1. These appeals have their genesis in the notice bearing F. No.380/141/80-Cus. II dated 24th March, 1981 issued to the Respondents by the Central Government under Section 131(3) of the Customs Act, 1962.
The notice called upon the Respondents to show cause why the Orders-in-Appeal Nos.- passed by the Appellate Collector of Customs, Bombay, allowing the appeals filed by them should not be set aside and the relative Assistant Collector's orders restored. The proceedings were transferred to this Tribunal in terms of Section 131-B of the Customs Act, 1962 for disposal as if they were appeals filed before the Tribunal.
2. Since all the matters arise out of the aforesaid consolidated show cause notice, this order disposes of all the matters.
3. The facts of the case, as set out in the show cause notice, in brief, are that the Respondents imported consignments of coconut oil on which the Customs authorities charged additional (countervailing) duty of Customs corresponding to the excise duty leviable on vegetable non-essential oils under item No. 12 of the First Schedule to the Central Excises and Salt Act, 1944 (GET, for short). The Respondents cleared the consignments on payment of the duty so assessed. Later on, they filed applications for refund of the additional duty on the ground that the coconut oil imported by them was unprocessed oil and, therefore, was exempt from payment of additional duty by virtue of Central Excise Notification No. 33/63, dated 1-3-1963. The Assistant Collector rejected the refund claims filed by M/s. Kapadia Trading Co., M/s. Godhwani Bros. and M/s Sangam Oil Mills as hit by limitation under Section 27(1) of the Customs Act, 1962. The claims filed by the other Respondents were rejected by the Assistant Collector on the ground that they had failed to prove that the coconut oil imported by them was unprocessed. Against these orders, the Respondents preferred appeals to the Appellate Collector of Customs who held that no additional duty was payable and further that the question of limitation did not arise. All the appeals were allowed by the Appellate Collector. On examining the records of the cases, the Government of India formed the tentative view that the Orders-in-Appeal passed by the Appellate Collector were not correct, proper and legal for the reasons that the onus lay on the assessees to establish that the goods satisfied the conditions laid down in the exemption notification, that there was nothing on record to show that it had been established beyond doubt by any of the Respondents that the coconut oil imported by them was other than processed oil. In one of the matters, the Appellate Collector had relied on a certificate from the suppliers that the goods were not subjected to any of the processes mentioned in Notification No.33/63-C.E. The Government considered that a mere affirmation that the goods were other than processed VNE oil would not be sufficient to attract exemption. The Government further observed that since the applications for refund were filed after six months from the date of payment of duty in some of the cases, the Appellate Collector seemed to have erred in deciding the relative appeals on merits on the wrong presumption that in such cases the time-limit under Section 27(1) of the Customs Act would not apply but that the limitation under the Indian Limitation Act would apply. The notice went on to say that in a case wherein goods had been wrongly classified or the benefit of an exemption notification was denied due to its wrong interpretation or otherwise by the proper officer of Customs in exercise of his judgment, the time-limit under Section 27(1) of the Customs Act would apply.
Since Item No. 68 of the Central Excise Tariff Schedule was introduced with effect from 1-3-1975 covering all goods not elsewhere specified in the tariff Schedule, all goods had become excisable and, therefore, there would be no occasion for the levy being without jurisdiction.
4. (a) Opening the arguments for the Appellant-Collector, Shri Sunder Rajan, DR, submitted with reference to the appeal against M/s. Sangam Oil Mills, that the statement made in the show cause notice that the refund claim was time-barred was not correct inasmuch as the duty was paid on 28-11-1977 and the refund claim was filed on 25-4-1978, that is, within the permissible period of six months from the date of payment of duty. With respect to the matters pertaining to M/s. Kapadia Trading Corporation and M/s Godhwani Bros., he submitted that the claims were barred by time as they had been filed beyond the prescribed period of six months of the date of payment of duty.
(b) The dispute in so far as the merits were concerned, hinged on the interpretation of Central Excise Notification No. 33/63, dated 1-3-1963, more specifically Clause (a) thereof read with the explanation which defined "processed vegetable non-essential oil" for the purpose of the Notification. According to the Notification, processed oil was not exempted from duty. For the purpose of the Notification, "processed" oil was defined as one which had undergone, subsequent to its extraction, any one or more of three specified processes, namely, treatment with an alkali or acid, bleaching and deodorization. He drew our attention to the technical opinion No. 523/12-9-79 dated 22-9-1979 furnished by the Deputy Chief Chemist (page 36 of the Dept.'s Paper Book in the Godrej Soaps Ltd. case). In the said opinion, the Deputy Chief Chemist had said that it was not possible to demarcate between "Processed" coconut oil as envisaged in the Central Excise Notification and "unprocessed" coconut oil for the reasons given in the said note, namely, that freshly expressed coconut oil could be water-white and of levy low fatty acid content and that only a total absence of odour in the oil could indicate beyond doubt that the oil had been deodorised. The Departmental Representative went on to say that the onus to show that the imported oil was not "processed" oil for the purpose of the notification, was on the importer. The certificate from Manilal Holding, Penang (page 16 of the same Paper Book) dated 12-1-1978 did not say that the oil had not undergone any one or more of the processes specified in the notification. That apart, Manilal Holdings were not the manufacturers but only suppliers and their certificate did not have much value. Referring to the comparative table at page 15 of the same Paper Book showing the Indian Standard Specifications contained in IS : 542-1968 for raw grade coconut oil and refined grade coconut oil, and the report of analysis of the oil imported by Godrej Soaps Ltd., he stated that while the I.S.I. specified colour in a 1" cell on the Lovibond scale as not deeper than 2 in the case of refined oil and 11 in the case of raw oil, the results of test on the imported oil indicated figures of 3.7, 6.5 and 3.3. Evidently, some processing had taken place. The contract for purchase of the oil (page 43) showed that certain specifications regarding iodine value, free fatty acid contents, etc. were set out therein implying that the oil required was such as had undergone some degree of processing because no specifications were required to be set out for unprocessed oil. The certificates of test by the Regional Agmark Laboratory, Bombay (page 40), the Public Analyst of the Bombay Municipal Corporation (pages 41-42) were not really relevant because those authorities were testing the oil from the point of view of its suitability for edible purposes.
(c) When an exemption was subject to certain specified conditions, the onus lay heavily on the party claiming the benefit of exemption to show compliance with the conditions set out in the notification.
For this, the Departmental Representative relied upon the decision of the Madras High Court in the case of M/s. Varadalakshml Mills Limited & Another v. The Assistant Collector of Central Excise, Madural and Ors. 1981 ECR 265-D (Madras).
(d) The Appellate Collector had exceeded his jurisdiction in those cases where he ignored the fact that the refund claims had been filed beyond the time-limit prescribed in Section 27(1) of the Customs Act, 1962. He also exceeded his jurisdiction in going into the merits of the cases except in the Godrej case, since the Assistant Collector had rejected the claims either as hit by limitation or as unsubstantiated. The Appellate Collector should have either upheld those orders or, in those cases where the claims were rejected as unsubstantiated, remanded the matters back to the Assistant Collector for his fresh determination.
(e) In the alternative, the D.R. stated, Notification No. 33/63 was a conditional notification, capable of fulfilment only by oil produced indigenously and, therefore, not applicable to imported oil.
5. (a) Appearing on behalf of M/s. Sangam Oil Mills (Order-in-Appeal No. S/49-1572/79, dated 11-12-1979), Shri S.D. Nankani, Advocate, submitted that the question of limitation did not arise in his case.
The goods were described in the contract of supply as well as in the Bill of Entry (the description remaining unchallenged) as "unrefined" coconut oil. Therefore, it would follow that the oil was not subjected to the process of treatment with alkali or acid which was one of the conditions in Notification No. 33/63. The D.R. had not cited any authority to show that the specifications of the imported oil could not be had without processing. In the Paper Book filed by Sangam Oil Mills, there was a report dated 26-10-1977 furnished by an independent laboratory at the port of loading to the effect that the oil was unrefined. All these documents were in existence prior to the import and clearance of the goods through the Customs and were, therefore, not hit by Section 149 of the Customs Act.
(b) The trade had experienced a. similar problem in 1978 when the Customs authorities started charging countervailing duty on crude coconut oil on the plea that the same was refined coconut oil. This matter was taken up by the Oils and Seeds Importers Association of Bombay with the Collector of Customs, Bombay. The association by a circular dated 9th June, 1979, had informed its constituents that the Customs Collectorate had agreed to consider the refund of the countervailing duty collected on imported crude/unprocessed coconut oil and had advised the members on the documentation required for future imports. Apart from the import documents, the foreign shipper's or analyst's certificate and the Port Health Officer's Certificate were in the Respondents' favour (Pages 65-67 of the Sangam Paper Book).
(c) Referring to the Deputy Chief Chemist's opinion, Shri Nankani stated that the Deputy Chief Chemist had clearly said, in conclusion, that the goods might have to be considered as unprocessed. This opinion was clearly in the Respondents' favour.
(d) There was no allegation to the effect that the goods had been partially bleached, and therefore, the D.R's contention with reference to the colour specification was not relevant for the present proceedings.
(c) A similar review notice had been issued by the Government of India in the case of Bombay Oil Industries and Ors. and these proceedings were subsequently dropped on the ground that the Department was unable to disprove the importers' contention and the benefit of doubt was extended to the importer. The Government's decision was reported in 1982 ECR 659, Though that decision was not binding, it had persuasive value.
6. (a) Shri R. Ravindran, Legal Manager, appearing for M/s. Godrej Soaps Ltd., adopted Shri Nankani's arguments. In addition, he stated that the Deputy Chief Chemist's technical opinion clearly stated that crude coconut oil could be water-white implying that it did not always have to necessarily be bleached. In the trade, white and yellow oil were known as crude coconut oil.
(b) In the alternative, Shri Ravindran submitted, even if the imported oil was taken to be "processed oil", it was only partially processed. Applying the ratio of the Supreme Court decision in 1977 E.L.T. J 197, Notification No, 33/63 would be applicable and the oil would have to be treated as unprocessed.
(c) If the imported oil had been produced locally, it would not have attracted Central Excise duty applying the ratio of the Supreme Court's decision. The imported oil would, therefore, not have also attracted countervailing duty.
7. (a) Appearing on behalf of M/s. Godhwani Brothers, Shri L.U. Balani adopted the arguments of Shri Nankani.
(b) The relative Order-Hi-Appeal was S/49-533/80R, dated 9-5-1980.
The show cause notice did not propose review of this order and this had been stated by the Respondent in his reply to the notice. There had been no amendment to the show cause notice. In the result, this order could not form the subject of the review proceedings.
(a) The orders of the lower authorities in the Godhwani Brothers case were also the subject of review proceedings inasmuch as the show cause notice specifically asked the Respondents to show cause why the Assistant Collector's order should not be restored.
(b) The dispute in the present case was not whether the oil was refined or unrefined. It was whether the oil was "processed" or "unprocessed" for the purpose of the exemption notification. The Supreme Court's judgment in the D.C.M. case was not applicable to the facts of the present dispute.
(c) There was no communication from the Collector of Customs or from the Government of India laying down any guidelines for the benefit of the Association or its members that crude oil would be accepted as unprocessed oil. The Deputy Chief Chemist's opinion that the imported oil might have to be considered as unprocessed oil was not binding nor was the Government of India's orders giving the benefit of doubt to the importers.
9. We have carefully considered the submissions before us. Before considering the merits of the dispute, it is just as well to consider and dispose of those matters in which the claims for refund were rejected by the Assistant Collector of Customs as hit by limitation but which were allowed by the Appellate Collector of Customs in appeal.
These matters pertain to the following Orders-in-Appeal in respect of the Respondents noted against each : (ii) S/49-533/80R, dated 9-5-1980-M/s. Godhwani Bros. We shall deal with these cases separately.
10. In the matter of Kapadia Trading Co., it is an undisputed position that the claim for refund was filed before the Assistant Collector of Customs after the expiry of the period of six months from the date of payment of duty, i.e. beyond the time-limit stipulated in Section 27(1) of the Customs Act, 1962. The Appellate Collector, however, ignored the said limitation on the ground that the collection of additional duty of Customs was without the authority of law and, therefore, the limitation under the Customs Act would not apply but that the Indian Limitation Act would apply. In the present cases, indisputably, coconut oil as a vegetable non-essential oil was an excisable under Item No. 12 of the Central Excise Tariff Schedule. Of course, "unprocessed" coconut oil conforming to the requirements of Notification No. 33/63 was exempt from excise duty and imported "unprocessed'' coconut oil would have, therefore, attracted the exemption. Determination of the question, whether a given consignment of imported coconut oil was processed or unprocessed and was, therefore, dutiable exempted, was, exempted, was, again, indisputably, a question to be determined by the proper officer of Customs in his jurisdiction. The decision arrived at may or may not be right but there can be no doubt that the determination was within jurisdiction.
11. The question whether claims for refund of Customs duty preferred before Customs authorities are governed by the limitation laid down in Section 27(1) of the Customs Act has been settled by the Supreme Court and it is no longer open to question in these proceedings. In its recent decision dated 6-4-1984 in Civil Appeal No. 1633 of 1984 in the Case of Miles India Ltd. v. Assistant Collector of Customs, the Supreme Court upheld the decision of this Tribunal holding that claims for refund of Customs duty preferred before Customs authorities were governed by the limitation under Section 27(1) of the Customs Act.
Therefore, the Appellate Collector erred in ignoring the time-limit under Section 27(1) of the Customs Act and the relative Order-in-Appeal is liable to be set aside. We do so and allow the appeal before us in respect of the order pertaining to Kapadia Trading Co.
12. Shri Balani, Counsel for Godhwani Brothers, contended before us that the review show cause notice did not propose review of the Appellate Collectors, order in his client's case and that, therefore, there could be no question of setting aside the Order-in-Appeal In this connection, we observe that the operative paras of the notice indeed do not refer to the Order-in-Appeal No. S/49-533/80R, dated 9-5-1980 as one of the matters in which the Assistant Collector at the original stage had rejected the claim as time-barred though from the heading "subject" of the show cause notice, it appears that the said order was among the orders proposed to be reviewed. The notice was, among others, addressed to Godhwani Brothers to show cause why the Appellate order should not be annulled or modified and why the Assistant Collector's order should not be restored without, however, setting out in clear terms that order No. S/49-533/80R, dated 9-5-1980 was proposed to be reviewed. The Counsel had, on behalf of Godhwani Brothers, replied to the show cause notice on 25-5-1981 pointing out the omission of any reference to Order-in-Appeal No. S/49-533/80 in the body of the notice.
Even while submitting his contentions regarding the merits of the assessment and the non-applicability of limitation in the Customs Act, the Counsel had requested the reviewing authority to communicate the proper grounds for issue of the notice. The Counsel stated before us that at no time were the grounds communicated to M/s. Godhwani Brothers or their Counsel nor was any amendment to the review notice received by them. The reviewing authority does not appear to have amended the notice or communicated the grounds for review of the said Order-in-Appeal. The Departmental Representative could not throw any light on the Counsel's objection on this score. In the circumstances, we agree with Shri Balani that no proceedings to review the Order-in-Appeal in respect of Godhwani Brothers arc before us, 13. In so far as the merits of the dispute are concerned, the technical opinion furnished on 22-9-1979 by the Deputy Chief Chemist is revealing. He says that freshly expressed coconut oil can be water-white and of very low free fatty acid content. Only a total absence of odour in the oil could indicate beyond doubt that the oil had been deodorized. The opinion further states that white oil with a free acid content of less than I % is possible if it is expressed from good well dried copra dried to 6% moisture and expressed in clean equipment. While, the Indian Standards Institution has differentiated between refined coconut oil and unrefined coconut oil, it is not possible to demarcate between "processed" coconut oil and "unprocessed" coconut oil for the purpose of the Central Excise Notification. The Deputy Chief Chemist concludes by saying that in the absence of reliable evidence to show that the oil in question should have resulted only from "processing" of lower grade oils, the imported goods may be to be considered as unprocessed.
14. As is well known, coconut oil is consumed for edible purposes inter alia for its flavour. It is not, therefore, always that coconut oil is deodorized before consumption. The certificate of M/s. Manilal Holdings Penang is to the effect that the parcels of white coconut oil "have been obtained by mechanically pressed process only and does not contain solvent extracted or chemically processed oil". The purchase contract shows that the commodity is described as coconut oil white (raw unrefined edible). M/s. Manilal Holdings' acceptance of the contract also describes the commodity as white coconut oil unrefined. Shri Sunder Rajan, Departmental Representative, has argued that the specifications set out in the purchase contract and acceptance, when compared with the I.S. specifications for raw and refined grades of coconut oil would show that the imported oil had undergone processing.
We must observe, in this connection, that what we are required to see here is not whether the imported oil is refind or unrefined according to the Indian Standards specifications but whether the oil is "processed" or "unprocessed" for the purpose of Central Excise Notification No. 33/63. On this aspect, the opinion of the Deputy Chief Chemist, as we have noted earlier, is quite clear that it is not possible to make out, in the absence of positive evidence, whether the oil is "processed" or "unprocessed" for the purpose of the notification. We have already noted that he has said that good quality raw coconut oil could be very low in fatty acid content and could be water-white. Because of these circumstances, he has suggested that the imported oil might have to be considered as unprocessed. The certificate of Manilal Holdings, the supplier of the oil, is also prima facie evidence of the fact that the oil had not undergone any chemical processing subsequent to its extraction by mechanical process. It is true that the certificates given by the Port Health and Public Health Authority are not very relevant to the issue since they test the oil not from the point of view of the Central Excise Notification but from the health hazards point of view. If the customs authorities had any doubt about the prima facie evidence put up by the importers they should have been suitably challenged after giving due opportunity to the appellants. In the absence of any such challenge and in the absence of any evidence to show that the oil was "processed" within the meaning of Central Excise Notification, and in the context of the Deputy Chief Chemist's opinion, we consider it proper that the benefit should go to the respondents and that the exemption from additional (countervailing) duty of Customs should be extended to the concerned respondents.
(i) Order-in-Appeal No. S/49-443/79R, dated 11-12-79 relating to M/s. Kapadia Trading Co., is set aside, the appeal is allowed and the Assistant Collector's order restored.
(ii) Order-in-Appeal No. S/49-1608/80R, dated 8-8-1980, relating to M/s. Godrej Soaps Ltd., Order-in-Appeal No. S/49-1453/79R, dated 11-12-1979 relating to Gujarat Trading Co., and Order-in-Appeal No. S/49-1572/79R, dated 11-12-1979 relating to M/s. Sangam Oil Mills are upheld and the appeals rejected.
16. No orders are required to be passed in respect of Order-in-Appeal No. S/49-533/80R, dated 9-5-1980 relating to M/s. Godhwani Brothers for the reasons we have already set out.