2018 (12) TMI 174 - AT - Customs

Benefit of Concessional rate of duty - N/N. 19/1994-Cus dated 01.03.1994 - import of 15.00 MT Weak Coking Coal - weak coking coal having Ash content below 12% or not? - Department has observed that the appellant had wrongly availed the benefits of concessional rate of duty under N/N. 19/1994-Cus in as much as the exemption under subject Notification was specifically for the Coking Coal of Ash Content below 10.29%. Held that - It is observed that there is no dispute that the sample is of coal in which ash content is 10.29%. In the bottom of the report it is mentioned as, no specification for weak coking coal with respect to its physico-chemical properties are available in the technical literature. However in the chemical analysis result, it does not show that whether it is weak coking coal or otherwise. Therefore, the test report 65-Cus/97 only confirms that the sample is of coal and Ash content is 10.29%. There is no dispute that the weak coking coal is also specie of coal ash content being 10.29% is well within the parameter prescribed in the entry Serial No of the notification i.e. below 12%. It can be seen that as per above report the remark of the chemical examiner regarding not mention of specification of weak coking coal is with reference to technical literature, it is nothing to do with actual analysis of coal conducted by the chemical examiner. Therefore, the report does not confirm that the goods imported by the appellant is not weak coking coal, therefore, only on the basis of the test report it cannot be concluded that the coal imported by the appellant is not weak coking coal. The department has nothing on record except the report to conclude that the coal imported by the appellant is not weak coking coal - Therefore, as regard the contention of the department that the coal imported by the appellant is not weak coking coal as per the test report is not correct, as the reports does not specifically gives the result that the coal is weak coking coal or otherwise. From the report, it is clear that the coal imported by the appellant is weak coking coal having Ash content much below 12%. It is also observed that the entire agreement for import of coal is in respect of weak coking coal and not for the coal other than weak coking coal - Though the appellant s product is weak coking coal and exemption is granted for coking coal. This does not make any difference for the reason that coking is a genus term in which all type of coking coal covered such as prime/hard coking coal, semi-hard coking coal, medium coking coal, soft coking coal, semi-soft coking coal, weak coking coal etc. the only criteria is that Ash content should be less than 12% which is not under dispute even as per the report of CRCL, New Delhi, therefore, the appellant is eligible for exemption notification 19/94-Cus. In the present case even as per CRCL, New Delhi report the Ash content admittedly is 10.29 % - exemption is provided to weak coking coal which is genus of all coking such as prime/hard coking coal, semi-hard coking coal, medium coking coal, soft coking coal, semi-soft coking coal, weak coking coal etc. therefore, merely because the chemical examiner does not mention in the test result that whether it is a weak coking coal or otherwise, the exemption cannot be denied particularly when all other documents clearly establish that the coal imported by the appellant is weak coking coal of Ash content below 12%. The coal imported by the appellant is weak coking coal having Ash content below 12%, accordingly, the appellant is eligible for exemption Notification No. 19/94-cus - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of imported coal as "Weak Coking Coal" and eligibility for concessional duty under Notification No. 19/1994-Cus.
2. Validity and accuracy of the chemical test report by CRCL, New Delhi.
3. Relevance of "end use" condition for granting exemption.
4. Timeliness of the Show Cause Notice (SCN).

Detailed Analysis:

1. Classification of Imported Coal:
The appellant imported "Weak Coking Coal" and claimed a concessional duty under Notification No. 19/1994-Cus, which allows a reduced duty rate for coking coal with ash content below 12%. The department contested this classification based on a CRCL test report indicating the coal had an ash content of 10.29%, arguing it did not qualify as "Weak Coking Coal."

2. Validity and Accuracy of Chemical Test Report:
The appellant argued that the sample was not drawn according to IS:436 standards, as required. They presented a Load Port Certificate from Indonesia showing an ash content of 7.94%, tested as per BS 1016 standards. The appellant cited the Supreme Court judgment in Tata Chemicals Limited vs. C.C., emphasizing that improper sampling methods invalidate the test results. The Tribunal found the CRCL report inconclusive, as it did not specify whether the coal was weak coking coal. The Tribunal relied on the Load Port Certificate, which showed the ash content was below 12%, and thus, the coal met the notification's criteria.

3. Relevance of "End Use" Condition:
The Commissioner (Appeals) denied the exemption on the grounds that the imported coal was not used for manufacturing coke or in the metallurgical industry. The Tribunal rejected this reasoning, stating that the notification did not impose an "end use" condition. The Tribunal referenced the case of JSW Steel Ltd vs. CC, C.EX. & ST, Goa, where it was held that usage is not a determining factor if not specified in the notification.

4. Timeliness of the SCN:
The appellant contended that the SCN issued on 15.05.1998 for goods cleared in 1995 was time-barred. They cited multiple judgments supporting their claim that the demand was not raised within the permissible period. The Tribunal did not address this issue directly in the final decision, as the primary grounds for the decision were the classification and eligibility for concessional duty.

Conclusion:
The Tribunal concluded that the imported coal was indeed "Weak Coking Coal" with ash content below 12%, making it eligible for the concessional duty under Notification No. 19/1994-Cus. The CRCL test report was deemed insufficient to disqualify the coal from the exemption, and the "end use" condition was found irrelevant. The impugned order was set aside, and the appeal was allowed with consequential relief.

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