2018 (5) TMI 519 - AT - Customs

Provisional release of detained goods - Heavy Melting scrap - the imported goods were found containing CR sheets/sheet cutting cut to various sizes weighing 132.895MT and 159.575MT respectively - 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) - Difference of opinion - majority order. Held that - from the said clarification dated 22/06/2017, it is found that the same refers to the clarification issued by NISST on 24/03/2017 and also reaffirming their findings that the goods in question were melting scrap as opined by them in report dated 14/03/2017. Therefore, I do not find that the contents of said clarification dated 22/06/2017 issued by NISST are having any developments after the said order dated 12/04/2017 has been passed. Further the said report dated 18/04/2017 has also been dealt with in para 24 of said order dated 12/04/2017 and consequence to be followed on receipt of said report dated 18/04/2017 have been ordered in the said paragraph. No purpose would be served by remanding the matter back to the original authority as opined by Member (Technical). In view of the majority decision, it is held that the goods can be released provisionally to the appellants as per terms and conditions enunciated in Para 10 of the order of Member (Judicial) and the appeals are not required to be remanded back to the original adjudicating authority. Appeal disposed off.

Summary

Issues Involved:
1. Classification of imported goods as Heavy Melting Scrap (HMS) or Cold Rolled (CR) sheets.
2. Requirement and conditions for provisional release of the seized goods.
3. Validity of the Chartered Engineers' reports and subsequent testing.
4. Compliance with Bureau of Indian Standards (BIS) certification.
5. Applicability of Import Control Order 2012.
6. Marketability and usability of the imported goods.

Issue-Wise Detailed Analysis:

1. Classification of Imported Goods:
The appellant declared the imported goods as Heavy Melting Scrap (HMS) under ISRI 207 code. However, upon examination, the goods were found to include CR sheets/strips/slits of varying widths, some of which were deemed serviceable. The adjudicating authority relied on reports from Chartered Engineers, who classified a portion of the goods as secondary and defective CR sheets. The appellant contested these findings, arguing that the Chartered Engineers' reports were based on visual inspection without proper segregation and weighment. A subsequent report from NISST confirmed the goods as melting scrap per ISRI 207, but the adjudicating authority still imposed conditions for mutilation before release.

2. Provisional Release Conditions:
The impugned orders allowed provisional release of the goods under Section 110A of the Customs Act, 1962, subject to several conditions:
- Provisional assessment of duty based on declared invoice value.
- Mutilation of goods to render them scrap.
- Furnishing a bond equal to the seizure value.
- Issuance of a Detention Memo for the goods detained.

The appellant argued that the condition of mutilation was unnecessary since the goods were already classified as scrap by NISST.

3. Validity of Chartered Engineers' Reports:
The appellant challenged the validity of the Chartered Engineers' reports, asserting that they were based on visual inspections and lacked proper segregation and weighment. The appellant also highlighted that the Chartered Engineers were not metallurgical experts. The Tribunal noted that the Chartered Engineer Shri Varun Chandok, along with a Metallurgical Engineer, had confirmed the goods as scrap. The Tribunal found that the reports from Chartered Engineers Shri Anil Soni and Shri Rajesh John were inconclusive and not fully reliable.

4. Compliance with BIS Certification:
The adjudicating authority classified the goods as Cold Rolled sheets, necessitating mandatory BIS certification. However, the appellant contended that the goods were scrap and not subject to BIS certification. The Tribunal observed that the tests conducted to classify the goods as Cold Rolled sheets did not follow the prescribed BIS procedures, and the NISST report confirmed the goods as melting scrap.

5. Applicability of Import Control Order 2012:
The adjudicating authority relied on the Import Control Order 2012 to justify the need for BIS certification. The appellant argued that the order applied only to standard length sheets/coils, not to scrap. The Tribunal found that the Import Control Order 2012 was not applicable to the imported scrap, which was in the form of end sheet cuttings and waste.

6. Marketability and Usability of Imported Goods:
The Tribunal noted that the NISST report and the Chartered Engineer's findings indicated that the imported goods were not suitable for further manufacturing or commercial production and were indeed scrap. The Tribunal emphasized that the goods should be assessed based on their usability and marketability as scrap, not as prime or secondary defective material.

Judgment:
The Tribunal, by majority decision, held that the goods could be released provisionally to the appellant without the condition of mutilation. The terms and conditions for provisional release were modified as follows:
- Provisional assessment of duty based on declared invoice value.
- Furnishing a bond equal to the seizure value.
- Issuance of a Detention Memo for the goods detained.

The appeals were disposed of in accordance with the majority decision, and the matter was not remanded back to the original adjudicating authority.