1. The captioned appeal was originally filed as a revision application before the Central Government which, under Section 131-B of the Customs Act, 1962, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.
2. The facts of the case, briefly stated, are that the appellants imported from Malaysia a consignment of coconut oil. The goods were described as "white coconut oil, unrefined" in the bill of entry filed for their clearance. They were allowed to be cleared for home consumption, without payment of additional duty of customs, on execution of a bond bending chemical test. On 23-9-1978, the Assistant Collector of Customs, Madras wrote to the appellants informing them that the goods were found on test to be refined coconut oil and hence liable to additional duty of customs of Rs. 15,000/-. The appellants contested the demand which, however, was confirmed by the Assistant Collector by his order dated 28-4-1979. The appeal against this order was dismissed by the Appellate Collector by his order of 1-7-1981. It is against this order that the appellants are now before us.
3. Before we set out the rival contentions, we may take note of one or two things. There is no dispute about the position that coconut oil falls under Item 12, of the First Schedule to the Central Excises and Salt Act, 1944 (CET, for short) reading : "Vegetable Non-Essential Oils, all sorts", (V.N.E. Oils, for short). In actual practice, however, not all such oils are charged to duty. Notification No. 33/63, dated 1-3-1963 exempts all sorts of V.N.E. oils other than processed V.N.E. oils. It also exampts processed V.N.E. oils if used in the manufacture of specified goods subject to certain conditions. The notification defines "processed V.N.E. oils" for this purpose in the following terms : "Explanation.-For the purpose of this notification "processed vegetable non-essential oil" means a vegetable non-essential oil which has undergone, subsequent to its extraction, any one or more of the following processes, namely :- 4. It is the appellants' contention that the improted oil is not "processed oil" for the purpose of the notification. The department holds to the contrary.
5. Shri K.R. Mehta, Consultant for the appellants, submitted with reference to the order placed on the suppliers, the supplier's invoice, the bill of lading, the Port Health Officer's certificate on test of a sample of the imported oil, and the suppliers' certificate that the imported oil was not refined. As against all these the only evidence produced by the department is the chemical Examiner's report which gave the acid value as less than 0.5 (which is often fund in raw unrefined coconut oil too) and, for the rest, was an expression of opinion that the oil could be considered as processed. Shri Mehta cited the Gujarat High Court decision in Steadfast Paper Mills v. Collector of Central Excise, Baroda and Ors. [1983 E.L.T. 744 (Guj.)] to the effect that it was not in the Chemical Examiner's province to give opinion on tariff classification. On the merits of the classification, he relied on the Tribunal's decision in Collector of Customs, Bombay v. Godrej Soap Ltd., Bombay and Ors. [1985 (21) E.L.T. 805] involving a similar issue and also Government of India's order in revision In re : Bombay Oil Industries Pvt. Ltd. and Ors. (1982 E.L.T. 707). He also submitted that Indian Standards Specifications on raw and refined coconut oil were not relevant for the present purpose since they were only quality control standards and not decisive of tariff classifications. In this connection, he relied on the Supreme Court decision in Indian Aluminium Cables Ltd. v. Union of India and Ors.
6. Replying to these arguments, Shri A.S. Sundar Rajan, Departmental Representative, submitted that the ratio of the decisions, cited on the merits of the dispute was not applicable to the facts of the present case. In the present case, the Port Health Officer's and supplier's certificates were in the importers favour but not so in the Godrej case (supra). The certificates, however, did not say that the oil was raw or unrefined. The importer was claiming the benefit of an exemption notification. The onus was on him to prove that the goods qualified for the exemption.
7. Shri K.R. Mehta replied to say that the Departmental Representative's similar arguments were not accepted by the Tribunal in the Godrej case.
8. We have carefully considered the submissions of both sides. It is seen from the documents on record that the appellants placed an order on the supplier for white coconut oil, unrefined, with the following specifications- "F.F.A. (free fatty acids)-1% maximum. M and I (Moisture and Impurities) 0.5% maximum. Iodine value 10 max. Colour in Lovibond Scale 5 1/4" cell R. Max." A certificate of weight and quality issued by Caleb Brett (Malaysia) describes the goods as White Coconut Oil. The certificate of analysis dated 21-9-1977 by Edtech Associates, SDN Berhad, Malaysia, gives the F.F.A. (expressed as Laurie Acid) as 0.08%, M and I as 0.12%, Iodine value as 8.8 and colour (Red units only in 5 1/4" Cell Lovibond Scale) as 1.0. The suppliers' invoice describes the goods as white coconut oil unrefined,-as also the bill of lading. It appears that, after import, the goods were sampled by the Madras Port Health Officer, for analysis.
His report reads : "This is to certify that the sample of White Coconut Oil unrefined collected for analysis, has been found to be fit for human consumption and conform to standard suggested by the Central Committee for Food Standards." The report of the Chemical Examiner, Custom House, Madras, on test of a sample reads: "The sample tested from the consignment and reported vide this office test report Lab. No. 3099/13-10-1977 was found to have an acid value of 0.33 which is within the maximum limit of acid value (i.e. 0.5) prescribed for Refined Grade Coconut Oil given in IS-542/1968. Hence, the goods under reference may be considered as Vegetable Non-Essential Oil Coconut Oil (Processed)." "Since it is not possible to find out by Chemical tests whether the sample has undergone bleaching the significance of description of the material as white coconut oil may be ascertained before deciding whether the material is to be treated as processed or otherwise," There is also a certificate dated 9-11-1978 from the suppliers to the effect that the goods were ordinary white coconut oil unprocessed (i.e.
unrefined). There is a certificate dated 22-9-1977 of M/s. Patel Holdings, Malaysia, the manufacturer of the goods, reading thus : "Certified that the above 788 Drums Coconut Oil were manufactured mechanically under Expeller Extraction Process." 9. Thus, a number of documents originating from the suppliers and the overseas analysts describe the goods as white coconut oil, unrefined.
The manufacturer says the goods were manufactured mechanically by the expeller extraction process, though it does not say whether the goods were, subsequent to extraction, processed or not.
10. As against these pieces of evidence, the only evidence from the department's side is the Chemical Examiner's report from which the following emerge :- (i) It is not possible to find out by Chemical tests whether the oil has undergone bleaching (The Chemist suggests that the significance of the description of the oil as white oil may be ascertained before considering it as processed or otherwise).
(ii) The acid value was found to be 0.33 (The Chemist opines that since this is within the maximum limit of 0.5 prescribed for refined grade Coconut Oil in I.S. 542 : 1968, the oil may be considered as processed).
This can, at best be idescribed as expression of an opinion. As held by the Gujarat High Court in the Steadfast Paper Mills case (supra) the Chemical Examiner's province is to furnish the result of his test. It is not his province to give opinion on tariff classification (He may, of course, give opinion of a technical nature which may enable the proper authority to arrive at the classification of the goods).
11. In our decision in the Godrej Soap case (supra) we noted in paras 12 and 13 as follows :- "12. 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 has been deodorized. The opinion further states that white oil with a free acid content of less than 1% 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 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 considered as unprocessed.
13. 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 described the commodity as white coconut oil unrefined. Shri Sundar 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 refined 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 alreaby 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 some 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." 12. The situation in the present case is almost identical but for the difference that in the Godrej case, the Chemical Examiner said the oil might have to be considered as unprocessed and in the present case, it might be considered as processed without, however, laying a sound foundation for the latter opinion. The reference to the I.S.I.Specifications, as we have noted, which are quality standard specifications, are not relevant for tariff classification purposes.
That this is so has been affirmed by the Supreme Court in its recent judgment in the Indian Aluminium Cable Co. case (supra).
13. We also note that the Central Government, acting in a quasi-judicial capacity in their order No. 587-B of 1981 reported in 1982 E.L.T. 77 observed as follows :- "After examining the case records and the documents and certificates relied upon by the Department and the importers, the Government are of the considered view that in the instant cases it can neither be proved nor disproved as to whether the cocount oil in question was processed. The Customs House has no evidence or material to refute the affirmation from the suppliers that the goods were not processed. As the Department are not in a position to verify the claim of the petitioners on the basis of an objective and acceptable criterion, and moreover, when the affirmation from the suppliers to the effect that the goods in question were unprocessed V.N.E. oil was produced by one of the Importers, a claim that the Department are not in a position to either prove or disprove, the Government are inclined to allow the importers benefit of doubt in all those cases where their claims were not hit by limitation." 14. In the light of the above discussion, we hold that the imported coconut oil was eligible for the duty exemption in Notification No.33/63. The impugned order is set aside and the appeal allowed.