TMI Blog2014 (5) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... lly the Advance Authorizations produced before the Customs assessing officers were not valid for the import of ‘Other alloy steel’ at the time of importation but looking to the provisions of Foreign Trade Policy and the subsequent acts of the offices of DGFT, necessary curative action was taken in favour of some of the importer appellants by the appropriate authorities in the interest of exports and export obligations with respect to certain Advance Authorizations have been accepted. However, the matter has not reached finality till date in view of the conflicting views expressed by the authorities under DGFT & due to the fact that the matter is subjudice before the Mumbai High Court but the defects in Advance Authorisations seem rectifiable. Preliminary objection taken by the appellants that provisions of sub-Section (ii) of Section 28 of the Customs Act, 1962 are not applicable to the show cause notices issued before 16.09.2011, is not acceptable as the amendment carried out under the Customs (Amendment and Validation) Act, 2011 uses the word Section which has to mean the entire Section 28 of the Customs Act, 1962, because amendment carried out inserted a sub-Section (ii) to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have referred the matter to the licensing authority for appropriate action rather than taking action suo motu. Practice of Customs clearance of the same grades of steel under similar Advance Authorizations right from 2000 onwards, clearly convey that classification of impugned grades was not considered important by the Assessing Officers in view of the export incentive schemes under Foreign Trade Policies read with Customs exemption notifications availed by the importer appellants. The most important aspect of the export incentive schemes under Advance Authorizations is that the same grade of steel (whether non-alloy or alloy steel) when exported in the exported goods the same grade of steel was eligible for import by the importer appellants. These appeals filed by the appellants cannot be decided against them on the basis of few admission statements of the individuals who were not involved in the practice of Customs clearances and were also not the metallurgical experts. The assessments made by the Assessing Officers on the Bills of Entry have not been challenged by the Revenue and the assessments already made cannot be opened only on the basis of a change in the mind of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C/11460/2013 C/11461/2013 C/11462/2013 C/11463/2013 Man Industries India Limited N. Nagrajan R.C. Mansukhani Abhilesh Ojha KDL/COMMR/64/2013-14, dated 28/2/2013 2. All the four importer appellants M/s. PSL Ltd, M/s Ratnamani Metals Tubes Ltd, M/s Welspum Corporation Limited and M/s. Man Industries India Limited imported API 5L PSL 2 x 70 and x80 grades of Hot Rolled Steel coils/plates which were used for making steel pipes for export as per Advance Authorizations issued under Para 4.1.10 and Para 4.1.3 of the Foreign Trade policy read with Notification No. 93/2004-Cus dated 10/09/2004 94/2004-Cus dated 10/09/2004. At the time of clearance of the goods under Advance Authorizations all the above four appellants were describing the goods as Prime HR Coils: API 5L PSL2 x70 or x80 and declared the classification under 72083690 of the Customs Tariff Act (CTA). Importer Appellants provided advance authorizations as per Input-Output Norm C-593 issued by offices of DGFT which reads, inter-alia, as follows:- Sr. Export Item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la Mumbai Ports by invoking extended period. Penalties under Section 112 (a), Section 114 AA 114 A of the CA 1962 were also imposed upon the importer appellants other individuals for which appeals have been filed as detailed in Para-1 above. All the stay applications, Misc. applications, and appeals were fixed for hearing on 20.03.2014 21.03.2014. After completion of the hearing all the appellants were directed to file written submissions within two weeks but the same could be filed only by 17.04.2014. 4. Sh. P. Sridharan (Senior Advocate), Sh. Laxmi Menon (Adv) and Sh. Manish Jain (Advocate) appeared for the appellants in Appeal No. C/11456/2013, C/11457/2013, C/11458/2013, C/114591/2013 and the related Stay/ Misc applications and appeals E/11460-64/2013. Sh. Sridharan made the bench go through Extracts from the reply of the Finance Minister to the debate in the Lok Sabha on the Finance Bill 2008 , as per Press Information Bureau release, to drive home the point that before the current period of imports involved in these proceedings there was a sharp increase in the prices of steel items and Govt. of India took following steps to contain the inflationary tendency in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Customs (Prev) was not competent to issue demand show cause notice under section 28 of the Customs Act 1962. That the ratio laid down by Supreme Court in the above case is applicable to the show cause notice issued by DRI. That further insertion of sub-section (11) to section 28, under the Customs (Amendment Validation) Act 2011 w.e.f. 16.09.2011 also does not give any legality to the show cause notices issued by DRI before 16.09.2011 as the words this section means only with respect to amended new Section -28(11). 4.2. That rate of customs duty on Alloy steel and Non-alloy steel has always remained same except for the period 29.04.2008 to 18.11.2008. During this period effective basic customs duty on Non-alloy steel of CTH 7225 was 5% whereas CTH 7208 attracted Nil rate of duty. That the CVD rate remained the same throughout. 4.3 That for being considered as other alloy steel all the elements present in steel should be in the percentage ranges as specified in chapter note 1 (f) of Chapter-72, otherwise the steel will remain Non-alloy steel. 4.4. That in the API PSL2 grades imported by PSL Ltd, the alloying elements could be either less than or within the element ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I grades will render at least a portion of SION C-593 redundant as it permits to export pipes of any API grade but will not permit import of the some grades. 4.10 That extended period of limitation is not invokable as PSL Ltd. has provided all the MTCs at the time of importation, as is clear from the examination reports. That with respect to B/E No.221283 dt 13.12.2007 MTC was specifically called for where Molybdenum content was 0.08% which accordingly to chapter note 1 (f) will take it to the category of other alloy steel of CTH 7225. That despite this fact known to the Revenue this consignment was still assessed under CTH 7208 as Non-alloy steel. 4.11 That for determining the goods being prime or seconds/defective invariably MTCs are required to be seen as per procedures under Trade Notices prescribed by the Revenue. 4.12 That classification of imported steel under CTH 7208 was solely claimed on the basis of past assessments made by proper officers with respect to the past imports made by the appellants and that all other importers of the same grades were claiming classification of steel under CTH 7208 without any objection by the department. That as per the invoices o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases where case for short levy is non-fulfillment of post-importation conditions and not other-wise. Where the exemption is being denied for non-fulfillment of threshold condition itself, duty demand cannot be made by invoking the bonds but has to be in terms of Section 28 only. (iii) That in the present case, the case of the revenue is that the raw material imported by the Appellant is not covered by the Advance Authorisations in question. This is therefore clearly a case where the benefit of the Notification is being denied at the threshold itself. It is not a case where in the appellants have violated post importation conditions of the Notification. In such a case, Section 28 alone is applicable. (iv) That in Indian Metals Ferro Alloys Ltd. Vs. Superintendent, C. Ex Cus. 2000 (123) ELT 337 (Ori.) affirmed by the Supreme Court in 2002(144) ELT A105 (S.C.) assessee was an EOU. The imported consignments of electrode paste were assessed to nil rate under Notification No.13/81-Cus and goods were warehoused. Exemption was extended on the ground that electrode paste is a raw material. Notification No.13/81, inter alia extended exemption to raw material and did not apply for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Tri- Mumbai)] Further, in view of Bombay High Court order in the case of CC (EP) Vs Hindustan Unilever Ltd. [2012 (285) ELT 500 (Bombay)] customs authorities are not justified in raising objection after the fulfillment of export obligations to the satisfaction of the licensing authorities. It was thus emphasized by the appellant that with respect to Advance Authorizations where export obligations have been fulfilled and licenses redeemed, no action can be taken where there is no fraud, willful misstatement or suppression. 4.19 That as per Customs Appraising Manual a classification given in the bills of entry cannot be considered as willful misstatement as deciding the classification of imported goods is the sole responsibility of the customs assessing officers when the description has been correctly given along with the required import documents. For this purpose learned Sr. Advocate relied upon the following case laws to emphasize that no confiscation of goods or imposition of penalties was attracted on any of his clients:- (i) Merther Plastic Ltd. Vs. CCE [1998 (101) ELT 549 (C)] (ii) ACE Kargowas Pvt. Ltd. Vs. CC [2003 (158) ELT 505] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) Whether the said goods are liable for confiscation under Section 111 (m), and Section 111 (o) of the said Act on account of mis-declaration? (viii) Whether the appellants are liable for penalty under Section 114A and 112 of the Customs Act, 1962? (2) That as per the stand taken by the Revenue the imported consignments contain Niobium, Manganese and Molybdenum more than the percentages specified in chapter Note 1 (f) of chapter 72 of the CTA, whether individually or collectively. That Revenue has not lead any evidence of an expert to substantiate the reclassification of the imported goods for which classification has been earlier accepted under CTH 7208 when MTCs for the contemporary imports of the same grades, imported by other importers were available with the Revenue. That a change of classification of imported steel with a change of mind, without having additional evidence, is not permissible when the original assessments of the imported goods were never challenged by the Revenue. (3) That a combined reading of chapter note 1 (d), 1 (e) and 1 (f) of chapter 72 of the Customs Tariff Act convey that every steel is an alloy steel and that all steels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for and granted. Para 4.4 of the Handbook of Procedure 2004-09 provides that where Standard Input-Output Norms (SION) have been published, an application in the prescribed form along with documents mentioned therein shall be submitted to the concerned Regional Authority for grant of Advance Authorizations. Para 4.4.2 of the Handbook further provides that where the norms have not been published, an application in the prescribed form along with documents mentioned therein shall be furnished to the concerned Norms Committee (NC for short), where the original copy of the application is filed with the concerned Regional Authority and a self-attested copy of the same is filed with the NC. Advance Authorizations in such cases are issued by Regional Authority (RA) as per NC recommendations. This is called ad-hoc route/method. As far as the Company is concerned, either under the SION or under the ad-hoc route, the Company was eligible for issue of Advance Authorizations. While the 52 Advance Authorizations, which are the subject matter of the present case have all been issued under the SION, the Company had applied for and obtained Advance Authorization also under the ad-hoc method, as is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was imported by the appellant was capable of being used in the export products. As a matter of fact, the said goods imported by the Company have actually been used in the manufacture of export products. On this ground also, the appellant is eligible to import duty-free goods under the 52 Advance Authorizations under the Customs exemption notifications. (9) That present appellant M/s Welspun approached Norms Committee (NC) of DGFT vide letter dated 06.04.2012 (page 550 Vol II/ of Paper Book) for clarification and NC vide letter dated 16.05.2012 conveyed the decision dated 02.05.2012 of the NC to the appellant as follows:- For the purpose of redemption of 52 Advance Authorizations as under, import of Alloy or Non-Alloy HR Coils/Plates is permitted provided that EO has been fulfilled by the firm by export of pipes made out of same grade of steel. There shall be no change in the norms of consumption of steel HR Coils/Sheets. (10) That NC is a part of the Ministry of Commerce under the office of DGFT and as per para 2.5 of FTP is conferred powers to deal with issues in relation to all aspects of SION and are the competent authority under FTP/DGFT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit filed by the Deputy DGFT, Mumbai (wrongly recorded as DGFT in the impugned Order) in Writ Petition (Lodging No. 2031 of 2012) filed by the Company in the Honorable Bombay High Court to conclude that it is the DGFT s contention that alloy steel is not permissible for import under advance authorizations bearing the description non-alloy steel . The reference to this affidavit in the impugned Order is misleading and/or irrelevant for the following reasons: (a) The said affidavit does not deal with the decision of the NC at all; (b) The Deputy DGFT is subordinate to NC and therefore, bound by the decision of the NC which the Deputy DGFT cannot ignore; (c) Subsequently, as aforesaid, the Honorable Bombay High Court has passed the Order dated 20.11.2013 which put matters beyond doubt that the NC s decision is to be implemented and that API Grade, as per NC s decision, cannot be referred to mean alloy or non-alloy steel. As such it was argued that no reliance whatsoever can be placed on the said affidavit-in-reply which in any case is overridden by the decision of NC, who as aforesaid, is the highest Competent Authority under Para 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re undefined are to be given a meaning based on commercial understanding and trade parlance. That the expression non-alloy steel cannot be said to exclude API Grades, particularly when API Grades refer to maximum percentages of the alloying elements and Chapter Note 1(f) refers to the minimum percentages resulting into an overlap of the two parameters in so far as the chemical composition of various elements in the steel is concerned. It was appellant s case that API Grades could thus, include both alloy and non-alloy steels and that by the computer printouts in trade parlance globally API Grades are considered as non-alloy steel. (15) That extended period is not invokable as the true and correct description of the imported grades were reflected in the bills of entry on the basis of past clearances made by the importers and the assessments of the same grades were also done under CTH 7208 which have not been challenged by the revenue in appeal. That making of a correct classification of the imported goods is the responsibility of the Assessing Officers and a classification head shown by the importers can at the most be considered as a claim of classification. (16) That custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the true meaning and legal effect of which has been set out herein above. It therefore, follows that the statements of the Officers, including the Chairman are not at all inculpatory. These issues involved in the present case are pure question of law which relate to interpretation and construction of Chapter Note 1(f) to Chapter 72, including sub-notes thereof, HSN Explanatory Notes, provisions of Chapter 4 of FTP and the terms and conditions of the said Exemption Notification. Besides, as stated herein, the appellant did not declare the said goods to be alloy or non-alloy steel. The Company correctly declared and described the said goods to be of API grade and it is well settled that classification is a function of the Proper Officer. The burden of classification of imported goods is on the Department. It is a trite law, that mere claim for classification does not amount to mis-declaration in view of the decision of the Honorable Supreme Court in the case of Northern Plastics Ltd. Vs. Collector of Customs 1998 (101) ELT 549. It is therefore, submitted that there is no mis-declaration at all by the appellant and hence, not only is the duty demand not sustainable on this accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such act. None of the individuals are, therefore, liable for penalty. The penalty under Section 144AA is also not leviable since none of the persons concerned have knowingly or intentionally made, signed or used or caused to be so, any declaration/statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of the act. Section 144A is, therefore, not applicable. Reliance is placed on the decision of the Tribunal in Z.U. Alvi Vs. Commissioner [2000 (117) ELT 69]. 6. Shri V.S. Nankani (Advocate) also made following additional arguments with respect to appeals filed by M/s Ratnamani Metals Tube Ltd and its employees: (1) That this importer seeks to adopt the submissions made by M/s Welspun Corp Ltd. (2) That vide order dated 18.07.2013, the Joint DGFT Ahmedabad has held that the imports of alloy steel as well as non-alloy steel are permissible under Advance Authorization issued under SION Entry C-593 C-2004. That Joint DGFT Ahmedabad has further held that as long as what is imported and exported are of the same grade (i.e. API Grade) the imports of same grade is permissible. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also hold good for non-imposition of penalty upon him under Section 112 of the Customs Act 1962:- So far as Shri B.K. Goenka is concerned, no evidence suggesting his intentional making, signing, using or causing to make, sign or use of any declaration, statement or document is available on record. Thus, I do not find his direct involvement in obtaining fake certificates from the manufacturer, mis-declaration of the goods in the bill of entries etc.. In view of the above I am not inclined to impose penalty on Shri B.K. Goenka, Chairman and Managing Director of M/s Welspun Corp. Ltd. Under Section 114AA ibid. (3) That in view of the above findings there was no justification in imposing penalty upon Shri B.K. Goenka under Section 112 (a) of the Customs Act 1962 (4) That in view of the following case laws also no penalty is attracted on the individual appellants:- (i) Rakesh Arora vs. Commissioner of Customs [2012 (276) ELT 181 (Del.)] (ii) Dayaram Agarwal vs. Commissioner of Central Excise [2007 (218) ELT 33 (Tri-Ahmd)] (iii) Ld. Commissioner vs. Praveen Ahuja [2008 (226) ELT A103 (Guj.)] (iv) Praveen Ahuja vs. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed either under Section 112(a) or Section 114AA of the Customs Act, 1962. 10. Shri K.M. Mondal (Special Counsel) appearing on behalf of the Revenue, during the course of hearing as well as through the written submissions, made the following arguments:- (a) That each of the four importer appellants imported Alloy Steel in the guise of Non-Alloy Steel by declaring the classification under CTH 7208 contrary to the items allowed under Advance Authorisations and/ or Advance Authorisations for Annual requirement and wrongly availed the benefit of customs exemption notifications by willfully mis-declaring the description and the classification of imported goods. That all the importer appellants had imported alloy steel of CTH 7225 as per Chapter note 1(f) of Chapter 72 of the Customs Tariff. (b) That for deciding the classification of the steel items imported by the appellants Mill Test Certificates (MTCs) were required to be provided to the customs authorities which was not provided except one case of M/s. PSL and one case of M/s. Man Industries India Limited. That only during investigation MTC s were obtained from the importer appellants and on exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 190C read with Notification No. 56/2008-Cus was not available. Hence, he had calculated the differential duty of Rs. 42.81 Crores as per the work sheet recovered from his cabin during the search. Shri Darak had also reiterated this fact in his statement dated 07.5.2011. (ii) In his statement dated 12.5.2010, Shri L.T. Hotwani, the then Director (Supply Chain Management) had, inter-alia- stated that HR Steel Coils API 5L PSL2 X70 Grade imported from TISCO, China through M/s. Corus International were alloy steels against Advance License authorized for import of non-Alloy HR Coils/ Plates, he replied that though he was aware that the said goods were alloy steels, he never conveyed the same down to the officers under him. (iii) In his statement dated 13.5.2010, Shri Balkrishna Goenka, Chairman and Managing Director of M/s. Welspun had, inter-alia, stated that the imported API grade steel coils/plates were alloy steels only because the same were needed for manufacture of API grade pipes for gas and petroleum industry. During recording of his statement, he was shown certain certificates claimed to have been issued by M/s. TISCO, China and obtained through M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... API X70 5L PSL2 grade of steel imported from TISCO, China and supplied to WCL was Alloy Steel as per Customs HSN as the said grade of steel plates/ coils were containing alloying elements. On the supply of non-alloy steel certificates, Shri Tamal Gupta stated that he had once confronted Shri Baruah with the question as to why they required a certificate of Non-Alloy Steel when the product was Alloy Steel. To that Shri Baruah had replied that it was required for their customer and it was none of his business to ask. (vii) In his statement dated 12.5.2010, Shri Ketan Shah, Branch Manager of CHA firm M/s. Thakker Clearing Agency Pvt. Limited, Gandhidham had, inter-alia, stated that he never submitted MTCs with import documents to Customs department as he did not receive the same from the importer. He clarified that WCL used to forward a certificate supposedly issued by the manufacturer of the imported steel certifying that the goods were nothing but Non-Alloy steels and that the said certificates were given to him by Shri Deepak Thokle of WCL. When he was shown the Country of Origin Certificates in respect of certain Bills of Entry wherein the HAS Code was mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er commitment. (x) Shri P.M. Sanghvi, CMD of the Company in his statement dated 13.04.2012 had, inter-alia, stated that his family is the promoter of the Company and that Shri Manoj Sanghvi, his son is a Business Head of the Company. He is answerable for all these activities and he reports to him (P.M. Sanghvi). (e) Statement of Officials of Man Industries (xi) Shri N. Nagrajan, the then General Manager (Operation) of the firm in his statements dated 01.12.2009 and 21.12.2009 had, inter-alia, stated that as per Chapter note 1(f) of Chapter 72 of the Customs Tariff, the goods imported vide bills of entry number 125570 dated 27.6.2008, 126772 dated 05.08.2009 and 124259 dated 16.05.2008 were Alloy Steel and there was mistake to take exemption which was available only to Non-Alloy Steel . Though he was not with the company during the period 29.04.2008 to 18.11.2008, he was with the company before and after the said period when the planned duty evasion took place. He was well aware that under the SION norms C-593, only Non-Alloy Steel was permitted to be imported, despite that he used the Advance license for import of Alloy Steel. (xii) Shri A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od 29.04.2008 to 18.11.2008. On being asked as to why and how Alloy steel was cleared using the Advance License permitting Non Alloy Steel , he merely stated that he never went into such details and carried on the practice followed since long. (xvi) Shri C.K. Goel, the then resident Director, in his statement dated 21.06.2010 had, inter-alia, stated that after going through the Chapter Note 1(f) of Chapter 72 of the Customs Tariff Act, 1975 and presence of percentage of elements in the MTCs, the H R Coils merited to be classified as Alloy steel only and admitted that his Exim Department failed to notice that exemption of the Notification No. 21/2002 (Sr. No. 190C) was not available on these bills of entries. (xvii) Shri Ashok Punj, Managing Director of PSL Limited in his statement dated 11.08.2010 had, inter-alia, stated that his company had executed the VAJAIPUR DADRI BAWANA PIPELINE project of GAIL (India) Limited for which they imported API X70 PSL2 5L grade steel coils/ plates. He was shown the import documents along with MTC and Chapter Note 1(f) of Chapter 72 of the Customs Tariff and asked whether the coils supplied by Corus International qualify to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) That contentions of the appellants that amendment of SION C-593 under DGFT Public Notice No. 51 (RE-2010)/2009-2014 dated 02.6.2011 is retrospective is not correct by virtue of the express language of this public notice. (h) That the clarification dated 06.6.2012 given by the Norms Committee decision has no relevance as the power to issue clarification is vested only in the DGFT under Para 2.3 of the FTP as follows: 2.3. The decision of DGFT shall be final and binding on all the matters relating to interpretation of Policy or Provisions in HBP v1, HBP v2 are classification of any import/ export policy in the ITC (HAS). (i) That norms committee has not dwelt upon the aspect of mis-declaration and misrepresentation on the part of the appellant at the time of import and that observation of Norms Committee, which is subordinate to the DGFT, will have no consequence. It was also his case that as per affidavit of Shri Daya Shankar, Dy DGFT on behalf of DGFT, filed before the Apex Court, the stand of the DGFT has been clearly brought out. (j) That it was the common submission of the appellants that they have utilized the imported material in the manufacture of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That it was the common submission of the appellants that the demand of duty is barred by limitation. It was contended that they had not suppressed any fact from the department. The goods imported were described in the Bills of Entry as per the import invoice. The goods were allowed clearance by the Customs authorities after necessary examination. Therefore, in the facts of this case, the extended period of limitation under Section 28 of the Customs Act, 1962 is not available to the department. This contention cannot be accepted for reasons more than one. It is established on record that they had imported Alloy Steel in the guise of Non-Alloy Steel . These are two different products even as per the DGFT. By giving wrong description of the goods, they have availed the benefit of exemption under the relevant notifications viz. Notification Nos. 93/2004-Cus and 94/2004-Cus both dated 10.09.2004. Except in one case of PSL Limited and one case of Man Industries, the appellant had not submitted MTCs in order to evade detection of the real nature of the goods. (i) That at the time of clearance of the goods, the appellant had executed bonds binding themselves to pay on demand an amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of API X 70 grade steel stating that the said specification always mentions the maximum percentage of the elements required to be present in the said grade of steel. Hence non-submission of MTCs cannot be regarded as willful suppression of fact. (iv) That in this connection, attention may be drawn to the statement submitted by the learned Counsel of Welspun at the time of hearing showing the chemical composition of API specification. Though the source of the said statement had not been mentioned, the maximum weight in percentage terms of each element has been prescribed. The percentage of Molybdenum has been shown as 0.5% (Maximum). The word maximum clarifies that the presence of the said element could be up to 0.5%. The customs Tariff prescribes that percentage of the said element equal to or more than 0.08% to qualify the product as alloy steel. It means the presence of the said element, as per API specifications submitted by the learned Counsel, could be below the proportion as shown in the Customs Tariff Note 1(f) of Chapter 72, it would be alloy steel and if the proportion is below that, it would be non-alloy steel. Hence without the knowledge of actual percentage of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be confiscated under the said provisions on the charge of mis-declarartion of goods. (m) It is submitted that the appellants were well aware of the fact that the gods imported were Alloy Steel and not Non-Alloy Steel for which they obtained Advance Authorisation from the DGFT. Though they knew that exemption will not be available to Alloy Steel, they deliberately indicated classification under Chapter Heading 7208 meant for Non-Alloy Steel. In some of the Country of Origin Certificates, the classification of the goods was shown as 72253000, but they ignored the same and classified the goods under Heading 7208. It was a case of deliberate attempt to conceal the fact. Had it not been so, they would not have suppressed the Mill Test Certificates which are essential to ascertain the exact nature of the goods. This is certainly a case of mis-declaration of the goods to get undue benefit of exemption under the notifications. Therefore, the Commissioner has rightly ordered confiscation of the impugned goods under Section 111(m) (o) of the Customs Act, 1962. Penalties : (n) That from the facts of the case as elaborated herein before, there cannot be any manner of do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advance Authorization No S. No. Advance Authorization No. S. No. Advance Authorization No. S. No Advance Authorization No. 1. 3410014136 27. 3410019072 1. 0810059887 1. 031042737 1. 0310438433 2. 3410014534 28. 3410019073 2. 0810070806 2. 0310435447 2. 0310439802 3. 3410014623 28. 3410019074 3. 0810067839 3. 0310435548 3. 0310439800 4. 3410016019 30. 3410019124 4. 0810068758 4. 0310436872 4. 0310441546 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. 3410018270 44. 3410020100 18. 0810073871 19. 3410018682 45. 3410020220 20. 3410018683 46. 3410021584 21. 3410018700 47. 3410021585 22. 3410018701 48. 0310451032 23. 0310429077 49. 0310451876 24. 3410019071 50. 3410025174 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.5% or more of chromium, with or without other elements. (f) Other alloy steel Steel not complying with the definition of stainless steel and containing by weight one or more of the following elements in the proportion shown: - 0.3% or more of aluminium - 0.0008% or more of boron - 0.3% or more of chromium - 0.3% or more of cobalt - 0.4% or more of copper - 0.4% or more of lead - 1.65% or more of manganese - 0.08% or more of molybdenum - 0.3% or more of nickel - 0.06 or more of niobium - 0.6% or more of silicon - 0.05% or more of titanium - 0.3% or more of tungsten (wolfram) - 0.1% or more of vanadium - 0.05% or more of zirconium - 0.1% or more of other elements (except sulphur, phosphorus, carbon and nitrogen), taken separately. 13.1 The stand of the Revenue that if any one of the elements is more than the limits prescribed in Chapter Note 1(f) above then the steel will be a category of Other alloy steel . On the other hand appellant importers are of the view that all the elements when present in the steel imported by them, should be more than the limits prescribed, for the steel to become Other alloy steel . As in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is relevant to see the export items permitted to be exported by SION C-593. The description of Export Item under this SION, inter alia, reads as follows: Carbon Steel Submerged Arc Welded Pipes as per API Grade/ ASTM Grade or equivalent The above description of Export item does not use the expression Other alloy steel or Non alloy steel whereas the corresponding Import Item under SION C-593 does talk of Non alloy steel 14.1 As per API (American Petroleum Institute) Specifications for Line Pipe [given in Table-5 (Welded Pipe) of API Specification 5L/ISO 3183], PSL2x70 x80 quality could have the following chemical composition when compared with other alloy composition and the same percentages are also reflected in the procurement specifications of the importer appellants: S. No. Name of element Maximum percentage weight in steel possible as per API Standard Minimum percentage weight required to be become Other alloy steel as per Chapter Note 1(f) of Chapter 72 of the Customs Tariff Act, 1975 1. Aluminium - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... item. There was thus a practice to allow API PSL-2 x 70 x80 grades to be cleared duty free under Advance Authorisation as per SION - 593, whether the same were Non alloy steel or Other alloy steel by treating them as goods of CTH 7208, as if correct classification of these grades was not at all relevant for the purpose of allowing exemption from Customs duty when imported against such advance authorizations. Necessary amendment was brought into effect from 02.06.2011 by the DGFT to SION C-593. By virtue of Para 2.3 of the Foreign Trade Policy Handbook of Procedures (2009-2014) it may be appropriate to examine whether the amendment carried out in SION C-593 with effect from 02.06.2011, is a clarificatory amendment having retrospective effect or will have only a prospective effect. As a matter of fact one of DGFTs subordinate office of the Joint Director General of Foreign Trade, Ahmedabad, in Order-in-Original F. No. 08/ F-3/ 03/ AM 13/ ECA dated 18/07/2013 in the case of M/s Ratnamani Metal Tube Ltd. (Para16) has taken a view that Public Notice No. 51/ (RE 2010) 2009-2014 date 02/06/2011, modifying SION C-593, is clarificatory in nature. Joint DGFT has accordingly amended a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion dated 02/05/2012. From the above facts available on records technically the Advance Authorizations produced before the Customs assessing officers were not valid for the import of Other alloy steel at the time of importation but looking to the provisions of Foreign Trade Policy and the subsequent acts of the offices of DGFT, necessary curative action was taken in favour of some of the importer appellants by the appropriate authorities in the interest of exports and export obligations with respect to certain Advance Authorizations have been accepted. However, the matter has not reached finality till date in view of the conflicting views expressed by the authorities under DGFT due to the fact that the matter is subjudice before the Mumbai High Court but the defects in Advance Authorisations seem rectifiable. 15. Next issue for consideration before us is whether appellants have made a willful mis-declaration on the Bills of Entry in order to evade payment of customs duty or to take any undue financial benefits. In this regard it is the case of the Revenue that the act of all the importers by declaring CTH 7208 in the Bills of Entry amounts to wilfull mis-declaration with in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not obligatory under the Customs Act that while presenting to Customs the importer or his Clearing Agent must indicate in the Bill of Entry the correct Customs Tariff Heading or customs duties or c.v. duties leviable or total duty leviable on the goods sought for clearance against the Bill of Entry. However, an indication of Customs Tariff Heading and Exemption Notification, if any, which the importer feels may be applicable to his goods is normally expected to be given at the time of presentation in the relevant column of the Bill of Entry to enable allocation of the Bill of Entry to proper Group/ Appraiser and to expedite its processing. In case the Customs Tariff Heading or Central Excise Tariff Heading under which the party feels his goods will be covered are not finally accepted by the Deptt. appropriate classification under the Customs Central Excise Tariff would be made in the Appraising Group without any action against the Importer. The Board considers that section 29 S.C.A. (Now Section 17 and 46 of C.A.62) are not a sufficient authority for requiring importers to furnish the Tariff classification although there is no obligation in asking them how their previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or by claiming benefit of the exemption notifications which have been found not applicable to the imported goods. We are also of the view that the declarations in the Bill of Entry were not made with any dishonest intention of evading payment of customs and countervailing duty. 15.2 In the light of above law laid down by the Apex Court in the present imports made by the importer appellants a declaration given with respect to classification of steel as CTH 7208 in the Bills of Entry, cannot be considered as wilfull mis-declarations with intention to evade customs duty, in the absence of any other corroborative evidence. In the present proceedings, as brought out during the course of hearings based on examination reports, the Mill Test Certificates for the imported grades, during the relevant time, were available with the assessing officers on which the composition of various elements were clearly reflected. Secondly, as per the website downloaded literature of suppliers of API 5L x 70 PSL2, relied upon by the appellants, these grades of steel were being indicated as Non alloy steel. Further, as per the tax invoices of Steel Authority of India Limited (SAIL) API 5L PSL 2 x 70 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew harboured by the importers that API 5L x70 PSL 2 grade is classifiable under CTH 7208. In view of the above no malafide can be attributed on the part of the appellants and it cannot be held that imported goods were liable to confiscation or the importer appellants and other appellants were liable to penal action under the Customs Act 1962. 16. On the issue of time barred nature of the demands against the importer appellants adjudicating authority has held that the demands are not time barred as all these importers have executed bonds under the Customs Exemption Notifications which can be invoked for realizing customs duty along with appropriate interest specified in the notifications, when goods are found to be not properly imported as per the Advance Authorizations and the conditions specified in the exemption notifications. In spite of the above observation made by the adjudicating authority he went ahead to confirm the duty under section 28 of the Customs Act, 1962 invoking extended period and did not enforce the bonds executed by the importer appellants at the time of clearance of imported goods under Advance Authorizations. In the background of Paras 15, 15.1 and 15.2 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of authorization there under) said question or doubt shall be referred to DGFT whose decision thereon shall be final and binding. 2.5 DGFT may pass such orders or grant such relaxation or relief, as he may deem fit and proper, on grounds of genuine hardship and adverse impact on trade. DGFT may, in public interest, exempt any person or class or category of persons from any provision of FTP or any procedure and may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting committees as under:- Sl. No Description Committee (i) Fixation/ modification of product norms under all schemes Norms Committee (ii) Nexus with Capital Goods (CG) and benefits under EPCG Schemes EPCG Committee (iii) All other issues Policy Relaxation Committee (PRC) 4.1.3 Advance Authorisation An advance Authorisation is issued to allow duty free imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er exporter or merchant exporter, tied to supporting manufacturers, in Form ANF 4B. 4.10.1 Revision of SION by NC NC may identify SIONs which in its opinion are required to be reviewed. Exporters are required to submit revised data in ANF 4B for such revision. It is mandatory for industry/ exporter(s) to provide production and consumption data etc. as may be required by DGFT/ EPC for revision of SION. Otherwise, applicant shall not be allowed to take benefit of Advance Authorisation scheme. 17.1 From the above Foreign Trade policy provisions it is observed that the basic aim of duty free exemption schemes under the Foreign Trade Policy is to enable importers to import duty free inputs whichever are used in the manufacture of finished goods which are subsequently exported without payment of duty. All the above duty exemption schemes are, therefore, put in to practice for Zero Tax Exports . There are a number of provisions/ procedures available under the Foreign Trade Policy to achieve Zero Tax Exports and the background for such exports incentive schemes cannot be to burden the export products for a particular period with additional burden of customs duties due to procedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s executed by the importer appellants and demands will not be time barred as held by the adjudicating authority. It has been laid by Hon ble Supreme Court in Para 17 of the judgment in the case of Atul Commodities Pvt. Limited vs. CC Cochin [2009 (235) ELT 385 (S.C.)] that if any doubt or question arises in respect of interpretation of Foreign Trade Policy or in the matter of classification of any item of the ITC (HS) or in the Handbook, the said question or doubt shall be referred to DGFT, whose decision thereon shall be final and binding. Above view is supported by the view expressed by CESTAT in the following case laws: (i) Commissioner of Customs (Gen), Mumbai Vs. AKM Trading Corporation [2007 (208) ELT 406 (Tri. Mumbai)]; (ii) CC Hyderabad Vs. Goel Enterprises [2005 (179) ELT 509 (Tri. Bang.)] (iii)CC Hyderabad Vs. Sanghi Spinners (P) Ltd. [2007 (209) ELT 43 (Tri. Bang.)] (iv) Hindustan Lever Limited vs. CC(EP), Mumbai [2012 (281) ELT 241 (Tri. Mumbai] In this regard it is relevant to reproduce Para 6.3 of the case law of Hindustan Lever Limited vs. CC (EP), Mumbai (supra) suggesting where appellant has violated an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking furnished by the appellants after considering the fulfilment of export obligation by the assessee. This Tribunal held as follows : Once a bank guarantee and legal undertaking has been redeemed by the competent authority and no action is being taken by the competent authority, therefore, we find this finding is not sustainable in view of the decision of the Hon ble Supreme Court in the case of Titan Medical Systems Pvt. Ltd. (supra). The Hon ble Supreme Court held that once an advance licence was issued and not questioned by the licensing authority, the Custom authorities cannot refuse exemption on an allegation that there was any misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. The ratio decidendi laid down in the above judgments applies to the facts of the present case. In the instant case also, the licensing authority has accepted the fulfilment of export obligation and have issued export obligation discharge certificates and have discharged the appellants from any further obligation. That being the position, the Customs authorities cannot deny the benefit of Customs duty exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t imported steel grades in these proceedings were Other alloy steel as even admitted by Shri B.K. Goenka, Shri L.T. Hotwani and other employees of the importers during investigation who are not the metallurgical experts having sufficient knowledge the interpretation of Foreign Trade Policies. It has also been categorically admitted that these individuals were not dealing with the day to day assessments of the imported goods. Practice of Customs clearance of the same grades of steel under similar Advance Authorizations right from 2000 onwards, clearly convey that classification of impugned grades was not considered important by the Assessing Officers in view of the export incentive schemes under Foreign Trade Policies read with Customs exemption notifications availed by the importer appellants. The most important aspect of the export incentive schemes under Advance Authorizations is that the same grade of steel (whether non-alloy or alloy steel) when exported in the exported goods the same grade of steel was eligible for import by the importer appellants. Same observations have been made by Honorable Bombay High Court in its Order dated 20.11.2013, in the case of WP No. 2240 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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