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2013 (9) TMI 422 - AT - CustomsMisdeclaration of goods whether the item is a melting scrap or re-rollable scrap for the purpose of Notification 21/2002-Cus - Revenue was of the view that goods were classifiable under Customs Tariff Item 7302 10 90 in which case the exemption under Notification No. 21/2002-Cus was not available to the goods - Held that - There was no reason to deny the classification claimed by the assesse for the goods to be under Heading 72.04 or to consider the goods not to be Melting scrap of Iron and Steel as described in Notification 21/2002-Cus following the judgement of Tata Iron and Steel Company v. CCE - 1994 (12) TMI 73 - SUPREME COURT OF INDIA . The difference in the case of used rails is that the item was specifically mentioned under Heading 72.04 for the purpose of excluding it - The meaning of the expressions melting scrap or re-rollable scrap were not defined in the Customs Tariff or HSN notes though the HSN notes makes a mention that waste and scrap which can be rolled into other products without melting to recover metal was excluded from Heading 72.04. Confiscation of goods u/s 111(d) and 111(m) Redemption fine u/s 125 Penalty u/s 112(a) Held that - Confiscation of the goods and penalty imposed in the order becomes not maintainable Decide in favor of assesse.
Issues Involved:
1. Classification of imported goods. 2. Applicability of exemption under Notification No. 21/2002-Cus. 3. Confiscation of goods under Section 111(d) and 111(m) of the Customs Act, 1962. 4. Imposition of penalty under Section 112(a) of the Customs Act, 1962. 5. Reliance on DGFT classification. Detailed Analysis: 1. Classification of Imported Goods: The appellants imported consignments of steel scrap and declared them as "Foundry grade heavy melting scrap" under Heading 72.04, claiming concessional customs duty. However, upon examination, the Revenue classified the goods as cut pieces of rails under Customs Tariff Item 7302 10 90, arguing that the goods were mis-declared to circumvent import policy and claim exemptions. The appellant argued that the goods were unusable as rails due to wear and cutting and should be classified under Heading 72.04 as per Section Note 8 of Chapter XV of the Customs Tariff, which defines waste and scrap as metal goods not usable due to breakage, cutting, wear, or other reasons. 2. Applicability of Exemption under Notification No. 21/2002-Cus: The exemption claimed by the appellant was applicable to "Melting scrap of iron or steel (other than stainless steel)" falling under Heading 72.04. The adjudicating authority relied on a C.B.E. & C. Circular dated 17-1-2006, which was struck down by the High Courts of Madras and Punjab & Haryana, to deny the exemption. The appellant presented certificates and argued that the goods were internationally recognized as HMS scrap, and the DGFT classified such goods under Heading 72.04, supporting their claim. 3. Confiscation of Goods under Section 111(d) and 111(m) of the Customs Act, 1962: The Revenue initiated proceedings to confiscate the goods under Section 111(d) and 111(m) of the Customs Act, 1962, read with Section 3(3) of the Foreign Trade (Development & Regulation) Act, 1992, arguing that the goods were mis-declared and subject to import restrictions. The Tribunal noted that the DGFT classified the goods under Heading 72.04 and considered it inappropriate to leave the classification decision solely to the DGFT. However, it found no justification for confiscation based on import policy violation if classified under Heading 73.02. 4. Imposition of Penalty under Section 112(a) of the Customs Act, 1962: A penalty of Rs. 3 lakhs was imposed on the appellant under Section 112(a) for mis-declaration. The Tribunal, considering the classification dispute and the DGFT's view, found no reason to maintain the penalty as the goods were indeed used for melting. 5. Reliance on DGFT Classification: The Tribunal acknowledged the DGFT's classification of the goods under Heading 72.04 and emphasized the need for consistency in classification for import policy and customs duty purposes. It noted that the DGFT's view should be considered for import restrictions but not for final classification decisions. Conclusion: The Tribunal concluded that the goods should be classified under Heading 72.04, making them eligible for the exemption under Notification No. 21/2002-Cus. Consequently, the confiscation of goods and the penalty imposed were not maintainable. The appeal was allowed, and the impugned orders were set aside with consequential benefits to the appellant. The judgment emphasized the importance of consistency in classification and the actual end-use of the imported goods.
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