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TMI Blog2025 (4) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Heading (CTH) 7204 49 00; Department, on examination of the goods, proposed to enhance the value of the goods from 400 USD per metric ton to 500 USD per metric ton based on the alleged contemporary imports of the identical goods allegedly taken from Directorate of Valuation Website; the customs duty was already paid by the Appellant; Revenue also alleged that the imported goods prima facie did not appear to be scarp of silicon steel; An independent Chartered Engineer appointed by Department, certified that the imported goods were obtained from the old and used rejected/damaged transformers and cannot be reused directly in the present situation and therefore, the imported goods are Silicon Steel Scrap; even the shed officer on re-examination of the goods found that the goods are of varied length and some of the sheets were found to be curved, zig-zagged or even generally de-shaped, rusted and sides of the sheets were also found to be crushed and cramped; the Appellant sought permission for mutilation of scrap, which was rejected. 2.1. A show cause notice dated 21.01.2015, was issued, seeking to reclassify the goods under CTH 7225 19 00; to reject the value declared; confisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTH 7204; silicon steel strips dismantled from transformers are scrap and not defective goods; expert opinion given by the CE regarding the classification issue is admissible evidence and even assuming, without admitting, that the classification under CTH 7204 is correct, it will not automatically follow that they will be classifiable under CTH 7225 as Silicon Steel Strips. He relies on the following cases: * Naveen lmpex Ghaziabad 2018 (1) TMI 1468 - CESTAT ALLAHABAD * Sujana Steel Ltd, Hyderabad 2000 (115) ELT 539 (Tri.) * Patiala Castings (P) Ltd 2003 (156) ELT 458 (P & H) * Sunshine Artifacts, 2012 (280) ELT 156 (Tri. Bom.) * M/s. Ansun System Consulting (P) Ltd 2005 (179) ELT 511 (Tri. -Del.) * Kishore Kr. Agarwal 2010 (252) ELT 138 (Tri. Kol.) * SPS Metal Cast & Oils Ltd 2004 (163) ELT 265(Tri. Kol) * Shree Ram Urban Infrastructures Ltd 2009 (246) ELT 718 * Malu Electrodes Pvt Ltd 2018 (364) ELT 1023 (Tri.-Mum) * Hinduja Foundries Ltd 2013 (288) ELT 571 (Tri - Chennai) * LML Ltd 1997 (94) ELT 273 (SC) * Bhushan Steels and Strips Ltd 2010 (257) ELT 5 (SC) 5. Learned Counsel submits that the Department did not adduce any concrete evidence to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very basis for rejection of declared value of the goods is not present. He submits that the transaction value in the present case is not liable to be rejected as it is in consonance with the contract; each transaction has to be assessed independently; Section 14 of the Customs Act clearly states that value should be the price actually paid or payable; the price actually paid has been declared, and therefore, rejection of the same, and re-determination is completely unwarranted and bad in law; Rule 3(2) of the Valuation Rules indicates that the Department is bound to accept the transaction value at all times except when the circumstances mentioned in the proviso to Rule 3(2) exist as held in M/s Sanjivani Non-Ferrous Trading Pvt. Ltd., 2018 (12) TMI 738 (SC) and Eicher Tractors Ltd. 2000 (122) ELT 321 (SC); the onus is on the Department to prove that goods have been undervalued as held in Prodelin India (P) Ltd., 2006 (202) ELT 13 (SC). He submits that though the appellants have furnished bills of entry, invoice and details of past imports, the Appellate Authority has discarded the aforesaid value without any basis and upheld the order of Adjudicating Authority which has enhanced th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... System Consulting (P) Ltd. (supra); Kishore Kr Agarwal (supra) and SPS Metal Cast & Oil Ltd. (supra) wherein, it was held that the materials obtained from dismantled transformers cannot be treated as defective CRGO sheets; consequently, the import restrictions as per Quality Control Order and the Amendment Order would not apply to the impugned goods. Learned counsel submits that as per Para 2.17 of the FTP 2009-14, authorisation is needed if the goods imported are in the nature of "Second Hand Goods other than Capital Goods" and not in case of scrap generated out of used goods. 9. Learned counsel submits that the provisions of Section 111(d) are not attracted in this case as there has been no violation of the Customs Act, Tariff Act, FTP, ITC(HS) or any other law in force; It is thus, Section 111(m) is also not attracted as the imported goods do correspond in value or any other particular with the bill of entry filed under the Act; the goods imported are indeed scrap and their value declared in the bill of entry is the `transaction value'; all the information available with the Appellant was fully disclosed at the time of importation; department has arbitrarily changed the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for penalty. 13. We find that the appellants imported steel scraps (silicon) and filed a bill of entry at a declared classification under CTH 72044900 and value of 400 $ PMT; on first examination, Revenue proposed classification under CTH 72251900 and value at 500 $ PMT. A Chartered Engineer was appointed to ascertain the condition and classification of goods. The Chartered Engineer vide Certificate, dated 15.09.2014, while indicating that the price could be 500$ PMT, commented on the condition of the cargo as follows: * Once the transformers outlive their specified life w.r.t their working conditions, their cores made up of silicon steel strips become weak to produce the desired results of power transmission or when they got damaged due to fire mishaps. * Hence such silicon steel strips obtained from the old & used rejected / damaged transformers cannot be reused directly in present condition. Such kind of cores are then dismantled and are supplied as a scrap in the secondary market. * Keeping in view of the international market practices and on the basis of the above findings. I am of the concerned opinion that the said Silicon Steel Strips are originated from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per CTA,1975, are follows. Tariff Item Description of goods Unit Rate of duty 7204 Ferrous waste and scrap; re-melting scrap ingots of iron or steel 7204 10 00 - Waste and scrap of cast iron Kg 10% - Waste and scrap of alloy steel 7204 21 -- Of stainless steel 7204 21 10 --- Empty or discharged cartridges of all bores and sizes Kg 10% 7204 21 90 --- Other Kg 10% 7204 29 -- Other 10% 7204 29 10 --- Empty or discharged cartridges of all bores and sizes Kg 10% 7204 29 20 --- Of high speed steel Kg 10% 7204 29 90 --- Other Kg 10% 7204 30 - Waste and scrap of tinned iron or steel Kg 10% - Other waste and scrap 7204 41 00 -- Turnings, shavings, chips, milling waste, saw dust, fillings, trimmings and stampings, whether or not in bundles. Kg 10% 7204 49 00 -- Other kg 10% 7204 50 00 - Remelting scrap ingots kg 10% 13.4. Note 8(a) of Section XV of the Tariff Act, the meaning of waste and scrap is as under: "Metal waste and scrap from the manufacture or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods along with the fact that their edges were cut and worn out and the fact that they were in not serviceable for the purpose of sheets, it has to be held that the same are metal waste and scrap, which are admittedly not usable as such because of breakage, cutting up, wear-tear or other reasons. In such a scenario, we are of the view that the goods can be used only by remelting the same and as such has to be held as being waste and scrap. We find no misdeclaration in the goods. As such the impugned orders lack merits and are set aside and appeal is allowed with consequential relief. 15. Further, Punjab and Haryana High Court in the case of Patiala Castings (P) Ltd. v. Union of India, 2003 (156) ELT 458 (P & H), held that 22. A perusal of the above provision shows that metal goods which cannot be used "as such because of breakage, cutting-up, wear or other reasons" fall within 'waste and scrap'. In the present case, the goods were not usable pipes as they had been used earlier. These were rusted, pitted and perforated and had even been repaired. Surely, a person who has to import pipes for being used in an industry shall not buy rusted or perforated pieces. ........ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial and issued instructions that if serviceable goods are noticed, they should be mutilated to such an extent to become steel scrap for availing the benefit of end use notification and the consignments are assessed as steel scrap as held in the (case) of Sujana Steels Limited v. Commissioner." 27. A perusal of the above would show that the authority was dealing with the case of the petitioner and M/s. Datt Multi Metals Private Limited. It was clarified that the goods should be mutilated to such an extent that these become steel scrap so as to enable the party to avail the benefit of the "end use notification and the consignments are assessed as steel scrap...." 28. On a consideration of these instructions issued vide letter dated June 16, 1995, it is clear that whenever the authority entertains any doubt regarding the goods, it has the option to get them mutilated so that the importer is not put to any harassment and the Revenue does not suffer any loss. Thus, even if the authority had suspected any irregularity, it could have immediately got the goods mutilated and ordered the release thereof. 16. We find that though the classification of the goods shall not depend on the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent stand in respect of the same appellant under identical set of facts. 18. We find that Appellate authority's apprehension regarding the possibility of reuse after processing, repair and re-use is unfounded. It is completely silent on the possible re-use of the goods and what processes can be undertaken to make the goods re-usable. Further, we find that the Appellate Authority is not a metallurgical expert to give a finding of this nature, when the Chartered Engineer and the Shed Officer have given categorical report on the condition of the impugned goods. In view of this, we find that the impugned goods are rightly classifiable as "other waste and scrap" falling under CTH 7204 49 00. In any case, the classification determined in the Impugned Order is incorrect as the goods have a width of 0.20 mm to 0.30 mm, i.e. less than 600 mm and mostly grain oriented, taking them out of the ambit of CTH 7225 19 00. Thus, we find that the Impugned Order is liable to be set aside, both the rejection of classification under CTH 7204 49 00 and classifying the same CTH 7225 19 00 are without any basis, reason and evidence. 19. We now turn our attention to the re-determination of value as done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed in Rule 4(2) of CVR 1988, the price paid or payable by the importer to the vendor, in the ordinary course of international trade and commerce, shall be taken to be the transaction value. In other words, save and except for the circumstances mentioned in proviso to Sub-rule (2) of Rule 4, the invoice price is to form the basis for determination of the transaction value. Nevertheless, if on the basis of some contemporaneous evidence, the revenue is able to demonstrate that the invoice does not reflect the correct price, it would be justified in rejecting the invoice price and determine the transaction value in accordance with the procedure laid down in CVR, 1988. It needs little emphasis that before rejecting the transaction value declared by the importer as incorrect or unacceptable, the revenue has to bring on record cogent material to show that contemporaneous imports, which obviously would include the date of contract, the time and place of importation, etc., were at a higher price. In such a situation, Rule 10A of CVR, 1988 contemplates that where the department has a 'reason to doubt' the truth or accuracy of the declared value, it may ask the importer to provide fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules framed thereunder. The said Rules are CVR, 1988. It was further held that in cases where the circumstances mentioned in Rules 4(2)(c) to (h) are not applicable, the Department is bound to assess the duty under transaction value. Therefore, unless the price actually paid for a particular transaction falls within the exceptions mentioned in Rules 4(2)(c) to (h), the Department is bound to assess the duty on the transaction value. It was further held that Rule 4 is directly relatable to Section 14(1) of the Act. Section 14(1) read with Rule 4 provides that the price paid by the importer in the ordinary course of commerce shall be taken to be the value in the absence of any special circumstances indicated in Section 14 (1). Therefore, what should be accepted as the value for the purpose of assessment is the price actually paid for the particular transaction, unless the price is unacceptable for the reasons set out in Rule 4(2). [Also See: Rabindra Chandra Paul v. Commissioner of Customs (Preventive), Shillong, (2007) 3 SCC 93 = 2007 (209, E.LT. 329 (S.C.)] 21. Further, we find that the adjudicating authority has conveniently ignored the findings in the Chartered Engineer's r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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