such as website of the supplier, email correspondence and admission of the assessee employee, accepting that the goods
imported is marble blocks and not dolomite block. The finding of the Adjudicating Authority to the extent he dropped the demand is not
correct and legal, the same needs to be set aside and Revenue’s appeal be allowed.

4.1 We have carefully considered the submission made by both sides and perused the records. We find that the core issue present in both appeals to be decided is that whether the goods imported by the assessee is Rough Dolomite Blocks, classifiable under Custom Tariff
Heading No. 25181000 as declared by the assessee or classifiable under

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Custom Tariff Heading No. 25151210 as claimed by the Department. To ascertain the legality of the order passed by the Adjudicating Authority, it is necessary to read the finding of the Adjudicating Authority. In respect of the duty demand dropped by the Adjudicating Authority, the following finding is given in the impugned order :-

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4.2 From the above detailed finding which is based on test reports of the department's own Central Excise and Customs Laboratory, Vadodara as well as independent Central Government Organization namely Geological Survey of India the Adjudicating Authority has decided that in respect of
the goods imported by the assessee against 8 bills of entry out of 9 bills of entry is Rough Dolomite Blocks classifiable under 25181000.

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Revenue in the grounds of appeal heavily relied upon the email correspondences with the supplier which was contended by the Revenue
that the assessee has instructed the supplier to change the description of the goods from Marble to Dolomite which shows that the goods is marble and not dolomite. In this regard, we find that consignments were cleared after conducting the chemical test by the laboratory. Moreover, from the email correspondences it does not suggest that the assessee has any mala fide intention or it has not been established that the assessee has
instructed to mis-declare the goods in the supplier invoice for the reason that when in the test report it has come out that the goods are dolomite even the instruction of the assessee is absolutely correct that the
correct description of the goods is dolomite and not marble. We agree with the findings of the Learned Commissioner that when the goods have been tested, the classification of goods is clearly based on the test reports
and not on the basis of any oral or any other documents, therefore, even the website which was relied upon for classifying the goods as dolomite is of no help to the department. In the grounds of appeal there is no rebuttal on test reports of Central Excise and Customs Laboratory, Vadodara and also of Geological Survey of India.

4.3 If at all had the department was not agreeing with such test reports a re-test could have been conducted but no re-test was done. Therefore, the test reports relied upon by the Adjudicating Authority are conclusive
and finding. Therefore, we do not find any substance in the revenue's appeal to counter the finding of the Adjudicating Authority. Therefore, as
regard the dropping of demand in both the show cause notices based on test reports and other findings, we do not find any infirmity in dropping of demand.

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4.4 As regard the assessee's appeal whereby it was challenged the confirmation of demand in respect of Bill of Entry No. 3269532 dated 16.09.2017, the adjudicating authority has given the following finding:-
. “35 I further find that no Test Report is on record in respect of the sample drawn from the consignment imported by the Importer through Adani Hazira Port under Bill of Entry No. 3269532 dated 16.09.2017. Importer have also not come up with Test Report of any Government Laboratory to support their arguinent that the product imported under this Bill of Entry was 'Dolomite' only. In the case of the Eight Bills of Entry, Test Reports of various Government Laboratories viz. Dy C.C Laboratory, JNCH, Nhava Sheva, CRCL, Vadodara and Geological Survey of India, Nagpur are on record and these Technical/Expert Reports overrule the contentions raised in the Show Cause Notices, as discussed at para supra. In absence of any Test result issued by a Government Laboratory with regard to the samples of the goods imported vide Bill of Entry No. 3269532 dated 16.09.2017, I have no option other than to agree with the proposal of the Show Cause Notice dated 08.08.2022 in respect of the goods imported vide the said Bill of Entry.

35.1 In view of the discussions in paras supra and the evidences on record, I am left with no option but to conclude that the goods imported by the Importer M/s. NITCO ltd. vide Bills of Entry covered in the two Show Cause Netices, except the Bill of Entry No. 3269532 dated 16.09.2017, are nothing but 'Dolomite Blocks' classifiable under Customs Tariff Heading No.25181000 and liable to applicable Customs Duty as per the said Customs Tariff Heading.

35.2 In view of my above findings, out of the demand raised vide show Cause Notice F.No.VIII/10-28/Commr./O&A/2021-22 dated 08.08.2022 for Customs Duty of Rs. 1,29,15,992/- involved in the goods imported under five Bills of Entry, demand for Rs.86,72,420/-(Eighty Six Lakhs Seventy Two Thousand Four Hundred and Twenty only) involved in the four Bills of Entry (appearing at Sr.Nos. 1 to 3 and 5 of Annexure-A to the Show Cause Notice) is required be dropped and demand of differential Customs Duty of Rs. 42,43,572/- involved in the Bill of Entry No.3269532 dated 16.09.2017 (appearing at Sr.No. 4 of Annexure-A to the Show Cause Notice) is required to be confirmed. Further, demand raised

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vide Show Cause Notice No.103/2022- 23/Pr.Commr./Gr.1% IA/CAC/JNCH dated 26.04.2022 issued by the Pr. Commissioner of Customs, Gr.I/IA, JNCH, Nhava Sheva-1 from F.No.S/26- Misc-2363/2021-22 Gr.I/IA.JNCH & DRI/AZU/CI/ENQ-48/INT-11/2020 for differential Customs Duty amounting to Rs. 1,16,84,333/- (One Crore Sixteen Lakhs Eighty Four Thousand Three Hundred and Thirty Three only) involved in the four Bills of Entry are required to be dropped. M/s. International Cargo Corporation is the Customs Broker who has filed the Bills of Entry on behalf of M/s. NITCO NIT ltd. for imports under the four Bills of Entry in respect of the goods imported through Nhava Sheva Sea Port (covered under the Show Cause Notice No.103/2022-23/Pr.Commr./Gr.I& IA/CAC/JNCH dated 26.04.2022 issued by the Pr. Commissioner of Customs, Gr.1/IA, JNCH, Nhava Sheva-I/IA as well as under the Bill of Entry No.5616596 dated 09.11.2019 (shown at Sr.No.5 of Annexure-A to the Show Cause Notice F.No.VIII/10-28/Commr./O&A/2021-22 dated 08.08.2022 issued by the Commissioner of Customs, Ahmedabad). Since the Duty demand in respect of the said five Bills of Entry is required to be dropped, penal proposals against the aforementioned Customs Broker as well as Shri Rupesh Jivanbhai Katariya, Authorised Signatory M/s. International Cargo Corporation are also required to be vacated.

36. In view of the above detailed discussions on the matter of classification of the goods imported under the Nine Bills of Entry at paras supra, I find that the consequential questions pertaining to confiscation of goods and penalty on Importer and Customs Broker, as proposed in the Show Cause Notices, are to be answered in the matter of the importation done under only one Bill of Er ty i.e. No. 3269532 dated 16.09.2017.”

4.5 From the above finding, it can be seen that the demand in respect of the bill of entry dated 16.09.2017 which is subject matter of the Assessee’s appeal was confirmed only on the ground that the assessee could not produce the test report. From the facts it is clear that for the goods of the bill of entry no. 3269532 dated 16.09.2017 also sample was
drawn and a test was conducted but since the test report was not
available with the assessee, they could not produce the same. It is the case of the revenue that the goods declared by the assessee is not

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correct. Therefore, the onus is on the department to bring on record tthetest report or other evidence, if available in the matter of
classification. In this case only because the test report is not available with the assessee, burden to prove the correct classification cannot be shifted from department to assessee . It is settled law that burden to prove the classification as claimed by the revenue is on the revenue and not on the assessee. Moreover, in the facts of the present case when out of 9 consignment in respect of 8 consignments when the test reports are in favour of the assessee, it cannot be presumed that in respect of one bill of entry dated 16.09.2017, the goods is different from the goods of other 8 bills of entry. It was found that the common description was
declared in respect of all 9 bills of entry and in respect of 8 bills of entry where the test reports are available, it has been established that
the goods are dolomite blocks and not marble blocks. In this fact and circumstances the adjudicating authority is not correct in classifying the goods as claimed by the revenue under 25151210. As regard the principle of burden to prove in the matter of classification to be first discharged by the department, we rely upon the following judgments:-

a) In the case of Navin Chimanlal Sutaria Vs. Union of India and Others- 1981 (8) ELT 913 the Hon’ble High Court of Bombay has passed the following order:- 7. This discussion is intended to demonstrate the futility of Mr. Advani’s contention that the issue of the goods falling within Item 28 has been raised for the first time in the present petition. It is nothing of the kind. On the contrary, the approach of all the authorities was that as the goods did not attract the exemption notification, they automatically fell within Item 22(4)(a). This approach has nothing to commend itself except its untenability. Even if the goods did not attract the benefit of the exemption notification, Item 22(4)(a) could not be automatically attracted, more so in the teeth of the petitioner’s contentions that the goods fell within Item 28, in support whereof he produced an expert opinion and cited standard technical books. All this was totally ignored. If it was the department’s stand that the goods fell within Item 22(4)(a), which in fact was the stand of the department as is manifest from the notice of demand dated 22nd

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December, 1973, the burden of proof was on the department, as observed by the Supreme Court in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore & Tea Co., (1967) 20 Sales Tax Cases 529, at page 527- “......In all cases of taxation the burden of providing necessary ingredient laid down by law to justify taxation is upon the taxing authority........................”. These observations were also followed by a Division Bench of this Court in Amar Dye Chem. Ltd. v. Union of India (1980) Cen-Cus 242D. This elementary and salutary rule of law has, in this case, been entirely ignored by the department. b) In the case of Heveacrumb Rubber (P) Ltd. Vs. Superintendent of Central Excise- 1983 (14) ELT 1685 the Hon’ble Kerala High Court has given the following view:- “3. It is interesting to note, that in the counter-affidavit filed by the respondents in paragraph 2, it is asserted that the products of the petitioner’s factory are liable for Central Excise duty under Tariff Item 68. But in paragraph 3, it is stated that there is no adverse order passed by the respondents against the petitioner and in paragraph 7 it is repeated that Exts. P3 and P5 are still pending for consideration. This has to be taken along with the assertion made in Ext. P2 by the 1st respondent wherein it is stated in paragraph 2 that block or crump rubber produced in the petitioner’s factory is liable for Central Excise duty under Tariff Item 68 of the Central Excise Tariff. The petitioner has filed detailed objections, evidenced by Exts. P3 and P5. In Ext. P3 the petitioner has also relied upon the decision of the Appellate Collector who has gone through the matter very exhaustively. It is also worthy to note that a Division Bench of this Court in O.P. No. 1770 of 1975 and connected cases directed that there will be a full-fledged enquiry in the matter after giving the petitioners a full and fair opportunity to substantiate their contentions. Notwithstanding all these, it is surprising that the respondents even without a proper investigation and adjudication as to whether the block or crump rubber produced in the petitioner’s factory is liable for Central Excise duty under Tariff Item No. 68 of the Central Excise tariff have been repeatedly asking the petitioner to furnish certain details in connection therewith. If the particular item produced in the petitioner’s factory is not liable for excise duty as contended by the petitioner, there is no reason why the respondent should insist the petitioner for furnishing the details. If, on the other hand, the respondents hold the view that notwithstanding the objections raised in Exts. P3 and P5, as also the decision of the Appellate Collector referred to in Ext. P3, the petitioner is liable for excise duty, the petitioner should be told so definitely with reasons therefor. A speaking order is a pre-requisite before saddling the petitioner with the liability to pay Excise Duty. The respondents have merely asserted that the block or crump rubber produced in the petitioner’s factory is liable for excise duty under Tariff Item No. 68 of the Central Excise Tariff. This is not sufficient. It is for the Revenue to allege and substantiate, at least prima facie, as to why a particular item is taxable under a particular Tariff entry. The initial burden is on the Revenue to substantiate the assertion. I have come across a few cases wherein only assertions are made that a particular item will fall under a particular entry in the Tariff, without referring to any material or basis on which it is so surmised. The assessee is entitled to know and should be informed, the basis on which the Revenue proceeds to assess it, so that the opportunity

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given to the assessee will be real and effective and not illusory and a make believe. Without such a real opportunity being afforded, if on mere assertions, further documents and papers are obtained and assessments are made and liability saddled on the assessee making it a “fait accompli”, it will be hard, unjust and improper. Steps so taken will be violative of the principles of natural justice. The assessing authority will be acting arbitrarily and not fairly. That the statutory authorities invested with power, which when exercised will effect persons with civil consequences, should act fairly, reasonably and in just manner, has been laid down repeatedly by courts. But it is regretable that such principles are given a go-bye in many cases and parties are driven to resort to this court under Article 226 of the Constitution. Notwithstanding the very detailed objections the respondents have not cared to dispose of Exts. P3 and P5, but continued to insist that the petitioner should furnish certain details asked for. The procedure adopted is unwarranted.”

c) In the case of Tata Exports Ltd. Vs. Union of India and Ors.-1985 (22) ELT 732, the Hon’ble High Court of Madhya Pradesh have given the following finding:- “4. The Supreme Court in Union of India v. Delhi Cloth Mills - 1977 E.L.T (J 199) (S.C.) = AIR 1963 S.C. 791 has held that manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. Relying on this decision, the Supreme Court in South Behar Sugar Mills v. Tata Chemicals - 1978 E.L.T. (J 336) = AIR 1968 S.C. 922 further held that there must be such a transformation that a new and different article must emerge having a distinctive name, character or use. In Sandoz India Ltd. v. Union of India - 1980 E.L.T. 696 a Division Bench of the Bombay High Court held that the processing of the physical form from a solid state to a liquid state by the addition of dispersing agents and water did not result in manufacture as there was no change in the chemical composition of the pigment. In Shakti Insulated Wires v. Union of India - 1982 E.L.T 10, the Bombay High Court further held that it is obvious that merely because some process is carried on any article it would not necessarily amount to a manufacture of a fresh article amounting to ‘manufacture’ under Section 2(f) of the Act. In Coromandel Proorite v. Government of India - 1985 (20) E.L.T. 257 a Division Bench of the Madras High Court held that if as a result of the process, raw-materials have been transformed into a distinct and commercially new product, then alone the process can be taken to be a manufacture. In this case since the end product brought about by the process of mixture or dilution continues to have the same chemical properties as resin, there cannot be said to be any manufacturing process. Recently, the Supreme Court in Empire Industries Ltd. v. Union of India - 1985 (20) E.L.T. 179 reiterated that any process or processes creating a new commodity commercially known as a distinct and separate commodity having its own character, use and name would be ‘manufacture’. It is settled law that in a case of taxation the burden of proving that the necessary ingredients prescribed by the taxing provision are satisfied is entirely upon the taxing authority [Sandoz India Ltd. v. Union of India (Supra)]. It is, therefore, primarily for the taxing authority to satisfy the Court that formulation of pigment slurry is entirely distinct commodity

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having entirely distinct name, character and use as compared with the pigment itself.”

d) In the case of Collector of Central Excise Vs. Fertilizers and Chemicals, Travancore Ltd-1986 (24) ELT 388 the CEGAT special Bench New Delhi has given the following view:- “7. The Department has referred to the Fertilizer Control Order as well as the Glossary of Terms used in Fertilizer Trade and Industry (IS 1304-1980). But this has been an exercise in futility as reference to both these authorities only establishes that ammonium chloride of high technical purity as well as lower purity is fully covered in the broad specifications applicable to fertilizers. In this situation, the burden of proof that the product in question, is not a fertilizer is on the Department and they have failed to discharge this burden. In view of the definitions contained in the Fertilizer Control Order, Glossary of Terms used in the Fertilizer Trade and Industry as well as the specific wording of Notification No. 164/69, there is hardly any justification for going into the end use of the product in question. We cannot also lightly brush aside the argument that if at all there was any doubt as regards the alternative classification, then as per accepted principles, a specific tariff entry is to be preferred to the general entry and also the view favourable to the assessee will have to be accepted. We are also quite clear that the allegation of suppression of facts that is now being made in the course of arguments, is wholly untenable. This allegation is not contained in the show cause notices and in view of regular submission of classification lists, we find that there is no substance in the allegation that there has been suppression of facts by the assessee. In this view of the matter, we agree that the demands of duty would also be essentially barred by limitation. However, this issue is largely academic, in view of the fact that the goods in question are being held to be fully covered by the exemption Notification No. 164/69.”

In view of the above settled legal position, coupled with facts and
circumstances of the present case we agree with the assessee that in respect of the goods covered under bill of entry No. 3269532 dated 16.09.2017 is correctly classifiable as dolomite blocks under Custom Tariff Heading No. 25181000.

4.5 As per our above discussion and finding we are of the view that
the demand of custom duty dropped by the Adjudicating Authority is
correct and legal. Hence, the same is upheld. The custom duty demand in

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respect of bill of entry No. 3269532 dated 16.09.2017 is not legal and correct, hence, the same is set aside.

4.6 All other issues such as confiscation, redemption fine their against,
interest and penalties which are consequential to the demand of custom duty in both appeals do not sustain. The penalties on other parties shall also not survive. As a result, the Revenue's appeals are dismissed and Assessee's appeals and other connected appeals of co-appellants are allowed. (Pronounced in the open court on 11.09.2024)

(RAMESH NAIR) MEMBER (JUDICIAL)

(C L MAHAR) MEMBER (TECHNICAL)

Raksha