1997 (3) TMI 238 - AT - Customs

Summary

Issues Involved:

1. Classification of imported goods as "Heat Resisting Steel Sheets in Coils" or "Stainless Steel in Coils."
2. Applicability of concessional rate of duty under Notification No. 118/65.
3. Time bar on refund claims under Section 27(1) of the Customs Act, 1962.
4. Adherence to ISI specifications versus commercial understanding in the classification of goods.
5. Jurisdiction and authority of High Courts in directing Customs authorities to ignore statutory time limits.

Detailed Analysis:

1. Classification of Imported Goods:

The core dispute revolved around whether the imported goods should be classified under Item 63(14) as "Iron or Steel hoops and strips, not otherwise specified" or under Item 63(20A) as "Stainless Steel Sheets." The respondents claimed the goods as "strips," while the Revenue argued they were "sheets." The Collector (Appeals) relied on ISI definitions and previous Government of India orders, concluding the goods were "strips." However, the Revenue contested this, citing the Madras High Court's decision in the case of Prema Metal Works, which classified similar goods as "stainless steel sheets." The Tribunal upheld the Revenue's view, emphasizing the commercial understanding of the goods as "sheets."

2. Applicability of Concessional Rate of Duty:

The respondents sought the concessional rate under Notification No. 118/65, which applied to "Cold Rolled hoops and strips of stainless steel." The Collector accepted the respondents' evidence that the goods were cold-rolled. However, the Revenue argued that the goods were "sheets" and did not qualify for the concessional rate. The Tribunal, aligning with the Madras High Court's judgment, concluded that the goods were correctly classified as "sheets" under Item 63(20A) and thus not eligible for the concessional rate.

3. Time Bar on Refund Claims:

The respondents' refund claims were initially rejected as time-barred under Section 27(1) of the Customs Act, 1962, which prescribes a six-month limit. The Delhi High Court directed the Assistant Collector to consider the claims on merits, condoning the delay. However, the Tribunal noted that such directions were contrary to the Supreme Court's rulings in Miles India Ltd. v. Assistant Collector of Customs and Union of India v. Kirloskar Pneumatic Company, which held that statutory authorities are bound by the prescribed time limits. Consequently, the Tribunal ruled the refund claims as time-barred.

4. Adherence to ISI Specifications vs. Commercial Understanding:

The respondents argued for classification based on ISI specifications, which differentiated "strips" and "sheets" by width. The Collector (Appeals) supported this view. However, the Revenue and the Tribunal emphasized the Supreme Court's principle that goods should be classified based on their commercial understanding. The Tribunal cited the Madras High Court's decision, which rejected reliance on ISI specifications in favor of commercial parlance, thus classifying the goods as "sheets."

5. Jurisdiction and Authority of High Courts:

The Tribunal addressed the issue of the Delhi High Court's jurisdiction in directing Customs authorities to ignore statutory time limits. It referenced the Supreme Court's judgment in Union of India v. Kirloskar Pneumatic Company, which clarified that High Courts cannot direct statutory authorities to act contrary to the law. The Tribunal concluded that the Delhi High Court's direction was beyond its jurisdiction and unenforceable, reinforcing the statutory time limits for refund claims.

Conclusion:

The Tribunal set aside the Collector (Appeals)' orders, upheld the classification of the goods as "stainless steel sheets" under Item 63(20A), denied the concessional rate of duty under Notification No. 118/65, and ruled the refund claims as time-barred. The appeals were allowed in favor of the Revenue.