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2024 (11) TMI 20 - AT - Customs


Issues Involved:

1. Eligibility for concessional rate of duty under Customs Notification No. 12/2012-Cus. dated 17.03.2012.
2. Classification of imported goods as 'seconds and defectives' versus 're-rollable scrap.'
3. Alleged violation of principles of natural justice by the Department.
4. Justification for denying the benefit of the notification.

Detailed Analysis:

1. Eligibility for Concessional Rate of Duty:

The core issue in these appeals was whether the imported cargo qualified for the concessional rate of duty under Customs Notification No. 12/2012-Cus. dated 17.03.2012. The appellants, M/s. DSRM Steels Pvt. Ltd. and M/s. Amman Steel Corporation, imported re-rollable scrap and sought the benefit of a reduced duty rate. However, the Department denied this benefit, classifying the goods as 'seconds and defectives,' which are excluded from the concessional rate under Sl.No. 330 of the notification.

2. Classification of Imported Goods:

The appellants contended that the imported goods were re-rollable scrap, not 'seconds and defectives.' They argued that 'seconds and defectives' arise during manufacturing and do not meet standards, whereas scrap is waste from dismantling machinery. The examination reports confirmed that the cargo was in the form of scrap, specifically rusted iron rods, which could not be re-rolled without melting. The Tribunal found that the imported goods were indeed scrap, not defectives or seconds, as they were not meant for sale without processing.

3. Alleged Violation of Principles of Natural Justice:

The appellants argued that the Department did not provide notice or reasons for denying the notification's benefits, violating natural justice principles. The Tribunal noted that the appellants paid the assessed duty under protest due to incurring ground rent charges, and the Department failed to vacate the protests or provide adequate notice.

4. Justification for Denying the Benefit of the Notification:

The Tribunal examined whether the goods could be classified as 'seconds and defectives,' which would justify denying the notification's benefit. The Tribunal considered guidelines from the Ministry of Steel regarding non-prime steel products and found no evidence that the imported goods were being sold as defectives or seconds. The Tribunal cited the case of Lucky Steel Industries, which highlighted that goods used as scrap for re-rolling should not be classified as second or defective solely based on their chemical composition.

Conclusion:

The Tribunal concluded that the imported cargo was re-rollable scrap, not 'seconds and defectives,' and thus eligible for the concessional duty rate under Notification No. 12/2012-Cus. The impugned Orders-in-Appeal were set aside, and the appeals were allowed with consequential relief as per law. The decision emphasized the importance of correctly classifying goods and adhering to principles of natural justice in customs assessments.

 

 

 

 

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