2017 (8) TMI 303 - AT - Customs

Benefit of Concessional rate of duty - N/N. 21/2002 (Sl.No. 207) dated 1.3.2002 - imported non-alloy steel wire rods (prime) - denial of benefit on the ground that the goods are not of prime quality - Held that - Apart from the report of NML stating that the goods are seconds, there is no evidence to establish that the goods are not prime. The benefit of Notification is eligible if the goods are of prime quality. The expert of IIT, Chennai has certified that the goods belong to prime category and the same has also been noted in the Bill of Entry. The fact that rust was present on the goods cannot be a reason to hold that the goods are of second quality for the reason that such rust can occur if the goods are exposed to moisture - the denial of benefit of Notification is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Import of non-alloy steel wire rods claimed under concessional rate of duty; Certification by National Metallurgical Laboratory (NML) as secondary goods; Denial of concessional rate, imposition of penalty, and confiscation; Appeal before Tribunal challenging denial of benefit.

Analysis:
The appellants imported non-alloy steel wire rods declared as prime, seeking concessional duty under Customs Notification No. 21/2002. However, NML certified the goods as secondary, leading the department to issue a show cause notice for duty recovery, interest, and penalty. The adjudicating authority held the goods as seconds, denying concessional rate, and imposing a redemption fine and penalties, including on the company's Director under the Customs Act, 1962. The appellants contested, providing evidence like invoices, certificates, and inspection reports to prove prime quality.

The appellant's counsel argued that the goods were declared prime in the Bill of Entry and supported by various documents, including a manufacturer's certificate. They contended that rusting and non-standard size do not make goods secondary, citing expert opinions and past Tribunal decisions favoring similar cases. The department claimed the goods were rejects due to rust and non-standard dimensions, asserting they are seconds and thus not eligible for the Notification's benefit.

The Tribunal considered the evidence, noting the NML report labeling the goods as seconds. However, the expert from IIT, Chennai certified the goods as prime, contradicting the NML report. The Tribunal emphasized that rusting does not automatically downgrade goods, especially if caused by external factors like moisture. The argument on non-standard size lacking support in the Notification was deemed insufficient. Referring to previous Tribunal decisions upheld by the Apex Court, the Tribunal ruled in favor of the appellants, overturning the denial of Notification benefit.

In conclusion, the Tribunal found the denial of Notification benefit unjustified, setting aside the impugned order and allowing the appeals with any consequential relief. The judgment highlighted the importance of expert opinions, past precedents, and adherence to Notification criteria in determining the eligibility for concessional rates, ultimately favoring the appellants' claim in this case.