Exemption notification under Customs law must be interpreted literally, allowing duty exemption for crude palm oil based solely on acid value of 4 or more without imposing an upper limit.

PER: R. BHAGYA DEVI

These 2 Appeals Nos. C/20073-20074/2014 have been filed by the appellant M/s. Ruchi Soya Industries Pvt. Ltd (Presently known as M/s. Patanjali Foods Limited) against the impugned Order-in-appeal No.399/2013 dated 25.10.2013 and Order-in-Appeal No. 389/2013 dated 15.10.2013 respectively passed by the Commissioner of Customs (Appeals), Bangalore.

2. The facts are that the appellant imported crude palm oil and claimed the benefit of Notification No.21/2002 Cus. dated 01.03.2002 (Sl.No.30II(A) claiming the crude palm oil to be of edible grade. Since the eligibility of the Notification was in dispute and the imported goods had to be tested, the appellant requested for provisional assessment which was accepted by the Revenue. On finalization of the provisional assessments based on the test reports, the benefit of the Notification was denied and differential duty was demanded by the original authority. On appeal, the Commissioner (Appeals) upheld the demands rejecting the appeal filed by the appellant, hence these appeals.

3. The Learned Counsel submitted that the appellant had entered into a contract with the foreign supplier M/s. Avanti Industries Pvt. Ltd., Singapore for import of crude palm oil of edible grade in bulk and the supplier had supplied 9749.856 metric tons of crude palm oil of edible grade in bulk against different bills of lading all dated 06.02.2012. Appellant filed 7 bills of entry all dated 22.02.2012 seeking clearance of the subject goods for home consumption classifying the same under CTH 1511 1000 and declared the subject goods as crude palm oil of edible grade in bulk and claimed the benefit of exemption from payment of duty in terms of the Notification No.21/2002 dated 01.03.2002.

3.1. Referring to the above Notification, it is submitted that crude palm oil having acid value of 4 or more and total carotenoid (as beta carotene) in the range of 250 mg/kg to 2500 mg/kg was entitled to the benefit of ‘Nil’ rate of duty. It is stated that on arrival of the vessel, samples were drawn from the subject goods by the customs authorities and the port health officer; 14 samples were drawn by the Port Health Officer on 25.02.2012 and the same were sent for testing to Customs Food Laboratory, Mysore (CFL) and the said Lab had rendered its report dated 29.02.2012 whereby it was certified that Acid value of the subject goods was 9.1. It was also opined that the sample confirmed to the standard laid down for Crude Palm Oil under the provisions of Food Safety and Standards (Food Products Standard and Food Additives) Regulation, 2011. Accordingly, the subject goods were released for refining and the same refined to the satisfaction of the Revenue authorities. However, further 8 samples were sent for testing to Customs Revenue Laboratory (CRL), Mangalore and 8 reports all dated 09.03.2012 were obtained wherein it was opined that the Acid value of the subject goods was 10.3 - 10.4 and based on this report, it was alleged that the appellant was not entitled to duty exemption as per the aforesaid Notification. Appellant vide letter dated 17.03.2012 submitted that the samples from the subject goods were tested and report dated 29.02.2012 was rendered by CFL, Mysore which confirmed that the acid value of the subject goods is 9.1 and the same confirmed to the standard laid down for crude palm oil under the provisions of Food Safety and Standards Regulation, 2011 and the said report having obtained at the instance of the Revenue is binding and the subsequent report of CRL Mangalore is liable to be rejected.

3.2. The Learned Counsel further vide letter dated 26.03.2012 submitted that if the Revenue was not satisfied with the original test report, they should have got retested, hence, the