TMI Blog2001 (9) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of the Customs Act, 1962. (iii) I impose a penalty of Rs. 10,000/- (Rs. Ten Thousands only) of M/s. PCK Buderus (India) Tool Steel Company, Madras-17 under Section 112(a) of the Customs Act, 1962. 2. The allegation against the appellant is brought out in Paras 1 to 19 and the reply filed by the appellant is in Para 20 of the impugned order which is extracted below :- M/s. Alis Enterprises, the Custom House Agent (hereinafter called CHA) have filed the Bill of Entry No. 9212, dated 22-2-1996 on behalf of the importers M/s. PCK Buderus (India) Tool Steel Co., 13 South West Boag Road, Madras 600 017 (hereinafter called the importers). The goods covered under Bill of Entry were declared as Alloy Steel Bars. The following documents have been filed alongwith the Bill of Entry : (a) Two invoices bearing Nos. 41568 and 41569, both dated 12-1-1996 raised by M/s. Edelstahlwerke Buderus AG in favour of M/s. PCK Buderus (India) Tool Steel Co. Madras for a total consideration of DM 45050.90 (CIF). The description of the goods is Alloy Steel Bars I grade 1.2714 : 1.2738 ISO-BM, 1.2311 ISL-BM. The country of origin is Federal Republic of Germany. (b) 6 numbers of specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter at Sl. No. 17 no relationship with the buyer was declared. In the Bill of Entry importers claimed clearance of goods against an Advance Licence No. P/L/0544650/C/ XX/37/D/95, dated 24-2-1995. In the invoice filed with the Bill of Entry it is declared as per P.O. No. PCK/BVI/TSO-4/94, Alloy Steel Bars in grade 1.2311 ISL-BM and 1.2738 ISO-BM in sizes as mentioned therein. Importers also produced Test reports from the supplier giving the composition for all grades and sizes for the steel under import. 8. The above referred value based Advance Licence submitted for clearance has been issued to M/s. TOP Forty suspension and made transferable as per Para 127(i) of Hand Book of procedures to Export Import Policy 1992-97, for Alloy Steel Bars/Rods/Billets/Blooms/Ingots subject to the condition that quality and Technical Characteristics of Import items should match with the resultant product for a value of US $ 76125. As per a copy of shipping bill 410835, dated 30-1-95 produced by the importer M/s. TOP forty suspension exported alloy steel forgings machined upto 10 KGPS wt as stipulated in the advance licence and hence the quality and Technical characteristics of items under import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s credit; that the list of items required are sent to Germany and orders are placed on M/s. Edelstahlwarke Bunderus AG, that they receive order confirmation from them confirming order acceptance; that M/s. P.C. Krishnan Iyer Co. are the agents of M/s. Edelstahlwarke Buderus AG and he is also a partner of the said company. In case of third party imports like BHEL, TVS-SUZUKI IFB etc. where they need a local representation, M/s. P.C. Krishnan Iyer Co. receives 2% agency commission in Indian rupees; that the steel items imported by them can also be imported by third parties in India and earlier M/s. Godrej has imported the same. The alloy steel bars imported under Bill of Entry No. 9212, dated 22-2-96 are basically for stocking in India and to be delivered against orders. 13. In continuation of his earlier statement he stated on 26-3-96, that opinion was given without visual inspection of cargo and requested for visual inspection in their presence on showing the opinion obtained from M/s. Steel Authority of India Ltd. by the department that he will submit from the supplier complete production procedure adopted to manufacture the pieces supplied and confirming that all steel bars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being usable is not available. The above mentioned provision suggests that there should be a nexus in the imports and exports and the intention is to prevent the mis-use of the DEEC Scheme. There is no provision to exclude the trader, who is importing under transferable advance licence. The burden of proving the nexus is on the person who is claiming the benefit. The importers have not proved the nexus in this case. 18. From the totality of facts, circumstances and investigation carried out, the following facts appear to emerge : (i) Importers have imported tool steel in guise of forging quality Alloy Steel Bars and sought clearance under an Advance Licence issued for export of forging quality Alloy Steel. Scrutiny of technical specification for grades under import, market enquiries and opinion from Steel Authority of India reveal that the steel under import is only tool steel which can be permitted as consumable upto 4% of Export Value of licence as a consumable. Hence, the goods are not eligible for clearance, under the above referred advance licence/DEEC. Therefore for mis-declaration of material particulars and manipulation of documents contrary to declaration made un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly the show cause notice on misdeclaration does not survive. (2.0) The show cause notice repeatedly points out that the material is not forging quality. (2.1) It was stated in Para 8 that the licence permitted only import of alloy steel forging quality due to specific endorsement on the licence to the effect that Tech characteristics or items under import should match with export product. (2.2) the item of import namely alloy steel bars satisfy the chemical composition criteria laid down in Chapter 72 of Customs Tariff and consequently fulfill the technical characteristic condition in the sense that export product were only alloy steel forging under broad heading. On this count the specific condition of meeting technical characteristics condition as demanded by the licence is completely met. (2.3) Due to the repeated mention of the term FORGING QUALITY, the issue is well settled restricting the scope of examination of material to forging quality. This term forging quality means that the material shall possess forging characteristics or forging properties after deriving the meaning of quality. While examining the material from this definition the material is accepted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions under HSN 7228 which included Die and Tool steel. This itself is a testimony from a Foreign Chamber of Commerce that the material does not belong to Tool or Die steel category instead belong to forging category. (2.10) Din 17200 as mentioned in the Para 15 only to cover forging quality is not correct. The title of DIN 17200 is in fact Quenched and Tempered steels and not forging quality steels. This standard covers wide range of steels based on chemical and physical characteristics. Hence it is not acceptable that DIN 17200 covers forging quality steels. Moreover this is a standard classifying steels on characteristics and not manufacturing methods. (2.11) To further prove our stand, we wish to bring to your notice that in DIN 17200 and DIN 17350 there are grades listed with similar composition. Hence you cannot conclude that DIN 17200 covers exclusively Forging quality material. (2.12) Based on these submission we wish to reiterate that the materials are only forging quality and show cause notice fails to prove categorically the other way. (3.1) Show cause notice repeatedly mentions that the conditions of licence relating to technical characteristics is not fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of Para 127(i) of Hand Book of procedures to Export Import Policy 1992-1997 for Alloy Steel Bars/Rods/Billets/Blooms/Ingots subject to the condition that quality and Technical Characteristics of Import items should match with the resultant product for a value of US $ 76125. M/s. TOP Forty suspension vide shipping bill 410835, dated 31-1-95 exported the resultant products namely Alloy Steel forgings machined upto 10 KGPC wt. as stipulated in the advance licence. Thus, the quality and technical characteristics of items under import should match the export i.e. only forging quality Alloy Steel Bars/Rods/Billets/ Blooms/Ingots are allowed to be imported. 39. Further in terms of input output norms at Serial No. 229 under heading Ferrous Manufactures as published in Volume II of Hand Book of Procedures to Export Import Policy (Corrected upto 31-3-94 i.e. norms applicable on the date of licence issued) against an Export of 50317 Pcs. Alloy Steel forgings machined (incl. stainless steel) upto 10 kg. PC Wt, Alloy Steel Bars/Rods/Billets/Blooms/Ingots are allowed at the rate of 1.7 kg. per 1 kg. of Export, product. Die Steel/Die block are also allowed at the rate of 4% of FOB value and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ists 56 Ni Cr. Mn. V grade steel with material No. 1.2714. 42. M/s. Steel Authority of India Ltd. (SAIL) have stated that the steels under import in grades 1.2714 1.2738 ISO-BM 1.237 ISL-BM are not of forging quality steel but tool steel as defined under DIN 17350 (1980) and the sizes mentioned are not bars but blocks. 43. M/s. PCK Buderus (India) Tool Steel Co. are related with M/s. P.C. Krishnan Iyer and Company. M/s. P.C. Krishnan Iyer and Co. are the agents of M/s. Edelstahlwarke Buderus AG and receives 2% agency commission in Indian rupees. 44. The forging quality steel is defined with reference to IS specification 1875 Class IV DIN 17200 Material No. 1.0402. From the documents shows that the imported steel is only forged steel and is not having any further forging quality. The goods under import are tool steels, die and plastic mould steels. 45. The importers have produced an Advance Licence No. 0544650, dated 24-2-95 under which the goods claimed clearance, states description of goods as Alloy Steel Bars/Rods/Billets/Blooms/Ingots subject to the condition that quality and technical characteristics of Import item should match with the resultant product. Clause I of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logue sheets produced by the importers that the applications of the different grade under import shows that they are not useful for making alloy steel forgings machined, whereas they are useful in making dies, tool components etc. Therefore, the goods under reference, cannot be used for the production of the resultant product viz. : Alloy steel forgings machined upto 10 kg. pc weight. The possible items that can be manufactured from the impugned goods are totally different from the resultant products. Thus, there is no nexus exists between the imported goods and the exported goods. 50. The importers reliance on Commerce Ministry s Letter No. 8/94 also do not throw much weight in this case since the advance licence allows only Alloy Steel Bars/Rods/Billets/Blooms/Ingots subject to the condition that quality and technical characteristics of import item should match with the resultant product. The resultant products are alloy steel forging machined upto 10 kg. per piece wt. The import items are tool steel, die steel and plastic mould steel. In terms of input output norms tool die steel/die block are allowed at the rate of 4% of FOB value of export items only. Accordingly, the consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate which is annexed with this order. 5. The opinion of Chartered Engineer which is at Page 34 of the paper book is also relied on by the appellant. The same is reproduced herein below :- CHARTERED ENGINEER S CERTIFICATE This is to certify that I have throughly gone through the catalogues of grade 2714/2311/2738 enclosed. All the three above STEEL grades are conforming to Alloy Steel as per notes of Chapter 72 of Customs Tariff. All the above three categories of steel are only of Forging Quality as evidenced by the term Hot Working Steel characteristics in the catalogue and also in particular the suitability of composition of Carbon, Nickel, Silicon and Chromium. These categories of steel are suitable to manufacture Forged Engineering Components. I have also gone through the wording subject to the condition that quality and Technical Characteristics of Import items should match with the Resultant products in the Licence No. 544650/24-2-95 and also in DEEC Books No. 152197 stating technical characteristics as Alloy Steel and quality as Forging . In respect of this note, I certify that items Import clearly match the items of Export as the items of Import ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 080/- was imposable and (c) penalty was also imposable for rendering the goods liable for confiscation. 2. It is submitted that the petitioner imported only Alloy Steel Bars which are of forgeable quality. In support of their claim, they obtained expert opinions from two well qualified experts namely Mr. N. Krishna Raj, Consultant Metallurgist, Research Scholar, IIT, Madras 600 036 (at Page 18 of the typed set of papers) and from Mr. K. Seethapathy chartered engineer (at Page 34 of the typed set of papers). On the other hand the respondent relied on the purported expert opinion given by Mr. Dev Dhar, Asstt. General Manager, Steel Authority of India Ltd., Chennai 600 024 (at Page 21 of the typed set of papers). The qualification and credentials of Mr. Dev Dhar to render the technical opinion is totally absent. He does not belong even to the research and development wing. Being the Asstt. General Manager belongs to the Administrative Cadre. Further while the expert opinions given by the appellants were well reasoned the opinion of Mr. Dev Dhar is cryptic and unreasoned. Therefore in the reply to the notice itself the appellants objected against the relying on the opinion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that even the surveyor had taken samples of the imported goods for making the endorsement behind the bill of entry. In fact the endorsement of the survey is only to the effect that documentary proof has to be demanded from the importer. Further the appellant themselves have properly replied that the material is of forged quality (Para 2.3) of the reply of Page 31 of typed set. In Para 2.6 it has specifically pointed out that complete specification was not provided to SAIL nor an examination of material by SAIL was arranged. Apart from that in fact the appellant had requested the Commissioner to send the material for test as the bill of entry was a live bill of entry which letter is available in the records of the Commissioner. Therefore, in the absence of any specific laboratory tests on behalf of the department the expert opinions furnished by the importer on the basis of test reports ought to have been accepted by the Commissioner. It is also submitted that only when the show cause notice is issued to the importer there is no contemplation of imposition of liability on the appellant. Till then whatever endorsement is made on the bill of entry or any other opinion need not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the samples from various containers of imported marble slabs. These samples were got examined by Professor S.D. Shah of Department of Earth Sciences, IIT Bombay. Professor Shah submitted a preliminary report and promised to submit a final report but did not actually submit a final report. The samples were cut to specific dimensions. The edges of the samples were trimmed and smoothened. Report deals with four samples, all of white colour with one side rough or non-glazed and the other side smooth and non-glazed. He reported that the goods were ready to use depending on their end-use. All the polished glazed slabs/tiles can be used readily for facing stone, while the polished unglazed slabs/tiles can be used as kitchen platforms, sinks in both bathrooms and toilets. The appellants got the samples examined by Mr. Hafeez, Contractor, an architect of Bombay who opined that none of the samples is in finished condition and several processes have to be followed to make them ready to be used and the samples were absolutely rough samples. The Commissioner did not apply his mind to this report since the report of Professor S.D. Shah was considered favourable to the department. Our attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e examined by the Commissioner. 9. He further relies on the judgment of the Mumbai Bench rendered in Sewa Polymers v. CC, Mumbai-II reported in [2000 (118) E.L.T. 621 (T)], wherein the Bench held in Paras 6 to 11 as follows :- 6. We have heard Shri S.P. Sheth Advocate for the appellants and Shri K.L. Ramteke for the Revenue. 7. We note that Professor Dr. Pandya was present before both the lower authorities during the proceedings. The orders of both the authorities noted his presence and his opinion also. The Assistant Commissioner made light of his chemical opinion in holding that an independent person s opinion was not binding on him. We observe that where the tariff seeks to classify a product on parameters of Chemistry, in the interpretation of those parameters, the opinion of an expert would prevail over the impression of a lay person. We find that the Assistant Commissioner was patently wrong in not placing reliance on the expert opinion. During the hearing before us, Shri K.L. Ramteke referred to the Supreme Court Judgment in the case of Reliance Cellulose Products Ltd. v. Collector of Central Excise [1997 (93) E.L.T. 646 (S.C.)]. We have seen this judgment in which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned to the position of non-extension. This note has been referred to by Professor Pandya in confirming that the product passes this test. Professor Pandya enthusiastically refers to the process adopted as a revolutionary process. 11. Thus from the opinion of the expert it would appear that the claim as to the classification advanced by the assessee was correct. On the other hand the Dy. Chief Chemist s opinion gives only the conclusion of the goods being made of plastic. Even in this opinion there is a lacuna, because in describing the results of samples of the sheets drawn from M/s. Shree Balaji Marketing (one of the buyers), the sample is described to be of cellular rubber. In this situation it has to be held that the authorities below erred in relying upon an incomplete and cryptic opinion of the department chemical experts in preference to an extensive report of an independent authority. This defect was amplified in the failure of the original as well as the appellate authorities to even discuss the relative opinions as also the blanket disregard of the request for cross-examination of the departmental chemical authority. We have reproduced the ld. Commissioner s order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has concluded that there is violation of advance licence and the import policy and appellants had attempted to evade customs duty of Rs. 6,73,080/-. We are of the considered opinion that the entire order of the Commissioner is violative of principles of natural justice. The reason being that the whole case is made out on the opinion of the Asstt. General Manager of SAIL who has not been produced for cross-examination at all. The reason for coming to such a conclusion by the Asstt. General Manager of SAIL has not been delineated. It is not known about his qualification or about his competence and as to whether he has tested the material. On the other hand, appellants have produced a strong and clinching evidence, which has not been put to test or challenged and the said expert has not been called for cross-examination. Noting the evidence produced by both sides and also considering the fact that the revenue s witness/expert has not been called for cross-examination, we hold that on the grounds made out, the order is violative of principles of natural justice and requires to be set aside. 14. Ld. SDR did not seriously contest for the matter to be remanded. Ld. Counsel prayed for re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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