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TMI Blog2015 (1) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... /2014 Shri P.K. Das and Shri R. Periasami, JJ. For the Appellant : Shri R.R.Padmanabhan, Advocate, P.C. Anand, Consultant , R. Parthasarathy, Advocate, M.Chidambaram, N. Venkataraman, Sr. Advocate & S.Muthu Venkataraman, Advocate, V.S.Manoj, Advocate, R. Parthasarathy, Advocate, M.Kannan, Advocate, B.N. Gururaj, Advocate, K.S. Venkatagiri, Advocate, Karthik Sundaram, Advocate, R. Parthasarathy, Consultant, C. Hari Shankar, Senior Advocate, S. Sunil, Advocate, S. Jaikumar, Advocate, A.P. Ravi, Advocate, Abraham Joseph Martos, Advocate , Rupesh Kumar, Advocate For the Respondent : Shri P.R.V. Ramanan, Special Counsel, Shri Parmod Kumar, JC (AR)Shri Alok Srivastava, Dy. Commissioner (AR) JUDGEMENT Per P.K. Das 1. Common issue is involved in these applications and therefore all are taken up together for disposal. Some of the applicants filed applications for early hearing of appeal/stay application. As we are taking up the hearing of stay applications, the Misc. applications for early hearing of appeal/stay application are disposed of. The applicants also filed applications for Additional Evidence/grounds, which would be considered at the time of appeal hearing. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Energy, USA. wherein the formulae for calculation of Gross Calorific Value on moist, mineral-matter free basis etc. have been defined and Coal Resource Classification System of the U.S. Geological Survey wherein the term Moist has been defined as to whether the definition of the word Moist in the phrase moist, mineral-matter-free basis as defined in literature mentioned above can be adopted as such in case of Coal imported into India. He submits that the entire proceedings was initiated on the basis of report dt. 7.3.2013 of the Joint Director, Customs Laboratory, Jawaharlal Custom House, Navasheva who opined that the formulae would be applied to the coal imported. Moisture-Mineral-Matter-free basis as mentioned in the literature can be applied to coal imported into India. The Joint Director during the cross examination could not give proper reply as to whether the inherent moisture is equal to moisture on Air Dried Basis. Revenue had not conducted any test of the samples of the imported goods. He drew the attention of the Bench to various paragraphs of ASTM (American Society for Testing Material). ASTM prescribed the procedure for the test of the samples in various parameter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as at the time of excavation from the mines, the coal contains inherent moisture which constitutes the basis for identifying the calorific values as per Sub Heading Notes 2 of Chapter 27, read with American Standard of Technical Materials (ASTM). He further submits that during the passage of time from importation, the coal moisture content will be reduced and therefore the reliance of surveyor report which is based on the Air Dried Basis which contains residual moisture, cannot be taken for the purpose of classification of goods as per the Chapter Notes. There is difference between the technical parameters and commercial transactions. Despite the decision of the Tribunal in the case of Tamil Nadu News Print & Papers Ltd. (supra), the department has not done the chemical test. Revenue filed appeal before the Hon'ble Madras High Court against the decision of the Tribunal in the case of Tamil Nadu Newsprints & Papers Ltd. (supra), which was dismissed as reported in 2014 (303) ELT 424 (Mad.). Revenue is heavily relying on the decision of the Tribunal in the case of Coastal Energy Pvt. Ltd. Vs CC - 2014-TIOL-1157-CESTAT-Bangalore. It is submitted that subsequently the same Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They filed Bills of Entry and out of that two Bills of Entry were finalized, against which Revenue preferred appeal before Commissioner (Appeals), which was dismissed. Even though show cause notices were issued in respect of the said Bills of Entry. They have already paid the amount partly. Out of 4 Bills of Entry, two Bills of Entry have been finalised and the department filed appeal, which is pending. (v) Shri Rupesh Kumar, Ld. Advocate submits that in his case, 7 Bills of Entry were finalized and the assessment orders were not challenged by the department but the impugned show cause notice was issued. (vi) Shri Jaikumar, Ld. Advocate, assisted by Shri A.P. Ravi, Advocate submits that Sub Heading Note 2 of Chapter 27 does not indicate the gross or net calorific value limit and therefore it should be taken as net calorific value which is beneficial to the importer. He further submits that they are eligible to benefit of Sl.No.67 of the Table appended to the Notification No.12/2012-CE dt. 17.3.2012. He submits that no cenvat credit can be availed on the imported goods, and they are eligible to avail exemption under the said notification. It is also submitted that even after the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n without filing any appeal by Revenue, the demand was raised. In their case, one import is from Indonesia. 4. The learned Special Counsel Shri P.R.V. Ramanan, assisted by Shri Parmod Kumar, JC (AR) on behalf of Revenue submits that the Bangalore Bench in the case of Coastal Energy Pvt. Ltd. (supra) decided the identical issue in favour of the Revenue and therefore all the applicants should be directed to predeposit the entire amount. He further submits that Bangalore Bench in the case of Maheshwari Brothers & Others vide MISC Order No.22821-22828/2014 dt. 28.10.2014 directed to predeposit entire amount of duties except in respect of imports of Indonesia which was remanded for verification of documents. He, particularly, drew the attention of the Bench to para-7 of the decision of the Bangalore Bench in the case of Maheshwari Brothers (supra). Learned Special Counsel also submitted that while passing the decision in the case of TNPL (supra), the Chennai Bench of the Tribunal had not discussed the load port report in detail and therefore the said decision would not be applicable in this case. In other words, the department has taken the load port report and applied the formula. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and a concessional CVD of 1 per cent to Steam coal for a period of two years till March 31, 2014." By Notification No.12/2012-Cus. dated 17.3.2012 Serial No.123 of the Table appended thereto, Steam Coal under CTH 27011920 was NIL rate of duty. It may be noted that Sl.No.124 of the Table appended to the said notification extended to concessional rate of duty 5% for "all goods other than those specified at Sl.No.122 and 123 above" covered CTH 27011100, 2701200, 2701.19. It may also be noted that the said benefit of NIL rate of duty was withdrawn in Budget 2013-2014. 6.2 As per Notification No.12/2012 (supra) the applicant claimed benefit of NIL rate of duty in respect of import of Steam Coal. At this stage, the Assessing officers proposed to classify the steam coal under LTH 27011200 as Bituminous coal on the basis of "Sub Heading Note 2 of Chapter 27 of CTA. It is contended by the applicant that after the withdrawal of notification, the applicants were importing the same goods as "Steam Coal" under tariff item 27011920. The dispute relates to as to whether during the said period the import of coal by the applicants would be classifiable under STH 27011920 as Steam Coal eligible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling and Analysis issued by M/s.GEO-Chem, Indonesia, an International Independent Inspection & Testing Co. which are similar to most of the appeals. The main contentions of the learned advocates are that the department had not followed the test methods of ASTM for determining C.V. limit on a moist basis for the purpose of classifying the goods other than steam coal. 7.3 In this context, both the learned Senior Advocates drew the attention of the Bench to various clauses of ASTM as under :- (i) Standard Terminology of Coal and Coke, Designation: D121-09a 3. Terminology air-dry loss, n- in coal, the loss in mass, expressed as a percentage, resulting from each air-drying stage or the sum of all sequential air-drying stages in which the results from each stage are adjusted to the as-received basis. DISCUSSION-Air-dry loss is neither a standard state nor a characteristic property of a coal. Air drying only removes water than can evaporate at or near ambient laboratory conditions, leaving in the coal some fraction of the inherent moisture that is more tightly bound in the pores (residual-moisture). Different laboratory environments or different drying temperatures or both will resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oisture is also referred to as bed moisture or equilibrium moisture and is believed to be the water held in the capillaries of varying radii that are found in coal. The vapor pressure of this water is somewhat less than that of the moisture found on the surfaces of coal, which is appropriately called surface moisture or free moisture. Surface moisture has a vapor pressure equal to that of free water at the same temperature. Decomposition moisture is produced from the thermal decomposition of organic constituents of coal. The water of hydration of mineral matter is incorporated into the crystal lattices of the inorganic and clay-like materials found in coal. xxx xxx xxx Air-dry loss moisture is the loss in weight resulting from-the partial drying of coal, and residual moisture is that remaining in the sample after air drying. Total moisture is the sum of the inherent and free moisture in coal and is also the of the-air-dry loss and residual moisture. However, inherent moisture is not the same as residual moisture, nor is free moisture equivalent to air-dry loss moisture. Some relationships may be established between the quantities of inherent moisture and surface moisture, as they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the definitions of "inherent moisture" and "residual moisture". 7.6 Though the Load port Report refers to "Gross Calorific Value", the said reference cannot be of any assistance, as what is required to be determined is the calorific value limit, on moist, mineral-matter-free basis", and not just the Gross Calorific Value (GCV). It is significant, in this regard, that Equation (4) in the Parr Formulae, which stipulates how GCV (MMMF) is required to be worked out, also contains the GCV reading on the right side of the equation. This GCV reading, too, is required to be on inherent moisture basis. There has been no attempt, at any point of time, to determine the values of the various parameters referred to in the Parr Formulae on "inherent moisture" basis. 7.7 In the Appeal C/41307/2014, the applicants have placed opinion of Stewart Surveyors and Assayers Pvt. Ltd. to whom Accreditation Certificate for testing Coal is issued by NABL, Department of Science and Technology, India. This detailed expert opinion concludes that the Load Port Reports contain moisture percentage determined in coal sample after air drying. In other words, the Residual moisture after air drying the coal (AST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, that Inherent Moisture was not the same as Air Dried Moisture. Rather, Inherent Moisture was equal to the Bed Moisture or Equilibrium Moisture, as established in accordance with ASTM D 1412 consequent to sampling as per para 7 of ASTM D 388. (f) In fact, the AD Moisture, as per the ASTM is known as the "residual moisture", estimated in accordance with ASTM D 3173, and is meant for commercial settlements, rather than for rank determination. (g) The fact that the PF could never be worked out on AD basis is also apparent from Table X2.1 in ASTM D 388. Applying the PF to the figures contained in the said table, it is seen that the GCV (MMMF) therein has been worked out using the figures of 5%, GCV and SFA % on AR basis. This, too therefore indicates that the Joint Director, CRCL's opinion that the readings on AD basis could be used in the PF, is totally incorrect and contrary to the ASTM. 8.1 Ld. Senior Advocate Shri Venkatraman, particularly, drew the attention of the Bench to foot note (B) of Standard Classification of Coals by Rank, Designation: D388-12. It says moist refers to coal containing its natural inherent moisture but not including visible water on the surfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no submission or evidence produced to show that the Joint Director was wrong in the opinion tendered by him. 10. We find that there is no dispute that a calorific value limit on a moist in sub-heading Notes 2 of Chapter 27 of CTA would cover the inherent moisture of the coal. Further, the Department calculated C.V. limit on a moist, on the basis of Load Port Report, air dry basis. To sum up, if sample of coal is tested in Residual Moisture, then, the denominator would be low and C.V. limit would be higher. In other way, if the sample of coal is tested in inherent moisture, then, the denominator would be higher and the C.V. limit would be low. On perusal of ASTM terminology, as mentioned above, it is noticed that inherent moisture in coal, the moisture that exists as integral part of the coal in its natural state, including water in pores. The characteristics of inherent moisture is available in natural state of coal at the time of excavation from the mines. The other term "residual moisture" is remaining in the sample after air drying. As per para 5.1, Moisture, of ASTM, Air-dry basis moisture is the low in weight resulting from the partial drying of coal, and residual mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that according to the purchase orders, invoices and the declaration by the appellants, the impugned goods under import are 'non coking coal'. The survey has been done at the instance of the importers to enable them to determine the amount payable to the supplier. The survey has determined the gross calorific value on air dried basis since the payment terms were dependent on such value. If the Department had a doubt about the description of the impugned goods and the classification of the same, they should have carried out a chemical test. Without such a chemical test, the Department has no basis to classify the impugned goods under heading 2701.12 and charge the same to higher rate of duty. On the other hand, the appellants have a strong case on classification of the impugned goods under heading 2701.19 on the basis of past imports, the invoices as well as purchase orders. Hence, we set aside the impugned orders and allow the appeals. It is seen that the Chennai Bench of the Tribunal categorically held that if the department had a doubt about the description of the goods and the classification, they should have carried out a chemical test which was not done in the present ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maheswari Brothers & Others and M/s.Coastal Energy Pvt. Ltd. (supra) are contrary to the decision of the Chennai Bench of the Tribunal in the case of TNPL (supra). In such cases, the Hon'ble Supreme Court in the case of Union of India Vs Paras Laminates (P) Ltd. 1990 (49) ELT 322 (SC) observed that on identical question when there is a contrary view of the Co-ordinate benches it should be referred to the Hon'ble President for decision to constitute a Larger Bench. In our considered view, the following issues may be referred to the Larger Bench for decision:- (i) Whether in the facts and circumstances of the case, C.V. limit on inherent moisture of the imported coal, as per Sub-Heading Notes 2 Chapter 27 of C.T.H, would be determined on the basis of Load Port report/Survey report on Air Dried Basis (ADB) as held by the Bangalore Bench of the Tribunal in the case of Maheswari Brother & other (supra). (ii) Whether in the facts and circumstances of the case the department should have carried out a chemical test of the imported coal to determine C.V. limit on inherent moisture as per ASTM for the purpose of classification of Bituminous Coal as held by the Chennai Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
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