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2014 (2) TMI 779 - AT - CustomsMisdeclaration of goods cut used rails or used rails of assorted sizes - whether the item is a melting scrap or re-rollable scrap for the purpose of Notification 21/2002-Cus - Revenue was of the view that goods were classifiable under Customs Tariff Item 7302 10 90 in which case the exemption under Notification No. 21/2002-Cus was not available to the goods - Rate of duty - Held that - There was no reason to deny the classification claimed by the assesse for the goods to be under Heading 72.04 or to consider the goods not to be Melting scrap of Iron and Steel as described in Notification 21/2002-Cus following the judgement of HINDUJA FOUNDRIES LTD. Versus COMMISSIONER OF CUS. (IMPORT), CHENNAI - 2013 (9) TMI 422 - CESTAT CHENNAI . The difference in the case of used rails is that the item was specifically mentioned under Heading 72.04 for the purpose of excluding it - The meaning of the expressions melting scrap or re-rollable scrap were not defined in the Customs Tariff or HSN notes though the HSN notes makes a mention that waste and scrap which can be rolled into other products without melting to recover metal was excluded from Heading 72.04. Whether the value loaded for assessment is sustainable because duty other than basic customs duty was payable even when exemption under notification 21/-2002-Cus (S. No. 200) is extended - Held that - The only reason for increase in value made is mis-declaration in description of goods. No evidence of additional remittance of money is brought out. Also there is an issue scrap is not a type of goods which can be easily compared. The appellants have also taken objection that the time of import of the comparable goods taken was also different and hence the value adopted for assessment has no legal basis. Revenue argues that the appellants accepted the increased value before clearance and hence they cannot challenge it now. No record showing acceptance of increase in value is brought on record - Following decision of CC Vs. D. M. International 2008 (6) TMI 525 - CESTAT, NEW DELHI - Decide in favor of assesse.
Issues Involved:
1. Whether the goods were restricted for import under the import policy. 2. Whether the goods were eligible for exemption under notification 21/2002-Cus (S. No. 200) exempting 'Melting Scrap of Iron and Steel' falling under chapter 72. 3. Whether there was under-valuation of goods. Issue-wise Detailed Analysis: 1. Restriction on Import of Goods: The classification of products like re-rollable and industrial scrap has been disputed between trade and CBEC. During the import period, goods classified under heading 72.04 were freely importable, while those under 73.02 were restricted. The restriction was due to the goods being old and used, with only capital goods being exempt. The DGFT, in a meeting on 16-02-2012, clarified that such goods are freely importable under heading 72.04. A subsequent DGFT notification on 28-02-2013 also allowed the import of used rails under ITC (HS) Code 7302, subject to certain conditions. Thus, the DGFT's stance during the relevant period was that the goods were classifiable under heading 72.04 and were freely importable. Therefore, the goods were not restricted for import during the relevant time. 2. Dispute Regarding Rate of Duty Applicable: The appellants claimed exemption under notification 21/2002-Cus (S. No. 200) for 'Melting Scrap of Iron and Steel' falling under chapter 72. The Revenue argued that the goods were suitable for re-rolling and thus not eligible for exemption. HSN notes under heading 72.04 exclude worn railway lines usable as pitorops or convertible into other articles by re-rolling. The Tribunal, in the Hinduja Foundries case, upheld classification under 72.04 for re-rollable scrap, citing past decisions and the nature of the goods as scrap rather than rails. The Tribunal found no reason to deviate from this precedent, noting that the goods were not suitable for use as rails and were more in the nature of scrap. Thus, the goods were eligible for exemption under notification 21/2002-Cus (S. No. 200). 3. Under-valuation of Goods: The appellants contested the enhanced value for assessment, arguing that no evidence of additional remittance was produced and that scrap is not easily comparable. The Revenue's argument that the appellants accepted the increased value was unsupported by records. The Tribunal found merit in the appellants' arguments, noting the lack of adequate material to reject the transaction value. The Tribunal followed the decision in CC Vs. D. M. International, deciding that the duty other than basic customs duty should be payable on the value as declared by the importer. Conclusion: The Tribunal set aside the impugned orders and allowed the appeals, ruling in favor of the appellants on all three issues: the goods were not restricted for import, were eligible for exemption under notification 21/2002-Cus (S. No. 200), and the transaction value should be accepted without any loading.
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