2013 (9) TMI 942 - AT - Customs

Exemption from CVD - misdeclaration of goods - import of Molybdenum concentrate classifiable under CTH 2613 declared as s Molybdenum Ore or Roasted Molybdenum Ore - Scope of exemption from excise duty under notification No. 4/2006-CE - Held that - the exemption contained in notification No. 4/06-CE applies only to ores and not to concentrates. Levy of CVD - appellant argued that he is eligible to avail cenvat credit of the CVD paid, even if CVD is not paid, it does not matter - Held that - This view is totally incorrect and has dangerous portents. The taxable event for levy of CVD is import of the goods into India. The eligibility to credit of CVD cannot and does not obliterate the liability to pay CVD if the taxable event for the levy of CVD has taken place. Reliance on the order of Commissioner(Appeals) - The Commissioner (Appeals) without understanding the scope of the remand, presumed that the Tribunal has passed an order on classification and on the basis of such presumption granted the benefit of notification No.4/2006 to imported molybdenum concentrate even without awaiting for the test report of the chemical examiner. If the lower appellate authority mis-read and mis-understood the order of the Tribunal, the appellant cannot place any reliance on such orders. In any case, the order of the lower appellate authority is not binding on this Tribunal and this Tribunal can independently arrive at a decision on the matter based on the facts placed before it. Limitation period - Whether the demand of CVD is barred by limitation of time - Held that - The time period for issue of demand in a case where the duty is short levied or short paid, not levied or not paid or erroneously refunded is one year from the relevant date, which , in the present case, is the date of clearance of the goods. The bills of entry were filed during 6-4-2011 to 6-9-2011 in respect of the previous imports and the show cause notice was issued on 9-3-2012, that is, within a period of one year. Whether confiscation of the impugned goods with an option to redeem the same on payment of fine and imposition of penalty is warranted - Held that - No reason for confiscation of the goods under section 111(d) which is for violation of the provisions of any law for the time being in force and no such reasons are forthcoming from the records of the case. Accordingly, we set aside the confiscation of the goods in the impugned order. Once the order of confiscation is set aside, the question of imposing redemption fine under section 125 or imposition of penalty under section 112/114A would not arise at all - Following decision in case of Northern Plastic Ltd. 1998 (7) TMI 91 - SUPREME COURT OF INDIA Demand of duty and interest confirmed but order of confiscation and redemption fine set aside - decided partly in favor of assessee.

Issues Involved:
1. Classification of imported goods as "ores" or "concentrates."
2. Applicability of CVD exemption under Notification No. 4/2006-CE.
3. Invocation of extended period for demand of duty.
4. Confiscation of goods and imposition of penalties.

Issue-Wise Detailed Analysis:

1. Classification of Imported Goods:
The appellant imported goods described as "Molybdenum Ore" or "Roasted Molybdenum Ore" but were found to be "Molybdenum Concentrates" after chemical examination. The test reports confirmed the goods as concentrates, which was also admitted by the appellant. The tariff description and the insertion of Note 4 in Chapter 26 of the Central Excise Tariff, which deems the conversion of ores into concentrates as manufacture, indicate that ores and concentrates are distinct commodities. The legislative intent to treat ores and concentrates differently is clear from the tariff structure and the use of the conjunctive "and" between the terms.

2. Applicability of CVD Exemption:
The appellant argued that ores and concentrates are the same and thus the exemption for ores should apply to concentrates. However, the Tribunal held that the legislative intent, as evident from the tariff description and Chapter Note 4, was to treat ores and concentrates as distinct commodities. The exemption under Notification No. 4/2006-CE applies only to ores and not to concentrates. The Tribunal also noted that the purpose of CVD is to provide a level playing field for domestic manufacturers, who are liable to pay excise duty on concentrates. Therefore, imported concentrates are not eligible for CVD exemption under the said notification.

3. Invocation of Extended Period for Demand of Duty:
The demand for differential duty on earlier imports was issued within the normal period of one year from the date of clearance of goods. The Tribunal found that the appellant had misdeclared the goods as ores to avail the exemption, which was deliberate and done to claim ineligible exemption. Therefore, the invocation of the extended period for demand was justified.

4. Confiscation of Goods and Imposition of Penalties:
The Tribunal set aside the confiscation of goods and the imposition of penalties. It was held that the appellant could have had a bona fide belief that the exemption for ores continued to apply to concentrates even after the amendment in the Central Excise Tariff. The Tribunal referred to the Supreme Court's decision in Northern Plastic Ltd., where it was held that a wrong declaration based on a belief does not amount to misdeclaration under Section 111(m) of the Customs Act. Consequently, the confiscation of goods under Section 111(d) and (m) and the imposition of redemption fine and penalties under Section 112/114A were set aside.

Conclusion:
The Tribunal upheld the duty demand and interest under Sections 28 and 28AA of the Customs Act but set aside the confiscation of goods and the imposition of redemption fine and penalties. The appeal was disposed of in these terms.

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