Full Judgment
2. Out of the five appellants in those group of appeals, only three have come with a prayer for reference to the High Court.
3. The applicants imported an item describing the same as "Soap Raw Material" claiming clearance under OGL as raw material for actual user (Industrial), to which the department objected on the ground that the same was "Palm Fatty Acid" which fell within Serial No. 368 of Appx. 3 of Policy AM 1981, and as such not permissible under OGL. The material was also got tested, by the Chief Chemist, who opined the item as containing Palm Fatty Acid, between 63.5% to 67.4%. The adjudicating authority, after issue of show cause notice, adjudicated holding the item as not importable under OGL, and hence ordered confiscation under Sec. 111(d) of the Customs Act, with option to pay fine in lieu of confiscation. In the appeal before the Tribunal, filed by the applicants, the said order was confirmed with modification in the quantum of fine. While confirming the finding, the Tribunal has inter alia held: "In the circumstances, when the predominance in the contents of the split produce is found to be having Palm Fatty Acid to the extent of 63.5% to 67%, the Collector's order holding it as Palm Fatty Acid cannot be considered unjust."
4. Based on the said observation of the Tribunal, the applicants seek reference, pleading that the following questions of law arise: (i) Whether the test of "predominant content" applied by this Hon'ble Tribunal is correct and proper in law to determine whether the "soap raw material" imported by the applicants is "Palm Fatty Acid" as per the description given against Serial No. 368 of Appendix 3 of AM 81 Policy Book, particularly when AM 81 Policy Book does not prescribe any such test for classification of the imported goods? (ii) Whether in the absence of any technical meaning or specifications of "Soap Raw Material" imported by the applicants, the literature published by PORAM, which is a publication from Malaysia, is to be followed, particularly since the Respondent Collector has admitted that the PORAM technical literature is a commercial specification laid down by the Industry in Malaysia and serves as a basis for conclusing commercial contracts and more so since "Soap Raw Material" imported by the applicants is of Malaysian origin? (iii) Whether or not this Hon'ble Tribunal was correct and justified in not classifying "Soap Raw Material" imported by the applicants on the basis of its free fatty acid contents which is a commercial consideration specified in the PORAM Technical Literature, wherein Palm Fatty Acid is said to contain minimum 80% free fatty acid? (iv) Whether or. not this Hon'ble Tribunal was correct and justified in upholding the classification of "Soap Raw Material" imported by the applicants for ITC purposes as "Palm Fatty Acid" covered by Serial No. 368 of Appendix 3 of AM 81 Policy Book, in spite of the fact that the same has not been classified as "Palm Fatty Acid" under the heading 15.08/13 but as a residue of Palm Oil under the heading 15.14/17 of the erstwhile First Schedule to the Customs Tariff Act, 1975 for the purpose of levy of import duty which shows that Palm Fatty Acid and residue arc two different commodities resulting from the treatment/processing of fatty substances?
5. Shri S.D. Nankani, the Ld. Advocate for the applicants, submitted that the aforesaid points of law arise out of the order of the Tribunal, as the Tribunal has based its conclusion on the predominant contents in the items imported, though the same could not be the proper criteria for classifying such product, which is something other than Palm Fatty Acid. In his submission, no such criteria or test is provided for in the Policy, and that therefore, the question of law, as to what test ought to be applied, arises. During the course of his submission, he also referred to the decision of this Tribunal in M.B.Impex v. Collector of Customs, 1990
(49) E.L.T. 213 (Tri.), and of the Bombay High Court in SVA Udyog Viniyog v. Union of India, 1991
(51) E.L.T. 212 (Bom.). He also pleaded that the Tribunal has also erred in law in overlooking the technical specification of the soap raw material, which is something different from palm fatty acid. He submitted that, therefore, the points indicated by the applicants be referred to the High Court.
6. Shri K.M. Mondal, the Ld. SDR, however, opposed the prayer and submitted that for reference to the High Court vide Sec. 130(1) of the Customs Act, three criteria have to be satisfied (a) question of law must exist; (b) the same should arise out of the order; and (c) the same should be such, where verdict of the High Court was called for. In his submission, if the point of law which has stood settled, the same need not be referred to the High Court. According to Shri K.M. Mondal, the Ld. SDR, the alleged issues relate to the factual aspects, and as such is called for no reference to the High Court.
7. Considering the submissions made, and the points of law as propounded by the applicants, the basis for all the issues, is the approach of the Tribunal, and reliance on the aspect of "predominant contents" in the item imported. Before considering this, it may be observed that the Tribunal has also examined the issue as to whether the item imported could be classified as anything other than "Palm Fatty Acid" and has agreed with the analysis of the item as given by the Collector in his order in original. The discussion on the issue could be found in para 5 of the order. This being the question of appreciation of factual aspect, cannot be taken as an issue of law and does not fall within the purview of Sec. 130(1) of the Customs Act.
8. It is in the light of the said finding of fact that though the item imported is shown as "Soap Raw Material" the predominant contents none other than Palm Fatty Acid, ranging between 65% to 67% and has applied the standard of predominant content.
9. Palm Fatty Acid is also one of the basic raw material for soap, but its import under OGL is not permissible, as the same is specifically mentioned at Serial No. 368 in Appx. 3 of the Import Policy AM 1981.
10. The classification on the basis of predominant contents is generally accepted as proper test. The other elements found are supplements to the said item and mixture thereof does not alter the main characteristic of the item, which remains to be the raw material for soap manufacture.
11. When the Tribunal has not applied the test arbitrarily but in the context of the other evidence on record indicating that the item imported is basically the Palm Fatty Acid, there appears no question of law arising out of the order calling for reference to the High Court.
12. Rest of the points raised arc all factual aspects, and in the nature of challenging the order on its merits. Provisions of Sec.
130(1) of the Act are not in the nature of permitting filing of an appeal against the order and hence none of them can be said to have been giving rise to the issue of law, calling for any reference.
13. In the result, we find no merits in the prayer and hence reject the same.