2012 (12) TMI 111 - HC - Customs

Determination of Nature of Impugned Goods - alloy steels vs non alloy steel - held that - A reading of the order of the Tribunal clearly pointed out that when the chemical test of the impugned goods pointed out the nature of goods sought to be exported and that with an uncertainty to the extent of 200% error margin writ large on the results, the test done by the Revenue is uncertain to support its claim on misdeclaration. Revenue does not deny the fact that National Metallurgical Laboratory is not a laboratory of the respondent s choice, but an authoritative institution to speak on materials like the impugned consignments. The remand order at the first instance itself was on account of the Revenue pointing out to the discrepancy between the respondent s test and the Revenue s report. As agreed to between the parties, the matter was once again referred to National Metallurgical Laboratory. When confronted with the error margin, the further plea for once again calling for further report from the Scientist, appears as a cry in vain. Thus, when a reading of the order of the Tribunal does not disclose any perversion in the finding, in the nature of absence of material on the factual finding, we do not find any question of law arising out of the order of the Tribunal for admitting this case by this Court. Hence, we have no hesitation in rejecting this appeal at the admission stage itself - In the circumstances, the above Civil Miscellaneous Appeals are dismissed at the admission stage itself. Consequently, connected MPs are closed. No costs.

Summary

Issues:
1. Misdeclaration of goods exported as alloy steel
2. Discrepancy in test reports from different laboratories
3. Reliance on chemical test results for tariff determination
4. Error margin in test results and its impact on classification
5. Use of National Metallurgical Laboratory's report as authoritative evidence

Analysis:
1. The case involved a dispute regarding the misdeclaration of goods exported as alloy steel to evade customs duty. The Customs, Excise and Service Tax Appellate Tribunal initially held that the goods were non-alloy steel billets, attracting a 15% customs duty. Samples tested at the National Metallurgical Laboratory revealed low boron content, indicating misdeclaration. The exporter contended that the goods were alloy steel billets with boron content of 0.0008%, exempt under a specific notification.

2. A key issue arose from the discrepancy in test reports obtained from different laboratories by the exporter and the Revenue. The Tribunal, upon remittance of the matter for fresh consideration, relied on the National Metallurgical Laboratory's report, which differed from the exporter's report. The Tribunal highlighted the uncertainty in test results, with an error margin of 200%, impacting the classification of goods.

3. The judgment emphasized the reliance on chemical test results for tariff determination, particularly in cases involving the classification of alloy steel based on specific elements' content. The Tribunal criticized the Revenue's methodology, pointing out the need for accurate testing facilities to determine boron content accurately for tariff purposes.

4. The impact of the error margin in test results on classification was a crucial aspect of the case. The Tribunal compared the test results with the tolerance limits and international standards for determining boron content in steel. It highlighted the inadequacy of the Revenue's testing methodology, which led to uncertainty in the classification of the exported goods.

5. The use of the National Metallurgical Laboratory's report as authoritative evidence was a significant factor in the Tribunal's decision. The judgment underscored the importance of relying on expert institutions for material testing in customs disputes. The Tribunal dismissed the Revenue's appeal, emphasizing the lack of substantial evidence to support the misdeclaration claim, and upheld the decision based on the laboratory's findings.