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M/s. J.S. Steel Traders Versus Commissioner of Customs, Ludhiana

2018 (2) TMI 961 - CESTAT CHANDIGARH

Provisional release of goods - import of Heavy Melting scrap at ICD, OWPL Ludhiana declaring the grade of the scrap as ISRI 207 - said goods were examined and on detailed examination of the consignment declared as Heavy Melting scrap ISRI code 207, the imported goods were found containing CR sheets/sheet cutting cut to various sizes weighing 132.895MT and 159.575MT respectively - mutilation of goods. - Held that: - As there is divergent views of the Members of this Tribunal, therefore the ma .....

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Singh, A.R. for the Respondent(s) ORDER Per: Ashok Jindal The appellant has filed these appeals against the following order sin the impugned orders:- In Appeal No.C/60450/_2017 List of steel products under mandatory Bureau of Indian Standards certification. Indian Standard number Title ITC (HS) Code Date of coming into force of the product in the standard to the extent given below (1) (2) (3) (4) (A) Product (B) With effect from Xx Xx Xx Xx Xx 3 IS 513 Cold reduced low carbon steel sheets and s .....

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The goods shall be assessed to duty provisionally on the basis of the declared invoice value, purely for the purpose of provisional release of goods only, without any prejudice to the right of the department to issue the show cause notice on any aspect including valuation. (ii) The goods mentioned in Table-1 excluding coated/ plated sheets/strips/slits and HMS shall be mutilated so as to render them scrap in such a manner so that they cannot be used as such except for melting in accordance with .....

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r the goods from the period for which they remained a detained in terms of regulation 6(1)(e) of Handling of Cargo in Customs Area Regulations, 2009 (HCCAR, 2009). In Appeal No.C/60452/2017 (i) The goods shall be assessed to duty provisionally on the basis of the declared invoice value, without any prejudice to the right of the department to issue the show cause notice on any aspect including valuation. (ii) The representative samples of the impugned goods mentioned in Table -1 & 2 excluding .....

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ase of demand the differential duty, fine, penalty or interest as may be leviable on such goods, if these are held to be other than scrap. (iv) The Assistant Commissioner (Shed), CFS OWPL, Ramgarh, Ludhiana shall issue a Detention Memo for the goods from the period for which they remained a detained in terms of regulation 6(1)(e) of Handling of Cargo in Customs Area Regulations, 2009 (HCCAR, 2009). 2. As the issue in both the appeals is identical, therefore both the appeals are dealt by this com .....

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vely. The same were detained and ordered to be released provisionally on the conditions mentioned in Para 1 hereinabove. Aggrieved from the said orders, the appellant is before us. 4. Ld. Counsel for the appellant submits that the appellant has declared the grade of the scrap as ISRI 207 which reads as under:- "207 : Busheling Clean steel scrap, maximum size 2 feet by 5 feet, including new factory busheling, (for example, sheet clippings, stampings, etc.). May not include, old auto body and .....

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ns as laid-down in the standing order. As per the internationally accepted code of ferrous scrap (ISRI), however, the said goods were detained, wherein examination was conducted with the help of the Chartered Engineer Shri Anil Soni. Shri Anil Soni, who is not the Metallurgical Engineer, vide report dated 17.02.2017 in respect of Bill of Entry No.8414179 dated 02.02.2017 as per visual examination conducted by him, out of the total quantity of 132.895 MTs declared scrap, CR sheets/ Strips/ Slits .....

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without even segregation or weighment of the goods at the time of inspection, despite the request of the appellant to communicate the criteria of segregation. He further submits that in respect of bill of entry No.8155288 dated 11.01.2017, the Chartered Engineer Shri Rajesh John reported that out of the total declared weight of 159.75 MTs the MS Sheet cutting/strips/slits (CR) missed coated/ plated width more than 600mm (secondary and defective) weighing 15.75 MTs were found, MS Sheets cutting/ .....

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ed for re-examination by another Chartered Engineer and the services of Shri Varun Chandok was obtained, who after considering the definition of secondary and defective goods as per criteria issued by Ministry of Steel, ISRI specification and definition of scrap as per Chapter Note XV 8(b) vide his report dated 01.03.2017 reported that since the material produced is in mix condition, the size of the material lying in definition of ISRI Busheling i.e. 2 feet by 5 feet may be considered as scrap. .....

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epted and after physical examination of the material, vide his report dated 14.03.2017 NISST confirmed that the material imported by the appellant is scrap as per ISRI 207, particularly Busheling Scrap. The said report has been given after considering all the factors of secondary steel, ISRI specification and explanation as per Chapter XV 8(a) of the Customs Tariff. It is his submission that the said institute (NISST) is BIS recognised laboratory. He further submits that despite the fact that th .....

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e the Appellate Authority, who shall consider the same as it shall affect the trade at large. It is his contention that the appellant is aggrieved by the condition of provisional release of the goods after mutilation, as the same is bad since the goods imported by the appellant are Heavy Melting scrap as per the internationally accepted standards of ISRI, which specifically provides that the length and breadth of the material shall be 2 feet by 5 feet. The said declaration as per ISRI has been d .....

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f the material imported under various specifications merely on the basis of the visual examination and without segregation and weighment of the same. The report of the Chartered Engineers Shri Anil Soni and Shri Rajesh John cannot be relied upon as they have failed to consider the criteria laid-down under the ISRI for import of scrap. Therefore, for the failure of giving any valid reason for imported scrap not falling under the said criteria, the opinion classifying the goods under the category .....

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lant are scrap as per ISRI. Moreover, the said Customs empanelled Chartered Engineer who had jointly examined the material with the help of Metallurgical Engineer Shri Tophanwala has reported that since the material falls within the criteria specified under ISRI, the same falls under the category of Heavy Melting Scrap. The recommendation of the said chartered engineer for obtaining the market opinion has not been accepted. He further submits that adjudicating authority has erred in relying on P .....

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SST vide its report dated 14.03.2017 have specifically held that the material imported by the appellant comprises of different sizes as per the ISRI grade. He submits that once the goods fall under the specification as laid down under ISRI, the question of reclassifying the same under the Chapter Heading of Sheets cannot be accepted, more-so scrap is always generated out of the prime, used and other material, which is waste and discard of prime material and does not have a specific name. He furt .....

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olding that the goods to be prime sheets. The said fact is evident from series of the dates, wherein the order-in-original was passed on 12.04.2017 and the samples were sent for testing after passing of the said order, therefore the findings of the adjudicating authority are premature. He further submits that the findings of the adjudicating authority classifying the goods as cold rolled sheets and attracting mandatory compliance of BIS is based on the test reports obtained after passing of the .....

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rays the impugned orders are to be modified and the Condition No.2 in the impugned orders are required to be deleted. 6. Ld. AR opposed the contention of the Id. Counsel and submits that before the Hon'ble High Court, the appellant themselves submitted that they may be allowed the goods after mutilation. He submits that as per Section XV 8(a) defines the waste and scrap metal waste and scrap obtained from the manufacture or mechanical working of metals and metal goods definitely not usable a .....

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- F.No. VIII-HQ/U/STEEL PIPES.2001/5848-60 DATED 30.05.2013 STANDING ORDER NO.02/CUS/2013 Sub : Assessment of HMS Scrap Mixed with Re Rollable/ Serviceable Material. In suppression of Standing Order No.2-Cus/2002 Dated 21.03.2002 issued in F. No.VII-48(106) T/VAL/Steel Pipes/2001, following practice is to be adopted with immediate effect for assessment of imported ferrous scrap. (i) An importer of ferrous scrap must declare, in the relevant Bill of Entry, the grade of scrap imported in terms of .....

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to any ISRI Code Grade, also referred to in Rule (b), shall mean a variation to 10%. As per the said instructions, the importer is required to be declared the grade of scrap imported in terms of internationally accepted ISRI Code. Admittedly, the grade of scrap has been mentioned as ISRI 207 which reads as under:- Busheling : As per ISRI 207 : Busheling Clean steel scrap, maximum size 2 feet by 5 feet, including new factory busheling, (for example, sheet clippings, stampings, etc.). May not incl .....

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ondary and defective) weighing 02.00 MTs and the balance material weighing 65.895 MTS was reported to be Heavy Melting Scrap and only 7 MT can be said to be not as per ISRI Code-207. The Standing Instruction allows the variation in size upto 10% of the total quantity. Admittedly, in respect of Bill of Entry No.8414179 dated 02.02.2017, the variation is less than 10%. Further, with respect to Bill of Entry No.8155288 dated 11.01.2017, as per report of Shri Rajesh John, out of the total declared w .....

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mination of the goods has given the following conclusion:- As per the said report of Chartered Engineer, the goods were held to be scrap as per ISRI and after examining the definition of scrap as per section notes of Section XV 8(a). He also specifically mentioned that with respect to the commercially marketability of the said goods, a market enquiry can be conducted to ascertain the marketability. Admittedly, no market enquiry has been conducted but report has been obtained from NISST, Mandi Go .....

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, we cannot comment on those. In fact, the NISST has given a categorical finding that such type of scrap material cannot be utilised further manufacturing in any manufacturing process but the Revenue has relied that this waste may be utilised other than re-melting, therefore, they ordered for mutilation of the same. There may be chances that after mutilation also some pieces of scrap can be re-used or used other than re-melting. It is not the tenor of the Standing Instruction dated 13.05.2013. I .....

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. In that circumstance, if the said goods qualify the specifications as per ISRI 207, the goods are to be released without mutilation. The said order of mutilation stands the harassment to the trade and against the Standing Instructions No.02/cus/2013 dated 30.05.2013. 9. We further find that the adjudicating authority has classified the goods as Cold Rolled sheets therefore, needs mandatory compliance of BIS is based on the test reports obtained after passing of the order. The said test reports .....

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that mutilation of the impugned goods are not required. 10. In view of the above discussion, we modify the impugned orders as under:- (i) The goods shall be assessed to duty provisionally on the basis of the declared invoice value, purely for the purpose of provisional release of goods only, without any prejudice to the right of the department to issue the show cause notice on any aspect including valuation. (ii) The importer shall furnish a bond equal to the seizure value i.e. 27,26,429/- of th .....

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f in the above terms. (Order pronounced in the court on) PER: DEVENDER SINGH 10. After going through the draft order of learned Brother Member (J), I record a separate order. 11. I find that the appellant imported Heavy Melting Scrap (HMS), which on verification was found to be contain M.S. Sheet, cutting, strips/slit (Cr) mix coated/plated width less than 600 mm, M.S. Sheet, cutting, strips/slit width more than 600 mm but of serviceable nature. It is pertinent to mention that the appellant in h .....

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en by the empanelled Chartered Engineers are tabulated below. Sr.No. Name of Chartered Engineer Sh. Date Report Description of goods actually found Appx. Quantity MT 1 Rajesh John 02.02.17 i) CR sheets/strips/slits width less than 600 mm (Second & defective) 60 ii) CR sheets/strips/slits width more than 600 mm (Second & defective) 05 iii) Coated/plated CR sheet (Second & defective) 02 2 iv) Melting Scrap 65.895 3 Varun Chandok 01.03.17 He opined that he could not Rule out any possibl .....

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ss than 600 mm (Second & defective) 60 ii) CR sheets/strips/slits width more than 600 mm (Second & defective) 05 iii) Coated/plated CR sheet (Second & defective) 02 iv) HMS of MS sheet curtns 65.895 (ii) For B/E 8414179 dt.2.2.2017, the summary of the reports given by the empanelled Chartered Engineers are tabulated below: Sr.No. Name of Chartered Engineer Sh. Date Report Description of goods actually found Appx. Quantity MT 1 Sh. Jaspal Singh 17.02.2017 i) HMS 72.00 ii) CR Cut Sheet .....

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5 feet, if found during segregation depends upon its market demand type of end use (point 5 page 5). Therefore, largely the report of Sh. Varun Chandok, remained inconclusive. 3 Anil Kumar Soni 07.03.17 MS sheet cutting/strips/slits (CR) mixed coated/plated width more than 600 mm (Sec. & def) 15.75 MS sheet cutting/strips/slits (CR) mixed coated/plated width more than 600 mm (Sec. & def) 72 HMS of MS sheet curtns 72.00 12. Opinion of NISST was obtained on recommendation of Shri Varun Cha .....

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udicating authority and the first appellate authority as it was obtained by importer subsequently. The NISST has not tested the goods for carbon content of the impugned material. 131 I find that the goods were also tested for carbon content as per the directions of the adjudicating authority in his order dt.12.4.2017. On testing of the goods at the Research and Development in Bicycles and Sewing Machines (RDBSM) laboratory, Ludhiana, the material in question has been found to be low carbon steel .....

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