2005 (12) TMI 182 - AT - Customs

Confiscation of the goods - Re-rollable steel scrap - recovery of the duty and penalty - benefit of reduced rate of customs duty under Notification No. 21/2002 Sl. No. 190B - Whether the goods can be considered as re- rollable scrap or not - HELD THAT - The appellants have contended that the length of the items imported is less than 2 metres and hence they would not be suitable for building construction. They had also obtained a letter from a leading Construction Company. The adjudicating authority has ignored this opinion of the Construction Company on the ground that they are not experts. The decision has been taken on the opinion of the NML. However, ld. Counsel drew out attention to the condition No. 28 in SI. No. 201 of the Notification No. 21/02 to say the same was already mentioned in the submissions made by the ld. Counsel. If that definition is taken into account the imported item can be considered as re-rollable scrap. The appellants undertake to use the materials under the provision of the Central Excise, if necessary. In these circumstances, as the appellants intends to use the material for re-rolling and in the light of the condition No. 28 the goods merits classification as re-rollable scrap. The report of the NML does not appear to be very categorical. The opinion of the Construction Company cannot be ignored also. The appellants further placed reliance on the IS 2549 1994 regarding classification of the Ferrous scrap and acts with the impugned goods would fit in with the definition given therein. In the circumstances, we uphold the classification claimed by the appellants. There is also no justification for altering enhancing the transaction value without following the Customs (Valuation) Rules, 1988. In the circumstances we hold that the goods are entitled for the benefit of the exemption Notification claimed. They are not liable for confiscation. The transaction value has to be accepted. Therefore, we set aside the impugned order with consequential relief, if any. The appeal is allowed.

Summary

Issues:
Classification of imported goods as re-rollable steel scrap or ribbed rusted rods - seconds under customs duty notification; Consideration of length and usage of imported goods in construction industry; Reliance on National Metallurgical Laboratory report and Indian Standard Code for classification; Discrepancy in valuation of imported goods; Imposition of penalty and confiscation of goods by the Commissioner.

Classification of Imported Goods:
The appeal involved a dispute over the classification of imported goods as either re-rollable steel scrap or ribbed rusted rods - seconds under customs duty notification. The appellants imported goods claiming them to be re-rollable steel scrap, while the department argued they should be assessed as ribbed rusted rods - seconds. The Docks Officers' report and the National Metallurgical Laboratory's opinion were central to the classification issue. The Tribunal considered the length of the imported goods, the construction industry's requirements, and the relevant Indian Standard Code for classification. The appellants successfully argued that the goods fit the definition of re-rollable scrap, leading to the classification in their favor.

Valuation and Penalty Imposition:
Another key issue was the discrepancy in the valuation of the imported goods and the imposition of a penalty by the Commissioner. The appellants contested the enhanced valuation imposed by the Commissioner, arguing that there was no misdeclaration and that the enhancement was unwarranted. They also challenged the imposition of a penalty, asserting that it was unjustified in matters involving interpretation and classification of goods. The Tribunal ruled in favor of the appellants, setting aside the enhanced valuation and penalty. The Tribunal emphasized that once goods were classified as re-rollable steel scrap, the question of valuation enhancement did not arise.

Confiscation and Relief Granted:
The Commissioner had confiscated the goods and imposed a redemption fine and penalty, which the appellants strongly opposed. The Tribunal, after considering all arguments and evidence presented, including the Construction Company's opinion and the IS 2549:1994 classification, ruled in favor of the appellants. The Tribunal held that the goods were entitled to the benefit of the exemption notification claimed, and they were not liable for confiscation. Consequently, the impugned order was set aside, and the appeal was allowed, granting relief to the appellants.

In conclusion, the judgment addressed the classification, valuation, penalty imposition, and confiscation issues comprehensively, providing detailed analysis and legal reasoning to support the decision in favor of the appellants.