Test Report of Random Sample of Coking Coal sent by Customs Dept cannot be Relied: CESTAT allows Customs Duty Exemption [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed customs duty exemption and observed that the Test Report of any random sample of Coking Coal sent by the Customs Department cannot be relied.

The appellant's, Saurashtra Chemicals Division Of Nirma Ltd, claim for exemption duly supported by the Load Port Certificate of Analysis was not accepted by the department despite there being no reason to doubt or reject the said Certificate as being defective, being brought on record. The assessing officer therefore resorted to provisional assessment by sending a Random sample drawn from the imported goods for test to CRCL, New Delhi under a Test Memo.

A Show cause Notice was thereafter issued to the Appellant, purportedly under Section 28 of the Customs Act 1962, which relied upon Test report, New Delhi, as per which the Ash content was 21.33%. The Notice contended that since the ash content as per the said test report of CRCL, New Delhi was above 12%, the goods were not eligible for the said exemption and accordingly, the Notice demanded differential duty of Rs. 71,32,025/-, purportedly under Section 28 of the Customs Act 1962.

In the present case, the appellant’s claim for exemption as Coking Coal of ash content below 12% was duly supported by the Load Port Test Certificate, as per which the ash content was below 12%. The Show Cause Notice recorded that the appellant had claimed the exemption based on the Load port test report. However, no reason or ground has been mentioned for doubting or rejecting the said certificate as defective.

In fact, the Appraising Manual relied upon by the department also stated that drawing of sample and resort to provisional assessment must be reserved only to cases where drawing of sample is really justified. In the present case since no reason had been advanced for doubting or rejecting the load port test certificate, as held by the Supreme Court in the decision in Tata Chemicals, there was no real justification for resort to provisional assessment and drawing of samples.

The Supreme Court in Tata Chemicals Ltd v CC, held that where admittedly sample sent for test by the department is not drawn by systematic sampling as provided in IS 436, the test report of such sample cannot be relied upon and it is immaterial that such sample was drawn in presence of the importer's representative who did not object to the manner of drawing of sample.

Allowing the appeal, a Two-Member Bench comprising Raju, Technical Member and Somesh Arora, Judicial Member noted that “In the instant case also process of sampling is relevant to arrive at correct findings, we hold that the department has not been able to justify the process of sampling or the delay of more than 11 months in receipt of the report and that too by not indicating actual date of test. The belated communication by CRCL too is without any authoritative supporting material.”

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