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TMI Blog2013 (11) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Tata Motors, the one in favour of assessee must be preferred in matters of classification where as is the settled law, the burden to prove is on the Department. On limitation, it does appear that manufacturer's certificates were obtained instead of producing the MTCs for clearance. Even on the basis of the chemical composition in the MTC if the goods merit classification under heading 72.08, the non disclosure of MTCs would not amount to wilfull conduct or concealment on the part of the Applicant, particularly when description in the bill of entry is not disputed. Even the few Country of Origin Certificates with heading 72.25 did not raise any query or objection from the assessing officer since the goods were meant for manufacture of export goods - prima facie no illegal illegible benefit or gain to the Applicant, if all goods are exported and hence prima facie no case of intention to evade duty, given the absence of diversion or misutilisation is made out - since all duty free inputs as imported in this case are required for manufacture of goods for export and have infact as claimed and not disputed, actually so used, there is no question of passing of the incidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipes) which are supplied to internationally reputed buyers in the oil and gas industry. These pipes, according to him, are manufactured out of steel for which special orders are placed with the manufacturers thereof based on the purchase orders received by the Company from different buyers all over the world. The purchase orders contain specifications of the steel where including the range of chemical composition and the Standards to which the same must conform and the grade which it must satisfy are mentioned as per buyer's requirements. He submitted that, in this case, the steel imported by the company confirms to API standards (American Petroleum Institute) and major quantity is that of grade X-70 and X-65. For this purpose, the company applied for advance licenses to import duty free raw materials/ inputs. He took us through Chapter 4 of Foreign Trade Policy (FTP) which deals with Duty Exemption and Remission Schemes, of which advance licenses is one part. Mr. Nankani invited our attention to paragraph 4.1 which talks about inputs "required for" or inputs used in the export product. He further pointed out that paragraph 4.1.3 of FTP provides that an advance authorization is iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escription is shown as "Hot Rolled Coils API 5L X-70" and the same description was also available in the invoices, packing list and bill of lading. However, they claimed classification under heading 72.08 which is for Non Alloy. The learned Counsel submits that that heading 72.08 is correct because as per Mills Test Certificate (MTC) (which were admittedly not produced by them at the time of clearance but seized during search) if the steel has more than one elements, then all the elements present in the steel must by weight be in the same proportion as shown in Note 1(f). As opposed to this interpretation, he submits, that according to the Revenue even if any one of the elements present is by weight as shown in Note 1(f), the steel becomes alloy steel. The learned Counsel submits that the interpretation by the Revenue renders the words "or more" in Note 1(f) redundant. He argues that if the intention was to cover steel with even one element by weight in the same proportion as shown in Note 1(f) it would have read as "any one of the following elements" and not as "one or more of the following elements". Consequently, according to the Applicants, since the steel imported by them, adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarification by DGFT on Policy interpretation is final and binding. Mr. Nankani refers to Policy Circular No.22 dated 18.7.2008 to show that if the Customs had disputed the classification at the time of clearances, they could have got the advance licences amended. He also referred to Public Notice 51 dated 2.6.2011 whereby C-593 of SION was amended to include both alloy and non-alloy steel . On the issue of extended period of limitation, the learned Counsel submitted that there was no intention to mislead by producing 13 certificates from manufacturer of steel, namely, TISCO, China certifying the goods are Non Alloy Steel when more than 100 consignments were imported. These certificates were produced to expedite clearances and are not false. The Company bonafide believed that goods are classifiable under heading 72.08 based on legal interpretation of Note 1(f). MTCs were not produced because as per Standing Order No/7837 dated 5.2.2004 issued by Mumbai Customs, which according to him is also followed in Kandla Customs casts onus on the customs officer to call for the MTC, and that too when there is doubt whether steel is prime or defective/seconds, but not otherwise. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us representations made by the Company during investigations in which the Company accepted that it made a mistake by applying for licences for non-alloy steel and erroneously imported the goods. Mr. Mondal submitted that the advance licences not only describe the goods as " non Alloy Steel" but also indicate the ITC( HS) Code as 72.08 which corresponds to Customs Tariff 72.08 meaning thereby that unless the goods imported are classified under the same heading, duty free benefit is not available. Referring to Tata Motors, he submitted that the observations of Hon'ble Member Technical supported his case. 7. Mr. Mondal placed on record the affidavit dated 3rd October, 2012 filed by Shri R.C. Kalra , Deputy Director of Foreign Trade in Writ Petition No.2031 of 2012 filed by the Applicant Company to show that even the licensing authority agreed with the Customs interpretation that Company was not permitted to import alloy steel against the licences issued to them Mr Mondal pleaded that redemption of licences was not conclusive and does not debar Customs Authorities from re-opening the cases for demanding duty. He submits that the Company deliberately did not disclose the MTCs as they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has thrown light on the word "Other". Note 1(f) starts with the words "Steel not complying with the definition of stainless steel....... ". Note 1(f) follows definition of Steel and Stainless Steel in Note 1(d) and (e). As such, on plain reading it appears that Note 1(f) covers all types of steel except stainless steel and not just confined to alloy steel as contended by Mr Mondal because if it is accepted that all steel is an ferrous based alloy, there is no need of definition of alloy steel. The use of the word "Other" and the absence of definition of non alloy steel, at this stage, subject to detailed further hearing, prima facie indicates that Note 1(f) covers all forms of steel. If that be so, what distinguishes alloy from non-alloy steel, and for this, the test, prima facie, appears to be presence all the elements in a given batch of steel in the same proportion by weight as shown in Note 1(f) when there are more than one elements to make it alloy steel but if all the elements are in different proportions, it would be non-alloy steel. If this interpretation is accepted than even as per MTC, the steel imported by the Applicants cannot fall under Note 1(f). We are conscious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is prior in time. Undoubtedly the Deputy Director is subordinate to DGFT and Norms Committee and clarification is binding as per para 2.3 of FTP and hence as there is no dispute that same grade of steel was imported and exported, prima facie, we hold that the Applicants have made out a prima facie case on merits. It is to be noted that in appellant's application for advance licence , they had sought for import of an item which was not mentioned SION Norms allowed by DGFT authorities. 12. On limitation, it does appear that manufacturer's certificates were obtained instead of producing the MTCs for clearance. But as aforesaid, even on the basis of the chemical composition in the MTC if the goods merit classification under heading 72.08, the non disclosure of MTCs would not amount to wilfull conduct or concealment on the part of the Applicant, particularly when description in the bill of entry is not disputed. Even the few Country of Origin Certificates with heading 72.25 did not raise any query or objection from the assessing officer since the goods were meant for manufacture of export goods. We find prima facie no illegal illegible benefit or gain to the Applicant, if all goods ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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