2015 (2) TMI 599 - AT - Customs

Classification of goods - Bituminous Coal or Steam coal - Calculation of gross calorific value - Held that - As per note No. 2 to Chapter 27 while volatile matter has to be computed on air dry basis, the gross calorific value has to be computed on moist, mineral matter free basis. The ASTM standards prescribe formula for conversion gross calorific value (ADB) on air dry basis to moist, mineral matter free basis and if that formula is applied, it would appear that the gross calorific value in respect of present three consignments would exceed 5833 Kcal/Kg and the goods appear to merit classification as bituminous coal. However, we notice that the goods had originated from Indonesia and in terms of notification No. 46/2011-Cus dated 01/06/2011 the appellant would be entitled for a concessional rate of duty on bituminous coal and the effective rate of duty would work out to 40% of the normal rate of duty applicable. In the present case, we notice that this notification has been taken into account while finalizing the assessment by the adjudicating authority which is a clear error. Therefore, while confirming the duty demand, the adjudicating authority should have extended the benefit of Notification No. 46/2011-Cus to the appellant, notwithstanding the fact that the appellant had not made any claim for exemption under the said notification. Since there is an error in the computation of duty demand, we are of the considered view that the matter has to go back to the adjudicating authority for re-determination of duty liability in terms of the provisions of Notification No. 46/2011-Cus and the matter has to be considered afresh. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Classification of imported coal as "Bituminous Coal" instead of "Steam Coal" by the adjudicating authority resulting in duty demand, interest, fines, and penalties. Calculation of gross calorific value (GCV) on air dry basis vs. moist, mineral matter free basis. Applicability of Notification No. 46/2011-Cus for concessional rate of duty on bituminous coal.

Analysis:
1. The appeal challenged the Order-in-Original classifying coal as "Bituminous Coal" instead of "Steam Coal," leading to a duty demand of approximately Rs. 2.89 crore, along with interest, fines, and penalties. The appellant contended that the coal, known commercially as "Steam Coal," had a gross calorific value below the limit required for classification as "Bituminous Coal." Both the load port certificate and the Customs Laboratory report recorded gross calorific values below the threshold, disputing the allegations in the show-cause notice. The appellant sought a stay on the provisional assessments.

2. The Revenue argued that GCV should be calculated on a moist, mineral matter free basis, not on an air dry basis as claimed by the appellant. They contended that if recalculated correctly, the GCV would exceed the threshold for "Bituminous Coal" classification. The Revenue highlighted that the assessments being provisional negated any time bar concerns and requested the appellant to comply with the demands.

3. The Tribunal noted that while the GCV calculation method favored the classification as bituminous coal, the appellant was entitled to a concessional rate of duty under Notification No. 46/2011-Cus for bituminous coal imports from Indonesia. The adjudicating authority erred in not applying this notification, resulting in an incorrect duty demand calculation. The matter was remanded for the re-determination of duty liability considering the notification's benefits, despite the appellant not initially claiming exemption under it.

4. Consequently, the appeal was allowed by remand, and the stay petition was disposed of. The Tribunal emphasized the need for the adjudicating authority to reevaluate the duty liability in light of Notification No. 46/2011-Cus, rectifying the computation error and ensuring the correct application of duty rates for the imported coal.

This detailed analysis of the judgment addresses the issues raised in the appeal regarding the classification of imported coal, the calculation of gross calorific value, and the application of relevant customs notifications, providing a comprehensive overview of the Tribunal's decision and reasoning.