2015 (1) TMI 208 - AT - Customs

Classification of coal - Classification as bituminous coal classifiable under CTH 2701 12 00 or as stem coal falling under the category of other coal (CTH 2701 19 20) - benefit of Sl. No.123 of Notification No.12/2012 Customs - Held that - The expression steam coal has not been defined in Notification No.12/2012 Customs. Hence, understanding in trade parlance should be followed and the benefit of exemption should be extended. - According to technical literature, ARB samples include total moisture (TM). An important preliminary process to prepare the ARB sample of coal for the actual analysis is the removal of surplus moisture from it. It has been specified that sample weighed for analysis shall be air-dried. (Reference Methods of Analysis of Coal in India by C. Forrester). Since all the analytical determinations are made on air dried samples. For this all the coal as received at the laboratory is calculated from the analysis of the air dried coal. (Reference Bulletin 638 Methods of analysing and testing coal Bureau of Mines, US department of the Interior). According to James C Speight (Handbook of Coal Analysis), the final report of the analysis should always contain the results on a basis of air-dried coal (i.e. coal in its most stable condition and in which it was analyzed), but for the purposes of classification or comparison, it is often necessary to convert to another basis, such as dry coal, dry, ash free coal, or as-received coal. Whether the calculation of calorific value on air dried basis as done by the department is correct or not - Held that - Inherent moisture (bed moisture, equilibrium moisture, capacity moisture) is assumed to be the water held within the pore system and capillaries of coal and is not to be identified with residual moisture. Surface moisture (free moisture) is, as the term implies, water held on the surface of the coal. Total moisture is the moisture determined as the loss in weight in an air atmosphere under rigidly controlled conditions of temperature, time, and airflow (ASTM D-3302) and is the sum of inherent moisture and free moisture and is also the sum of the air-dry loss and residual moisture. Air-dry loss moisture is the loss in weight resulting from the partial drying of coal, and. residual moisture is that remaining in the sample after determining the air-dry loss moisture . As-received moisture also is equal to the total moisture, or is the sum of the inherent and free moisture present in the coal at the time of the analysis. Decomposition moisture is produced from the thermal decomposition of organic constituents of coal. Water of hydration of mineral matter is the water that is incorporated into the crystal lattices of the clay and inorganic minerals in coal. No evidence by way of illustration or example was produced before us to show that the formula used by the Revenue for arriving at GCV on a moist mineral free basis is wrong. We have already seen that the submissions as regards the method of calculation are also incorrect and reliance on ASTM D388 is also not correct since it is mainly used for classification and ranking of coal and D388 itself provided that various parameters have to be determined according to the tests and sampling prescribed for the purpose and wherever calculations have to be made, formulae are provided in D 388.. It is the use of one of these formulae that has been done by the Revenue. There is no basis for the submission that the steam coal imported by the appellant ought to have been tested ARB. In most of the cases load port reports have been relied upon and in this case also it is not the submission of the appellants that load port reports submitted by them are wrong. In any case, the appellants cannot disown the load port report on the basis of which even the value of the imported consignment gets determined. After all, the duty element is much less than the value that an importer pays for the goods. That being the position, load port report which is acceptable to both the parties for the purpose of determination of the value and for the purpose of identification of the goods cannot be said to be ignored for the purpose of assessment. In the present case, the load port certificates submitted by the appellants have been accepted and even where tests have been conducted there are no disputes about the results of the test. Therefore we do not find anything wrong. Wherever the goods are of Indonesian origin, duty exemption in terms of Notification No.46/2011-Cus. would be available and may be extended - In the order passed in the case of Coastal Energy Private Ltd. & others (supra), the penalty was set aside and we had indicated to the learned counsel that the order portion relating to confiscation of the goods and imposition of penalty would not be sustained. In spite of this observation, this submission has been made and the learned counsel also had the advantage of the order in the case of Coastal Energy Pvt. Ltd. (supra) and our observation that we will be following that order. Notification No.12/2012-CE (Sl.No.67) extends the benefit of 1% concessional excise duty subject to the condition of not taking credit of inputs and appellants are eligible for this benefit Eligibility of the appellant for the benefit of exemption in the case of imports from Indonesia. If they were to show at least some evidences to substantiate their claim or at least if they were to make an assertion that they have fulfilled all the conditions and they have a certificate with them which is in the format and which fulfills the requirements of statute, we could have and should have considered the eligibility for exemption in respect of imports from Indonesia while determining the amount of pre-deposit. Even then, just because the appellants have stated that their imports from Indonesia are eligible for the benefit of exemption, since we are considering the stay application and not passing a final order, we consider that appellants should not be required to deposit more than the amount liable to be paid by them in respect of imports from Indonesia applying the exemption available for imports from Indonesia with applicable interest. We keep in mind the fact that the coal is used for power generation and is not a consumer durable. We direct the appellants to deposit the entire amount of differential duty payable as worked out in respect of their imports from South Africa and countries other than Indonesia and in respect of imports from Indonesia, the appellants should deposit the entire amount of duty payable as per the rate applicable for imports from Indonesia subject to the condition that the appellants produce the relevant documents to the original adjudicating authority who get the same verified and prima facie if the documents are in accordance with the requirements of statute, the deposit that will be made as per the rates applicable for imports from Indonesia would be sufficient. If there is a dispute on this issue, the same would be taken up at the time of considering the compliance report. We clarify that interest is also required to be deposited - Decided against assesse.

Summary

Issues Involved:
1. Classification of imported coal.
2. Eligibility for exemption under Notification No.12/2012-Customs.
3. Determination of the gross calorific value (GCV).
4. Reliance on load port reports and chemical tests.
5. Applicability of alternative Notification for imports from Indonesia.
6. Imposition of penalties and confiscation of goods.
7. Applicability of concessional excise duty under Notification No.12/2012-CE.
8. Legislative intent and interpretation of statutory provisions.

Detailed Analysis:

1. Classification of Imported Coal:
The appellants imported coal from South Africa and Indonesia, declaring it as steam coal under tariff heading 2701 19 20, claiming exemption under Notification No.12/2012-Customs. The Directorate of Revenue Intelligence (DRI) contended that the imported coal was bituminous coal (CTH 2701 12 00) and not steam coal, leading to a reclassification and denial of exemption benefits.

2. Eligibility for Exemption under Notification No.12/2012-Customs:
The Tribunal emphasized that the classification of coal under the Indian Customs Tariff (ICT) must be determined first before considering eligibility for exemption. Since the imported coal met the technical definition of bituminous coal, it was not eligible for the exemption under the said notification, which was specific to steam coal.

3. Determination of Gross Calorific Value (GCV):
The appellants argued that GCV should be determined on an As Received Basis (ARB) rather than an Air Dry Basis (ADB). The Tribunal, referencing technical literature and methodologies, upheld the department's use of ADB for determining GCV, stating that it aligns with standard practices and the Parr formula.

4. Reliance on Load Port Reports and Chemical Tests:
The Tribunal found no fault in the department's reliance on load port reports submitted by the appellants, which included necessary parameters for classification. It was deemed unnecessary for the Customs to conduct separate tests, as the load port reports were comprehensive and reliable.

5. Applicability of Alternative Notification for Imports from Indonesia:
The appellants claimed eligibility under Notification No.46/2011-Cus. However, they failed to provide the necessary country of origin certificates and other required documentation. The Tribunal could not consider the claim due to the lack of evidence and proper assertion.

6. Imposition of Penalties and Confiscation of Goods:
The Tribunal reiterated its earlier decision in the case of Coastal Energy Pvt. Ltd., setting aside penalties and confiscation on the grounds of misclassification. It was held that there was no suppression or misstatement of facts by the appellants.

7. Applicability of Concessional Excise Duty under Notification No.12/2012-CE:
The appellants argued for the benefit of 1% concessional excise duty under Notification No.12/2012-CE, as they had not taken CENVAT credit. The Tribunal, referencing the decision in Priyesh Chemicals and other relevant case laws, concluded that the exemption was not applicable to imported goods as they could not fulfill the condition of non-availment of CENVAT credit on inputs and input services.

8. Legislative Intent and Interpretation of Statutory Provisions:
The Tribunal discussed the legislative intent behind the exemption notifications and the principles of statutory interpretation. It was concluded that the clear statutory definitions and conditions must be applied as written, without considering trade parlance or external interpretations unless there is ambiguity.

Conclusion:
The Tribunal upheld the department's classification of the imported coal as bituminous coal, denying the exemption under Notification No.12/2012-Customs. The reliance on load port reports and the determination of GCV on ADB were deemed appropriate. The appellants' claims for alternative notification benefits and concessional excise duty were rejected due to non-fulfillment of conditions. Penalties and confiscation were set aside, consistent with the Tribunal's earlier decisions.