2024 (8) TMI 1320 - AT - Customs

Classification of imported goods - Heavy melting scrap or not - to be classified under Customs Tariff Heading 7204 4900 as claimed by the importer-appellant or under Customs Tariff Heading 7215 9090 for Iron Rods and under Customs Tariff Heading 7308 9010 for Channels as held by the adjudicating authority - valuation of imported goods - value declared by the appellant should be accepted as assessable value in the absence of any documentary evidence as urged in the grounds of appeal or not - difference of opinion - majority order. Classification of goods - HELD THAT - On careful analysis of the observation of the learned Member(Judicial) as well as that of learned Member(Technical), it is found that there is no difference in finding on the issue of classification of the iron rods and channels to be under CTH 7215 9090 and CTH 7308 9010 of the Customs Tariff Act respectively. Learned Member(Judicial) has laid emphasis that the mutilation as per Section 24 of the Customs Act, 1962 should have been allowed for conversion of said iron rods and channels into scrap in the event if such option is not availed / exercised by the appellant, duty can be demanded for goods as iron rods under CTH 7215 9090 or channels under CTH 7308 9010 - In the present circumstances, since no such request for mutilation was advanced nor any direction for such mutilation was issued initially, the classification of the iron rods and channels would be under CTH 7215 9090 and CTH 7308 9010, respectively. Valuation of imported goods - HELD THAT - It is noticed that initially for the entire 212.13 MTs of Heavy Melting Steel scrap imported, the value was declared as Rs. 36,01,729/-. After change in the classification, the adjudicating authority has applied contemporaneous import price of Rs. 20/- per kg. for 22.920 MTs of channels and 47.200 MTs of iron rods against the imported scrap price of Rs. 16.97 per kg. The appellant claimed that the contemporaneous import value should be adopted as Rs. 19/- per kg. However, no evidence has been placed by the appellant in support of their claim - there are no discrepancy in the said enhancement of value of the iron rods and channels based on contemporaneous import, once the classification of the scrap has been changed with regard to total quantity of 70.12 MTs. of channels and iron rods - the findings of the learned Member(Technical) on the issue of determination of value based on the contemporaneous import price of iron rods and channels, agreed upon. The matter may be placed before the regular Bench for appropriate action/order. As per the majority opinion, the impugned order is upheld - Appeal filed by the assessee is dismissed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Valuation of imported goods.
3. Confiscation and penalty imposed.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The appellant, M/s. Minar Alloys and Forgings Pvt Ltd., imported 212.13 MTs of "Heavy Melting Steel (HMS) scrap" under Customs Tariff Heading 7204 4900. Upon examination, it was found that 22.920 MTs were channels and 47.200 MTs were iron rods of assorted sizes, which could not be considered HMS scrap. The adjudicating authority reclassified these goods under CTH 7215 9090 for iron rods and CTH 7308 9010 for channels. The appellant argued that the goods were imported as per the policy condition prevailing at the time and supported by a certificate from an accredited agency. However, the Tribunal upheld the classification by referring to Chapter 72 read with Note 8 of Section XV of the Customs Tariff Act, which clearly distinguishes scrap from iron rods and channels.

2. Valuation of Imported Goods:
The Original Authority adopted a contemporaneous value for the iron rods and channels, resulting in an enhanced assessable value and a differential duty demand of Rs. 1,34,405/-. The appellant accepted this enhanced value under pressure due to demurrage and detention charges. The Tribunal noted that the appellant had no knowledge of the assorted sizes in the goods and that no excess amount was paid to the overseas supplier. The Tribunal found no evidence to support the department's allegation and held that the declared classification and valuation could not be rejected solely based on the examination report. The Tribunal upheld the valuation based on contemporaneous import prices, rejecting the appellant's claim for a lower value due to a lack of supporting evidence.

3. Confiscation and Penalty Imposed:
The Original Authority allowed the appellant to redeem the goods on payment of Rs. 3,00,000/- as fine and Rs. 1,00,000/- as penalty. The Commissioner (Appeals) set aside the confiscation and penalty, considering the appellant as actual users and noting that it was the first instance of such misdeclaration. The Tribunal upheld this decision, noting that the goods were imported based on a pre-inspection certificate from a DGFT-registered agency, and there was no intention to misdeclare the goods. The Tribunal emphasized that the goods were for manufacturing purposes and not for trading, thus justifying the appellant's bona fides.

Majority Order:
The majority opinion upheld the impugned order, dismissing the appeal filed by the assessee. The Tribunal confirmed the classification under CTH 7215 9090 for iron rods and CTH 7308 9010 for channels and upheld the valuation based on contemporaneous import prices. The Tribunal also agreed with the decision to set aside the confiscation and penalty, considering the appellant's bona fides and the lack of misdeclaration intent.

Conclusion:
The Tribunal concluded that the imported goods were correctly classified and valued, and the appellant was not liable for confiscation and penalty. The appeal was dismissed, and the impugned order was upheld.