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TMI Blog2015 (1) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... nce: Bulletin 638: Methods of analysing and testing coal Bureau of Mines, US department of the Interior). According to James C Speight (Handbook of Coal Analysis), the final report of the analysis should always contain the results on a basis of air-dried coal (i.e. coal in its most stable condition and in which it was analyzed), but for the purposes of classification or comparison, it is often necessary to convert to another basis, such as dry coal, dry, ash free coal, or as-received coal. Whether the calculation of calorific value on air dried basis as done by the department is correct or not - Held that:- Inherent moisture (bed moisture, equilibrium moisture, capacity moisture) is assumed to be the water held within the pore system and capillaries of coal and is not to be identified with residual moisture. Surface moisture (free moisture) is, as the term implies, water held on the surface of the coal. Total moisture is the moisture determined as the loss in weight in an air atmosphere under rigidly controlled conditions of temperature, time, and airflow (ASTM D-3302) and is the sum of inherent moisture and free moisture and is also the sum of the air-dry loss and residual mois ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d - In the order passed in the case of Coastal Energy Private Ltd. & others (supra), the penalty was set aside and we had indicated to the learned counsel that the order portion relating to confiscation of the goods and imposition of penalty would not be sustained. In spite of this observation, this submission has been made and the learned counsel also had the advantage of the order in the case of Coastal Energy Pvt. Ltd. (supra) and our observation that we will be following that order. Notification No.12/2012-CE (Sl.No.67) extends the benefit of 1% concessional excise duty subject to the condition of not taking credit of inputs and appellants are eligible for this benefit Eligibility of the appellant for the benefit of exemption in the case of imports from Indonesia. If they were to show at least some evidences to substantiate their claim or at least if they were to make an assertion that they have fulfilled all the conditions and they have a certificate with them which is in the format and which fulfills the requirements of statute, we could have and should have considered the eligibility for exemption in respect of imports from Indonesia while determining the amount of pre-de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in great detail and after hearing learned counsels for more than 3 appellants in a number of appeals, this Tribunal had passed Final Order No.20998-21002/2014 dated 20.6.2014. The learned counsel was informed that even though the stay applications only were to be considered at that time with the consent of both Revenue as well as the appellants, the matter had been taken up finally and a final order was passed. It was also informed that matter was considered in great detail and order is also a fairly detailed one. Nevertheless, the counsel insisted that he should be heard and accordingly, we heard him for quite considerable time. After hearing him for such a long time, we found prima facie that almost all the issues raised by him had been considered in the order referred to above and therefore we felt it would be better and appropriate to require the learned counsel to file written submissions so that no omissions or commissions happen while the order is prepared subsequently in the chamber. The learned counsel had been directed to file the written submissions on or before 22.9.2014 with a copy to AR and 15 days time thereafter was given to the learned AR to file written submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of Sl. No.123 of Notification No.12/2012 Customs would not be available to the appellant. Further, besides demanding interest on the differential duty, goods have been confiscated and redemption fine has been imposed and further penalties also has been imposed on the appellants. 4. In the written submissions the learned counsel had mentioned that while considering the written submissions, we have to consider the appeal memorandum also since it was specifically stated in the written submissions that the points mentioned in the appeal memorandum are reiterated. Therefore as a first step, we examine whether any point was in the memorandum of appeal but not found in the written submissions. The following grounds have been mentioned in the appeal memorandum. (i) For the purpose of determination of eligibility for exemption, in the absence of definition in the statutory provisions, the trade parlance has to be followed. This is covered by the written submissions. (ii) Since steam coal is not defined, lower grade anthracite coal and bituminous coal used as fuel in the industry should be considered as steam coal . Under this ground, the appellants have explained the und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submissions need to be considered in great detail again. (iii) The determination of gross calorific value is not correct. This is covered in the written submissions also and therefore we deal with the issue when dealing with written submissions. (iv) Submissions relating to chemical test have been made in the written submission. (v) Claim for alternative Notification for imports from Indonesia. This aspect also will be discussed since it is covered by the written submissions. (vi) The case laws relied upon by the original authority are not relatable to the facts and circumstances of the case and therefore the order of original authority is illegal, unjustified and unreasonable. In view of the fact that we have considered the issues and relevant case law in great detail, we do not think it necessary to revisit the case law relied upon by the original authority and comments of learned counsel. (vii) As regards the miss-declaration, in the order passed and referred to above by the Tribunal it has already been held that there cannot be penalty on the ground of miss-declaration and no invocation of extended period also. (viii) As regards suppression also, the observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly identifies the eligible goods by the twin criteria viz., description of the goods and tariff heading, the fact that steam coal is not defined is not material and classification of the goods is material and once the classification is settled, if the Notification does not cover that classification, the benefit of exemption cannot be extended. (vi) The legislature could have simply mentioned steam coal in which case the classification aspect would not have arisen at all and in such a case, trade parlance would have been relevant and could have been considered. Once the classification is determined and the Notification gives the tariff heading, there is no question of going into trade parlance. As already observed on two occasions earlier, Paras 5 to 59 of the order in the case of Coastal Energy cover the issue in detail. 5.1.3. The appellants have relied upon certain decisions which we propose to deal with very briefly. The learned counsel while filing the written submissions did not enclose the copies of full decisions relied upon by him. Therefore, we have tried to interpret the issues based on the submissions made by the learned counsel to the best of our abilities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms used. Therefore, prima facie this decision is not applicable to the present case. (v) It is also to be stated that the Hon ble Supreme Court has already taken a view that Notifications are part of the statute. According to principles of statutory interpretation if meaning is plain, effect must be given to it irrespective of consequences. In this case when the tariff heading and the description of the items are given in the exemption notification, it is quite clear that exemption has to be extended only when the twin conditions are satisfied. Therefore the principle that when the words of a statute are clear, plain or unambiguous, they are reasonably susceptible to only one meaning, the courts are bound to give effect to that meaning irrespective of consequences has to be followed. (Nelson Motis vs. UOI - AIR 1992 SC 1981). (vi) We have followed the principle that a ratio of a decision has to be applied after considering the facts and circumstances of the case and by not taking observations made in the order. (vii) We are also of the view that the kind of facts and circumstances that we have found in these case and in the earlier case where this tribunal passed fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral matter in the coal using the ash yield and total sulphur content determined on that coal. There is a clear cut demarcation between rank Parameters reported by laboratories and coal ranks and their use for classification. For classification of coal according to rank, fixed carbon and gross calorific value has to be converted into mineral-matter-free basis in accordance with the Parr formulas wherein the quantities are to be taken into consideration on inherent moisture basis. The ASTM D 388 referred to by the learned counsel explains the scope of D 388 as The specification covers the classification of coals by rank, that is according to their metamorphism or progressive alteration, in the natural series from lignite to anthracite . The site explains the significance and use a follows: this classification establishes categories of coal based on gradational properties that depend principally on the degree of metamorphism which the coal was subjected while buried. These categories indicate ranges of physical and chemical characteristics which are useful in making broad estimate of the behavior of coal in mining preparation and use. According to James G Speight, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd only then the total moisture in such a sample on ARB can be stated to be equal to inherent (bed) moisture. On the other hand, if the sample is drawn at any subsequent stage, undoubtedly surface moisture would be present in the coal in addition to the bed moisture. In such an event, ARB moisture would be reckoned as Total moisture and not as inherent moisture' (vi) The entire procedure for determining the total moisture in coal, after collecting the gross sample, begins with preparing the sample for analysis (ASTM D2013). If gross sample is sufficiently dry, it may be sieved immediately and air-dried. If the sample is too wet to reduce in size, it should be weighed before size reduction and air-dried using an oven. In this manner, the moisture in the sample is reduced to an inherent moisture (equilibrium moisture) condition with the air in the laboratory, and changes in moisture content are minimized during the crushing and grinding operations and even during analysis. Air-drying steps in the analysis and efficient sample handling help minimize the effects of relative humidity changes and it removes most of the surface moisture of coal. (vii) While the total moisture is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintaining the relative humidity at 96 to 97%. The vessel must be evacuated to about 30mm Hg and the entire sample maintained at 3010.2 C (8610.4?F) for 48 hours for coals of higher rank than lignite; lignite will require 72 hours to reach equilibrium. The method can also be used to estimate the surface for extraneous moisture of wet coal; such moisture is the difference between the total moisture of the coal and the natural bed moisture. In the Hand Book of Coal Analysis , the usage of inherent or equilibrium moisture is also discussed and for better appreciation is reproduced below: The various forms of moisture in coal are described according to the manner in which they are measured by some prescribed standard method. These forms are (1) inherent moisture, (2) surface or free moisture, (3) total moisture, (4) air-dry loss moisture, (5) residual moisture, (6) as-received moisture, (7) decomposition moisture, and (8) water of hydration of mineral matter. Inherent moisture (bed moisture, equilibrium moisture, capacity moisture) is assumed to be the water held within the pore system and capillaries of coal and is not to be identified with residual moisture. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent moisture and surface moisture The measurement of inherent moisture depends on the fact that its vapor pressure is less than that of surface moisture. Drying, pulverizing, dust-proofing, and the general handing of coal all depend on surface moisture data since wet coal is very difficult, and in some instances almost impossible, to pulverize. 5.2.7. No evidence by way of illustration or example was produced before us to show that the formula used by the Revenue for arriving at GCV on a moist mineral free basis is wrong. We have already seen that the submissions as regards the method of calculation are also incorrect and reliance on ASTM D388 is also not correct since it is mainly used for classification and ranking of coal and D388 itself provided that various parameters have to be determined according to the tests and sampling prescribed for the purpose and wherever calculations have to be made, formulae are provided in D 388.. It is the use of one of these formulae that has been done by the Revenue. There is no basis for the submission that the steam coal imported by the appellant ought to have been tested ARB. In fact in the synopsis filed in respect of Appeal No. C/21313 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the laboratory is the GCV value and the NCV is derived applying a formula. Reference is invited to section 7 of the extracts from the book titled 'Hand Book of Coal Analysis' by James G Speight. (iv) A perusal of the contracts for supply of coal, entered into by almost all importers with their overseas suppliers, would reveal that they are categorically mentioning to take gross calorific value (GCV) for the purpose of calculation of calorific value and there is no reference to net calorific value in such contracts (v)Further, various expressions and equations adopted in ASTM standards for the purpose of conversion also refer to calorific value in the context of gross calorific value. Also, the load-port certificates presented by the importers before the Customs authorities indicates that gross calorific value has been obtained while arriving at various parameters like air-dried basis, as-received basis etc. (vi) In view of the above, the point raised above does not merit consideration. 5.3.2. The learned counsel without mentioning any details simply stated that the appellants relied upon the following case laws. i) Chief Engineer/Mech/Coal TNEB Vs C.C. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case, the load port certificates submitted by the appellants have been accepted and even where tests have been conducted there are no disputes about the results of the test. Therefore we do not find anything wrong. 5.4.3. As for the opinion of the Joint Director, CRCL, GCV (Moist mineral free) was obtained by using Parr formula and the parameters reported in the load port certificates. These observations of the joint director are yet to be discredited or proved to be wrong by any of the parties. In this case, there is no submission or evidence produced to show that the Joint Director was wrong in the opinion tendered by him. Moreover, the opinion given by the Joint Director was made known the appellant. Instead of challenging the expert opinion relied upon, with the support of technical literature, the appellants are resorting to technicalities. In a similar case, we found that the Joint Director had been cross- examined and he had reiterated his views. 5.5. Wherever the goods are of Indonesian origin, duty exemption in terms of Notification No.46/2011-Cus. would be available and may be extended. 5.5.1. The only submission that is made is that attention is invited to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the sample has not been determined. 5.7.1. We agree with the submission of the learned special consultant for Revenue that even if sulphur content in the sample has not been determined by CRCL, there is nothing wring if the sulphur content as reported in load port certificates submitted by the appellant is taken for this purpose. 5.8. Notification No.12/2012-CE (Sl.No.67) extends the benefit of 1% concessional excise duty subject to the condition of not taking credit of inputs and appellants are eligible for this benefit. 5.8.1. Since the appellant has not taken credit of CENVAT in their inputs, they are eligible for the benefits. The question as to whether benefit of Notification No.12/2012 has to be extended to the importers or not was considered in Paragraphs 60 to 67 to reach the conclusion that importers were not eligible for the benefit. Nevertheless some of the points we would reiterate and thereafter proceed to consider the case law that has been relied upon by the learned counsel. 5.8.2. The first legal issue submitted by the learned counsel is that Section 3 of the Customs Act, 1962 is analogous to Section 4 of the Central Excise Act, 1944 and therefore e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification as it is obvious that imported goods cannot satisfy the condition relating to payment of excise duty on raw-material. We read the relevant observation in the judgment :- 7. .................The submission was advanced by urging that the rate of countervailing duty should be in accordance with the exemption Notification No. 302/79, dated December 4, 1979 issued by the Central Govt. in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excises Rules, 1944....................... The perusal of the Notification indicates that in respect of high Density polyethylene the rate of duty prescribed is 27 per cent instead of normal duty of 42 per cent. This partial exemption from payment of duty is prescribed by the Notification provided the two conditions are satisfied, and those conditions are (i) artificial or synthetic resins are manufactured from raw Naphtha or any chemical derived therefrom, and (ii) on which the appropriate amount of duty of excise has already been paid............................. Shri Bulchandani submitted that the other condition that on which the appropriate amount of duty of excise has been paid is not sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken and therefore once he cannot show that CENVAT credit has not been taken, the obvious conclusion is that he is not eligible for the exemption. 5.8.6. The reliance of the learned counsel on the decision in the case of Sudharsan Pine Products Ltd. Vs. CC, Chennai [1999(111) ELT 78 (Tri.)], in our opinion, also does not help their case. In the said case, the issue was import of Oleo pine resin and availment of exemption subject to a condition that oleo pine resin was manufactured without aid of power. In that case, there were two tariff headings. One covered the resin manufactured by using power and the other one covers without using the power. In view of the fact that the importer has to be considered as a manufacturer while considering the levy of excise duty, if the appellants claim was accepted, the mere declaration of importer would have been enough for claiming the classification of resin manufactured without the aid of power. If department has to revise the classification claimed, it was for the Revenue to prove that there was manufacture and with the aid of power. Board issued a clarification that such benefit can be given if a certificate is produced from the country o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reproduced Para 10 of the said circular which we reproduce for better appreciation: Doubts have been raised about the applicable CVD rate on the 130 items, which Excise Duty @ 1% has been levied vide Notification 1/2011-CE dated 01.03.2011, when imported. It is further learnt that manual bills of entry have been permitted at certain customs locations as 1 % CVD rate was not available in the system. This concessional rate of 1916, however, is available only if the Cenvat Credit on inputs and input services is not availed of; otherwise all these items attract 5% Excise duty as prescribed vide Notification 2/2011-CE dated 01.03.2011 and Tenth Schedule to the Finance Bill. At the time of updating of ICES, the Directorate of Systems had been advised not to feed Notification 1/2011-CE dated 01. 03.2011 in the system as 1 % rate will not be applicable for CVD purposes. There should have been no confusion on the subject. Since the CVD is levied to provide a level playing field for the domestic manufacturers, CVD is charged at a rate equal to excise duty rate. However, in respect of these 130 items, there are two excise duty rates. It needs to be appreciated that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, is well founded. In this view of the matter, we hold that the Commissioner (Appeals) is wrong in extending the benefit of the Notification to the importers In the Final Order adverted to earlier, vide Paras 60 to 67, Hon'ble Tribunal has taken the view that the subject imports are not eligible to the benefit under Notification 12/2012-CE [SI.No.67]. This ratio is squarely applicable to the present case. This decision is in line with the underlying policy objective of the aforesaid notification. In the normal course, a domestic manufacturer of coal would pay full C Ex duty on the value of coal cleared by him and avail of C Ex duty/ S tax credit as admissible. Thus, effectively, C Ex duty @ 6% adv. would be attracted on such coal. Where the domestic manufacturer chooses to avail of the benefit of Notification No. 12/2012-CE [SI.No.67], he will pay 1% adv. on the assessable value of coal, while absorbing the C Ex duty/S tax paid on the inputs/input services used by him. In the case of an importer of coal, if he is allowed the benefit of aforesaid Notification, though he will pay 1% adv. on the assessable value of coal, the absorption of the C Ex duty/S tax paid on the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax had taken place, the benefit would not be available. Therefore the Supreme Court s decision also is not helpful to the appellant. 5.8.11 In the case of Bhagwati Enterprises [2009(236) ELT 602 (Tri. Del.)], while examining the scope of Notification No.6/2000 dt. 01/03/2000 with reference to imported goods, according to the learned counsel, the Tribunal had considered the decision in the case of Motiram Tolaram and held that presumption regarding duty having been paid on the raw materials cannot be made. This was the view taken in the case of Motiram Tolaram and the Tribunal had not followed this view. However, we have to bear in mind that while applying the decisions, we have to look into facts and should not take observations in isolation. 5.8.12 The learned counsel also took us through the legislative history and made written submissions wherein he has traced the history of levy and collection of countervailing duty right from the time of Kautilya s The Arthashastra . He submitted that from the historical perspective and the submissions made by him relating to the levy of countervailing duty right up to the times when Customs Act 1962 came into force, according to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Finance Minister what emerges is that the intention of the Government was to give relief to the power producers. However even though intention becomes quite clear, what emerges from the speech is that after the exemption was introduced, there was rampant misclassification. Obviously, the misclassification mentioned in the Finance Ministers speech has to be taken as the one indulged by the importers and not by the Government. We are also not able to accept this submission that this would mean that the intention of the Government was to exempt all types of steam coal and even if it was bituminous coal, the intention was to exempt and give relief to power producers. If that was the case, there was no need to increase the rate of duty in respect of both the BCD and CVD in 2013. While taking a view that there was misclassification and disputes, what the Government seems to have done is to reduce disputes and with that intention increase the rate of duty and give relief to all types of coal. We could not find any help from the parts of the speeches that can be derived by the importers who imported steam coal prior to the notification prescribing same rate for bituminous coal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd capital goods and therefore, if he availed the benefit of Cenvat credit in respect of in all these items, he becomes liable to pay 6% excise duty and therefore, we cannot come to a categorical conclusion that the input services or capital goods used for the manufacture of coal abroad and sent to India have suffered such duty at all. In this case, the burden to show that he is eligible would fall on the importer since Indian manufacturers are eligible for credit on inputs and input service or capital goods. Inputs may be excluded since coal is extracted from earth. Credit on capital goods or input service would be definitely available and therefore, even an Indian manufacturer would not be eligible for lower rate of duty straightaway. Therefore, the decisions cited by learned sr. counsel cannot be applied to the facts of the case even if submissions made by Revenue in which we find considerable force, are not applicable. 5.10.1 We reproduce below the Paragraphs 8, 48, 63 65 of M/s. Coastal Energy Pvt. Ltd. (supra) reproduced by the learned counsel in his written submissions. (i) Vide Para 8 of the above, it was observed as below: Obviously the misclassif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be eligible for lower rate of duty straightaway. Therefore the decisions cited by even if submissions made by Revenue in which we find considerable force, are not applicable. 65. In view of the above, we have to agree with the submission that the importers could never have shown that they fulfilled the condition for claiming lower rate of duty under the Notification 12/2012-C.E. 5.10.2 In Para 8, even though the learned counsel claims to have reproduced Para 8 in his submissions, we find that the first portion starting from the word obviously and ending producers is reproduction of a portion of Para 8 and the Paragraph starting with the word It and ending with correct is actually reproduction of a portion of Para 9. In fact whole of the Para 9 is a summary of the submissions made before us as regards intention of the Government. Our conclusions are contained in Para 10. 5.10.3. Para 48 is once again a reproduction of submissions made before us and has been quoted as our observation. We only clarify that this is not so. In fact the learned counsel has extracted a part of the Paragraph which refers only to the submissions and has omitted the conclusion which read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r imports from South Africa and countries other than Indonesia and in respect of imports from Indonesia, the appellants should deposit the entire amount of duty payable as per the rate applicable for imports from Indonesia subject to the condition that the appellants produce the relevant documents to the original adjudicating authority who get the same verified and prima facie if the documents are in accordance with the requirements of statute, the deposit that will be made as per the rates applicable for imports from Indonesia would be sufficient. If there is a dispute on this issue, the same would be taken up at the time of considering the compliance report. We clarify that interest is also required to be deposited. 8. The relevant documents and certificates should be produced by the appellants before the original adjudicating authority within 30 days (thirty days) from the date of receipt of the order or such further time that may be allowed by the Commissioner for producing the documents/certificates. The appellants are directed to make the deposit within two months from the date of receipt of this order and report compliance on 7.1.2015. (Order pronounced in open court o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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