1994 (1) TMI 181 - AT - Customs

Summary

Issues Involved:

1. Classification of imported refractory bricks.
2. Eligibility for exemption under Notification 77/90.
3. Misdeclaration and penalty under Sections 111(m) and 112(a)(ii) of the Customs Act, 1962.
4. Consideration of additional evidence and expert affidavits.

Detailed Analysis:

1. Classification of Imported Refractory Bricks:

The appellants imported Dolomite Based Basic Refractory Bricks and classified them under Heading 6902.10, claiming exemption under Notification 77/90. The Customs House, however, found that the bricks were intended for use in an AOD convertor, classified under Heading 84.54, and not under industrial furnaces classified under Heading 84.17. The Collector concluded that the convertor, used in the second stage of steel manufacturing, is not synonymous with an industrial furnace, which is used for melting metal. Hence, the bricks did not qualify for the exemption under Notification 77/90.

2. Eligibility for Exemption under Notification 77/90:

The appellants argued that the AOD convertor is an industrial furnace both technically and in commercial parlance, supported by various technical literature. They contended that Notification 77/90 does not specify a tariff heading for industrial furnaces, implying that the plain meaning of the term should be considered. The Tribunal examined technical authorities, which indicated that convertors are considered a type of industrial furnace in the metallurgical industry. However, the Tribunal noted that the exemption also depends on whether the bricks are used as component parts of industrial furnaces, not just as replacement parts.

3. Misdeclaration and Penalty under Sections 111(m) and 112(a)(ii) of the Customs Act, 1962:

The Collector found that there was a misdeclaration of the goods, leading to their confiscation under Section 111(m) and a penalty of Rs. 5 lakh under Section 112(a)(ii). The appellants argued that the penalty was unwarranted as there was no deliberate misdeclaration, supported by past practices of the Customs House. The Tribunal acknowledged that similar consignments had been granted exemption in the past, suggesting no deliberate intent to misdeclare. Consequently, the penalty was set aside, giving the appellants the benefit of doubt.

4. Consideration of Additional Evidence and Expert Affidavits:

The appellants presented additional affidavits from experts obtained after the adjudication order. The Tribunal allowed the textual authorities on furnaces to be taken on record for submission purposes. The Tribunal emphasized the importance of interpreting exemption notifications based on the plain meaning of the words used, without adding any additional criteria not specified in the notification.

Conclusion:

The Tribunal concluded that the refractory bricks could be considered for use in industrial furnaces based on the technical literature provided. However, the case was remanded to the Collector for further examination of whether the bricks could be classified as component parts of industrial furnaces, as required for exemption under Notification 77/90. The penalty imposed on the appellants was set aside, and the appeal was disposed of accordingly.