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2015 (12) TMI 1389 - CESTAT MUMBAI

2015 (12) TMI 1389 - CESTAT MUMBAI - 2016 (343) E.L.T. 717 (Tri. - 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 co .....

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ling 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. - 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 c .....

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mercial) 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 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 foll .....

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ing, strongly caking. And further in comparison with the IS standards 1353:1993 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 .....

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f the same samples was found to be 5 to 5.5. The appellant requested for cross 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 Commissio .....

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on Revenue in the preceding paras to disprove the appellant's own reports. Noting 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. .....

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/85484/14 and C/85238/14 respectively against the same impugned Order dated 27.09.2013 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 Assis .....

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documents now placed cannot be a basis for arriving at a decision in the present 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 4 .....

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oresaid discussion, our decision, with respect to the two questions of law, referred 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, .....

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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 to Customs duty @5% Adv. The period of import is Dec 2006 to Mar 2011. 3. .....

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terial are charged in the furnace for manufacture of steel whereas in the Corex 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 it .....

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andard Rate Additional duty rate Condition no. 68. 2701 Coking coal of ash content 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 .....

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ex furnace. It was alleged that as per the supplier of the Corex technology, 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 .....

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AG, Switzerland on the Appellant for the supply of semi-soft coking coal in bulk. 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 consignmen .....

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mption notification had itself introduced the criteria of 1 CSN by way of an 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 Re .....

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ation NO. 21/2002-Cus would also be available to coal "suitable" for 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 f .....

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coking coal for making coke in the appellant's coke plant as also third parties' 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 o .....

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coals and that the consumption of hard coals can be brought down to 35-38%. 8.4 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-coo .....

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, with their group numbers when juxtaposed with the CSN reads as under: Crucible 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 .....

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down by the Apex Court applies on all fours to the facts of the present case. 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 clear .....

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Commercial) 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 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 cokin .....

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. ii) State of Haryana V. DalmiaDadri Cement Ltd. 2004 (178) ELT 13 (SC) iii) 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 Met .....

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mercially established and industrially proven smelting reduction process based 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 .....

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l invoices showed the coal sold for use in Corex Furnace as Weakly Coking/Soft 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 a .....

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tatement admitted that business plans approved by the management Committee is 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 200 .....

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ope and Asia. Website of Billiton, another supplier of coal shows that JSWSL 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/McC .....

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tion coking properties like CSN number, Mean Max reflectance (MMR) and fluidity 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 .....

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Calorific Value, Moisture, Asch Content etc., that their principal company has 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. JSWS .....

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JSWEL as steaming (Non Coking) Coal/Steam Coal. That the invoices issued by their 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 specifi .....

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m the originating mines is sometimes annotated with words such as 'hard', '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 und .....

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s that: (a) The description furnished in the invoices issued by the overseas 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 vess .....

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operties Fixed carbon > 63% Ash < 8% Volatile matter < 27% Sulphur < 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 .....

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nit in the Coke Oven batteries 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 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) .....

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ologies Gmbh & Co., Linz, Austria indicates follows: "Corex is an industrially 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 blas .....

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ted by M/s JSWSL for use in their Corex furnace was in fact non coking coal and 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 .....

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of investigation is that nomenclature of 'semi soft coal, soft cooking coal, 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 .....

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sold as fines to M/s JSWEL. 9.11 The Contracts entered by JSWSL for import of 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 .....

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both JSWSL and JSWEL but with different descriptions in the invoices issued. 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 .....

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ed Notification No. 31/2011-Cus dated 24.3.2011, 'Coking Coal' means 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 .....

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sel took us through the details at length. We have, in paras above, tried to 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' / .....

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the subject presented by both sides. Before discussing the evidence, we reproduce 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, .....

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o , the following S. No. and entries shall be inserted, namely:- (1) (2) (3) (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) .....

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ents submitted to SEBI for public issue. Revenue has also relied upon the business 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 t .....

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er (Iron Making) that the use of the nomenclature 'non-coking' in certain 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 becaus .....

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ovens). By classifying in this session, I was not expressing any view on the 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/Helsenb .....

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ffice here to say that since the coals did have some coking property, documents 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 w .....

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coking coal/Corex coal. The defence of the appellant is that the expressions 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 .....

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cording 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 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 .....

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fied as 'Blendabale coals' by the erstwhile Coal Board under the Coal 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 .....

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ot;, whereas the invoices issued by them contained the description of goods as 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, .....

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ity of cases, the Chemical Examiner himself had determined the imported coals 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 .....

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laid down in the amended notification of 2011. As a note of caution, we may emphasise 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 .....

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allenge the fact that the coal imported from mines did have CSN of one and above. 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 canno .....

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JSWSL for purchase of steam / thermal coal. To address this issue, we have to 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 .....

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n recovered by Revenue stated that, as shown in the presentation, the Corex Coals 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 w .....

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especially when their CSN is one and above. Technically also, a coking coal has 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 prio .....

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usability of soft coal in coke making, vindicating the stand of the appellant. 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 .....

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fter the period of dispute. Both sides contend that this criteria cannot be applied 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 facto .....

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remains that the Chemical Examiner himself declared the coal to be weakly coking. 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 .....

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Ltd experiments with different qualities of coals ranging from high volatile 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 .....

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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 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 'Bespo .....

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ters, the trade parlance usage is important. We find that the business description 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 N .....

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ve not been used at any point of time in their unit in the Coke Oven batteries 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 Fur .....

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orted is usable in blending of Coal/fines with Coking Coal for coke making; that 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 .....

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as actually used in the generation or distribution of electrical energy. It must 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 und .....

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w that generation of fines and their use in power generation to a large extent 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 .....

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Nevertheless even the technical person stated that coal may be indicated as non-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 .....

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kup on the basic price and the coking coal price was higher than that of the 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 .....

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he two are not comparable. Notwithstanding these factual details, it is still 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 .....

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f because he stated that the coal is supplied for energy markets as well. The 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 .....

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s 3.5 and above) or coking coal (weakly coking)". We observe that the Chemical 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 .....

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ng but its suitability for such use. We find similar facts in that case. The 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 .....

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ovide for monitoring that coal is to be used actually for conversion into coke 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 the .....

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e argument of the Revenue that the goods imported could not be considered as 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, Cok .....

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Coal, Ministry of Mines as well as Ministry of Steel, while retaining the exemption 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 & PC .....

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hnology (s. No. 66A of Notification No. 21/2002-Customs ibid). This exemption 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 .....

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to mean coal having mean reflectance of 0.60 and above and Swelling Index or 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, F .....

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, was realized in the amended notification in 2011. But for the period in question, 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 D .....

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l suitable for Coking; that as per the dictionary, 'Coking' means destructive 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 speci .....

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al property of this char is similar to that of Coke, whose main function is to 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 co .....

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s used in Corex plant……. 17.4.5. Shri B Mastan Reddy Deputy General 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 t .....

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al but not directly suitable for coke making; that hence the coals used in Corex 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 ostens .....

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the CSN was found to be between 0 and 0.5, the contention of the learned advocate 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 fin .....

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IT South Africa' which says that the CSN number is reported to decrease with 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 .....

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tself disputes the applicability of CSN criterion of 1, the fulfillment of only 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 .....

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