M/S. POLYGAS ACRYLIC MFG. CO. LTD. versus COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM

Citation: [2003] 3 S.C.R. 188 · Decided: 31-03-2003 · Supreme Court of India · Bench: M.B. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
MIS. POL YGAS ACRYLIC MFG. CO. LTD. 
v. 
COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM 
MARCH 31, 2003 
B 
[M.B. SHAH Al\D ARUN KUMAR, JJ.] 
Customs Act, 1962: Section I 38-E. 
C 
Classiftcation-Misdeclaration of imported goods-Import of Methyl 
Methac1ylate Monomer (MMM) regenerated second grade-Show cause notice 
for misdeclarnlion of goods--Testing of sample of goods by both Revenue as 
well as assessee--Test reports confinning the goods as regenerated second 
grade MMM--Commissioner a/Customs dropped proceedings-Appeal allowed 
by CEGAT rejecting test reports as sample was not fit for testing-On appeal, 
D held: Tribunal has rejected cogent evidence oftest reports in respect of sample 
of goods on grounds which are not germane to the issue under consideralion-
Tribunal ignored tesl report ohtai11ed at the instance of Revenue but accepted 
a not so relevant reporl .from another institution on superfluous grounds-
Since test reports rlearl)' established that imported goods are regenerated 
E second grade MMM, there is no misdeclaralion of goods by the assessee. 
Appellant-assessee had imported raw material Methyl Methacrylate 
Monomer for its manufacturing activity. In the invoice as well as packing 
list the goods were classified as "MMM regenerated second grade". 
Revenue did not accept such declaration of quality of goods, therefore, 
F provisional clearance was allowed on payment of import duty on the 
declared price of the goods and on furnishing bank guarantee for the 
hi11her assessed value of goods. Samples were taken and sealed for testing 
quality of goods. Some samples were given to the assessee as well. Samples 
were sent by the department to the Central Revenue Control Laboratory/ 
G 
H 
llT. On the basis of test report from CRCL, a case of misdeclaration of 
2oods was set up by the department as according to them the goods were 
not regenerated second grade MMM but were of prime quality and a show 
cause notice was issued to the assessee. Assessee refuted the stand of the 
department on the basis of test reports of samples obtained from HT/other 
institutions confirming the goods as MMM regenerated second grade; 
188 
r 
MIS POL YGAS ACRYLIC MFG. CO. LTD. v. COM MR. OF CUSTOMS 
] 89 
sample test was also conducted at the instance of assessee by a Professor A 
of llT before the Commissioner who was satisfied with the test report and 
directed dropping of the show cause notice. CEGAT allowed the appeal 
of the dtpartment rejecting the test reports holding that sample was unfit 
for testing the quality of goods. Hence the present appeal. 
It was contended for the appellant that Tribunal did not accept test B 
reports from HT/other institutions in favour of appellant but accepted the 
test report of CRCL though CRCL had earlier denied about having 
facilities to conduct such test and moreover the report was not clear and 
even did not support the stand of the Department in unequivocal terms; 
and that it was incumbent upon the Department to establish misdeclaration C 
of goods by the appellant. 
On behalf of the Department, it was submitted that test sample was 
sent to test laboratories after a long lapse of time when sample became 
unfit for testing. 
Allowing the appeal, the Court 
HELD: 1.1. The fact that the test reports of the samples were sent 
by the laboratories/other institutions, shows that they were able to conduct 
the tests. These were Government institutions and pr""sumably there was 
D 
no reason for them to give a wrong report. The delay in sending the sample E 
for examination by the appellant was explained on the basis of the fact. 
Issuance of the show cause notice gave a clear indication that the 
department was not accepting the stand of the appellant. This occasioned 
the need for the appellant to get test reports with respect to the quality of 
goods. f 194-A, Bf 
1.2. The Tribunal has rejected cogent evidence produced by the 
appellant on grounds which are not germani: for the issue under 
consideration. The reasoning of the CEGAT is contradictory in as much 
F 
as it accepts the report of the CRCL while ignoring a report from the llT, 
New Delhi which was also obtained at the insta')ce of the department. The G 
reports in fal'our of the appellant by Gol'ernment departments have been 
rejected on superfluous grounds. f194-D, Ef 
1.3. The test was conducted in the presence of the Commissioner and 
other departmental representatives. It shows that the test was possible. 
The Tribunal h

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