2018 (2) TMI 961 - AT - Customs

Provisional release of goods - import of Heavy Melting scrap at ICD, OWPL Ludhiana declaring the grade of the scrap as ISRI 207 - said goods were examined and on detailed examination of the consignment declared as Heavy Melting scrap ISRI code 207, the imported goods were found containing CR sheets/sheet cutting cut to various sizes weighing 132.895MT and 159.575MT respectively - mutilation of goods. Held that - As there is divergent views of the Members of this Tribunal, therefore the matter may be placed before the Hon ble President to appoint third Member to resolve the following issue - Whether the goods can be released provisionally to the appellant as per the terms and conditions of Para 10 of this order, as held by Member (Judicial) - Matter referred to Third Member.

Issues Involved:
1. Classification of imported goods as Heavy Melting Scrap (HMS) or other than scrap.
2. Compliance with Bureau of Indian Standards (BIS) certification requirements.
3. Validity of Chartered Engineer reports.
4. Requirement of mutilation of goods for provisional release.
5. Marketability and reuse of imported goods.
6. Procedural adherence and fairness in adjudication.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods as Heavy Melting Scrap (HMS) or Other Than Scrap:
The appellant declared the imported goods as Heavy Melting Scrap (HMS) under ISRI 207, but upon examination, the goods were found to contain Cold Rolled (CR) sheets/strips/slits, some of which were secondary and defective. The Chartered Engineers' reports varied, with some concluding the goods were scrap and others suggesting they could be reused. The NISST report confirmed the goods as scrap, while the adjudicating authority relied on the Chartered Engineers' reports indicating potential reuse.

2. Compliance with Bureau of Indian Standards (BIS) Certification Requirements:
The adjudicating authority classified the goods as Cold Rolled sheets, necessitating compliance with BIS certification. The goods were tested for carbon content, and the RDBSM laboratory found them to be low carbon steel, which requires BIS certification. The appellant did not provide evidence of such certification, leading to the imposition of BIS compliance requirements.

3. Validity of Chartered Engineer Reports:
The validity of the Chartered Engineers' reports was contested. The appellant argued that the reports were based on visual examination without proper segregation and weighment. The reports by Chartered Engineers Shri Anil Soni and Shri Rajesh John were deemed unreliable by the appellant, while the report by Shri Varun Chandok, supported by a Metallurgical Engineer, was in favor of the appellant. The adjudicating authority, however, relied on the initial Chartered Engineers' reports.

4. Requirement of Mutilation of Goods for Provisional Release:
The adjudicating authority imposed the condition of mutilation for provisional release, which the appellant contested. The appellant argued that the goods were already classified as scrap under ISRI 207 and did not require further mutilation. The Tribunal found that the goods, as per ISRI specifications and the NISST report, qualified as scrap and should be released without mutilation.

5. Marketability and Reuse of Imported Goods:
The issue of marketability and reuse was central to the case. The Chartered Engineer Shri Varun Chandok suggested a market survey to ascertain the marketability, but no such survey was conducted by the Revenue. The NISST report concluded that the material was melting scrap and not suitable for further manufacturing processes. The Tribunal held that the goods should be considered scrap as per ISRI specifications.

6. Procedural Adherence and Fairness in Adjudication:
The appellant argued that the adjudicating authority's findings were premature and based on test reports obtained after the order was passed. The Tribunal noted that the test reports were conducted without following BIS procedures. The Member (Technical) suggested remanding the case for re-examination, considering the subsequent reports and giving the appellant a fair opportunity to defend their case.

Conclusion:
The Tribunal modified the impugned orders to release the goods provisionally without mutilation, based on the declared invoice value and subject to a bond equal to the seizure value. However, due to divergent views between the Judicial and Technical Members, the matter was referred to the Hon'ble President for the appointment of a third Member to resolve the issue. The key points of difference were whether to release the goods provisionally as per the Judicial Member's terms or to remand the case for re-examination as per the Technical Member's view.

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