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2017 (10) TMI 674 - HC - CustomsClassification of goods - Stainless Steel Articles - Duty Drawback - whether the Stainless Steel Bright Bars of Austenitic Variety is classifiable as Bright Steel Bars for the purpose of drawback schedule under the Customs and Central Excise Duties Drawback Rules, 1972? - whether the same will go under sub serial No.3606 or 3803 of schedule F of the Rules? - Held that - Stainless Steel Bright Bars of Austenitic Variety had been treated in a manner differently from that of bright steel bars and shafting at the relevant time. Stainless steel comprises of ingredients which are Nickel and Chromium, both imported items used in manufacturing of stainless steel. The duty drawback has also been treated differently for stainless steel articles from that of all types of bright steel bars and shafting. The duty drawback of stainless steel articles of Austenitic Variety was ₹ 8.90 per kg. as against ₹ 395/- PMT for bright steel bars and shaftings. This distinction has also been carried forward in the change effected in the schedule of duty drawback of the Rules from 1st June 1989. The duty drawback of stainless steel with effect from 1st June 1989 was ₹ 1090 PMT as against ₹ 540 PMT for other varieties of bright bars and shafting. Item No. 3803 subsequent to the change has been kept vacant. This only goes to show that at the relevant time there was a clear distinction made between stainless steel articles of Austenitic Variety as against bright steel bars both in terms of the classification and the duty drawback rate. The headings under which sub-serial No. 3606 and sub-serial No. 3803 comes, along with the entries at the relevant time. In the duty drawback rate prescribed, there was a substantial difference between stainless steel of austentic variety and bright steel bars - the words all types of bright steel bars would necessarily to apply to the dimensions of steel bars such as round, hexagon, octagon, flat but would not mean include all grades / variety of steel. This would therefore, not include stainless steel at the relevant time. Stainless Steel Bright Bars of Austenitic Variety could classify only for inclusion in subserial No. 3803 at the relevant time. It is a settled law that where there are two views possible, the one favourable to the assessee in the matter of taxation has to be preferred. We are of the view that the impugned order of the first Respondent has incorrectly arrived at a finding that the scheme of drawback schedule at the relevant time was such that the words Steel mentioned in sub-serial No. 3606 would include stainless steel also. We are of the view that the first Respondent has erroneously held in the impugned order that the goods exported are bright stainless steel bars and are appropriately classifiable under sub-serial No. 3606. We are not going into issue as to whether the first Respondent has validly exercised power under Section 129DD of the Customs Act 1962 in reviewing an order of the Commissioner (Appeals) pursuant to an application made by the Collector Customs (Judicial) as we find on merits itself that the impugned order is unsustainable and is required to be quashed and set aside. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Jurisdiction of the Central Government under Section 129DD of the Customs Act, 1962. 2. Classification of "Stainless Steel Bright Bars of Austenitic Variety" under the Customs and Central Excise Duties Drawback Rules, 1972. 3. Validity of the impugned order dated 23rd December 1992 and subsequent demands. Issue-wise Detailed Analysis: 1. Jurisdiction of the Central Government under Section 129DD of the Customs Act, 1962: The Petitioners argued that the impugned order was without jurisdiction as it reviewed the order of the Collector (Appeals), which the Central Government was not authorized to do under Section 129DD of the Customs Act, 1962. They contended that an application for review could only be made by a "person aggrieved," and the Collector of Customs (Judicial) Bombay did not qualify as such. The court, however, did not delve into this jurisdictional issue, as it found the impugned order unsustainable on merits. 2. Classification of "Stainless Steel Bright Bars of Austenitic Variety" under the Customs and Central Excise Duties Drawback Rules, 1972: The core issue was whether "Stainless Steel Bright Bars of Austenitic Variety" should be classified under sub-serial No. 3606 as "Bright Steel Bars" or under sub-serial No. 3803 as "Articles made of stainless steel casting, not otherwise specified, made of Austenitic variety of stainless steel." The Petitioners contended that their product should be classified under sub-serial No. 3803, which provided a higher drawback rate of ?8.90 per kg, as opposed to ?395 per MT under sub-serial No. 3606. They argued that stainless steel bright bars involve Nickel and Chromium in their manufacturing, distinguishing them from other bright steel bars. The Respondents, on the other hand, argued that "Stainless Steel Bright Bars of Austenitic Variety" fell under the definition of "steel" and should be classified under sub-serial No. 3606. They pointed out that subsequent changes in the drawback schedule from 1st June 1989 included stainless steel under bright steel bars and shafting, indicating its classification under sub-serial No. 3606. Court's Analysis and Conclusion: The court found that "Stainless Steel Bright Bars of Austenitic Variety" had been treated differently from bright steel bars and shafting at the relevant time. The duty drawback rates for stainless steel articles were significantly higher, reflecting the use of imported Nickel and Chromium in their manufacturing. The court noted that the classification headings and the distinction in duty drawback rates supported the Petitioners' contention. The court concluded that the Collector (Appeals) had correctly classified the goods under sub-serial No. 3803, appreciating the distinction between stainless steel articles and other bright steel bars. It held that the words "all types of bright steel bars" in sub-serial No. 3606 did not include stainless steel at the relevant time. The subsequent changes in the drawback schedule further supported this view. 3. Validity of the Impugned Order Dated 23rd December 1992 and Subsequent Demands: The court found that the first Respondent had erroneously classified the goods under sub-serial No. 3606, and the impugned order was unsustainable. It quashed and set aside the impugned order dated 23rd December 1992 and the letter dated 10th March 1993 demanding ?2,63,868/- from the Petitioners. Order: (a) The impugned order dated 23rd December 1992 and the letter dated 10th March 1993 were quashed and set aside. (b) The Respondents were directed to pay the Petitioners the differential duty drawback as determined by the Collector of Customs (Appeals) within three months. (c) No order as to costs. (d) The Petition was made absolute on the above terms.
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