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TMI Blog2015 (1) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... & 22/3/99 28/2/2007 25/10/2007 2 C/221/05 11,19,721.88+ equal penalty [65(2)(b)]/[116/117] 7/5/2000 12/4/2001 12/2/2002 4/4/2000 24/4/2000 19/7/2000& 10/5/2000 21/7/2004 Common 11/1/2005 3 C/1182/05 6,72,971+ equal penalty [65(2)(b)] [116/117] 16/6/1999 2/7/1998 26/5/1998 1/2/1999 4/8/1999 31/5/2005 31/5/2005 Total 18,76,859.88 1.1 The fact of the case is that appellant engaged in import of round Billets without payment of custom duty for the manufacture of Seamless tubes and pipes in the private bonded of warehouse under the custom licence issued under section 65 of Customs Act, 1962 and in terms of notification 20/99 Cus 28/2/99. During course of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehouse for home consumption, therefore no custom duty is required to be paid. He also refers Standard Input output norms (SION) prescribed under Foreign Trade Policy in respect of final product Seamless steel pipes and tubes wherein for 1 kg of seamless pipes and tubes, the raw material i.e. alloy, non alloy, round, bar was allowed to be imported is 1.20 kgs, this evident that in the policy as a whole taking in to account the waste and scrap and also burning loss in every process, input-output norms is fixed. He pleaded reliance on following judgments. (i) Western Metal Caps Ltd. vs. Commissioner of C.Ex., Ahmedabad - 2004 (170) ELT 451 (Tri-Mumbai) (ii) Hindustan Copper Ltd. vs. Commissioner of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he burning loss arising in the manufacturing process carried out in the custom bonded warehouse is leviable to custom duty in terms of section 65(2)(b) of Customs Act, 1962. As regard the claim of the appellant regarding the nature of burning loss and quantum thereof there is no dispute. The Raw material for manufacturing of Seamless pipe was imported by the appellant under notification no. 20/99 Cus dated 28/2/99 (Sr. NO. 183), which is reproduced below: In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g No. Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 183. 84 or any other Chapter Parts and raw materials for manufacture of goods to be supplied in connection with the purposes of off-shore oil exploration or exploitation Nil Nil 35 35 If, - (a) the parts and raw materials are used in the manufacture of goods in accordance with the provisions of Section 65 of the Customs Act, 1962 (52 of 1962); and (b) a certificate is produced in each case to the Assistant Commissioner of Customs from a duly authorised officer of the Directorate General of Hydro Carbons in the Ministry of Petroleum and Natural Gas, Government of India, to the effect that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 65(2). Accordingly, no duty can be charged on nonexistent quantity of burning loss. It is very important to note that in any processing industry, apart from recoverable waste and scrap, smaller part of the burning loss is also generated. Keeping this aspect into mind the legislators consciously made explicit provision for levy of custom duty on the waste and scrap, which is physically available and cleared from the warehouse. However, as regard the burning loss, no such explicit provision was made. This might be for the reason that the quantity of imported material consumed in the final product includes burning loss also as it has same nature as the raw material which gets consumed in the manufacturing of final product. I am therefore o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that the quantity of burning loss, since, neither cleared out of the custom bonded warehouse for home consumption nor otherwise disposed of, but factually it got consumed in the manufacturing, no custom duty is leviable on the same. As regard the reliance placed by the Ld. Supdt., (AR) on behalf of Revenue on the judgment of Cochin Shipyard Ltd. (supra), on carefully reading, it is observed that the fact of the said judgment is related to physical waste and scrap generated during manufacture and cleared for home consumption, whereas in the present case the duty demand was made on the invisible burning loss which is not cleared from the warehouse for home consumption. Hence the ratio of the Cochin Shipyard judgment is not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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