ORDER
J.H. Joglekar, Member (T)
1. M/s. Dujodwala Resins and Terpenes Ltd. (hereafter called as DRTL) imported goods described as “alpha pinene 85% (cyclo terpene)” claiming classification thereof under subheading 2902.19. The value declared by them was US $ 350 PMT C&F. A show cause notice was issued alleging classification under heading 38.05, also alleging under valuation and proposing revaluation at US $ 395 PMT. After hearing the importers the Deputy Commissioner passed orders dated 13-3-2000 classifying the products under 3805.90 and enhancing the value. DRTL then filed an appeal. The Commissioner (Appeals) remanded the matter on the paucity of findings by the lower authority. Orders in de novo proceedings were passed on 13-3-2000 arriving at the same decision as was earlier arrived at by the first adjudicating authority. The importers again filed an appeal. The Commissioner of Customs (Appeals) allowed the appeal insofar as it related to the classification upholding the claim of sub-heading 2902.19 but maintained the orders as to revaluation. Against this order two appeals have been filed. In Appeal C/424/2000-Mum. the importers are contesting the enhanced value. In Appeal C/551/2000-Mum. the department is agitating the issue of classification. Both appeals were heard together and are being decided by this common order.
2. We are heard Smt. Reena Arya for the revenue. Shri Sujay Kantawala appeared for the importers.
3. Heading 29.02 covers cyclic hydrocarbons. Sub-heading 2902.15 covers cyclanes and cyclenes except for cyclohexane. In terms of the sub-notes contained in the HSN pinene is a cycloterpene containing the spirits of turpentine, pinewood oil etc. Therefore, prima facie, alpha pinene which is a sub-category of pinene would merit classification thereunder. However, below this sub-clause is the following clause :-
“This heading excludes essential oils, and gum, wood or sulphate turpentine and other terpenic oils produced by the distillation or other treatment of coniferous woods.”
The heading suggested for the goods specified under this exclusion is under 38.05.
4. Heading 3805 is identically worded both in the CTA and the HSN. The HSN sub-note described the goods covered thereunder as volatile products obtained by distillation of terpentine excluded from coniferous trees. The specific example given are pine oil, crude dipentene etc. There is however a significant exclusion made of derivatives from the coverage of the said sub-note. The exclusion clause says that the following are not covered thereunder :-
“Pure or commercially pure terpenic hydrocarbons or terpenes, terpineol and terpin hydrate.”
After the exclusion the classification thereof suggested is under Chapter 29.
5. Thus the contested goods would appear to fall under Chapter 29 but for the exclusion clause. However, they are not welcome in Chapter 38 either and would therefore go back to Chapter 29. There is however a very significant stipulation. Only such products which are excluded from chapter 29 would be covered under Chapter 38 where they are not pure or commercially pure. In other words impure or commercially impure products would continue to be classified under Chapter 38 but in spite of the first inclusion, pure or commercially pure products would re-enter Chapter 29.
6. The issue now centers around as to what is ‘pure’ or ‘commercially pure’. Substantial arguments have been advanced at all levels on the interpretation of these phrases.
7. The revenue is relying upon two opinions. The first is that given by the Joint Director of the New Custom House Laboratory in an undated letter. There is no test report but a sample is referred to as of alpha pinene and the purity thereof is shown to be 90%. As regards the classification the Joint Director has referred the Deputy Commissioner to an earlier T.O. No. 69, dated 9-8-1999. We have seen that T.O. On examination of the literature available the Joint Director has opined therein that alpha pinene of over 88% purity should be deemed to be of commercial grade. Reading together these two letters one would imagine that the imports made by DRTL are certified to be of commercially pure grade by the Joint Director. In the first adjudication order the Deputy Commissioner had adopted 88% as the required level to indicate purity. The same scheme is adopted in the second adjudication order also. This opinion has been held against the assessees when presumably the sample of their own products was shown to have purity of 90%.
8. Smt. Reena Arya submits that the undated letter of the Joint Director does not relate to the present imports at all. In that case we fail to see what relevance it has to the proceedings. We therefore have to presume that it relates to the sample of present imports.
9. Regardless of this we have also seen various opinions placed on record by the experts in the field. There is a certificate from the Regional Research Laboratory run by CSIR which certifies that alpha pinene containing 80% purity is of commercial grade and that containing 85% is of technical grade. The same opinion has been given by the National Chemical Laboratory in Pune. These are government institutions funded by the government and therefore their opinions are of sufficient weight. As against that Smt. Arya refers to and relies upon an extract placed in the department’s appeal showing “composition of turpentines of some pines”. This is the second leg of the Revenue’s contentions. It would seem to indicate that any turpentine derived from the tree pinus merkusii which normally grows in Indonesia and Vietnam can yield 97% of alpha pinene. Unfortunately nothing is indicated as to the source of this piece of information. It has never earlier been referred to. In the appeal memorandum the source is said to be Foreign Research Institute but this is an unsupported claim. It appears that the show cause notice also does not refer to any such extract. We therefore find little therein to support Revenue’s case.
10. Apart from the government bodies several commercial sources have also adopted purity of 80% to 85% for pinene to be called as of commercial grade. One of them is from Arizona Chemical and the other is a company called the Indian Turpentine & Rosin Co. Ltd. which is a U.P. Government Undertaking. This is a letter relating to supply of alpha pinene of certain purity and does not give any opinion as to commercial purity.
11. Earlier we have held that by default the purity of the goods imported by the importers would seem to be of 90%. Even if it was not so the suppliers had certified the purity of this consignment at 85%. Therefore in terms of the sub-note of HSN, the contested goods qualify for the phrase “commercially pure”. In view of the double exclusion made these goods would merit classification under heading 29.02. The revenue appeal therefore fails and is dismissed.
12. On the ground of valuation the assessees have placed reliance on similar goods imported at a later date at a lesser value i.e. US $ 342. It is submitted that due to the falling value of the Indonesian Rupiah the values are continuing to fall and presently prevail at US $ 315 PMT. Citing the computer printout issued by the Custom House it is claimed that prior to the importation alpha pinene was cleared at US $ 380 which was of a substantially higher grade i.e. 95% purity as evidenced by latest report of Deputy Chief Chemist. The third argument made is that the prices are negotiated with the suppliers and also the prices are the result of such negotiations. Smt. Arya on the other hand, citing the same source, submits that in the present case the imports are about 13.5 tonnes whereas US $ 380 is for an import of higher volumes i.e. about 108 MT. She submits that in the case of lower price i.e. US $ 340 the quantity is 136 MT.
13. We are handicapped in appreciating the facts in the area of valuation. It is claimed that prior to the market fall in the value of Indonesian currency the same goods were imported in May, 1999 @ US $ 530 PMT. Unfortunately the importers are unable to show us the quantity imported at that price. If it were a small quantity as is in the present consignment, then the point would immediately be accepted. Nor are the importers able to show us the bills of entry at the current assessable value of US $ 315 for equivalent quantity of imports.
14. There is considerable case law on the determination of valuation. Prima facie the invoice value is required to be accepted. Where the Customs doubt the invoice value the Customs have to show a specific valuation in negation of the transaction value. In the present case show cause notice makes a bare reference to the computer printout. It seems that during the adjudicating proceedings copies were made available and contested. Now the appellant importers are escalating the submissions by going back to a period of about five months and also ahead by an equivalent period.
15. In the judgment in the case of Basant Industries v Addl. C.C. -1996 (81) E.L.T. 195 the Supreme Court have cautioned the department against rushing into a higher assessment in the face of some invoice. The Hon’ble Court had cautioned that a price which is obtained under negotiation should not be lightly discarded. In the present case the Supreme Court had accepted the lower price in the face of contemporaneous imports made at the higher value also. We would have adopted the ratio of this judgment but for the fact that there is a paucity of evidence before us today. Shri Kantawala at this stage submits that we may adjourn these proceedings to give more time. We are unable to accede to the request of the importers. We have given the hearing out of turn and are unable to and unwilling to adjourn the proceedings.
16. We observe that the law laid down by the courts and the Tribunal as to valuation would apply to all the cases where the assessees are able to show that lesser price was paid for similar quanta as have been imported in the disputed proceedings. If there had earlier prevailed a higher price and there prevails a much less price at present, then it should suffice for the Assistant Commissioner to accept the claim of less valuation. It need not be emphasized that in assessing quanta he need not look for the exact weightage but that the volume of the imports should suffice.
17. With these observations we allow the appeal of the importers and remand the proceedings back to the Commissioner (Appeals). He will invite the importers for a fresh hearing. The importers will present before him the evidence in support of the claimed valuation. The Commissioner will then give his finding thereupon keeping in mind the caution given by the Supreme Court in the aforementioned case and also taking into account the ratio of the decisions on valuation by the courts and the Tribunal.