2013 (1) TMI 301 - AT - Customs

Custom duty on coking coal Assessee imported coal and filed two Bills of Entries namely 05/2010 dated 13-1-2010 declaring the goods as Jelinbah Semi Coking Coal and 20/2010 dated 15-7-2010 and declared the goods as Jelinbah PCI Coal - Claimed exemption from customs duty under Notification No. 21/2002-Cus., dated 1-3-2002 Serial.No.68 - coking coal was fully exempted from customs duty - Customs department restored provisional assessment with view that the goods imported were not coking coal Held that - The description that the supplier adopts for his goods in contract by itself cannot be conclusive in deciding applicability of a customs exemption especially when the scope of the description of the goods used in Customs Notification in India is not clear and gives room for an argument that the goods fits into the description. In the absence of a clear definition, we should go by natural meaning. The explanations in the notification prior to the period of import and later to the period of import provide certain technical characteristics and do not provide for monitoring that coal is to be used actually for conversion into coke before using it in metal extraction. During the period of import there was no explanation at all. We feel that adoption of a new technology enabling use of coal, which could be converted into coke in admixture with other coal, without conversion of such coal into coke cannot be a reason to deny the exemption The Chemical Examiner does not state the criteria based on which he opined that the goods were not coking coal . In the absence of such details the Chemical Examiner s report is only an opinion and not a report of chemical analysis. An opinion formed by chemical examiner has very limited value because such opinion is formed without hearing the party. In favour of assessee

Issues Involved:
1. Definition and classification of "coking coal."
2. Eligibility for customs duty exemption under Notification No. 21/2002-Cus.
3. Validity and interpretation of test reports from the Customs House Laboratory.
4. Relevance of subsequent amendments to the exemption notification.
5. Alleged misdeclaration and intent to evade duty by the importer.

Issue-wise Detailed Analysis:

1. Definition and Classification of "Coking Coal":
The primary issue was whether the imported coal could be classified as "coking coal" for customs duty exemption purposes. The Customs department argued that the imported coal was not coking coal based on laboratory test reports. However, the Commissioner (Appeals) found that there was no clear definition of "coking coal" during the relevant period, and thus, the imported coal could be considered as coking coal eligible for exemption.

2. Eligibility for Customs Duty Exemption:
The Respondents claimed exemption from customs duty under Notification No. 21/2002-Cus., dated 1-3-2002, which fully exempted "coking coal" from customs duty. The Commissioner (Appeals) extended the exemption, stating that the impugned goods could be considered as coking coal. The Revenue challenged this decision, arguing that the goods did not meet the criteria for coking coal.

3. Validity and Interpretation of Test Reports:
The Customs House Laboratory issued two test reports indicating that the goods were "other than coking coal." The Tribunal noted that the Chemical Examiner's reports did not specify the criteria used to classify the coal and were merely opinions without detailed scientific analysis. Consequently, the Tribunal did not give much weight to these reports, emphasizing that the absence of a clear definition of "coking coal" during the relevant period made these reports less conclusive.

4. Relevance of Subsequent Amendments:
The exemption notification was amended on 1-3-2011 to include a specific definition of "coking coal." The Tribunal held that these amendments could not be applied retrospectively to imports made before the amendments. The Tribunal relied on the decision of the Honorable Supreme Court in UOI v. Martin Lottery Agencies Ltd., which stated that new criteria could not be applied to past imports.

5. Alleged Misdeclaration and Intent to Evade Duty:
The Revenue argued that the importer misdeclared the goods as "semi-soft coking coal" to evade customs duty. The Tribunal found that the description used in the Bill of Entry and the contract with the supplier was not conclusive in determining the applicability of the customs exemption. The Tribunal rejected the Revenue's argument, stating that the merits of the issue needed to be examined based on the technical literature and the meaning of the expression "coking coal."

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue, upholding the decision of the Commissioner (Appeals) that the imported coal could be classified as "coking coal" eligible for exemption under Notification No. 21/2002-Cus., dated 1-3-2002. The Tribunal emphasized the lack of a clear definition of "coking coal" during the relevant period and the inadequacy of the Chemical Examiner's reports in providing a conclusive classification. The Tribunal also noted that subsequent amendments to the exemption notification could not be applied retrospectively to past imports.

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