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TMI Blog2024 (8) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... mber(Judicial) has laid emphasis that the mutilation as per Section 24 of the Customs Act, 1962 should have been allowed for conversion of said iron rods and channels into scrap in the event if such option is not availed / exercised by the appellant, duty can be demanded for goods as iron rods under CTH 7215 9090 or channels under CTH 7308 9010 - In the present circumstances, since no such request for mutilation was advanced nor any direction for such mutilation was issued initially, the classification of the iron rods and channels would be under CTH 7215 9090 and CTH 7308 9010, respectively. Valuation of imported goods - HELD THAT:- It is noticed that initially for the entire 212.13 MTs of Heavy Melting Steel scrap imported, the value was declared as Rs. 36,01,729/-. After change in the classification, the adjudicating authority has applied contemporaneous import price of Rs. 20/- per kg. for 22.920 MTs of channels and 47.200 MTs of iron rods against the imported scrap price of Rs. 16.97 per kg. The appellant claimed that the contemporaneous import value should be adopted as Rs. 19/- per kg. However, no evidence has been placed by the appellant in support of their claim - there ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant are Heavy Melting Scrap and it was subject to 100% visual inspection during loading process. 3. The learned counsel further submits that due to the heavy pressure from the department and as the goods were incurring huge amounts as demurrage and container detention charges and also the appellant was highly in need of the goods for the continuous production in their factory, they had to accept the enhanced value for the purpose of assessment as proposed by the department vide their letter dated 30.04.2009. In their letter dated 30.04.2009, the appellant had stated that they are manufacturers of steel ingots out of HMS scrap and it is for the first time that the alleged kind of goods are seen in their consignment and that they had placed order for HMS srap only; that the import documents and pre-shipment certificates shows that the ordered item and the imported item are HMS scrap only; that the pre-inspection certificate from the port of exports has also certified that there was 100% inspection of the goods under the import; that the agency was the one authorized and registered with DGFT, India to issue such certificates; that the appellant had no intention to mis-declare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot reclassify the goods unilaterally on the basis of the examination report of officers alone. Technical opinion given by the pre-inspection certificate and by M/s. Alloys and Metal Test Services, cannot be disregarded. Also the fact that all the shipping documents describe the goods as steel melting scrap only cannot be denied. Under such circumstances, denying the classification and the benefit of exemption are not tenable. For the same reason, the department has not made its case for redetermination of the value of the impugned goods for the purpose of assessment. We find that declared classification and valuation cannot be rejected only on the basis of examination report of the officers, more so, when technical reports were not in favour of the view taken by the Revenue, Therefore, taking recourse to LME prices is also not acceptable. It is not the case of the department that to value over and above the price declared in the invoice was paid to the overseas supplier. It is also not the case of the department that the said scrap was not utilised as scrap. Therefore, we find that department has not given forth any evidence to support the allegation. We find that the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their order reported in 2014 (305) E.L.T. 377 (Mad.) upheld the above Tribunal s order and dismissed the CMA filed by Revenue. The relevant paragraphs of the Hon ble High Court of Madras order are reproduced as under: 12. The Appellate Tribunal, after considering the available materials on record, has rightly found that the things in question are nothing but scrap materials. Under the said circumstances, the respondent has been directed to pay duty on the basis of scrap materials and in view of the discussions made earlier, this Court has not found any acceptable force in the contention put forth on the side of the appellant and altogether the present Civil Miscellaneous Appeal deserves to be dismissed. 13. In fine, this Civil Miscellaneous Appeal deserves dismissal and accordingly is dismissed without costs. The ratio of the High Court decision and this Tribunal s decision (supra) is clearly applicable to the present case as the issues are identical and also considering the fact that there is no misdeclaration by appellant as seen from the purchase order/sales contract and sales confirmation report and pre-shipment inspection certificate, wherein appellants have placed orders f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issible by complying with certain conditions and the Appellant had complied with the conditions as prescribed. We also find that pre-shipment inspection certificate issued by accredited agency under para 2.32(i) of Handbook of procedure clearly indicates that they have conducted visual inspection of 100% of the cargo and declared that the import consignment is actually metallic scrap /seconds/defective as per the internationally accepted parameters for such a classification. Further description of the pre-shipment inspection certificate shows the goods as heavy metallic scrap. The allegation regarding presence of assorted size of scrap were brought to the notice of the Appellant only when it was subject to inspection by proper officer. There is no allegation that Appellant had knowledge regarding presence of assorted size of panel having length between 1.5 m to 5.5 m. Immediately when the above fact was brought to the notice of the Department, considering the appellant as manufacturer and considering the goods imported as raw material, if respondent have recently believe that the imported goods can be used for more than one purpose, to render the goods unfit for such purpose, an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner (Appeals) in the impugned order held that since the enhanced value was accepted at the time of assessment appeal against the valuation cannot be filed as there was no grievance in relation to valuation. However, he set aside confiscation of goods, consequently penalty is also set aside. The appellant has filed an appeal against this order. 9. When the appeal was taken up for hearing, the Learned Counsel for the Appellant draws our attention to the documents including sale contract dated 06.04.2009, invoice issued by overseas supplier dated 06.04.2009, relevant pages of the Hand Book of Procedure related to import of metallic waste, Scarp, etc., Appendix file showing the list of inspection and Certificate of Origin issued by M/s. Atlas Metals Trading Co., LLC, and Pre shipment certificate, etc., showing that the goods imported by the Appellant are Heavy Melting Scrap and it was subject to 100% visual inspection during loading process. 10. The Learned counsel further submits that due to the heavy pressure from the department and as the goods were incurring huge amounts as demurrage, container detention charges and also the appellant was highly in need of the goods for the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bai were ignored. Also, the request of the appellants for mutilating the goods before clearance was also not allowed. It is the contention of the appellants that by nature steel melting scrap is likely to have some defective secondary parts or articles. However, the supplier treated the same as scrap only. It is a matter of fact that the said scrap was utilised in their factory for melting only. Therefore, denying the classification and the exemption are bad in law. 5. We find that the appellants have a point in their favour. We find that the adjudicating authority has not explained as to why various certificates submitted by the appellants were not accepted. It is not known as to why the department has not allowed the request for mutilation of the goods before clearance. Chartered Engineer s examination was also not ordered. This being the factual milieu, we find that department cannot reclassify the goods unilaterally on the basis of the examination report of officers alone. Technical opinion given by the pre-inspection certificate and by M/s. Alloys and Metal Test Services, cannot be disregarded. Also the fact that all the shipping documents describe the goods as steel melting s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mon parlance the length of TMT rods in the market is from 11 to 12 mtrs (33 to 36 ft.) and the length of the rods imported range from 3 ft. to 15 ft. and are cut end pieces of assorted sizes. Since the cut ends do not have proportionate size they have very limited usage. When we fail to understand how this can be the basis for concluding that the goods are not HMS, we are not able to find any cogent reason for discarding the pre-inspection certificate in toto. The jurisdictional High Court in the case of CC, Chennai v. Kamatchi Sponge Power Corpn. Ltd. - 2016 (337) E.L.T. 73 (Tri.-Chennai) in similar set of facts had upheld the order passed by Tribunal, which set aside confiscation and penalty. The relevant portion is reproduced as under: We also find that the Revenue preferred CMA against the Tribunal s order before the Hon ble High Court of Madras and the High Court of Madras in their order reported in 2014 (305) E.L.T. 377 (Mad.) upheld the above Tribunal s order and dismissed the CMA filed by Revenue. The relevant paragraphs of the Hon ble High Court of Madras order are reproduced as under: 7. As pointed out earlier, the only point that has to be decided in the present Civil Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report and pre-shipment inspection certificate, wherein appellants have placed orders for supply of 1000 MTs of HMSS, and imported the said goods and cleared in terms of purchase order. The Commissioner (Appeals) has discussed the issue and given detailed findings. We also find that the test report relied by Revenue in a private laboratory is not the competent authority approved by CRCL or Customs. Further, even as per the test report, the goods were found to be secondary pipes which clearly confirms that they are scrap . We find that Commissioner (Appeals) taking into consideration of the goods clearly directed the department to mutilate and allow clearance as scrap. Therefore, Revenue s relying on Punjab and Haryana High Court decision in Aman Alloys Ltd. (supra) is distinguishable and not applicable for the reason that this jurisdictional High Court of Madras order which upheld the decision of this Bench of the Tribunal is binding on the Tribunal and prevails over. We also find that the appellants are registered Central Excise assessee having foundry for manufacture of billets, TMT bars as evident from the Central Excise registration and paying Central Excise duties on the final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the declared items were rods and channels and now they cannot claim that they are nothing but scrap. Note 8 of Section XV which reads as: 8. In this Section, the following expressions have the meanings hereby assigned to them : (a) waste and scrap: (i) all metal waste and scrap; (ii) metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons. (b) Powders: products of which 90% or more by weight passes through a sieve having a mesh aperture of 1 mm . 16. The above note clearly establishes that scrap is different from rods and channels and therefore there is a distinct heading for each one of these items. The chapter headings reproduced below clearly distinguish the scrap from iron rods and channels and therefore the question of treating iron rods /channels as scrap does not arise. Therefore, classification of the impugned goods is upheld. Section-XV Chapter-72 - Other waste and scrap: 7204 41 00 -- Turnings, shavings, chips, milling waste, sawdust, fillings, trimmings and stampings, whether or not in bundles 7204 49 00 -- Other 15% - 7204 50 00 - Remelting scrap ingots 15% 7215 Other Bars and Rods of Iron or Non-Alloy Steel 7215 90 90 --- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant is for the period 3.1.2009 to 10.2.2009 but the import happened on 15.4.2009 and hence the adjudicating authority observation that he considered the lowest contemporaneous value of that period is justifiable and therefore we do not find any reason to disregard the value which has resulted in differential duty of only Rs. 1,34,405/-. In view of the above no purpose will be served in remanding the matter to the Commissioner (Appeals) and therefore, based on our discussions supra the classification and valuation of rods and channels is upheld. The Appeal is dismissed. (R. BHAGYA DEVI) MEMBER (TECHNICAL) DIFFERENCE OF OPINION On going through the order signed by the learned Member (Technical), it is seen that following differences of opinion emerge:- (i) Whether the goods imported by the appellant can be classified under Customs Tariff Heading 7204 4900 as claimed by the importer-appellant or under Customs Tariff Heading 7215 9090 for Iron Rods and under Customs Tariff Heading 7308 9010 for Channels as held by the adjudicating authority. (ii) Whether the value declared by the appellant should be accepted as assessable value in the absence of any documentary evidence as urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 1.00 lakh under Section 112(a) of the Customs Act, 1962. Aggrieved by the said order, the appellant filed appeal before the learned Commissioner(Appeals) who confirmed the classification and differential duty. but set aside the confiscation and imposition of penalty. Not satisfied with the order of learned Commissioner(Appeals), appellant approached this Tribunal. 22. The learned Member(Judicial) has observed that the presence of assorted sizes of iron rods and channels between 1.5 meter to 5.5 meter in the imported consignment was not within the knowledge of the appellant and to render the goods unfit for making it as a scrap, opportunity for mutilation of the same as per Section 24 of the Customs Act, 1964 ought to have been extended to the appellant and in the event the appellant refused to accept the condition of mutilation, then duty could have been demanded for goods as iron rods under CTH 7215 9090 and channels under CTH 7308 9010. In other words, as argued by the learned AR for the Revenue, neither the Commissioner(Appeals) nor the learned Member(Judicial) has either discussed or disputed the issue of classification of the iron rods and channels found in the imported ..... X X X X Extracts X X X X X X X X Extracts X X X X
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