2021 INSC 0552 1 Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION Civil Appeal Nos 5644-5645 of 2021 Commissioner of Customs , Pune ... Appellant Versus M/s Ballarpur Industries Ltd. ...Respondent J U D G M E N T Dr Dhananjaya Y Chandrachud, J 1. Admit. 2. These appeal s by the Commissioner of Customs, Pune arises from a judgment of the Customs, Excise & Service Tax Appellate Tribunal (“CESAT ” or the “ Tribunal ”) dated 27 September 2017. The question of law which has been formulated in the appeal s is whether the Tribunal erred in setting aside the demand of anti – d umping duty on the product ‘Styrene Butadiene Rubber ’ ( “SBR ”) classified 8 (i) No basis was indicated in the show cause notice to disturb the classification claimed by the respondent a s the result of which the declarat ion by the r espondent that the goods fell under CTH 40021100 “remained untouched”; and (ii) While issuing the notice to show cause, the adjudicating authority had not examined the classification based on the Laboratory report. 12. Ms Aishwarya Bhati, A dditional Solicitor General appear ing on behalf of the appellant submits that both the underlying findings of the Tribunal are flawed for the following reasons: (i) The notice to show cause dated 23 May 2006 contained a specific reference to the fact that the test report by the Indian Rubber Manufacturers ’ Research Association ( “IRMRA ”) dated 6 March 2006 had revealed that the goods were found to be SBR of 1900 series and since the goods originat ed in Korea R.P. they were subject to anti -d umping duty ; (ii) A similar averment was contained in the show cause notice dated 30 May 2006; (iii) The test report s of the IRMRA which were sought by the respondent also contained a similar finding that the goods which were imported were SBR of the 1900 series; (iv) The Commissioner had specifically considered and placed reliance on the tests report s of IRMRA; and 9 (v) The finding of the Tribunal that the notice to show cause did not refer to the classification purportedly made by the importer in the B ills of Entry is belied by the contem poraneous record. 13. On the above premises it has been submitted that the test report s which were commissioned both by the department as well as the importer from IRMRA indicated that the goods imported were SBR and there is no challenge to these reports. In the circumstance, it has been urged that the Tribunal had ignored material evidence on the record warranting the interference of this Court in appeal. 14. On the other hand, Mr S urender Kumar Gupta, learned Counsel appearing on behalf of the respondent urged that: (i) The explanation provided by the respondent in the reply to the notice to show ca use was to the following effect: “3.4 SBR of 1900 series is essentially a dry polymer The Test Report of the Deputy Chief Chemist itself describes the sample tested as: ''the samples is in the form of white liquid. It is an aqueous emulsion of styrene butadiene .......... " (Kindly refer to Annexure 8) The goods imported by us, which exists in a liquid form, are widely used in the paper industry and known in common trade parlance as Latex. Unlike the former, SBR of the 1900 series is a dry polymer, which is incapable of existing in a liquid form. Unlike Latex, SBR of 1900 series has wide app lication in the footwear industry and in the manufacture of "V" Belts. Thus the two products are completely different in their physical state or applicability though there are certain common chemicals in their chemical composition. ” 10 (ii) Moreover, according to the respondent , in its reply: “3.8 Latex and SBR of 1900 are two separate products - As mentioned above, the product imported by us is "Styrene Butadine Co- polymer". The goods imported by us, which exists in a liquid form, are widely used in the paper industry and known in common trade parlance as Latex. Kindly note that, SBR of the 1900 series is a dry polymer, which is incapable of existing in a liquid form. Unlike Latex, SBR of 1900 series has wide ·application in the footwear industry and i n the manufacture of "V" Belts.” In other words, while SBR of the 1900 series is a dry polymer, the goods imported by the respondent were in a liquid form and hence, according to the respondent, fall for classification under CTH 40021100 as L atex . In this context, reliance was sought to be placed on the Vanderbiit Rubber Handbook and an opinion obtained from the University of Mumbai. On the above premises, it was submitted that the goods which were imported fall under CTH 40021100. It was urged that the literature indicates that goods imported in a liquid form would fall for classification as Latex and the opinions of experts demonstrate that the S tyrene content is not decisive on whether or not the goods would fall for classification as La tex. 15. The Tribunal has set aside the decision of the Commissioner of Customs on an evidently superficial evaluation of the issues raised in the appeals. The Tribunal came to the conclusion that there is “no whisper of any reason in the Show Cause N otice to disturb the classification” claimed by the importer . This finding is contrary 11 to the record. Paragraph 3 of the Show Cause Notice dated 23 May 2006 is extracted below : “ 3. Whereas, as per the test report No: RPT/0502588rt 14478/205 d ated. 03.03.2006 and Ref. No: IRMRA/RK/03- 06/23- RD dated 06.03.2006 (copy enclosed) received from Indian Rubber Manufacturers Research Association (IRMRA), the sample goods found as STYRENE BUTADIENE RUBBER of 1900 series. As per Anti -dumping duty Notification No:. 100/2004 ·. dated 28.09.2004, the goods i.e. STYRENE BUTADIENE RUDDER of 1900 series falling under heading 3903 or 4002 of the First Schedule to the Customs Traffic Act 1975, originated in, or exported from, Korea R.P. are chargeable to Anti -dumping Duty @ US $ 0.0689 per Kg. In view of the fact that the goods covered under five Bills of Entry referred as above ·are found as STYRENE BUTADlENE RUBBER of 1900 series as confirmed by IRMRA Test Report dated 06.03.2006 and the goods are of Korea R.P. origin, the goods become cha rgeable to Anti -dumping duty @ US $ Q.0689 per kg as per Not ification No: 100/2004 dated · 28.09.2004.” Paragraph 4 of the Notice contains similar allegations that: “4. Whereas the goods imported in question were declared as 'LUTEX 701' in import document s and, not as 'Styrene Butadiene Rubber (SBR) of 1900 Series which has been confirmed by Test Report dated 06.03.2006 from IRMRA. The importer is regular imp orter of subject goods and are actual users of the goods and therefore they should be well aware of the description of the goods imported and the duty liability thereon. Therefore it appeared that the Importer mis declared the description of the goods as TUTEX 701 instead of as Styrene Butadiene Rubber (SBR) of 1900 Series with the intention to evade the Anti Dumping Dut y. At the time of filing of Dills of Entry, the Importer did not come up with full a.id complete description of the goods imported. If the Importer had declared the complete and proper description of the. goods at the time of filing of Bills of Entry, the Anti Dumping duty would have been levied at the time of provisional assessment. Therefore it appears to be a case of suppression of facts on the part of the Importer by not declaring proper description of the goods and mis declaring th e description of the goods as 'LUTEX -701' against proper description as 4 12 Styrene Butadiene Rubber (SBR) of 1900 Series. As importer is an actual user of the goods ii question and was aware of the Anti Dumping duty notification no: 100/2004 issued on 2 8.09.2004 at the time of filing of impor t documents, it appears that the importer willfull y did not declare the proper and complete description of the goods in import documents with the intention to evade the Anti dumping duty. ” A similar allegation was contained in the second show cause notice. The Commissioner of Customs specifically dealt with the contents of the test reports in paragraph 6.2 of the order dated 17 October 2006, which is extracted below : “6.2 As has been extracted at paras 4 and 5 supra, the said Importer has heavily argued that the Test Reports of IRMRA are Inconclusive and have sought for the cross examination of the official of the IRMRA. For the reasons recorded here under, I am not persuaded by these arguments of the said Importer. As per the facts, it may be seen that, initially, samples of Lutex 701 and Lutex 780 were drawn for tests to be done by the Dy. Chief Chemist, CCRL Nhava Sheva to ascertain (1) composition (2). percentage of Styrene, and (3) whether the goods are Styrene Butadiene Rubber of 1900 series. The Dy. Chief Chemist CRCL vide his report dated 30th June, 2005, for the product, Lutex 701, informed that "the samples In the form of white coloured liquid. It Is an aqueous emulsion based on synth1tic resin - Styrene Butadiene type solid contents = , 54.5°/o. For content of Syrene, sample may be forwarded to some rubber testing laboratory" Similarly, In his report dated 5th July, 2005, relating to the samples of Lutex 780 it was informed by the Dy. chief Chemist, CRCL, that "The· sample is in the form of white liquid. It. is an aqueous· emulsion of Styrene Butadiene, For content of Styrene, sample may be forwarded to rubber testing laboratory;” 16. The Commissioner also recorded in paragraph 6.4 that the importer had also approached IRMRA independent ly for testing the samples of Lutex 701 and 780 in their control. A similar finding was arrived at by IRMRA from the samples furnished by the importer . P aragraphs 6.4 of the decision of the Commissioner reads as follows : 13 “6.4 It may be pertinent to again mention here that the said Importer themselves had also approached the IRMRA for an independent testing of the samples of Lutex 701 and Lutex 780 which were in their control and the said IRM RA, vide their Evaluation Report dated 14.09.2006, for the same goods under the control of the said Importer and which are also covered under the First Notice and the Second Notice conveyed the results thereof to the said Importer wherein the Styrene content was observed to be 64.44% and 66.75% respectively for Lutex 701 and Lutex 780.” In this background, the Commissioner held: “6.5 Thus, It may be seen that when the said Importer got the Impugned goods tested on his own from the same laboratory where the department had sent the goods for ascertaining the Styrene content, in the imported Lutex 701 and Lutex 780, the styrene content was reported to be above, 60%.” None of the above findings have been displaced in the order of the Tribunal. T he Tribunal has not looked into the merits of the appeals at all on the fac etious ground that the show cause notice did not contain any basis to doubt the classification of the goods and that while issuing the notice, the adjudicating authority had not examined the classification based on the report of the laboratory. The findings of the Tribunal are contrary to the record and cannot therefore be sustained. 17. At the same time, since the Tribunal has not considered the case of the respondent in appeal on merits, we are of the considered view that it would be appropriate to restore the proceedings back to the Tribunal for the purpose. In order to facilitate a fresh decision on r emand, we have recorded the broad submission s of the contesting parties on the merits as well but leave open the matter for evaluation by the Tribunal on remand. We accordingly allow the appeal s and set aside the judgment of the Tribunal dated 27 September 2017. Appeal Nos. C/70 & 71/07 14 arising out of the orders in Original No.II/Cus/2006 and 12/Cus/2006 both dated 17 October 2006 of the Commissioner of Customs, Pune are restored to the file of the Tribunal for determination afresh. 18. The appeal s are disposed of in the above terms with no order as to costs. …………..……………………………. J [Dhananjaya Y Chandrachud] ..… ………………………………………J [Vikram Nath] …..……… ..…………………………….J [Hima Kohli] New Delhi; September 21 , 2021