2020 (2) TMI 766 - AT - Customs

Classification of imported goods - LMS Bundles and Heavy Melting Scrap - whether classifiable under CTH 72044900 or under CTH 72044100 of the Customs Tariff Act, 1975? - Benefit of Notification No. 21/2002-Cus dated 01.03.2002 - HELD THAT - The appellant is a manufacturing unit and using the imported material for melting thereof and use in the manufacture of ingots therefore, as per the use there is no doubt that the goods is melting scrape. Even though there can be a dispute to whether it is falling under Custom Tariff Heading No. 72044100 or 72044900 but as per the entry No. 200 for the purpose of exemption under notification No. 21/2002-CUS all the waste and scrape of 7204 if it is a melting scrap are exempted. Therefore, as per the facts of the present case the chapter sub heading of the goods is not very significant. According to the nature of the goods there is no doubt that even though it is in the nature of HR Side Cutting but the same has no other use except for melting and all the melting scrap is covered under exemption notification No. 21/2002-CUS under serial No. 200 - It is not the case of the department that the goods so imported is not scrap but classifiable as HR Coil or Sheet. It cannot be said that the appellant has mis-declared the goods and consequently the goods are not liable for confiscation - Appeal allowed - decided in favor of appellant.

Summary

Issues: Mis-declaration of imported goods leading to confiscation, penalty imposition, and reassessment of goods.

Mis-declaration of Goods:
The case involved the mis-declaration of imported goods by M/s. Hans Industries Pvt. Ltd., where "HR Side Cut Trimmings" were mixed with LMS Bundles and Heavy Melting Scrap. The department alleged that the goods were mis-declared to evade the applicable Basic Custom Duty, as "HR Side Cut Trimmings" should have been classified under CTH 72044100, chargeable at 5%, instead of CTH 72044900 with nil duty. A Show Cause Notice was issued proposing confiscation, penalty under section 112(a) of the Customs Act, 1962, and reassessment at a higher value. The adjudicating authority confirmed the charges and imposed penalties, leading to the appeal.

Legal Analysis and Decision:
The appellate tribunal analyzed the case, noting the appellant's claim for exemption under Notification No. 21/2002-Cus for melting scrap of iron and steel. Despite the dispute over the classification under CTH 72044100 or 72044900, the tribunal found that all waste and scrap of 7204, if melting scrap, were exempted under the notification. The tribunal emphasized that the nature of the goods, primarily for melting with no other use, qualified them as melting scrap exempt from duty. Unlike previous judgments cited by the Revenue, where goods were classified as prime material, here, both the appellant and the Revenue agreed that the imported goods were steel scrap. Therefore, the mis-declaration allegation was dismissed, and since the goods were exempted, confiscation was deemed unwarranted. The tribunal allowed the appeal, modifying the impugned order and rejecting the enhancement of value by the lower authority.

Conclusion:
The tribunal's decision focused on the nature and use of the imported goods, determining them as exempted melting scrap under Notification No. 21/2002-Cus. The mis-declaration allegation was refuted based on the agreement between the appellant and the Revenue regarding the classification of the goods as steel scrap. The judgment highlighted the significance of the goods' intended use for melting, leading to the allowance of the appeal and the modification of the order, emphasizing the exemption status and dismissing the confiscation and penalty imposition.