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Dunlop India Limited Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)LC611Tri(Delhi)
AppellantDunlop India Limited
RespondentCollector of Customs
1. these appeals arose from the following orders of the appellate collector: 1. no. c. 3/185/77, c. 3/2070, 2071, 2072, 2692 & 2947/76 dated 2 12.1977.2. the product which is the subject of dispute is dutrex rt, a proprietary product of shell international, london. it is used as a tackifier for compounding rubber in the production of rubber tyres. the goods were being assessed under item 27(7)(2) old customs tariff and heading 27.10(7) new customs tariff, and c.v. duty under central excise item 10. the dispute that we have to settle is with respect to the levy of countervailing duty. the importers m/s. dunlop india limited claimed that for years this product dutrex rt had been assessed on import at all ports to customs countervailing duty under central excise tariff item 10. but.....
1. These appeals arose from the following orders of the Appellate Collector: 1. No. C. 3/185/77, C. 3/2070, 2071, 2072, 2692 & 2947/76 dated 2 12.1977.

2. The product which is the subject of dispute is Dutrex RT, a proprietary product of Shell International, London. It is used as a tackifier for compounding rubber in the production of rubber tyres. The goods were being assessed under item 27(7)(2) Old Customs Tariff and heading 27.10(7) new Customs Tariff, and C.V. duty under Central Excise item 10. The dispute that we have to settle is with respect to the levy of countervailing duty. The importers M/s. Dunlop India Limited claimed that for years this product Dutrex RT had been assessed on import at all ports to customs countervailing duty under Central Excise Tariff item 10. But suddenly in about 1974, the Madras Custom House decided it should change its testing methods, (Till then the test was made in accordance with the Board's letter F. No. 8/23/56-CX. HI dated 7.11.1956). In a note dated 16.8.1974 Lab No. 1705 on Dutrex RT, the Madras Chemical Laboratory said that the sample on qualitative analysis did not give test for bitumen although the carbon residue determined in the Rarasbottom carbon residue apparatus showed a carbon residue of more than 0.25%. The laboratory said in a later note about the same Lab No.1705/16.8.1974 that the carbon residue left by an oil when tested in the Ramsbottom carbon residue apparatus is not due entirely to the bituminous substance in the oil and it was not correct to conclude that, whenever an oil leaves more than 0.25% carbon residue by the above test, it contained bituminous substances. Carbon residue to such an extent can be left also by a thick mineral oil not containing bituminous substance, for example, lubricating oils. The note went on to say that when an oil does not contain bituminous substance, the Ramsbottom carbon residue apparatus test loses its significance and even when the carbon residue is more than 0 25% by weight of the oil, it does not satisfy the condition regarding the bituminous substances content specified in the item for furnace oil.

3. In March, 1976 a test report 1351 dated 6.3.1976 was made on the product and the laboratory reported that it was free from bituminous substance. Eventually, on 7.12 76 the Chemical Examiner of the Madras Custom House wrote a paper in which he said that they had evolved a simple qualitative test for verifying the presence of bituminous substance in a mineral oil sample, since they felt that such a test would be necessary in the case of oils other than diesel oil N.O.S.covered by the Board's instructions of 7.11.1956. After evolving this test, it was applied to a sample of Dutrex RT, whereupon it was found that the sample did not contain any bituminous substance. From that time, all testings of Dutrex RT by the Madras Custom House were done by the qualitative test as recommended by the Chemical Examiner.

4. The appellants say that the matters which require consideration now are: (i) Whether the Chemical Laboratories under the Central Board of Excise & Customs and in particular the Chemical Laboratory attached to the Madras Custom House had tested Dutrex RT for verifying whether it conforms in all respects to the specifications set out in Excise Tariff Item 10 corresponding to old Customs Entry 27(7)(2) and new heading 27.10(7)? (ii) In particular whether the product had been tested for its carbon residue in the Ramsbottom carbon residue apparatus and if not whether it was reported as having carbon residue of more than 0.25% by weight of the oil? (iii) On the basis of test conducted whether the Chemical Examiners were justified in reporting the product as not conforming to the specifications in TI 10 CET? (iv) Whether having regard to the clear instructions contained in the letter of Central Board of Revenue F. No. 8/23/56-CX. Ill dated 7 11 56 appearing in CBR Bulletin Central Excise & Land Customs (Technical), the Chemical Examiners of Madras Custom House had any authority to deviate on the test prescribed for certifying the bituminous content in the mineral oil tested? If not whether the quasi-judicial adjudicating and appellate authorities dealing with the claims of the appellants are bound to discard that part of the report which was not prescribed or authorised by the Control Laboratory? (v) Whether having regard to the Doctrine of "Contemporanea Expositio" (which this Bench has accepted as being fully applicable to the interpretation and application of Central Excise Law and Tariff) the instructions of the Government of India/CBR issued in 1956 soon after Excise Tariff entries 8, 9 and 10 were inserted in the First Schedule to the Central Excises & Salt Act has binding effect in the law on all authorities interpreting and applying the tariffs for determining the excise duty leviable and the corresponding countervailing duty to be charged on like products when imported into the country? 5. It was argued by the learned Counsel on behalf of M/s. Dunlop that the Chemical Examiner had no authority to suddenly change the method of testing which had been laid down by the Board in 1956. There is no explanation why that Custom House laboratory accepted the method of testing by the Ramsbottom carbon residue apparatus for so many years, without seeing any incompatibility in the results it obtained. Other Custom Houses conducted the same method of test and this product was being assessed to C.V. duty under Central Excise Tariff 10 and continued to be so assessed even after the Madras Custom House arbitrarily and unilaterally changed its method of test. Madras Custom House laboratory had no authority to deviate from the test prescribed by the Board for determining bituminous substance presence in mineral oils. What was even more surprising was that the so-called qualitative test devised by the Chemical Examiner of Madras did not specify the exact manner of testing. As a remit, they were kept in the dark about the method adopted by the Madras Custom House laboratory to determine a vital detail for the purpose of assessing their product, for which reason they were subjected to prejudice and denial of proper opportunity to put forward their side of the case. They have obtained an opinion from a qualified person, namely, Dr. V. Rajamani, Associate Professor of Biochemistry, School of Environmental Sciences of Jawaharlal Nehru University, New Delhi. They have also had the product tested by two independent testing analysis, namely, Italab and R.V.Briggs & Co. The first analyst after testing a sample of Dutrex drawn from 10 drums lying at factory premises of Dunlop Madras reported that it contained 1.7% asphaltenes; while the second, that is R.V. Briggs, found a sample of Dutrex RT, contained in a small bottle by M/s.

Dunlop, Hooghly, containing 0.26% bituminous content.

6. In an appeal order No. C.3/1546/72 dated 19.9.1973, the Appellate Collector of Customs, Madras, Mr. A.C. Saldana, allowed an appeal in respect of Dutrex RT saying that amongst other things, the sample was found on test to have a bituminous substance of more than 0.25% by weight, he therefore ordered assessment to C.V. duty under item 10 Central Excise Tariff.

7. The learned Counsel submitted a synopsis of oral arguments in which he has grouped the appeals into four groups. In the first group, M/s.

Dunlop claimed refund on the ground that countervailing duty was assessable under item 10 having regard to past test reports which were based on the carbon residue, amongst other factors. Refunds were claimed on this ground but subject to the plea that no C.V. duty was leviable. Alternatively, they argued that C V. duty should be levied under item 68. In the second group of appeals, the plea by M/s. Dunlop was that the product was leviable to C.V. duty under excise tariff item 10 on the basis of past reports with reference to the carbon residue.

Refunds were claimed on this ground subject to their plea that no C.V.duty was leviable, or alternatively, C.V. duty should be under tariff item 68. In the third group, the product was claimed to be assessable under Excise tariff item 10 on the basis of the carbon residue tests and other factors. M/s. Dunlop urged that even if C.V. duty was levied, item 68 was the most appropriate In the last group, the appellants claimed before the original authorities that the product was assessable to C.V. duty under Excise tariff item 10 on the basis of the carbon residue tests and other factors.

8. It was strongly urged that it was not right for the Madras Custom House to abandon the earlier testing methods to suddenly employ a new test to determine the bituminous content of Dutrex RT. If they wanted to change the test method, and particularly when the method was detrimental to their interest and prejudiced their claims, they should have been given sufficient warning and told about the impending change sought to be introduced in the testing method so that they could, if they wished to examine and satisfy themselves that the method about to be adopted was scientifically appropriate and acceptable to determine the question at stake. They were given no information of this kind. Nor were they informed the manner of the qualitative test, or why the old method of testing by the carbon residue tests was found wanting when it had been found adequate for so many years. There was arbitrariness in the action of the Madras CH, an action unjustified from every point of view, especially when it is remembered that no other Custom House adopted this method of test for their product.

9. The expert opinion which they have produced from Dr. Rajamani, establish clearly that the absence of bituminous matter in the mineral oil cannot be proved unless it is shown that the carbon residue does not contain any detectable quantities of vanadium or that the mineral oil does not contain complex aromatic hydrocarbon molecule, and that in any case the method of analysis should be specified. He has also pointed out that because mineral oils commonly contain variable amounts of bituminous matter, those having lower percentages of bituminous matter will have such elements (eg. vanadium, nitrogen, sulfur, oxygen), below detection limits for many common analytical techniques.

10. The test by ITALAB reported an asphalt content of 1.78%. According to Dr. Rajamani, the presence of asphaltenes is a conclusive proof of the presence of bituminous matter in the Dutrex RT, because asphaltenes itself is a bituminous hydrocarbon with complex structures. Dr.

Rajamani has also written in his note that most of the carbon residue results from aromatic complexes with ring-type-structures, which indicate bituminous substances.

11. Two independent testing laboratories have vouched for the presence of bituminous substances and there can be little doubt that bituminous substances occur in Dutrex RT. There was something very wrong about the testing method adopted by the Madras CH and they should not have been subjected to prejudicial actions when they had not been given proper opportunity to represent to the contrary, and when the carbon residue tests were still found reliable by other Custom House laboratories, 12. The learned Counsel for the department strongly opposed the appeals saying that the technical opinion of Dr. Rajamani produced by M/s.

Dunlop does not help them. Dr. Rajamani stated that the carbon residue may contain complex molecule of carbon derived from both long aliphatic hydrocarbons and from aromatic complexes (bitumens), incompletely burnt bituminous substances and ash and that bituminous substances are characterised by hydrocarbon molecules while carbon residue is dominated by complex carbon molecules. The learned Counsel says this is of no relevance to prove the presence or absence of bitumens since the essential nature of carbon residue would be similar in each case whether it is derived from bituminous substances or non-bituminous hydrocarbon constituents of the mineral oils or from the additives.

Petroleum products are mixtures of many compounds which differ widely in their physical and chemical properties. Some of them may be vaporised in the absence of air at atmospheric pressure without leaving an appreciable residue. Other non-volatile compounds leave carbonaceous residue and this residue can be correlated with the API gravity of the petroleum, indicating the heaviness of the crude oil and the gasoline producing propensity (page 112, The Chemistry and Technology of Petroleum by James G. Speight, 1980). Therefore, the carbon residue cannot be attributed as necessarily arising from bituminous matter.

13. The learned Counsel for the department points out that the book "Physical & Chemical Examination, Paints, Varnishes, Lacquers, Colours" by Gardner, gives certain analytical factors for tests to establish the presence of asphalts.

14. He rejected the tests reports of Italab and R.V. Briggs & Co.

saying that it is not known who drew the samples for those tests and from where the samples came. No reliance can be placed on those reports. He, therefore, said that Dr. Rajamani's affidavit and the two test reports cannot be relied upon.

15. The counsel went on to say that the greatest weakness in M/s.

Dunlop's case was that they never challenged the test reports at the time they were made. It is only very much later that they woke up and began to throw doubts on the method.

16. The matter before this Tribunal is complicated by the fact that the Custom House does not tell us the method by which it determined the absence of bituminous content. All that the laboratory said was that it had abandoned the former test methods and evolved "its own simple qualitative tests for verifying the presence of bituminous substance in a mineral oil sample." 17. It all began in November, 1956 when the Board prescribed the method for determination of the weight of bituminous substance in indigenous and imported diesel oil not otherwise specified. The Board decided that an oil claimed as diesel oil not otherwise specified would be accepted as containing 0.25% or more by weight of bituminous substance, if it satisfies both the following conditions: (a) It is as dark as or darker than an Iodine (analytic reagent quality) solution in a 5% weight by volume solution of potassium iodine (analytical reagent quality) in a distilled water, the strength of the Iodine solution being exactly 0.04 normal, and (b) it gives a carbon residue of not less than 0,25% by weight when tested in the Rarasbottom carbon residue apparatus by the procedure described in Indian Standard Institution publication I.S. 310-1951.

The learned Counsel for the department said at the time of argument that this letter related only to the testing of oils claimed to be diesel oil and is not meant for testing Dutrex RT. The fact remains that the Madras Custom House followed this letter even for testing Dutrex RT : that is, it relied largely on the determination of carbon residue to satisfy itself about the content of bituminous substances in the oil. With respect to the learned departmental counsel's argument, it is worthwhile to note that item 9 (diesel oil N.O.S) and item 10 (furnace oil) had the same specification for bituminous substances content, word for word, as follows: Contains one quarter of one per cent or more by weight of any bituminous substance.

18. The problem as we see it, is the determination of bituminous substance. The Board's letter of November, 1956 speaks of such determination for diesel oil, but it is not too much to expect that the testing laboratory used the same method for determining bituminous content for another petroleum product/derivative that is as similar to diesel oil as furnace oil. The two oils, after all, are derived from the same source and have remarkably similar specifications and constituents. It is, therefore, not by any means unreasonable if the same test is used to determine the content or weight of the same substance in a like product. Therefore, if the Madras Custom House, and we think, other Custom Houses too, used this method of test to find out the carbon residue to satisfy themselves about the bituminous content in an oil that would have been assessed as furnace oil, it is altogether right and we can see nothing improper in it. We, of course, agree with the learned Counsel for the department when he says that the two test reports produced by M/s. Dunlop from ITALAB and R.V. Briggs & Co. cannot be relied upon-we do not know the origin of the samples that they tested.

19. We agree also, in certain measure, with his argument that the expert opinion given by Dr. Rajamani of the Jawaharlal Nehru University does not really tell us much, because the expert himself says in his note that some amount of carbon residue can also come from non-bituminous hydrocarbon during controlled combustion of petroleum products. He writes that the carbon residue may contain complex molecule of carbons derived from both long aliphatic hydrocarbons and from aromatic complexes (bitumens) incompletely burnt substances and ash.

20. In a letter dated 7.10.1972 (Tariff advice No. 61/72) the Board directed that classification of Dutrex brand products should be determined after ascertaining the composition each time by chemical test in the light of the principles mentioned in the enclosed opinion of the Chief Chemist and in Board's TR 215/55. The opinion of the Chemist referred to a sample of Dutrex 55 (Dutrex 729 UK) which had been tested and received as an enclosure with the Collector of Customs, Calcutta's letter dated 22.2.1972. The Chief Chemist reported that it conformed to the characteristics of furnace oil and should fall under item 10 of the Central Excise Tariff. He, however, added that this did not mean that all Dutrex products satisfy the characteristics of furnace oil or that they would attract countervailing duty under item 10. It is seen that some Dutrex products contain less than 0.25% by weight of bituminous substance and would thus fall under item 11A of the Central Excise Tariff, The Chief Chemist, therefore, ended by recommending that the assessment of Dutrex product should depend upon their characteristics Up to this time, we see that there was still no hesitation, regarding assessment of some Dutrex products as furnace oil, presumably by determining their bituminous content with reference to their carbon residue.

21. This is evident from the fact in his note dated 7.12.1976, the Chemical Examiner says "in the matter of determining the bituminous substances and content, there is no direct method for quantitative examination, and the Board's instructions cited above did not also include any specific qualitative test for the presence of bituminous substance, before resorting to the indirect method of determining the Ramsbottcm carbon residue (i.e. a carbon residue left by the oil on controlled combustion which will include the bituminous substance in the oil and which will not be wholly due to the bituminous substance content only) and reckoning the percentage of such carbon residue as equal to the percentage of bituminous substance content of the oil." This sentence contains the very true arid significant statement that there is no qualitative test for determining bituminous content. We must understand clearly that bitumen is only a constituent of asphalt, which is obtained as a residue in the refining of petroleum. (It also occurs in nature).

22. The separation refining is on the principles of boiling range and refinery fractions are classified roughly as follows: Light distillates Intermediate distillates Heavy distillates Residue (1) (2) (3)(4) Motor gasolines Heavy fuel oils Heavy mineral Lubricating Jet fuel Gas oils Heavy flotation Fuel oils Kerosene Waxes Road oils Light heating oils Lubricating oils Asphalts Coke 23. Another group embraces casing head gasoline, natural gas and liquid petroleum gas. Though bitumen itself is a hydrocarbon, it has a complex hydrocarbon structure with traces of vanadium, nickel, nitrogen and sulfur.

24. At the relevant time the tariff required that for assessment under item 10, the oil should have, amongst other things, one quarter of one per cent or more by weight of bituminous substances. We have seen that the same is also required of goods to be assessed under item 9 as diesel oil not otherwise specified. The test was later changed to a test for carbon residue of not less than one quarter of one per cent by weight when tested by Rams-bottom carbon residue apparatus. We have seen also the Chemical Examiner of the Custom House saying that there was no direct method for qualitative estimation of the bituminous substance content. Indeed, to our knowledge there is no method by which the quantity of bituminous substances in a petroleum product can be directly determined and this was quite true even before the Chemical Examiner wrote his note dated 7.12.1976. But it appears that the laboratory had been reporting a quantity of bituminous content in petroleum products for a long time, doing so in accordance with the Board's instructions of November, 1976. Surety, it was known to the laboratory that a carbon residue is not a result only of bituminous substances in the oil tested but of various other substances, although bituminous substances would leave relatively more carbon residue than other petroleum derived substances. We have not been told the nature of the qualitative test which the Custom House devised. Qualitative tests generally employed are the nuclear magnetic resonance tests; quantitative methods are gravimetric and volumetric methods, as, for example, precipitation, titration and solvent extraction. In qualitative analysis the aim is chiefly identification of materials. In a product like Dutrex RT, qualitative tests like nuclear magnetic resonance and nuclear quadrupole resonance etc. can reveal the existence of bituminous substances. But Dutrex RT does not appear to be a mixture, and, therefore, it is doubtful if qualitative tests, apart from merely detecting the presence of trace elements, can determine the volume or percentage or the weight of the element sought to be identified. The Chemist himself says in his note of December, 1976 that they evolved a simple qualitative test for verifying the presence of bituminous substances; the tests did not appear to have aimed at determining the percentage of the bituminous substances. All the test reports made in accordance with this test certify only the absence of bituminous substances. In his note Dr. Rajamani of the Jawaharlal Nehru University points out that the absence of bituminous substances can be proved by physical techniques such as NMR, X-Ray diffraction and moleculer weight determination or by chemical analysis for vanadium, sulfur, nitrogen. This, in our opinion, is the key to the whole matter and fits in with the statement of the Chemical Examiner of the Madras Custom House that there was no quantitative tests for determining bituminous substances content in a mineral oil. We will record here briefly that in his note of December, 1976, the Chemical Examiner Madras threw doubts not only of the carbon residue test prescribed by the Board in 1956, but also the colour of the oil when compared with an 0.04 N Iodine solution. He apparently did nothing about this but concentrated only on deciding a qualitative test in place of the Ramsbottom carbon residue test.

25. It is of great significance that today the percentage of bituminous substance is no longer a factor in the assessment of diesel oils and furnace oils. In place of this specific, the test requires the determination of carbon residue. This appears to be a recognition by the Government that bituminous substance percentage determination is impracticable; this would tend to be confirmed by the Government instruction in 1956 that for diesel oil N.O S., the laboratory should test for carbon residue. There was no necessity for such an instruction if bituminous substances percentages could be determined. We ourselves are not aware of any method by which the percentage of bituminous substances can be quantitatively ascertained; and even if the presence of these substances can be detected, the extent of their association or presence cannot be accurately worked out, for the simple reason that it is not the bitumen that has to be isolated but bituminous substances, that is to say, any bitumen-bearing or bitumen-yielding substances; but as we have already noted earlier, bitumen is only a constituent of asphalts, being almost entirely composed of carbon and hydrogen.

26. It is well to remember that bitumens are found not only in refinery asphalts; they also occur in natural asphalts and in some low grade coal asphaltics. In his note of December, 1976, the Chemical Examiner of Madras says "Said instructions pf the Board were issued in connection with the testing of diesel oil, it is known to be a brand of distillate oil and residual oil (containing bituminous substance) and thus will no doubt contain bituminous substance", We are not aware of the authority for this. We have already noted that diesel oil is one of the intermediate distillates.

27. The learned Counsel for the department produced a number of authorities to support his arguments. But none of the authorities contain any guide that will help in establishing the percentage of bituminous substance in a petroleum distillate. Some of the authorities that he quoted discuss the difference between asphalt and coal tar, their colour in solvents like benzene or the presence of free carbon, the method of distillation and the manner of detecting the difference-one from the other. The most promising one of the authorities, namely, Allen's Commercial Organic Analysis has an article on the estimation of the asphalt content in the mineral oil, petroleum pitch and similar materials, but, does not give a clear picture of how the asphalt content can be separated for the purpose of determining its weight, volume, quantity etc. As a matter of fact, this authority appears to deal with the asphaltic mineral oils, that is to say, mineral oil with known asphaltic contents. It contains a sentence which says "A sharp separation of the asphalt from the oil could not obtained by this treatment, but on heating the butanone to boiling (81C), clear dark solutions were obtained". The authority reports the tests were made on cylinder oils using a butanone-water mixture. Here again we ought to note that the authority deals with separation of asphalts rather than isolation of bituminous substances. Although asphalt is bituminous, it is not entirely so. In any case, if this method could have yielded the desired results, there is no explanation why the Chemical Laboratories at Madras did not employ it in isolating the asphaltenes/bituminous substances from Dutrex RT when it tested the product.

28. The book Chemistry of Petroleum Derivatives by Carleton Ellis has paragraphs on separation and isolation of asphalts from petroleum distillates but whether the methods advocated will be suitable in separating asphalts/asphaltenes/bituminous substances from a product like Dutrex RT is not known, especially when, reading further down, we find a paragraph that deals with the removal of asphaltenes and similar dark coloured substances from natural/artificial asphalts. It even reports that according to two authorities, namely, Rakovskli and Balashov, 50% sulphuric acid is the best strength for precipitation of asphaltenes from tar. We are, therefore, not able to see the applicability of this authority to the case we have.

29. The book Chemistry and Technology of Petroleum by James G. Speight carries an article on carbon residue and tells us that petroleum products are mixtures of many compounds which differ widely in their physical and chemical properties. Some of them are vaporised in the absence of air at atmospheric pressure without leaving an appreciable residue while other non-volatile content leave a carbonaceous residue when destructively distilled under such conditions. The residue is known as carbon residue. This book tell us what we already know, because petroleum derivatives and products being compounds of carbon and hydrogen will leave residues of carbon, although the more volatile will leave very little such residues compared with the heavier fractions. This book says, however, that there are two well known methods for determining the carbon residue of a petroleum product, namely, the Conradson method and the Ramsbottom method, both of which have been codified into the American Society for Testing Materials.

There is nothing about isolation of bituminous matters or of calculating their weight relative to the other constituents.

30. The learned Counsel also quoted in his arguments from the book Physical & Chemical Examinations, Paints, Varnishes and Colours, by Gardner, which, he says, are widely accepted analytical approaches to establish the presence of asphalts; but the data appear to be for the purpose of determining it the substance isolated is indeed asphalt or not, For example, it tells us the colour in benzene of asphaltic materials is brown without fluorescence, and that a specific gravity of cracked distillate, at 25C of asphaltic materials is 0.74 to 0.87. Here too we cannot learn much that is pertinent to our problem.

31. We have already seen that the Government has abandoned the bituminous substances content tests in favour of the carbon residue test. The latter is not only more scientific and more widely accepted generally, but is more accurate because, unlike the bituminous substance test, which the Chemical Examiner said was quantitatively indeterminate, the carbon residue lest is more accurate and simpler.

32. We consider that the change in the method of testing, without notifying the affected person is wrong. The same laboratory had been testing the product by the carbon residue tests and should not have changed over suddenly without sufficient warning and without giving the importer a chance to contest the accuracy of the test especially when a drastic change which brought complete reversal of results was introduced. It was not a case of a new untested product which was being tested for the first time but an oft-tested substance being suddenly declared to be not what it had been declared for close on 20 years to be, by the same laboratory. We, therefore, think that, all things considered, the benefit should go to the importer and his claims should be accepted. This is not only in keeping by the past practice of the same Custom House but also conforms to the practices of other Custom Houses. Although the learned departmental counsel submitted to the Tribunal that he knew nothing about this practice, we think that the submission by M/s. Dunlop that similar goods had been assessed to CV duty under item 10 of Central Excise tariff in other Custom House is correct. At any rate, the department has not effectively refuted this claim. If it had reasons to dispute it, it should have done so; there was plenty of time as the hearing was spread over different days.

33. M/s. Dunlop submitted a list with its note of 25.4.1984. This list groups the cases into four groups, and also details the issues at the original stage and at the appeal stage. The claims shown for all the groups were that the product was classifiable under Customs heading 27(7)(2) and CV duty under item 10 CET having regard to past test reports. All the refund claims were said to have these common grounds.

In two groups, M/s. Dunlop claims it added an overriding claim of no CV duty as the goods were not manufactured in India and an alternative claim to assessment under item 68. In a third group, the importer said it presented only item 68 as an alternative to item 10. In the last group, the appellant did not put forward any alternative assessment.

34. The papers do not give a clear picture and the orders-in-original are too brief and inarticulate. In one order (bill of entry-D776/18.9.1978), the Assistant Collector does mention item 10 as claimed. But he also discussed how Section 3(1) Customs Tariff Act, 1975 requires CV duty to be levied even if the goods are not manufactured in India, though this is not a ground presented by the claimant; but he says nothing about assessment under 68 which is put out as an alternative. In another, the Assistant Collector rejected a claim on the ground that the goods were mineral oils. In a third order, the Asstt. Collector rejected a claim for assessment under item 10 as unsubstantiated because he said the claimants had not produced any documentary evidence in support of the claim. It would take too long to discuss every single order-in-original, but we will proceed on M/s.

Djalop's statement that refund, claims had been under item 10 (with or without alternatives).

35. We order that CV duty should be assessed under item 10 CET in Jail those cases where assessment was claimed under this item, and where the test reports showed carbon residue and other specifications as satisfying the conditions laid down in Board's letter F. No.81/23/56-CX. III dated 17.11.56. All refunds shall be paid within six months.

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