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TMI Blog2015 (1) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... have also expressed our prima facie view in favour of the decision of the Tribunal of Chennai Bench in the case of Tamil Nadu Newsprint & Papers Ltd. [2009 (8) TMI 656 - CESTAT, CHENNAI]. Since we are referring these matters to the Hon'ble President for constitution of Larger Bench, we waive the predeposit of duty along with interest and penalty till disposal of the appeals. - Stay granted. - C/41899-C/41918/2013, C/40658/2014, C/42026-42030/2013, C/42031/2013, C/42032-42050/2013, C/40160/2014, C/40491/2014, C/40492/2014, C/40538/2014, C/40560/2014, C/40617/2014, C/40624/2014, C/40692/2014, C/40693/2014, C/40694/2014, C/40828/2014 - MISC ORDER No.42230-42339/2014 - Dated:- 18-11-2014 - C/41899-C/41918/2013, C/40658/2014, C/42026-42030/2013, C/42031/2013, C/42032-42050/2013, C/40160/2014, C/40491/2014, C/40492/2014, C/40538/2014, C/40560/2014, C/40617/2014, C/40624/2014, C/40692/2014, C/40693/2014, C/40694/2014, C/40828/2014, C/40829/2014, C/40860/2014, C/40861/2014, C/41052/2014, C/41053/2014, C/41075/2014, C/41076/2014, C/41078/2014, C/41108/2014, C/41109/2014, C/41214-C/41215/2014, C/41234/2014, C/41235/2014, C/41239/2014, C/41240/2014, C/41243/2014, C/41263/2014, C/41264/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be higher. But if the Revenue would draw a sample of imported coal, as per ASTM (American System of Testing Material) on inherent moist, the denominator would be higher and the C.V limit would be low, within the C.V limit as mentioned in Sub Heading Notes 2 of Chapter 27 of CTA. The adjudicating authority held that the imported goods are to be classified as Bituminous Coal under CTH 27011200 and confirmed the demand of customs duty @ 5% as per Sl.No.124 of the Table appended to the said notification along with interest. It has been observed that as per opinion of Joint Director, CRCL, technical literature of USA, and of formula therein, inherent moisture in the imported coal may be determined on the basis of Load Port Report and it indicates C.V. limit on moist is more than cut off value as mentioned in Sub-Heading Notes 2 of Chapter 27 of CTA. The applicant filed these applications for waiver of pre-deposit of duty along with interest. 3. All these matters were heard extensively on 17th and 18th November 2014. The submissions of Ld. Advocates appearing on behalf of the applicants, are, briefly, as under:- (i) Shri C. Hari Shankar, Ld. Senior Advocate with Sri S. Sunil Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ASTM and other issues, therefore the said order should not be followed. On the other hand, the Chennai Bench of the Tribunal in the case of Tamil Nadu Newsprint Papers Ltd. Vs Commissioner of Customs, Tuticorin - 2010 (253) ELT 153 (Tri.-Chennai) on the identical issue allowed the appeal of the appellant. It has been held that when the department had a doubt about the description of the goods, the department should carry out the test of the sample before changing the classification. So, in the present case, the department had not tested the samples and therefore following the decision of Tamil Nadu Newsprint Papers Ltd. (supra), of Chennai Bench of the Tribunal, the appeal should be allowed. (ii) Ld. Senior Advocate Shri N. Venkatraman, along with Shri S.Muthuvenkatraman, Advocate submits that the demand is raised on the basis of Load Port Report prepared by the Surveyor for the purpose of determination of value and quantity of goods for finalization of price. He submits that the said documents cannot be the basis to hold the goods as Bituminous coal as per Sub-Heading Note 2 to Chapter 27. He drew the attention of the Bench to relevant portion of the Standard Classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Additional Notes, the Bituminous coal and the Steam coal both are classified as per eight digit system. He submits that as there is conflicting views between the two coordinate Benches of Chennai and Bangalore, therefore the matter should be referred to the Larger Bench. On a query from the Bench, the learned Senior Advocate submits that the Larger Bench of the Tribunal in the case of Vandana Global Ltd. Vs CCE - 2009 (238) ELT 420 (Tri.-LB) held that the Tribunal can refer the matter to the Larger Bench at the stage of stay petition hearing after granting stay. Relied upon the case of Himtaj Ayurvedic Udyog Kendra Vs CCE Allahabad - 2001 (135) ELT 931 (Tri.-Del.). In any case, they have imported from Indonesia in respect of 9 consignments out of 11 consignments and also made predeposit of ₹ 7 crores. (iii) Shri R.R.Padmanabhan, learned Advocate submits that the demand was raised on the basis of discharge port certificate which cannot be the basis for confirmation of demand. He submits that they have obtained opinion from the Institute for Energy Studies, Anna University, Chennai for working out the values of MMMF Basis. He submits that according to the Anna Universi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am coal and the question of applying the Sub Heading Notes of bituminous coal does not arise. (ix) Shri R. Parthasarathy, Ld. Advocate assisted by Shri Karthik, Advocate submits that they have produced all the reports at the discharge port as per the IS Standards 38.12 Part II which was not considered by the adjudicating authority. It is also contended that as per the IS Standard, GCV of the coal is less than 5833 Kcal/Kg. as mentioned in the chapter note. They placed statement containing computation of correct calorific value. The calorific value in their cases is below 5833 Kcal/Kg. He submits that they have sought for cross-examination of the Chemical Examiner who clarified inherent moisture in the test report is actually 'residual moisture'. He submits that Bangalore Bench of the Tribunal had not considered this aspect. (x) Shri Abraham Joseph Martos, Ld. Advocate reiterates the arguments of other counsels. He submits that they have purchased the goods on high sea basis. (xi) Shri B.N. Gururaj, Ld. Advocate submits that 3 Bills of Entry have been finally assessed and there was no review by the Commissioner (Appeals), Demand notice issued under section 28 is bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -deposit of 10% of duty which was upheld by the Hon'ble Gujarat High Court and in some cases, the predeposit was 50% of duty. 5. Heard both sides and perused the records. 6. The relevant facts of the case, in brief, are that the applicants have been importing Non-coking (Steaming) Coal, declaring as Steam Coal for use in the manufacture of Electricity from various countries, namely, South Africa, Indonesia etc. over a decades. The applicants have been classifying Steam Coal under CTH 27011920. It is a long practice in the trade that the Bills of Entry are provisionally assessed pending final determination of value based on the test report of the discharge port. The provisional assessment was done on the basis of the invoice value at the load port certificate. The assessments are finalized on the basis of final invoice indicating actual payment supported by credit or debit note, as the case may be. No dispute was raised on rate of duty on import of steam coal as the rate of duty of steam coal (other coal) and Bituminous coal were same. 6.1 In the Budget 2012-13 as on 16th March 2012, the Hon'ble Finance Minister in Budget speech stated as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 2701 20 -Briquettes, ovoids and similar solid fuels manufactured from coal: 2701 20 10 ---Anthracite agglomerated 2701 20 90 ---Other Notification No.12/2012-Cus. dt. 17.3.2012 :- TABLE xxx xxx xxx S.No . Chapter Heading or sub-heading or tariff item Description of goods Standard rate 123 27011920 Steam Coal Nil 124 2701 11 00, 2701 12 00 2701 19 All goods other than those specified at S.Nos . 122 and 123 above. 5% 7.1 As per Sub Heading Notes 2 of Chapter 27, Bituminous Coal would be covered under sub heading 270112, subject to :- (a) a volatile matter limit (on a dry, moist, mineral-matter-free basis) exceeding 14% and (b) a calorific value limit (on a moist, mineral-matter-free basis) equal to or greater than 5833 kcal/kg. 7.2 in the present cases, we are concerned wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that present in macroscopically visible fractures. DISCUSSION-In coal as it exists in the ground before it is disturbed, the pores are essentially filled with water (gases, for example, methane, may occupy a minor proportion of the pore volume in some coals); this pore-filling moisture is determined as total moisture and referred to as inherent moisture in a freshly collected sample that (1) does not exhibit visible water on fracture surfaces, (2) has not been allowed to dry after collection, and (3) was collected from a fresh coal face that is not dried (see Classification D388). On samples not meeting these criteria, inherent moisture may be estimated by determining equilibrium moisture in accordance with Test method D1412. D388, D1412 pore moisture, n-moisture in the pores of coal, which may be quantitatively equivalent to or less than inherent moisture depending upon the state of dryness of the sample. residual moisture, n-that moisture remaining in the sample after air drying. DISCUSSION-Residual moisture is neither a standard state nor a characteristic property of a coal. Air drying only removes water that can evaporate at or near ambient laboratory conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed moisture also is equal to the total moisture, or is the sum of the inherent and free moisture present in the coal at the time of the analysis. xxx xxx xxx Equilibrium Moisture-The ASTM standard method of determining the equilibrium moisture in coal is ASTM D 1412-Equilibrium Moisture of Coal at 96 to 97 Percent Relative Humidity and 30 0C. Equilibrium moisture is the best estimate of the inherent moisture. In this method, a sample is brought into equilibrium in a partially evacuated desiccator with an atmosphere of 96-97 % relative humidity at 30 0C. The amount of moisture in the coal under these conditions is determined by weight loss upon heating. As in all methods of determining moisture, there are problems associated with this equilibrium moisture method, and precautions must be taken to obtain reliable results. It appears from para 5.1, Moisture, inherent moisture is not the same as residual moisture. The terminology of residual moisture means the moisture remaining in the sample after air drying. There is procedure for testing of sample in ASTM. 7.4 It is contended by the Ld. Advocates, that regarding the applicability of the Parr Formulae, the primary stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) As per ASTM Manual 57 , Para 5.1 inherent moisture is not the same as residual moisture, nor is free moisture equivalent to air-dry loss moisture. Air-dry loss and residual moisture should not be used as significant values for interpretation. Residual moisture, or as-determined moisture, alone has no significance in the characterization of coals. Inherent or equilibrium moisture is used for calculating moist mineral-mater-free calorific values for the rank classification. (b) Even Joint Director, CRCL opined that the quantities on Air Dried Basis could be taken for use in the PF. In cross-examination, he could not justify his opinion with reference to ASTM standards. He deposed that BIS Standard IS 1350 for Proximate Analysis of Coal indicated that IM an AD basis were the same. However, the said IS 1350 does not indicate, anywhere that IM and AD basis were synonymous. Contrary to the opinion of the CRCL, therefore, Inherent Moisture basis under ASTM D388, is not equivalent to Air Dried basis. (c) Moist, Mineral Matter Free Basis [MMMF Basis] is explained in ASTM D 388. The Note below Table 1 states that moist refers to coal containing its natural inherent moisture. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra). In that case, the Tribunal observed as under :- (i) From the fact, as observed by them in their earlier order in the case of Coastal Energy Pvt. Ltd. and others (supra). in all most, all the load port reports, the details of ARB as well as ADB are provided. Invariably, the inherent moisture is also provided. Inherent moisture or equilibrium moisture is the moisture level that comes closest, moisture in the coal gets state known as bed moisture. When the words moist-mineral-matter-free-basis are used, it is understood that the moisture content is inherent moisture and nothing else. (ii) The appellant contended that the department should have taken NCV (Net Calorific Value) and not GCV (Gross Calorific Value). The Tribunal accepted the submission of the learned special counsel on behalf of the Revenue in so far as various expressions and equations adopted in ASTM Standards for the purpose of conversion also referred to calorific value in the context of GCV. Also, the load port certificates presented by the importers before the customs authorities indicates that Gross Calorific Value has been adopted while arriving at various parameters like ADB, AR basis etc. (iii) It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the ASTM parameter as stated above, prima facie, we are unable to accept the view of the Revenue that Load Port Report is based on inherent moisture. We find that ASTM prescribed procedure, on samples not meeting the criteria, inherent moisture may be estimated by determining equilibrium moisture in accordance with Test Method D 1412. 10.1 The Ld. Special Counsel for the Revenue drew the attention of the Bench to Certificate of Sampling and Analysis of PT Geoservices, Marine Cargo Surveying to substantiate that the sample is termed as inherent moisture . On perusal of the said certificate, we find that it indicates the test method of ASTM D 3173. We have already reproduced above, the ASTM D 3173, which covers testing of Residual moisture. According to testing method as mentioned in the said certificate, it would be residual moisture and not inherent moisture. So, prima facie, we are of the view that the Revenue should have tested the sample of imported coal as per ASTM for ascertaining C.V. limit on a moist in the imported coal. 11. We have also noticed that the similar issue came before the Tribunal in the case of Tamil Nadu News Print Papers Ltd. (TNPL) Vs CC Tuticori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Maheswari Brothers Others (supra). On a perusal of the said decision, we find that the decision of Chennai Bench in the case of TNPL (supra) was not placed before the Bench. In the case of Maheswari Brothers (supra), the Tribunal observed that no evidence by way of illustration or example was produced before the Bench to show that the formula used by the Revenue for arriving at GCV on a moist mineral free basis is wrong. The Bangalore Bench following the earlier decision in the case of Coastal Energy Private Ltd. held that based on Load Port Reports submitted by the appellant themselves, tariff sub heading description read with sub heading notes, the coal imported answers to the definition of Bituminous Coal . The Tribunal after going through the Hand Book of Coal Analysis by James G. Speight at para 5.2.6 observed that in almost load port reports, the details of ARB as well as ADB are provided. Invariably, the inherent moisture is also provided. Inherent moisture or equilibrium moisture is the moisture level that comes closest to the moisture in the coal in its unexposed state known as bed moisture. 13. In the present case, the learned Senior Advocates drew the attentio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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