2016 (12) TMI 1034 - AT - Customs

Classification of imported goods - Broken Copper Cathode - classified as Waste and Scrap of CTH 74040019 for which pre-shipment inspection certificate is required or are classified as Refined Copper under CTH 74.03 - goods confiscated and penalty imposed. Held that - not only copper cathodes but Sections of Cathodes are also covered under 7403 11 00 as a category of Refined Copper . Further CTH 7403 19 00 also gives scope for other categories of copper which could be Refined Copper . As per Rule-1 of the General Rules of Interpretation to the first schedule to the Customs Tariff Act, 1975 classification of imported goods shall be determined according to the terms of the headings and any relevant section or chapter notes. Under the section and chapter notes there is a definition of Refined Copper and a definition for Waste & Scrap . Nowhere in the Customs Tariff or HSN explanatory notes it is specified that notes for waste and scrap will get precedence over chapter note on Refined Copper . It is not refuted by the department that broken copper cathodes are not a category of refined copper. Even if imported goods are not considered as Sections of Cathodes then also the imported goods could be classified as -Other under CTH 7403 19 00 so long as the imported goods satisfy the criteria of Refined Copper . The goods imported by the appellant will be classifiable, as a category of Refined Copper under CTH 7403 and not as Waste & Scrap of CTH 7404 - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues involved:
Classification of imported goods as 'Waste and Scrap' or 'Refined Copper'; Requirement of pre-shipment inspection certificate.

Analysis:
1. Classification of Goods:
The appeal revolved around classifying imported broken copper cathodes as 'Waste and Scrap' or 'Refined Copper.' The Adjudicating Authority classified the goods under CTH 74040019, considering them unusable as copper cathodes. However, the appellant argued that the imported goods were prime and met the criteria for 'Refined Copper' under CTH 74.03, citing the purity level of 99.60% and the value in line with London Metal Exchange prices. The Chartered Engineer's opinion supported that the goods were broken parts of copper cathodes, not waste or scrap, suitable for melting purposes. The Tribunal agreed that the imported goods satisfied the definition of 'Refined Copper' and should be classified as such under CTH 7403.

2. Legal Interpretation:
The Tribunal analyzed the Customs Tariff Act, Chapter Notes, and HSN explanatory notes to determine the classification. It noted that the Adjudicating Authority relied on Section Note-8 to classify the goods as waste and scrap, but failed to consider the broader definition of 'Refined Copper' and the HSN explanatory notes. The Tribunal emphasized that the HSN notes clarified that waste and scrap were materials used for metal recovery or chemical manufacture, which did not apply to the imported goods intended for melting to manufacture copper alloy and stainless steel. The Tribunal highlighted that the imported goods were usable for their intended purpose and aligned with the definition of 'Refined Copper' as per the Customs Tariff.

3. Pre-shipment Inspection Certificate:
The issue of requiring a pre-shipment inspection certificate was also raised. The appellant argued that even if the goods were considered waste and scrap, no such certificate was necessary based on relevant Foreign Trade Policy provisions. The Tribunal did not delve into this aspect as it determined that the imported goods were not waste and scrap, thereby setting aside the Adjudicating Authority's order and allowing the appeal in favor of the appellant.

In conclusion, the Tribunal's detailed analysis focused on the proper classification of the imported goods, emphasizing their quality, intended use, and alignment with the definition of 'Refined Copper.' The judgment underscored the importance of interpreting legal provisions accurately and considering all relevant factors to determine the appropriate classification of goods under the Customs Tariff Act.