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JSW Steel Ltd., Commissioner of Customs, Central Excise & Service Tax, Goa Versus Commissioner of Customs, Central Excise & Service Tax, Goa, JSW Steel Ltd, JSW Energy Ltd, Sajjan Jindal Chairman & Managing Director, Jayant Acharya, Director, D Ramesh Senior Vice President, VP Garg, Vice President, Ravindra Dattatreya Bhalerao, Madhav Mattathu Ramchandra Warrier, Sical Logistics Limited (Cha Division) , Om Freight Forwarders Pvt Ltd, HM Lageneles

2015 (12) TMI 1389 - CESTAT MUMBAI

Whether the coals imported by M/s. JSW Steel Ltd (JSWSL for short), the appellant, i.e. for use in Corex Furnace and declared as weakly Coking/Soft Coking/Semi Soft Coking/Corex Coal are "Coking Coal" classifiable under tariff item 27011910 of the Customs Tariff Act and eligible for exemption from payment of customs duty under Sl. No. 68 to notification No. 21/2002-Customs dated 1.3.2002 or these were in fact thermal coal/ Steam Coal classifiable under tariff items 27011920 and 27011990 leviable .....

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with other coal cannot be a ground for denying the benefit of the exemption. It was further held that the criteria regarding 1 CSN and 0.60 MMR, which were introduced in the Notification granting exemption to coking coal with effect from 1.3.2011, cannot be given retrospective effect. - coking coal imported by the appellant for its Corex Plant had weak caking properties with CSN of more than 1 and less than 3 clearly comes out from the statements of Shri AVRP Dasu, General Manager - 4MT (Iron M .....

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Hyderabad. From the said seized hard disk record, a report dated 29.5.2008 tabulates the CSN of the various coals, being used in the Corex process from the various mines, to be between 1 to 1.5 - The exemption to coking coal was not linked to any particular end-use and that any coal which fulfilled the criteria of being a coking coal was eligible for the benefit of exemption. It is settled law laid down in the following judgments that where a notification contemplates an end use, the Centra .....

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93 we note that the weakly caking, medium to strongly caking and weakly to medium caking categories have a CSN number which is greater than 1 whereas non-caking has a CSN less than 1. In the remarks column in table 2, against strongly caking coal, the purpose of utilization is 'metallurgical Coke making'. According to learned Spl counsel only such coal can be considered as coking coal. However we notice that against the weakly/medium caking coal varieties, the purpose of utilization is written a .....

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s examination of the chemical Examiner. From the records of cross-examination, it transpired that the samples were not drawn in the manner prescribed in IS 436 not was the procedure for testing prescribed in IS 1353"1993 completely adhered to in as much as against three readings of CSN, only one reading of CSN was recorded. It has been held by the Hon'ble apex Court in the case of Tata Chemicals Ltd. It versus Commissioner [2015 (5) TMI 557 - SUPREME COURT] that if samples are drawn contrary to .....

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ting the totality of evidence in favour of the appellant, we do not agree with the findings of the Commissioner in confirming the demand of duty in respect of 21 bills of entry. - Impugned order is set aside - Decided in favor of assessee. - Application No. C/MA (Ors.)/96139/2014 &Application No. C/S/93023/2014 in Appeal No. C/85484/2014 and Application No. C/CO/91083/2014 In Appeal No. C/85484/2014 and Application No. C/MA (Ors.)/94269/2015 & Appeal No. C/85238/2014 - Final Order Nos. A/3894-38 .....

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7.09.2013 passed by the Commissioner. Stay application has also been filed by Revenue against the impugned order. The appeals and stay are taken up together for decision. 1A. C/MA(ORS)/94269/2015 in appeal C/MA(ORS)/85238/14 is filed by the appellant seeking to place additional evidence on record under Rule 41 of the CESTAT Procedure Rules 1982. The MA has been filed on the ground that the cross examination of the Assistant Chemical Examiner who conducted the testing of samples was not allowed b .....

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sent case before us. At most they may give an indication regarding procedures followed in drawing and testing of samples. 1B. MA (ORS)/96139/14 in Appeal C/85484/14 is filed by the appellant for the reason that there was no application of mind by the Chief Commissioners while passing the Review Order under Section 129D of the Customs Act. The file notings in this connection are sought to be placed on record under Rule 41 ibid. We allow this additional evidence to be placed on record. We find tha .....

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eferred to us, is as follows: (i). In so far as question no. 1 is concerned, the same is answered in favour of the Revenue. The Tribunal, as indicated above, cannot examine the issue beyond the factum as to whether or not a decision has been taken by a Committee of Commissioners to institute the appeal. (ii) In view of our answer rendered qua question no. 1, question no.2 does not arise for consideration. In any event, in our discussion hereinabove, we have clearly indicated that the act of appe .....

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ft Coking/Corex Coal are "Coking Coal" classifiable under tariff item 27011910 of the Customs Tariff Act and eligible for exemption from payment of customs duty under Sl. No. 68 to notification No. 21/2002-Customs dated 1.3.2002 or these were in fact thermal coal/ Steam Coal classifiable under tariff items 27011920 and 27011990 leviable to Customs duty @5% Adv. The period of import is Dec 2006 to Mar 2011. 3. The Appellant is engaged in the manufacture of Hot Rolled Coils, Sheets, Plat .....

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ex furnace, coking coal with weak caking properties can be directly charged in the furnace without having to be first made into coke. By doing so, a steel manufacturer can do away with the need of first converting coking coal into coke in a coke oven, where hard coking coal (which is quite expensive) in admixture with soft/semi soft/weakly coking coal is used. The Appellant put up two Corex plants in 1998 and 2000 in its facility at Tornagullu. It also has two blast furnaces. It has been importi .....

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ntent below 12% [Nil] - 68A. 2701 Coking coal of ash content of 12% or more [Nil] - With effect from 1.3.2011, the said Exemption Notification was amended and an explanation was added to S. No. 68 of Notification 21/2002-Cus which was thereafter substituted on 17.8.2011 to provide that, for the purpose of the said exemption, coking coal means coal having max mean reflectance (MMR) of more than 0.60 and Crucible Swelling Index (or CSN) of 1 and above. 4. DRI initiated investigations into the coki .....

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the Corex process required non-coking coal, which is also how these coals were recorded in the Appellant's internal records viz. business plan, balance sheet, process flow chart, documents offered to SEBI for public issue purposes, etc. It was alleged that the expression soft/semi-soft/weakly coking coal had been coined by the Appellant in the invoices in connivance with the supplier, and that what had been supplied was thermal/steam (non-coking) coal. It was contended that coal from the sam .....

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ulk. 5. The adjudicating authority permitted cross examination of some of the witnesses whose statements were recorded in the course of the investigation, and also furnished at the Appellant's request, copies of the test results undertaken by the chemical examiner at the time of the import of the consignments in question in approximately 120 odd cases. He confirmed demand for Customs duty in respect of 21 consignments of coal wherein, on testing, the chemical examiner has found the CSN in re .....

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explanation, which being clarificatory, was to be applied retrospectively. The adjudicating authority also gave relief on the ground of limitation where the provisional assessments were finalized after receipt of test reports. The adjudicating authority did not see any merit in the confiscation of goods as well as the penalties imposed on various officials and the CHAs and set them aside. 6. Both appellant as well as Revenue have challenged the order, inter-alia, on the ground that the explanati .....

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r use in admixture with other coal for making coke. It was held that the mere adoption of a new technology enabling the use of coal without first converting the same into coke in admixture with other coal cannot be a ground for denying the benefit of the exemption. It was further held that the criteria regarding 1 CSN and 0.60 MMR, which were introduced in the Notification granting exemption to coking coal with effect from 1.3.2011, cannot be given retrospective effect. 8.2 It was submitted that .....

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arties' plants such as Padmavati Coke Pvt. Ltd. and IST Steel & Power Ltd as also stated by Shri Bhupinder singh Kera, Associate Vice President (Raw Material Handling System) and Shri V.P. Gar, Vice President (Commercial), 8.3 The suitability of soft/semi-soft/weakly coking coal/PCI coal for coke making, albeit in admixture with other types of coking coals, has been recognized in (i) Letter of the Commissioner of Customs, Guntur No C.N. 1/01/09/2013 legal dated 27.5.2013 (ii) Research pa .....

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.4 The expression coking coal used in the exemption Notification is a genus and would cover within its ambit different species thereof such as prime/hard coking coal, semi-hard coking coal, medium coking coal, soft coking coal, semi-soft coking coal, weakly coking coal and PCI coal. Reliance was placed on the Ministry of Coal notifications defining Coals other than coking or semi-coking or weakly coking coals as non-cooking coals. The Coal Directory of India also contains the very same definitio .....

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ble Swelling Number (LT) Gray-King Assay Coke Type 0-0.5 A-B 1-4 C-G2 4.5-6 F-G4 6.5-8 G3-G9 8.5-9 G7 or above And Table 2 of Indian Standard: 770-1977 shows that coal with Gray-King (LT) Coke Type, C-D-E which is weakly caking to medium caking and has CSN ranging from 1-4, is mainly used for blending for manufacturing coke. It was submitted that exemption to coking coal would apply to all species thereof and not alone to such coking coal which was actually used in coke making as was being conte .....

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. 8.5 It is an undisputed fact, as is evident from the statement of Shri Madhu Ranjan, Vice President, R&D as also the statement of Shri Raju Rangachar, Director, Rawmet Commodities Pvt. Ltd. dated 17.8.2011 that coal with weak caking property was required in Corex process. Further, that coking coal imported by the appellant for its Corex Plant had weak caking properties with CSN of more than 1 and less than 3 clearly comes out from the statements of Shri AVRP Dasu, General Manager - 4MT (Ir .....

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ory, Hyderabad. From the said seized hard disk record, a report dated 29.5.2008 tabulates the CSN of the various coals, being used in the Corex process from the various mines, to be between 1 to 1.5 Further, on testing the chemical examiner had found the CSN to be 1 or more in the majority of the cases and had recorded that the coals imported by the Appellant were Coking Coal (Weakly coking/). 8.6 The exemption to coking coal was not linked to any particular end-use and that any coal which fulfi .....

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Commissioner of Customs, New Delhi V. Sameer Gehlot 2011 (263) ELT 129 (Tri.-Del) 8.7 Admittedly 115 out of 151 Bills of Entry were finally assessed after granting the exemption. It stands judicially settled that such finally assessed Bills of Entry cannot be reopened under the proviso invoking the extended period of limitation and/or without challenging the test reports. Reliance is placed on the judgment of Magus Metals P ltd vs. Commissioner of Custom -2005-TIOL-1694-CESTAT. Therefore the ad .....

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d on non-coking coal. Thus one of the major raw material used in the Corex Furnace is non coking coal. 9.2 During the period under reference, M/s JSWSL has not imported non coking coal for use in their corex furnace nor procured any non coking coal indigenously. The MOUs /Contracts/Agreements by JSWSL with suppliers for purchase of coking coal for manufacture of Coke for use in Blast Furnace are clearly titled as Coking Coal Contracts/Agreements. The specifications of these coals are matching wi .....

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t Coking /Semi soft Coking/Corex Coal. These contracts are similar to contracts entered into by M/s. JSWEL (Sister Concern of M/s. JSWSL) with their overseas suppliers for purchase of steaming / Non Coking/Thermal Coals (i.e. other than Coking Coals) for use in generation of power and are titled as 'Coal Contracts/Agreements. The pricing for both the contracts entered into by JSWSL and JSWEL is based on parameters as for Non Coking Coals such thermal value. 9.3 The statutory and other docume .....

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the basis for procurement of Coals by M/s. JSWSL, that Web site of M/s JSWSL shows that Corex plant uses Non Coking Coal. File submitted (Raw material) contain details of coal fines generated and its consumption for the year 2006-07 to 2010-11. It also contains the details of sale of coal fines to JSWEL and others; coal fines generated during this period for use in other than Corex Furnace varied from 39.04% during 2006-07 to 52.73% during 2009-10 and 51.38% during 2010-11. Steel Ministry, Gov. .....

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are using non coking coal for their corex operations. Agreement dated 12.12.2001 between M/s JSWSL and M/s Jindal Tractwel Power Company Ltd (Now known as JSW Energy Ltd) is on the basis of calorific value of the Coal which matches with the specifications of thermal coal. Price entered into by M/s JSWSL in respect of supply of Weakly Coking/Soft Coking/Semi Soft Coking/Corex Coal is based on the API-4 Index of Argus/McCloskey's Coal price Index which is meant for thermal coal. This price Ind .....

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ty for reference; whereas in case of steam coal contracts these parameters are not provided. Shri Raju Rangachar, Director of M/s Rawmet Commodities Pvt Ltd, a company engaged in providing support services to their principals viz IMR Metallurgical Resources AG, Switzerland for whom JSWSL/JSWEL are customers for purchase of coal stated that Coking coal is a coal having coking properties and used in metallurgical industry i.e. for manufacture of Coke or Steel; that Soft Coking/Semi Soft Coking Coa .....

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s been entering into only one type of contract for Semi soft Coking Coal and Steaming coal from Mine owners/traders etc., by describing the description of goods to be procured as 'Coal'; JSWSL have requirement for inferior quality coal for use in their Corex Furnace apart from use of coal in coke oven batteries for ultimate use in Blast furnace; that they were regular suppliers of metallurgical coke to M/s. JSWSL. When asked specifically as to why CSN/FSI Number and MMR are not reflected .....

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heir principal contained the description of goods as 'Coal in Bulk' whereas the invoice issued to JSWSL described the goods as 'Semi soft Coking Coal; that as per the contract, the price of the coal is determined based on AP14 index meant for thermal/steam coal used in the power generation. Shri Sandeep Bhargava, CEO of M/s. Rawmet Commodities Pvt. Ltd. stated that as regards the parameters/technical specifications of the coal indicated in the contract, to the best of his knowledge s .....

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39;, 'soft', 'semi soft', or 'weak' to give an indication of its generic properties and use; for instance Illawara Hard Coking coal, riverside Coking coal, Blackwaster Weak Coking Coal, Black Water Soft coking Coal etc; that such annotation or any other reference to the coal as 'hard' soft, 'semi soft' or 'weak' coal is merely a business description of such coals as is understood in general marketing parlance and developed over the decades by buyer .....

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suppliers are only general in nature based on the end use application but not based on the actual quality/specification of the goods supplied to M/s. JSWSL and M/s. JSWEL; (b) The description in third party inspection certificate is based on the description by the exporters only. 9.5 Statements of Company personnel Shri Dasu, General Manager 4MT (Iron Making) JSWSL, Bellary stated that (1) Blast Furnace is a single vessel and Corex is two vessesl (2) Blast furnace uses hot air at elevated temper .....

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lt; 0.6% Size of Coal 6.3 mm to 50 mm Inherent moisture < 1% Gross Calorific Value > 7400 KCAL/KG (Air dried basis) About CSN number of coals used in Corex furnaces, he stated that as and user they are not bothered about CSN number as they knew that most them are more than one and less than three; that Corex Coals indicated as Non-Coking Coals in the business plans may be to avoid contamination/mixing Corex Coals with other coals. Shri Bhupinder Singh Khera, Associate Vice President (Raw M .....

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coal fines for PCI charge as well as for blending of Corex Coal fines with Coking Coal for coke making. Shri Arvind Raj Gopalan GM (Commercial) stated that the price of Soft Coking / Semi Soft Coking/ Corex Coal is based on API 4 index for coals originating from South Africa. That the Soft Coking / Semi Soft Coking/Corex Coal are imported by them for the purpose of use in Corex Furnace, PCI purpose and Steaming (Energy) Coal / Thermal Coal is imported for the purpose of use in boilers for power .....

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dustrially and commercially proved direct smelting reduction process that allows for cost-efficient and environmentally compatible production of hot metal directly from iron ore and non-coking coal. The process was developed to industrial maturity by Siemens VAI and is the only alternative to the conventional blast furnace route consisting of siner plant, coke oven and blast furnace It distinguishes itself from the blast furnace route by - direct use of non-coking coal as reducing agent and ener .....

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nd M/s JSWSL are not entitled to the benefit of exemption. 9.8 All the definitions referred to by Commissioner in the impugned Order point out to one single parameter i.e. the coal which is suitable for production of coke to sustain a blast furnace charge for manufacture of steel is called as coking coal. Adjudicating Authority has erred in holding that coking coal with lesser CSN value can be called as soft or weak or medium coking coal and coking coal with higher CSN can be called as prime cok .....

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al, Corex coal, semi soft coking coal' was given by M/s JSWSL and its suppliers with an intention to evade payment of duty and goods imported by them are non coking/thermal coal. The process flow chart prepared by M/s. JSWSL contained the details of process flow of raw materials in the manufacture of hot metal through Corex Furnace process as well as through blast furnace. It showed that non-coking coal is directly fed into Corex furnace for manufacture of hot metal. As against this, in resp .....

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Coals described as 'Soft Coking Coal' / Semi Soft Coking Coal/Corex Coal' are based on API 4 Index of Argus/ McCloskey's which is meant for Coal Price Index Report for Thermal Coal originating from Richards Bay Coal Terminal of South Africa. Similarly the pricing of thermal/steam coal are also based on the AP1 4. However, the pricing of coking coal import for their blast furnace was based on the pricing prevalent at the Japanese Steel Mills. The mine owner invoices showed the de .....

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The coal produced by Total SA and Sasol Coal South Africa is understood and treated as 'thermal Coal' in trade parlance. The specifications in the agreements as well as in the load port certificate is akin to the internationally accepted standards for thermal coal specifications. There is nothing in the documents produced by M/s JSWSL to indicate that coal imported by them was other than thermal coal. 9.12 For classification purposes the nature of goods are to be identified first; the a .....

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coal having mean reflectance of more than 0.85 and swelling index number of more than 2. The notification was further amended to provide CSN of 1 or more than 1. The notification is conditional; two conditions are to be jointly satisfied. In the instance case noen of the test reports showed the mean reflectance (MMR) values. Therefore in none of these cases the condition of the notification is satisfied. 9.14 As regards the reliance by JSWSL on the judgment of Hon'ble Tribunal in the case of .....

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bring on record all the significant contentions made by both sides that would enable us to analyze the issue in a comprehensive manner. The issue to be decided is spelt out in para 2 of this Order and needs no repetition. The matter needs examination from various perspectives to decide whether JSWSL mis-declared the description of the coal imported by them as 'Soft Coking Coal'/'Semi Soft Coking Coal' / weakly coking / 'Corex Coal', etc. and availed full duty exemption ap .....

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oduce the relevant notifications below: Notification No. 21/2002-Cus S. No. Chapter or Heading or sub - heading Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 68 2701 Coking coal of ash content below 12% Nil - 68A 2701 Coking coal of ash content of 12% or more Nil - Notification No. 21/2011-Cus dt. 1.3.2011 [Amendment to Notification No. 21/2002-Cus] xi) against S. No. 68, for the entry in column (3), the following entry shall be substituted, namely .....

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(4) (5) (6) "66A 2701 Coal having Swelling Index or Crucible Swelling Number of 1 and above and mean reflectance of above 0.60, for use in the manufacture of iron or steel using Corex, Finex or PCI technology Nil - 5"; Notification NO. 77/2011-Cus dt. 17.8.2011 [Amendment to Notification No. 21/2002] In the said notification, in the TABLE, - (i) S.No. 66A and the entries relating thereto shall be omitted. (ii) in S. No. 68, in column (3), in Explanation, for the figures and words " .....

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iness plans of the company which indicate that the coal imported for Corex technology was non-coking coal. In our view though documents are indicative, the ultimate test would be the nature of the coal actually imported and not what is reflected in the business plan etc. If, in the ultimate analysis, what is imported is held to be coking coal actually imported and not what is reflected in the business plan etc. If, in the ultimate analysis, what is imported is held to be coking coal in terms of .....

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tain records is to avoid mixing of Corex Coals with other coals, cannot be brushed away. During the cross-examination, in reply to specific questions he stated that he stated that 'the total coal that the company gets is either used in Corex or Coke ovens, so this distinction was made to know how much coal will be used in Coke ovens and how much in Corex. The coal used in Corex, we classify as non-coking coal because we went by the terminology used by the equipment supplier. Even though thes .....

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nature of the coal…….' This statement of the main technical person reveals that the coal used in Corex technology has weak coking properties. As already observed above, the real test would be the nature of coal imported. A significant aspect to be noted in this regard is that the business plans specifically enlisted the coal with respect to the names of the originating mines such as Ensham/SBW/Helsenburg//Metro/Datong. From the records we find that these coals have weak coking .....

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ts such as business plans and balance sheet may not truly reflect the nature of coal imported in the context of the customs notification. 11.1 The other set of documents relied upon by Revenue are the MoUs/Contracts /Agreements with the suppliers of coal. Whereas these documents referred to purchase of coking coal for use in manufacture of Coke, the suppliers have not referred to the coal imported for Corex furnace as weakly coking coal/soft coking coal/semisoft coking coal/Corex coal in the mai .....

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soft/semisoft/weakly coking coal have not been coined by them in connivance with the suppliers, but these expressions are in existence and recognized nationally and internationally. Therefore it would be useful to refer to some of the technical literature on the characterization and categorization of various kinds of coal. From the IS standards 770-1977, we find that in Table 2 of the standards, the bituminous coal is classified into categories such non-caking, weakly caking, medium to strongly .....

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l. However we notice that against the weakly/medium caking coal varieties, the purpose of utilization is written as 'blending'. This indicates that such coal can be used for blending with the strongly caking coal for steel making. We have already noted above that in a majority of the imports in question the CSN factor is 1 and above. Therefore there is merit in the contention of the Ld Advocate that only the non-coking coal is ineligible for the exemption. 11.2 We also find that the term .....

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Mines Act 1952. 3. Coals other than coking or semi cooking or weakly cooking coal are non-coking coals." The same terms find mention in the Coal Mines Act 1952, Australian Coal Review Database, Platt which is a Journal of prices, McCloskey Coal Report etc. For example, in the McCloskey Coal Report Issue 365 of 24 July, there is a reference to prices of weak coking coal. Therefore the contention of the Ld advocate that such coals imported belong to the genus of coking coals has merit. In ou .....

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s semi soft coking coal. Further that the CSN number and MMR are not reflected in the quality certificates issued in respect of supplies to JSWSL as per the business transaction and requirement of the customer. From this we gather that there is no misrepresentation as such. The description given by the Principals is coal. It cannot be concluded that the coal supplied was not semi soft coking coal. The fact remains that, as also stated by Shri Raju, the company had requirement for inferior qualit .....

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to be weakly coking. 11.4 Revenue has also relied on the contracts and purchase orders to state that they did not mention the criteria of minimum CSN and therefore could not be said to be coking coal. The contention of Ld advocate is that the records seized from the hard disk of Shri Arvind Rajagopalan GM Commercial, show that the coal was being procured from specific pre-approved mines and the coal source was tied up to suitability for use in the Corex furnace; which means that parameters such .....

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mphasise that here we are not suggesting application of notification of 2011, retrospectively. At the same time we have discussed technical literature above which gives some guidance on the nature and properties of weakly coking/coking coals. As mentioned in paras above, we find that the business plan of the company enlisted the coals with respect to the names of mines such as Ensham/SPW/Helsenburg/Metro/Datong and such coals were having weakly coking property with CSN ranging from 1 to 1.5. Thi .....

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ove. Therefore we find the stand of Revenue not sustainable. Further the Coal Directory only mentions the ash content of such coals which implies that such weakly coking coals can be described in trade parlance/documents without specifically giving the CSN no. 12. It appears to us that the main stand of Revenue is that the Corex technology does not require coking coal and the weakly coking coal said to be imported cannot get the benefit of the exemption. The question that arises is whether weakl .....

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see whether such coal imported for Corex technology could be termed as soft coking/ weakly coking coal. We note that during the course of investigations, the hard disk of Shri Arvind Rajagopalan had been seized and sent to the Central Forensic Science Laboratory, Hyderabad. From the said seized hard disk record, a report dated 29.5.2008 tabulates the CSN of the various coals being used in the Corex process. The same is reproduced herein below for ease of reference: SBW Coal 1.5 Ensham Coal 1.5 .....

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oals may have maximum CSN as six. As mentioned by the Commissioner in the impugned Order, M/s. Voest-alpine IndustrieanlagenbauGmbh, Linz, Austria (VAI) who are the owners of the Corex technology suggest that Corex technology can take Non Coking Coals with CSN from 1 upto 6. 12.1 We have seen that the Coal Directory of India calls the weakly coking coals as blendable, meaning thereby that the same can be used in blend with coking coal to produce steel. The point is, therefore, that the soft coki .....

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as to be permeable by the very technology involved and the soft coking coal adds to this function. 12.2 The Research paper on the experience of using hundred percent imported coal in Bhilai steel Plant, which is a public sector unit, states that 'But in the middle of 2014, with non-availability of indigenous coal, DSP was left with the option of having to use hundred percent imported coal for some time. With no prior experience of suing hundred percent imported coal, it became an unknown jou .....

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. Revenue has not shown any technical reading to dispute this stand. 12.3 Another technical reference presented by the appellant is the extract from the book "Elements of Fuels, Furnaces and Refractories" by Om Prakash Gupta in which the coking coal classification systems in USA Australia and Japan are given. Although the classification indicates various parameters, the parameter of CSN shows that in Japan the CSN of semi-coking coal is 1 to 2 and of medium coking coal is 2.5 to 4. The .....

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pplied for the period of dispute. To determine whether a coal imported is coking coal or not, there has to be some technical or scientific parameter to term coal as coking or non-coking. In the present case the only relevant parameter which has been discussed by both sides and is also figuring in the reports of the Customs Chemical Examination is CSN. Therefore, in our view some credence has to be given to the CSN factor. The technical literature seems to indicate that the coal imported by the a .....

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ing. And no convincing reason has been given to justify that weakly coking coal cannot be considered as coking coal, albeit weakly. The contention of Revenue is that in such eventuality, the other parameter of MMR should have been determined. We find that the onus is on Revenue to determine this parameter. The Chemical laboratory has concluded the coal to be weakly coking. The burden is on Revenue to determined the MMR factor which was not done for reasons best known to them. Apparently the Chem .....

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soft coals to low volatile coals, where two of the five samples having CSN of one, were mixed to form blends with other coals which had CSN of 4.5 - 5.5. It was found that the blends with coals having CSN of one showed good coking potential. 12.5 The above literature submitted by the appellant goes to show that weakly coking coal can be used in blending and has coking potential and deserves to be treated as coking coal within the contours of the exemption notification. We find ourselves unable .....

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oals as is understood in general marketing parlance and developed over the decades by buyers and sellers in the international markets and is merely indicative and not determinative of the technical quality or specification of the coal; that Optimum coal being one such coal whose intrinsic geological properties can find application in metallurgical as well as Energy Markets and when sold to M/s. JSWSL is named 'Bespoke Optimum Semi soft Corex Coal'. According to us, even if it is a busine .....

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ption indicated above is nothing but description in trade parlance. It is therefore not refutable that the coal imported is described as weakly or soft coal in trade parlance. Therefore the contention of the Ld Counsel that the classification should be as per popular understanding is also met. 13.1 The other statements relied upon by Revenue may be seen. Mr. Dasu stated that as end user they are not bothered about CSN Number as they knew that most of coals imported have CSN more than one and les .....

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s for manufacture of coke except usage of Corex coal fines for PCI charge as well as for blending of Corex Coal fines with Coking Coal for coke making. Shri Arvind Raj Gopalann GM (Commercial) stated the price of Soft Coking/Semi Soft Coking/Corex Coal is based on API 4 index for coals originating from South Africa. That the Soft Coking/Semi-Soft Coking/Corex Coal are imported by them for the purpose of use in Corex Furnace, PCI purpose and Steaming (Energy) Coal/Thermal Coal is imported for the .....

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hat Soft Coking/Semi Soft Coking Coal is one type of coking coal having less coking properties (Statement of Raju Rangachar). Notwithstanding this contention of the appellant, the fact remains that the exemption to coking is not linked to any end-use condition. Even the amendment of notification 21/2002 by notification 77/2011-Cus dated 17-08-2011 did not prescribe end-use condition. The appellant have rightly relied on judgements which lay down the law that wherever end use is contemplated, the .....

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ust be noted that the important words used in the relevant provisions are goods for use by it in the generation or distribution of such energy (emphasis supplied by us). On a plain reading of the relevant clause it is clear that the expression "for use" must mean "intended for use". If the intention of the legislature was to limit the exemption only to such goods sold as were actually used by the undertaking in the generation and distribution of electrical energy, the phraseo .....

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t still does not establish that what was imported was not weakly coking coal. The notification granting exemption has to be read strictly. Meanings cannot be read into the notification except what its wording simply states. End-use condition cannot be built into a notification when there is none. 13.2 Shri Dasu stated that the Corex Coals may be indicated as non-coking coals in the records to avoid contamination/mixing Corex coals with other coals. However he also categorically said that they we .....

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on-coking coals in the records only to separate the coals used in the blast furnace and in the Corex furnace. 13.3 Revenue has relied on statements to prove that the API-4 index is the parameter for fixing of prices for steam coal as done by the appellant. It is further alleged by Revenue that these coals are imported for the purpose of use in Corex furnace, PCI purpose and steaming coal/thermal coal is imported for use in boilers for power generation; further that except the usage of coal there .....

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thermal coal. Argument of Special counsel is that the price difference between coking coal and thermal coal should be much higher in any case. Learned Special Counsel also drew attention to the fact that the coal was supplied to the appellant and steam non-coking coal supplied to JSWEL at the same price. The response of Ld advocate is that this is only one solitary instance. And that no evidence has been shown that the coal supplied was from the same source or the dates of contracting were the s .....

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not established that the coal imported is not soft coking coal or that it cannot be mixed with the coking coal in the blast furnace to produce Coke. We have noted that no end use conditions are provided in the notification; therefore usage cannot be a determining factor. In our view the same reasoning would apply against the Department's contention that coal fines were used for power generation. 13.4 The statement of Shri Mahesh Vaidya GM Glencore India Pvt Ltd was countered by the Ld advoc .....

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coal supplied is described as 'bespoke optimum semi soft Corex coal' which does not rebut the contention that this is coal coking and can be blended with other coals apart from being as sold as energy coal. 14. On the basis of analysis in the preceding paras we come to the conclusion that the coal imported by the appellant was in the nature of weakly coking coals as also held by the Customs Chemical Laboratory in the vast majority of reports out of 150 Bills of Entry. There are as many .....

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emical Examiner in coming to the conclusion that it is weakly coking has not stated the specific parameters on basis of which he has come to this conclusion because the parameters tested apart from CSN also include Moisture, Ash, VM and Agglomerating property. The MMR has not been tested. It appears that the basis is CSN because wherever the CSN is less than 1, he has concluded the coal to be non-coking. The opinion of the Customs Chemical Examiner cannot be simply wished away without any substa .....

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allegation there was that the contract with the supplier namely CC Carbon Pvt Ltd Singapore was only for supply of "Jellinbah PCI coal" and not for supply of coking coal whereas the respondent(in that case) showed the description of the said coal as 'semi soft coking coal' in all relevant records with the sole intention of claiming it is as coking coal to take benefit of exemption under notification 21/2000 dated 1-03-2002. It was held by the Tribunal that "18. In the abse .....

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e before using it in metal extraction. During the period of import there was no explanation at all. We note that even after 01-03-2011, the Government has been changing the criteria to define the expression evidencing that there has been no clear intent about the characteristics to be satisfied. The criterion added by new explanation does not prescribe that the coal should have been used for conversion into coke and then used. The position is that the imported coke was suitable for use with othe .....

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coking coal for the purpose of customs duty for the reason that the goods were not converted into coke." 14.1 The intention of the Government in bringing about the change in the Not 21/2002 is brought out in the letter F No. 336/3/2013-TRU dated 21-05-2013 of Director TRU addressed to the Commissioner Guntur in connection with a representation from the appellant. It stated "(i) Prior to the budget 2011-12, Coking coal, having ash content below 12% as also Coking coal having ash content .....

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emption for coking coal, a definition of coking coal was provided in the Budget 2011-12, whereby coking coal was defined to mean "coal having mean reflectance of more than 0.85 and Swelling Index or Crucible Swelling Number of more than 2" (Sl. No. 68 of Notification No. 21/2002-Customs ibid). (ii) On getting further representation from the domestic steel industry that manufacturers using Corex, Fines & PCI fuel injection technology could not avail of the benefit of exemption since .....

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was based on end-use. This was notified on 24.03.2011. (iii) Thereafter, a representation was received from new Zealand High Commission seeking full exemption from customs duty on imports of weak coking coal for manufacture of steel using blast furnace technology . When the matter was examined, it was seen that most of the established manufactures of steel in India were using conventional "blast furnace technology" wherein coal is first converted into coke before being used in the man .....

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Crucible Swelling Number 1 and above irrespective of the technology used for manufacture of iron or steel (Sl. No. 68 of Notification No. 21/2002- Customs ibid). Simultaneously the entry relating to exemption of coal based on end use (sl.No. 66A of 21/2012-Customs) was omitted on the belief that the new definition would take care of all the coals used in the iron and steel industry. Irrespective of technology (corex, Finex, PCI or Blast furnace Technology) used, since all these coals were presu .....

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stion, even this condition was absent. As to the meaning of coking coal, the statements of the Technical persons in charge of the Iron/Steel making plants have much relevance. The relevant portions of the impugned Order in this regard are reproduced below: 17.1.11…..M/s JSW Steel Limited as to whether the coals used by their company in Corex Furnace falls under the category of 'Coking Coal' or not, Shri Dasu after perusing the definition of 'Coking Coal' in McGraw-Hill Dic .....

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tructive distillation of Coal to make Coke; that from the above definition of Coking coal, coal used in manufacture of coke in Coke Ovens is called as Coking Coal; that in terms of the above definition also gies meaning of all coals which can form coke irrespective of the coke strength produced from the coal and other value can be termed as coking coals including the coals which use in Corex Furnace. When enquired specifically as to whether coke is manufactured in the Crex Furnace or not, Shri D .....

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o support the burden and to allow the gas to penetrate upwards and liquids to penetrate downwards. When asked to furnish about records maintained for 'char' in the plant of M/s JSW Steel Limited, Shri Dasu stated that the Char is produced in the Meltergasfier, which serves the purpose of Coke in Blast Furnace and there are no quantification of amount of char generated in the Meltergasfier as the same is being consumed in the process of generation of heat required for melting solid iron t .....

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eral Manager 10 MT (Iron Making) "when asked to offer his comments specifically with reference to the coals used in Corex furnace by their company as to whether the coals used by their company in Corex Furnace falls under the category of 'Coking Coal' or not, in the light of the definition of 'Coking Coal' as per McGraw-Hill Dictionary of Scientific and Technical Terms, Shri B. Mastan Reddy stated that he has read the McGraw-Hill dictionary of Scientific and Technical Terms .....

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rex Furnace can also be called as weak coking coals…" The statements reflect that what was imported was coking coal even without placing reliance on technical parameters. Without basing our decision only on the parameters, we find that in the present case there was neither any restriction in the statute based on technical characteristics (other than ash content) nor any intention to deny the exemption ostensibly to weakly coking/soft coking/mildly coking coals during the period in di .....

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ocate is that the criterion of CSN one cannot be given retrospective effect. We agree with this contention as already held by the Tribunal in the appellants own case in Commissioner Of Customs vs JSW Steel Ltd 2012(284) ELT 680 (Tri-Chennai). The other contention is that the test reports were never furnished to the appellant till the adjudication stage. Therefore the appellants never had the opportunity to rebut the findings of the tests. The results were communicated after many years during the .....

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ith increased degree of weathering. It has been brought on record by the appellant that the internal test reports in respect of these 21 bills of entry clearly show that the CSN was one or more than one. The Ld. Advocate submits that their laboratory is having ISO 9001 standards. In the circumstances we do not find any reason to disbelieve the internal reports because these reports were recovered from the records of the appellant seized by DRI. Revenue has selectively chosen to ignore these reco .....

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ly criterion of Ash content during the relevant period, the detailed analysis by us in paras above, the absence of a precise definition of coking coal, the refusal to allow cross-examination of the Assistant Chemical Examiner, the decision of the tribunal in appellant's own case (supra) and a plain reading of the notification would, in our view, decide the issue in favour of the appellant. 15.2 An interesting aspect is that the appellant in one case of import at Goa, which is not related to .....

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