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TMI Blog2007 (8) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... ities that the goods was in the nature of waste/residue/remnant/spillage with impurities generated in the manufacture of iron and steel) they felt that it would be more appropriately classifiable under Heading 26.19 of the Tariff Schedule irrespective of its suitability for recovery of metal. Accordingly, the goods was caused to be inspected by the scientists of National Metallurgical Laboratory (NML). NML, after test of representative sample of the consignment, reported that the material could be considered as mild steel skull scrap suitable for melting. Their report also indicated presence of slag. On this basis, the Customs authorities took the view that M/s. Kanishk Steel Industries Ltd. [hereinafter referred to as the importer] had misdeclared the goods in the Bill of Entry and that the goods was more appropriately classifiable under Heading 26.19 [SH 2619 00 10] of the Tariff Schedule. As it appeared that goods falling under this entry could be imported only under a specific licence and that the importer had not produced any such licence, the import itself was found to be in violation of the Foreign Trade Policy. On this basis, the department held the goods to be liable for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... metal but only a waste resulting from the manufacture of iron and steel, classifiable under Heading 26.19. In his rejoinder, learned consultant pointed out that NML had separately analyzed the metallic and slag parts of the sample of the goods to report the iron content in each part. The metallic part was found to contain 94% iron and the slag part was found to contain 43.34% iron. According to learned consultant, goods of such composition could by no stretch of imagination be classified as 'slag, dross, scalings or other waste from the manufacture of iron or steel'. It could only be considered as MS scrap classifiable under 72.04. 3. After considering the submissions, we have not found any distinction between this case and the case of M/s. Ponneri Steel Industries (supra). in that case, goods declared as "non-alloy steel melting scrap consisting of skull" and classified by the importer under Heading 7204 49 00 was tested by NML and it was reported thus: "based on visual examination and chemical analysis, the material can be considered as non-alloy steel skull scrap suitable for melting. The percentage of recovery of iron from the scrap is about 80% by weight." The rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. We find that the decision taken in favour of the Revenue in SAIL's case will work against the Revenue in the instant case. We have also given mindful consideration to the submissions made by learned JDR with reference to HSN Notes. The Notes under HSN Heading 72.04 say that this Heading covers waste and scrap of iron or steel as defined under Note 8(a) to Section XV. Note 8(a) says that 'waste and scrap' means metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons. Note 8(a) to Section XV of the Tariff Schedule reads identically. In the instant case, it is not in dispute that the imported scrap was generated in the manufacture of iron or steel. The same was the factual situation in SAIL's case as also in the case of M/s. Ponneri Steel Industries (supra). The HSN Notes under Heading 72.04 also say that this Heading excludes slag, dross, scalings or other waste from the manufacture of iron or steel even if suitable for the recovery of the metal [Heading 26.191. At the same time, HSN Notes under Heading 26.19 say that the Heading also includes dust from bla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies under the above Heading. There are two sub-divisions under 'other waste and scrap', which are '- -'entries viz. 7204 41 00 and 7204 49 00. The first of these sub-divisions stands for 'turnings, shavings, chips, milling waste, saw dust, filings, trimmings and stampings, whether or not in bundles'. The second sub-division is 'Other' - residuary entry under the category of 'other waste and scrap'. According to the Revenue, the subject item would fall under Heading 2619 and sub-heading 2619 00 10. The Heading covers 'slag, dross (other than granulated slag), scalings and other waste from the manufacture of iron or steel'. The entry 2619 00 reads identically. There are two sub-divisions under this entry, the first of which covers 'converted slag (skull) of blast furnace'. The remaining sub-heading is residuary ('Other'). 3. Learned Counsel has relied on the NML report, which declared the item to be non-alloy steel skull scrap suitable for melting and reported its composition indicating ferrous content of 80% by weight. It is submitted that the presence of a small amount of slag in the scrap would not make the scrap classifiable under Heading 2619. In this connection, learned Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5%). This note relies on Government of India's decision in the cases of Electrosteel Castings Ltd. and Texmaco Ltd. In his rejoinder, learned Counsel submits that S.B. Sarkar quoted wrongly from Government of India's judgments. 5. After giving careful consideration to the submissions, we observe, at the outset, that S.B. Sarkar's notings under 'skull scrap' with reference to Government of India's decision in the cases of Electrosteel Castings Ltd. and Texmaco Ltd. are erroneous. The notings are to the effect that 'skull scrap' is a mixture of slag, sand, lime and earth and contains little of the metal (upto 5%) whereas what was found by the Government in the said cases was to the contra. In both the cases, it was held, by relying on IS 1529/1953, that Se 'skull scrap' used for remelting should not contain more than 5% of slag. The product considered by the Government in the above cases contained 3% metal and 95% waste and accordingly, the item was held to be not chargeable to central excise duty. It is on record that the goods in question was composed of about 80% by weight of iron along with some amount of slag as reported by NML. NML considered the goods to be non-allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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