2024 (1) TMI 258 - AT - Customs

Exemption from Basic Customs Duty (BCD) in terms of Sl. No. 190C of Notification No. 21/2002-Cus. dated 01.03.2002, as claimed - deformed Steel Bars Grade HRB 500 (TMT Bars) - whether the impugned goods were alloy steels or non-alloy steels and prime or secondary? - HELD THAT - This is a case where apparently the demand has been raised by the Revenue by re-classifying the TMT bars under CTH 72279090, which action is not at all supported by any evidence. Thus, the very demand appears to be only on assumptions and presumptions of the adjudicating authority. From the test reports placed in the appeal paper book from page 28 onwards reveal that 15 samples of 20mm TMT bar were tested and 14 samples of 25mm TMT bar were tested by NML; the percentage of silicon content of 20mm TMT bar was between 0.37 and 0.62 and in respect of 25mm TMT bar, the same was between 0.57 and 0.66. The average would be 0.58% in respect of the 20mm TMT bar. The Commissioner (Appeals), however, in the impugned order, has held that the average silicon content was more than 0.6%, which is also baseless and it only shows the non-application of mind. Having referred for test analysis, his observation that the application of Indian Standards guidelines would not be correct is a misnomer, especially when he is not an expert himself. Chapter 72 prescribes the percentage of each element/constituent in respect of non / other alloy steel and it is not the case of the Revenue that in respect of the 20mm, 25mm and 32mm TMT bars, the percentage of these elements is more than the prescribed limit. The Revenue is not justified in denying the benefit of Notification No. 21/2002-Cus. dated 01.03.2002 (Sl. No. 190C) and the consequential demand in respect of the 32mm TMT bars cannot sustain. The impugned order deserves to be set aside in toto, which is done - appeal allowed.

Summary

Issues Involved:
The judgment involves the classification of imported deformed Steel Bars Grade HRB 500 (TMT Bars) under CTH 7213 1090 for exemption from Basic Customs Duty (BCD) and Counter-vailing Duty (CVD) under Notification No. 21/2002-Cus. The main issue is whether the appellant is entitled to the benefit of Nil rate of BCD as claimed.

Details of the Judgment:

Issue 1: Classification of Imported Goods
The lower authorities doubted whether the imported goods were alloy steels or non-alloy steels and prime or secondary, leading to sending samples for testing at the National Metallurgical Laboratory (NML). NML's test report confirmed the goods as 'TMT Bars Grade 500 Prime Quality'. The final assessment of the Bill-of-Entry was done without giving an opportunity to the importer, leading to a request for re-assessment, which was initially denied by the Revenue.

Issue 2: Judicial Review and Re-assessment
The importer approached the High Court seeking to quash the final assessment order, which was set aside by the High Court for re-assessment in accordance with the law. Subsequently, the original authority granted the benefit of Nil rate of BCD for 16mm TMT Bars as 'non-alloy', but denied the same for 20mm, 25mm, and 32mm TMT Bars, classifying them as 'alloy' eligible for concessional rate of BCD at 5%.

Issue 3: Appeal and Decision
The importer appealed to the Commissioner of Customs (Appeals), Chennai, who rejected the appeal. The appellate tribunal, after considering the contentions of both sides and the expert opinion from NML, found that the Revenue's re-classification of TMT bars as alloys lacked evidence and justification. The tribunal held that the Revenue was not justified in denying the benefit of the Customs Duty exemption, setting aside the impugned order in its entirety and allowing the appeal with consequential benefits as per law.

This judgment highlights the importance of expert opinions in customs classification disputes and the need for proper justification and evidence in re-classification decisions by the Revenue authorities.