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2018 (5) TMI 270 - AT - CustomsClassification of goods - Heavy Melting Scrap and Re-rollable scrap - Department took the view that 197.915 MTs of cut/end pieces of TMT rods are classifiable under CTH 72149990, hence not eligible for exemption and that the declared value is not true transaction value - validity of SCN - Held that - On perusal of the SCN though the section under which it is issued is under Section 124, the allegations made out as well as the proposal is for recovery of duty short paid. - Section 124 of the Act seeks only the action of confiscation of goods and / or imposition of penalty. To recover duties not levied /not paid/ short paid / short levied / erroneously refunded, a notice has to be served on the person chargeable with duty or interest etc. under Section 28 of the Act. Classification of goods - Held that - On examination, the Chartered Engineer has opined that out of 232.85 MTs, only 34.91 MTs of twisted rods were having less than 5 ft. Length and balance quantity of 197.915 MTs was cut/end pieces of TMT rods - The basis for the Chartered Engineer to arrive at such conclusion is that in common parlance the length of TMT rods in the market is from 11 to 12 mtrs (33 to 36 ft) and the length of the rods imported range from 3 ft to 15 ft and are cut end pieces of assorted sizes. Since the cut ends do not have proportionate size they have very limited usage - we fail to understand how this can be the basis for concluding that the goods are not HMS, we are not able to find any cogent reason for discarding the pre-inspection certificate in toto. The Jurisdictional High Court in the case of CC Chennai Vs Kamatchi Sponge Power Corpn. Ltd. 2016 (3) TMI 220 - CESTAT CHENNAI in similar set of facts had upheld the order passed by Tribunal, which set aside confiscation and penalty. The impugned goods are Heavy Melting Scrap only - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of imported goods. 2. Eligibility for exemption under Notification No. 21/2002-Cus. 3. Rejection of the declared transaction value. 4. Confiscation and imposition of penalty. 5. Jurisdiction and authority under Section 124 and Section 28 of the Customs Act, 1962. 6. Validity of the department's appeal based on monetary limits. Issue-wise Detailed Analysis: 1. Classification of Imported Goods: The primary issue was whether the imported goods, declared as Heavy Melting Scrap (HMS) and Re-rollable scrap, should be classified under CTH 72044900 or reclassified under CTH 72149990. The department argued that the majority of the goods were cut/end pieces of TMT rods, not HMS, and thus reclassified them under CTH 72149990. However, the Tribunal found that the goods should be classified as HMS based on the pre-shipment test reports and certifications from internationally accepted agencies, which described the goods as metallic scrap. The Tribunal upheld that the goods were indeed HMS and not subject to reclassification. 2. Eligibility for Exemption under Notification No. 21/2002-Cus: The importer claimed exemption from Basic Customs Duty under Notification No. 21/2002-Cus. The department denied this exemption based on the reclassification of the goods. The Tribunal, considering the pre-shipment inspection certificates and the nature of the goods, concluded that the goods were eligible for exemption as they were indeed HMS, as stipulated under Sl.No.200 of the said Notification. 3. Rejection of the Declared Transaction Value: The department rejected the declared value of the goods, alleging undervaluation and adopted the market value determined by the Chartered Engineer. The Tribunal found no evidence of undervaluation or misdeclaration by the importer. The Tribunal emphasized that the transaction value should be accepted as the declared value was consistent with the purchase order, invoices, and pre-shipment inspection certificates. 4. Confiscation and Imposition of Penalty: The department confiscated the goods and imposed a penalty on the importer. The Tribunal, referencing the case of CC Chennai Vs Kamatchi Sponge & Power Corpn. Ltd., found that there was no misdeclaration by the importer and that the goods were indeed HMS. Consequently, the Tribunal set aside the confiscation and penalty, allowing the goods to be cleared after mutilation under Customs supervision. 5. Jurisdiction and Authority under Section 124 and Section 28 of the Customs Act, 1962: The Tribunal discussed the procedural requirements under Section 124 and Section 28 of the Customs Act, 1962. It was noted that Section 124 pertains to the confiscation of goods and imposition of penalties, while Section 28 deals with the recovery of duties. The Tribunal found that the Show Cause Notice (SCN) was issued under Section 124 but included proposals for duty recovery, which should have invoked both sections. However, the Tribunal chose to focus on the merits of the case rather than this procedural discrepancy. 6. Validity of the Department's Appeal Based on Monetary Limits: The importer's counsel argued that the department's appeal should be dismissed based on the CBEC guidelines, which set a monetary limit for appeals to CESTAT. The Tribunal did not explicitly address this argument but dismissed the department's appeal on the merits of the case. Conclusion: The Tribunal concluded that the imported goods were Heavy Melting Scrap, eligible for exemption under Notification No. 21/2002-Cus. The confiscation and penalties imposed by the department were set aside. The importer's appeal was allowed with consequential reliefs, and the department's appeal was dismissed. Disposition: Both appeals were disposed of accordingly, with the importer's appeal being allowed and the department's appeal being dismissed.
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