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2019 (1) TMI 925 - HC - Customs100% EOU - Import of brass metal scrap containing other impurities without payment of duty as per Notification No.52/2003-Cus dated 31.03.2003 for manufacture of brass articles - contravention of N/N. 53/2003-Cus dated 31.03.2003 - it was alleged that segregation of imported brass scrap into foundry and non-foundry did not result into manufacture, as per CBEC Circular No.62 of 2001 dated 12.11.2001 - it was also alleged that the utilization/clearance of excess scrap, could be said to have been not used for the intended purpose - contravention of N/N. 52/2003-Cus. Held that:- What the respondent has imported is brass scrap for the purpose of manufacturing brass articles. For this purpose, the scrap has to be segregated to first remove the brass and foundry items which are then used for manufacturing purpose. Unless the plastic and other waste is removed, it would not be possible to use the brass for manufacture. Therefore, the segregation of the brass and foundry from the scrap is the first step in the manufacturing process and the plastic and other material generated on account of such segregation, which cannot be used for manufacturing brass articles do not retain the character of the item which was imported, viz., brass scrap. Therefore, the question of charging customs duty on such goods by considering them to be articles imported “as such” would not arise. CBEC Circular No.62/2001-Cus dated 12.11.2001 - Held that:- The Circular relates to valuation of plastic waste and scrap - The identity of the goods imported and the goods cleared into DTA is the same, namely plastic waste. Evidently, therefore, the plastic waste cleared into DTA is clearance of plastic waste “as such”. Whereas in the facts of the present case, what is imported is brass scrap and what is cleared into DTA is waste other than brass and foundry items, the identity whereof is different from the goods imported. The said circular would, therefore, have no applicability to the facts of this case. Circular No.1029/2016-CX dated 10.05.2016 - Held that:- The Circular clarifies regarding segregation of impurities, viz., iron, steel, rubber, plastic, dust etc. from honey grade plastic scrap - while the above circular clarifies whether segregated foreign materials from imported honey grade brass scrap can be treated as “inputs as such” as contemplated in rule 3(5) of the CENVAT Credit Rules, 2004, the principle involved is the same. In this case also, the segregated material has an altogether different character and use vis-à-vis the brass scrap. The value per unit and classification of the segregated foreign materials is also different from that of the imported brass scrap. As a necessary corollary therefore, the segregated foreign material cannot be treated as input “as such” for the purpose of levy of customs duty. The Tribunal, therefore, did not commit any error in placing reliance upon Circular No.1029/2016-/CX dated 10th May, 2016. Whether clearance of such scrap upon payment of excise duty would fall within the ambit of paragraph 3 of Notification No.52/2003- Cus dated 31.03.2003? - Held that:- Waste and scrap arising in the course of production or manufacture of finished goods are also exempt from the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and the additional duty, if any, leviable thereon under section 3 of the said Customs Tariff Act - Reverting to the facts of the present case, as noticed hereinabove, the segregated waste has arisen in the course of production/manufacture of the finished goods viz. brass articles; the Commissioner of Customs has recorded that the segregated waste had in fact been cleared on payment of duty after being duly permitted by the Development Commissioner in accordance with the provisions of the EXIM Policy. The requirements of clause (3) of Notification: 52/2003-Cus dated 31st March, 2003 are therefore, wholly satisfied - there does not appear to be any legal infirmity in the view adopted by the Tribunal. Appeal dismissed - decided against appellant-Revenue.
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