9911796707
TMI Blog2013 (11) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... two broad propositions to show prima facie case. The first he submitted that steel imported by the Company is non-alloy but the Commissioner has misconstrued Chapter Note 1(f). The second is regardless of the classification, the steel imported has been actually used in the export product and 100% export obligation has been completed and hence the language of the advance licence must be construed having regard to provisions of the Customs Notification and Foreign Trade Policy. 3. Dealing with the first point, Mr Nankani submitted that before reading Note 1(f), we must read Note 1 (d) and Note 1(e) which define "Steel" and "Stainless Steel" which reveal that all steel is an alloy of ferrous with varying percentage of elements. Note 1(f) uses the expression "containing by weight one or more of the following elements in the proportion shown". The learned Counsel submits that depending on the requirement of the end customer order for steel is placed to manufacture pipes. The company is a manufacturer exporter and engaged in the manufacture of Submerged Arc Welded pipes (SAW pipes) which are supplied to internationally reputed buyers in the oil and gas industry. These pipes, according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are wholly exempted at all times under Notification No.93/2004 Cus. He invited our attention to the definition of "Materials" in the Explanation to the said Notification which contains the words "required for" which are wide enough to include all or any inputs for manufacture of export goods. He therefore submitted that when the company was qualified for and eligible to apply for advance licences for alloy steel there was no reason for the company to import alloy steel in the garb of non alloy steel, more so when in so far as the export product is concerned, it does not matter whether the steel is called alloy or non alloy so long the standards and the grade of the steel match with each other. According to the learned Counsel, when the law permitted the Company to apply for alloy steel licences there was no intention to evade duty, especially, when duty outside advance licence scheme was also the same for the entire period from 1.4.2007 to 19.2.2010, except for the 7 month period mentioned above. Upon import, he also pointed out that in all the bills of entry the description is shown as "Hot Rolled Coils API 5L X-70" and the same description was also available in the invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Oblum Electrical Industries Ltd vs CC [1997 (94) ELT 449] in which case it was also held that wider meaning is to be given to the definition of "materials" because of the use of the words "required for". He drew our attention to two Policy Circulars 30 dated 10.10.2005 and 72 dated 24.3.2009 issued by the DGFT/Ministry of Commerce in the context of DFRC and DFIA, which are also part of the Duty Exemption Schemes under Chapter 4 of FTP to show that duty free import of alternate inputs is also permissible since the basic idea is to provide export incentives under all these Schemes including advance licences . He pointed out that 36 licences were infact redeemed by the licensing authorities. Accordingly, when dispute arose in this case, the Company sought clarification from the DGFT/Norms Committee and by letter dated 16.5.2012, it was clarified that so long as the goods imported and exported are of the same grade, the import was permissible. He relied on the Apex Court judgement in Atul Commodities Pvt Ltd vs CC [2009 (235) ELT 385] and para 2.3 of FTP to submit that clarification by DGFT on Policy interpretation is final and binding. Mr. Nankani refers to Policy Circular No.22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object according to the Company is to fulfill export obligation and for which purpose, whether the steel is classified as alloy or non-alloy is irrelevant. 5. Lastly Mr. Nankani referred to the Consolidated Accounts for the year ended 31.3.2013 to show that there is a Post Tax loss of about Rs. 88 crore , and hence any order of pre-deposit would cause the Company undue hardship. 6. Mr. K. M. Mondal , learned Counsel for the Respondent submitted that on a plan reading of Note 1(f) when the steel has an element which by weight conforms to the proportions shown thereunder, the steel ceases to be non-alloy steel and merits classification under heading 72.25. He vehemently submitted that the Company knew the truth as has been admitted in the statements of the Chairman and other senior officers of the Company recorded under Section 108 of the Customs Act that the steel imported by them was alloy steel and yet they cleared them duty free as non-alloy because the advance licences were for non-alloy steel falling under heading 72.08. He also invited our attention to the various representations made by the Company during investigations in which the Company accepted that it made a mistake b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. There is no dispute that the entire quantity imported has been used in accordance with FTP and Customs Notification for export production. There is also no dispute that whatever be the goods - alloy or non-alloy steel after using the, final products have been exported and export obligation is 100% completed. We find there is no allegation of diversion of goods imported duty free in the market or mis-utilisation for some other purpose. There appears also no dispute that API standard X-70 grade can be either alloy or non-alloy in terms of Note 1(f) as applied by the Commissioner. Equally well, it is not in dispute that MTCs were not filed with the bills of entry. 9. We now take the classification issue. Here too, two things are not in dispute. Any type of steel is an alloy and there is no definition of Non Alloy Steel in the Customs Tariff. If steel by itself as seen from Note 1(d) and (e) to Chapter 72 is an alloy, normally, it would be incorrigible to conceive of non-alloy steel. But Note 1(f) defines "Other Alloy Steel". Neither the assessee nor the Department has thrown light on the word "Other". Note 1(f) starts with the words "Steel not complying with the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n isolation. We also take note of the fact that Customs Notification refers to materials required for manufacture goods for export which expression must be given a wide meaning as per the law down in Oblum Electrical (supra) and therefore regardless of the classification under 72.08 or 72.25, so long as the steel imported was required to manufacture goods for export and has infact been so used as stated, benefit of Customs Exemption Notification cannot be denied. 11. Mr Mondal did not oppose that the Company is eligible to apply for both non-alloy and alloy steel for import under advance licence and also the fact that X-70 grade can be both alloy or non-alloy based on Department's case but he relied on the affidavit filed by Deputy Director before the High Court to contend that as per DGFT also the Company could not import alloy steel against licences for non alloy steel and that alloy and non alloy steel are distinct items. We find that the affidavit of the Deputy Director does not deal with the clarification dated 16.5.2012 issued by DGFT/Norms Committee which is prior in time. Undoubtedly the Deputy Director is subordinate to DGFT and Norms Committee and clarification is bindin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
