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2022 (3) TMI 640 - AT - CustomsClassification of imported goods - import of old and used rusty rails for melting (Heavy Melting Scrap) - classifiable under Chapter Heading 7302 as alleged by revenue or Chapter Heading 7204 as declared by the appellant? - validity of enhancement of value of goods from USD 110 PMT to USD 176.58 PMT - levy of interest - HELD THAT - The appellant has relied upon the survey report/ certificate dated 22.04.1996 issued by M/s SGS India Limited at the land port; Advice of status by City National Bank USA dated 12.10.1996 and the contract entered between the appellant and his foreign buyer, which show that goods imported are Used Rail Heavy Melting Scrap. On the other hand, no evidence has been led by the department in order to classify the goods under Chapter Heading 7302. Also the lower authorities have discarded the evidence led by the appellant by merely relying upon the Circular 17.01.2006 classified the goods under Chapter 7302 - As per the facts of the present case, it is undisputed that the report certifies that the goods is question are rusted, re- rollable rails/rail of iron and steel of varying length starting from 1 m length to 12.5 m. Due to the varying length, it establishes that the rails of different length are meant for remelting. It is well settled law that burden to classify the goods under particular heading is on the department. In the present case, the department has not discharged their burden to prove their alleged classification of goods by adducing cogent and tangible evidence - the impugned goods are rightly classifiable under Chapter Heading 7204 as USED RAIL HEAVY MELTING SCRAP. Valuation of goods - HELD THAT - The value of goods has been rejected by the department by straight away applying Rule 10A of the Customs Valuation Rules and re-determined by applying Rule 3(i) read with Rule 4(i) of the Customs Valuation Rules, without first rejecting the value under Section 14 of the Customs Act, 1962. It is noted that it is well settled law that department has to first reject the transaction value under Section 14 of the Customs Act, 1962 with cogent evidence and thereafter the department has to apply the valuation rules sequentially. In the present case, the department has enhanced the value on the basis of one invoice no. 4433 dated 26.04.1996 by one ALL-RAD VERTRIESS in which the goods are sold at the rate of USD 176.58. It is also found that transaction value cannot be rejected merely on the basis of one invoice, which even the department has failed to link with the present impugned consignments. The investigation conducted by the DRI is inconclusive and hence cannot be held against the appellant inasmuch there is no tangible evidence that has been adduced by the DRI and neither a show cause notice has been issued on the basis of said inconclusive investigation of DRI - It is settled law that the price of contemporeous goods cannot be applied invariably in each and every case. Before applying the enhanced comparable price varies circumtances need to be verified such as the quality of goods, quantity of goods, country of origin etc. In the present case, the revenue has neither carried out any investigation on this aspect nor brought any such data of the import related to invoice no. 4433 dated 26.04.1996 which was the sole reliance for enhancing the value. Demand of interest - appellant s contention is that the goods were never warehoused, therefore, interest cannot be levied - HELD THAT - It is pertinent to note that it is the department who has not assessed the Bills of Entry due to the various reasons such as litigation by the various parties in connection with the supplies, detention of goods by the DRI. The assessment was admittedly done by the department on the direction of the Hon ble High Court vide order dated 28.02.2104. Therefore, the assessment was admittedly done on 28.03.2014. The due date for payment of duty is from the date of assessment of Bills of Entry in terms of Section 47 of the Customs Act, Therefore, it at all there is any liability of interest, it should start from the date of assessment of Bills of Entry i.e. 28.03.2014 - in the facts of the present case, demand of interest is not sustainable for the period prior to assessment of Bills of Entry which has taken place on 28.03.2014. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of goods. 2. Valuation of goods. 3. Demand of applicable interest. Issue-wise Detailed Analysis: 1. Classification of Goods: The appellant contested the classification of imported used rails, arguing they should be classified under Chapter Heading 7204 (FERROUS WASTE AND SCRAP; REMELTING SCRAP INGOTS OF IRON OR STEEL) instead of Chapter Heading 7302 as classified by the revenue. The appellant supported their claim with documents such as the contract with the supplier, SGS survey report, and advice from City National Bank USA, all indicating the goods were "Used Rail Heavy Melting Scrap." The tribunal noted that the department did not provide evidence to support their classification under Chapter Heading 7302 and had merely relied on a circular dated 17.01.2006, which was quashed by the Hon’ble High Court of Madras. The tribunal cited the Supreme Court's direction that assessing authorities must exercise independent judgment and consider all evidence. The tribunal concluded that the goods were correctly classifiable under Chapter Heading 7204, as the department failed to discharge the burden of proof for their classification. 2. Valuation of Goods: The appellant challenged the enhancement of the goods' value from USD 110 PMT to USD 176.58 PMT. The tribunal observed that the department enhanced the value based on an invoice unrelated to the impugned consignment and without conclusive evidence from the DRI investigation. The tribunal emphasized that the department must first reject the transaction value under Section 14 of the Customs Act, 1962, with cogent evidence before applying valuation rules. The tribunal referenced Supreme Court judgments, highlighting that the burden of proving undervaluation lies with the department, which failed to provide evidence of contemporaneous imports at higher prices. The tribunal held that the value declared by the appellant at USD 110 PMT should be accepted, as the department did not substantiate the enhanced value. 3. Demand of Applicable Interest: The appellant argued that interest could not be levied as the goods were never warehoused. The tribunal confirmed that the goods were in the custody of Kandla Port Trust and not warehoused, as evidenced by the DRI letter and report. The tribunal noted that the assessment order was passed following the Hon’ble High Court of Gujarat's directions, and interest liability should only commence from the date of assessment of the Bills of Entry, i.e., 28.03.2014. Consequently, the tribunal set aside the demand for interest for the period prior to the assessment date. Conclusion: The tribunal ruled in favor of the appellant, holding that: a) The goods are classifiable under Chapter Heading 7204. b) The declared value of USD 110 PMT is correct. c) The demand for interest prior to the assessment order date of 28.03.2014 is not sustainable. Order: The impugned order was set aside, and the appeal was allowed with consequential relief as per law.
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