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TMI Blog2020 (9) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be copper (of 99% purity) and the surrounding metal to comprise of iron (99% steel with traces of other metals). To ascertain the copper content of the impugned imports, samples were drawn from the first consignment and sent to the National Metallurgical Laboratory, Jamshedpur with consent of the importer that the sample was representative of both the consignments. 2. According to the analysis of the laboratory, communicated vide letter dated 7th March 2018, the copper content was 59.62% and the iron content of 39.52%. The results, transmitted to the importer by letter dated 1st August 2018, was not acceptable to them and, by letter dated 13th August 2018, re-test was sought. Between November 2018 and January 2019, several agencies were approached but all disclaimed their competence to undertake analysis. The National Metallurgical Laboratory which had, initially, confirmed the 'positive material identification (PMI)' test, identifying copper responded to letter of customs authorities dated 13th February 2019 for providing, as narrated in the impugned order, 'percentage wise constituent materials in the metal scrap block' with their inability to do so which, strangely, had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to be appurtenant with order of confiscation. In the circumstances of the inability to undertake re-test which was allowed by the competent authority, of the claim by the importer that the presence of copper does not add value to 'scrap', owing to non-extractability, not having been disproved and of the finding that copper had been deliberately concealed being unevidenced, the imposition of penalty under section 114AA of Customs Act, 1962 on the Director of the importing company appears to have been a casual, and irresponsible, disposal of the proposal in the show cause notice. This is a colourable exercise of power which we, with reluctance, are constrained to the record because it is such adjudications that ultimate clog the appellate jurisdiction. 5. Learned Counsel for the appellant points out that the imports were effected for trading in the metal recovery market and that the shape or contents will not alter final utilisation of the goods for melting. It is also submitted that, of late, they had been importing 'scrap' from M/s R&G Pacific Pty Ltd, Australia which, invariably, included unserviceable 'cathode collector bar' discarded by aluminium smelters and that the certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the second report of the National Metallurgical Laboratory, Jamshedpur, it would appear that the cylindrical core, reported, in the first instance by the same laboratory as contributing more than the 'ferrous content' to the impugned goods, is not alloy of copper. The cylindrical core, with its copper content not marred by significant presence of any of the other elements, has been wrongly classified in heading no. 7404 0029 of the First Schedule to Customs Tariff Act, 1975; as 'copper alloy' is non-existent in the cylindrical core that is alleged to be the predominant metal, the revised classification fails. Once the proposed classification is ruled out, the declared classification survives. On this ground itself, the adjudication order lacks authority of law. 8. We now turn to the issue of applicability of note no. 7 in Section XV of the First Schedule to Customs Tariff Act, 1975 prescribing, and, thereby, precluding resort to General Rules for Interpretation, the test of placement under the appropriate base metal. The adjudication order, claiming authority under circular no. 30/2017-Cus dated 18th July 2017 of Central Board of Excise & Customs (as it then was), placed relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nologically, capable of recovery, that would not have altered the nature of the impugned goods for description as 'composite article' for discarding the declared value. 10. Resort to legal fiction afforded by notes in the sections or chapters of the First Schedule to Customs Tariff Act, 1975 for 'breaking the tie' to arrive at fresh classification, cannot, by any stretch, be construed as evidence of deliberate misdeclaration or as impinging upon a commercial agreement in which commercial parlance of the trade is the lingua franca of the contract. Discarding of declared value without establishing that the transaction and the contract are at variance is contrary to law as enacted. We take particular note that the impugned order does not dispute that the impugned goods are 'waste and scrap' of one sort or the other. Therefore, whether the note in Section VII is applicable or not, the value declared in the invoice cannot be subject to variation unless the prescriptions in section 14 of Customs Act, 1962 that render the transaction value to be acceptable have not been conformed to. There is no evidence to that effect in the show cause notice or the impugned order. 11. For the above re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edominates over other available metals in the same goods. However, the imported goods cannot be considered as an alloy, since the term alloy includes sintered mixtures of metal powders, heterogeneous intimate mixtures but in the instant case, as found from physical examination, two metals are distinct components of the bar imported in the name of heavy melting steel scrap. 14. Be that as it may, those metals could easily be separated from each other by subjecting those to different melting points or even by other separation methods including processes of physical separation. Further, the density of copper is more than the density of iron for which from the physical examination it would be almost impossible to conclude which part of metal predominates by weight in the goods imported. Therefore, test report of the export has to taken as the best piece of evidence. However, appellant had disputed the first report on the ground that it was a revised report and an enquiry made by it through the Information Act revealed presence of another report prepared prior to 07/03/2018. But such apprehension can never be stated to be conclusive in view of the fact that in both the reports presence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing ordered by the Hon'ble High Court of Allahabad on 19th December, 2019 in the case of M/s IFFDC Krishak Sewa Kendra Thru Sole Proprietor Vs. Appellate Authority/Director of Agriculture U.P. Lko & Anr. that had dealt with similar situation in respect of Fertilizer Control Order, 1985. Therefore, it would not cause any irregularity in the procedure if such second re-testing could be ordered by the adjudicating authority. On this point also remanding the appeal for re-adjudication would better serve the ends of justice. 17. Considering the complexity of the issue which is purely dependent on an accurate test report and as no other incrementing material except description in the bill of entry is noticed in the evidence on record against Mr. Omprakash Kanungo in Appeal No. C/85014/2020, I have no hesitation to go with the findings of my learned brother in the other appeal. (Dr. Suvendu Kumar Pati) Member (Judicial) 18. In view of the concurrence of finding in appeal no. C/85014/2020, the penalty imposed on Shri Om Prakash Kanungo is set aside. 19. In view of difference of opinion as to allowing of appeal, as held by Member (Technical), and remanding the matter for re-test, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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