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2018 (12) TMI 173

Demand of differential duty - HR plates - confiscation of goods found in excess than the goods declared in the relevant Bills of Entry - appellant contended that, the steel plates in international trade are traded with reference to their length, width and thickness. The weight of such plates is never the basis or criteria for trading in such goods. The weight of such steel plates is never determined by actually weighing them on a weigh scale but is always computed with reference to a scientifica .....

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on the exceptions provided for in Rule 3(ii) of the erstwhile Customs Valuation Rules, 1988, could the assessable value be determined in terms of the valuation provisions - The ratio laid down in the aforesaid judgement applies in all fours even under the amended Section 14 and the Customs Valuation Rules, 2007. - In the instant case, the adjudicating authority has not come to a conclusion that the transaction value as adjusted in accordance with the provisions of Rule 10, was incorrect or .....

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al weight as has been contended by the appellant, which also appears to be the position as is evident from the Indian Standard specification as also the Japanese Standard specification, the weight tolerance envisaged in the trade notice referred to by the Respondent in the impugned order qua such steel plates has to be taken at + 5% / -2.5% and not at 1% as has been adopted by the Respondent - it is not in dispute that the difference between the theoretical weight that has been declared on the b .....

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the Appellant Shri Jeetesh Nagori, Additional Commissioner (AR) for the Respondent ORDER Per: Ramesh Nair This appeal is directed against order-in-original dated 29.10.2015 passed by the Principal Commissioner, Customs Mundra, wherein the following order was passed:- (i) I order confiscation of 2605.480 (2281.112+324.368) MTs of HR Steel Plates valued at Rs.Rs.13,80,54,382/- (122999765/- + 1,50,54,617/-) under Section 111(d)(j)(l)(m) and (o) of the Customs Act, 1962 read with Section 120 of the .....

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by them. (v) I impose a penalty of ₹ 3,56,89,819/- (Rs. Three Cores Fifty Six Lakhs Eighty Nine Thousand Eight Hundred Nine only) and an amount equal to interest payable on the importer, M/s Welspun Corp Limited, District Bharuch, under Section 114(A) of the Customs Act, 1962. However, if the Customs duty and interest confirmed as discussed above is paid by the importer within 30 days from the date of communication of this order, the amount of penalty stands reduced to 25% in terms of prov .....

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as to the goods found in excess than the goods declared in the relevant Bills of Entry and shown by the port personnel in the documents given by them to the transporters. The CBI officers handed over the said intercepted goods to the custodian of CFS CG-7. The appellant vide their letter dated 21.03.2013 and 22.03.2013 requested the CBI, Gandhinagar and concerned officers for delivery of the imported goods to carry out their production of Steel Pipes. Consequently, the importers submitted an und .....

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nt vide their letter dated 18.07.2013 and letter dated 07.08.2013 requested the customs authorities to consider the theoretical weight declared in the Mill Test certificate and bill of lading and to finalize the bills of entry with request to release their bank guarantee. 3. Thereafter, a show cause notice F. No. S/48-147/Import/Misc/MP & SEZ/13-14 dated 06.01.2014 was issued to the appellant proposing confiscation of the goods involving excess weight and to demand customs duty on the undecl .....

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pproved universal formula which is 7.85kg/dm3. The impugned order does not dispute the correctness that the weight of steel plates in international trade is only arrived at on the basis of a scientifically approved formula. However, an adverse inference was drawn against the Appellant on the premise that there was a difference between the actual weight vis-a-vis the weight arrived at on the basis of a scientifically approved formula. He submits that it is nobody s case that the number of steel p .....

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s not in dispute that world over as also in India, the standards which have been laid down in respect of steel plates envisage that the mass of the steel plates shall be expressed with reference to the density of the steel plate by applying the formula 7.85kg/dm3. This formula finds mention not only in the Indian Standards IS 1730:1989 but also in JIS Handbook for Ferrous Materials and Metallurgy issued by the Japanese Standard Association. The said formula also finds a mention in the ASTM. The .....

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early not justified in applying the results so arrived at without conforming to the standards prescribed and without dealing with the Appellant s submission that none of the standards prescribed for steel plates envisaged a physical computation of the weight of steel plates. All the standards envisaged computation of weight only on a scientific basis with reference to the length, width and thickness and not on a physical weighment basis. 4.1 Ld. Counsel submits that it is a settled law laid down .....

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rence to their theoretical weight. 4.2 Without prejudice to the above submissions, ld. Counsel further submits that in the purchase orders placed on its suppliers for the supply of steel plates provided for a tolerance of at least -0/+2% with respect to the quantity, which was expressed with reference to the number of plates as also the weight arrived at on the basis of the scientific formula. In some other purchase orders, the tolerance prescribed was with respect to the thickness, width and le .....

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s subsequently revised to 1989 by more than +5% / -2.5%. He submits that it is clear from IS-1852:1985 that the weight of steel plates is always expressed as a theoretical weight and that statutorily a tolerance of up to +5%/-2.5% is within the normal tolerance levels. He submits that it is not in dispute that the difference in the weight declared, as indicated in the import documents vis-à-vis that computed by the authorities was well within the prescribed IS-1852:1985 tolerance limit of .....

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t. Thirdly, there are no weigh slips which are produced or relied upon to show the gross weight or the tare weight of the truck. Fourthly, it is not shown as to how the weight declared in the Bill of Entry which is common for the goods removed against several hundred trucks- trailers was distributed for the purpose of comparison amongst the various truck trailers, under cover of which the material was moved out of the port. He submits that in the absence of evidence regarding the authenticity an .....

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d or not, without applying his mind to this issue the authorities have left the issue by contending that the appellant not having objected to the manner of weighment while taking delivery of the goods, it could not raise such an objection subsequently. 4.3 Ld. Counsel further submits that for steel products, it is a well-accepted practice that if the said steel products are accompanied by Mill Test Certificate issued by the Manufacturer which gives details such as the manufacturer s name, Heat N .....

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as refused to apply the Public Notice No. 92/2009 issued by the Nhava Sheva Customs. The Adjudicating Authority also erred in refusing to apply the Circular No. 06/2006 dated 12.01.2006 on the premise that the same applied only to liquid cargo and not apply to bulk solid cargo. 4.4 Without prejudice to the above submissions, he also submits that all the 9 consignments in question have been cleared against advance licenses and in every case, there was sufficient balance, both towards quantity as .....

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nal hearing, has submitted over and over again that if there is any difference in weight, the same may be debited in the license and it has produced the license for this purpose. The Adjudicating Authority has however ignored the same for the reasons best known to him. He submits that the Notification No. 96/2009 dated 11.09.2009, in terms of which the advance licenses have been issued provide for exemption from the levy of customs duty subject to the condition that: (i) the authorization is pro .....

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d without taking cognizance of the provisions of the Customs deserve to be quashed. He submits that the said Public Notice dated 29.06.2010 applies to those cases where duty is payable with reference to the weight of the product and not where variation in the weight of the product on the higher side does not have any impact of the applicable duty payable. By applying the said public notice, the Adjudicating Authority has contended that as long as the variation in the weight was more than 1%, as .....

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the transaction value was not required to be altered even if there was a slight variation as a consequence of which a higher quantity was imported as the transaction value did not change in respect of the said imports. He further submits that the demand of duty is wholly illegal inasmuch as there is no change in the transaction value of the goods, and regardless of the weight of the consignment, the actual price paid for the goods is the same and since the duty is chargeable on ad-valorem basis .....

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ainst the advance license without suffering any duty incidence. The value declared for the goods was true and correct transaction value, therefore, except for the quantity, to be debited against the license for which also there was sufficient balance available, there was absolutely nothing else required to be done. Accordingly, the transaction value in question did not entail any duty liability and consequently there could not be any incidence of payment of duty. He submits that as per the above .....

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ds was rightly ordered. He relied on the judgment of Hon'ble Supreme Court in the case of Mangalore Refinery & Petrochemicals Limited vs. CC, Mangalore - 2015 (323) ELT 433 (SC). 6. We have carefully considered the submissions made by both sides and perused the record, we find that the two primary issues that arise for our determination are whether: (i) the department was right in demanding differential customs duty by re-computing the assessable value in respect of the alleged un-declar .....

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ection of the transaction value. 8. It is settled law laid down by the Hon ble Apex Court in the case of Eicher Tractors Ltd vs Commissioner of Customs reported in 122 ELT (321) that it is only when the transaction value is liable to be rejected, based on the exceptions provided for in Rule 3(ii) of the erstwhile Customs Valuation Rules, 1988, could the assessable value be determined in terms of the valuation provisions. The relevant observations of the Apex Court are extracted for use of refere .....

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of these rules and sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available in India. If the phrase the transaction value used in Rule 4 were not limited to the particular transaction then the other Rules which refer to other transactions and data would become redundant. 14. It is only when the transaction value under Rule 4 is rejected, then under Rule 3(ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 of the Rules. Conversely i .....

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the case there is no basis for enhancing the value on an arbitrary basis without reference to the statutory provision of Section 14 and the provisions of the Valuation Rules, 2007. 9. In the instant case, we find that the adjudicating authority has not come to a conclusion that the transaction value as adjusted in accordance with the provisions of Rule 10, was incorrect or mis-declared and was required to be rejected and the assessable value re-computed under the valuation rules. The adjudicatin .....

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is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule 4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules. 9.1 Even otherwise, the sole basis on which the Revenue has contended that the assessable value was to be enhanced and the matter taken up for adjudication, is the reliance on Public Notice N .....

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actual weight than the declared weight, but the value of excess goods will be loaded in the total assessable value and appropriate duties will be recovered. (b) If the variation is above +/-1%, value will be loaded with adjudication with appropriate redemption fine and penalty. 9.2. It appears from the said Public Notices that the weight variation upto 1% is to be accepted and ignored irrespective of the nature and type of the commodity. We are unable to persuade ourselves to accept this proposi .....

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dard lays down rolling and cutting tolerance for hot rolled structural steel, beams, channels, equal and un-equal leg angles, Tee bars, bulb angles, round and square bars, flats, plates, strips and sheets rolled from structural steels including medium and high strength steel. Part 7 of the said standard deals with rolling and cutting tolerance for plates. Clause 7.1 stipulates the tolerance with respect to the width of the plates; Clause 7.2 provides for the tolerance with respect to the length .....

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he contracts that the Appellant had entered into with its overseas supplier provided for invoicing based on the theoretical weight basis of 7.85 kgs/m3. A copy of one such purchase order has been annexed at page 130 of the appeal memorandum. The supplier s invoice, mill test certificate as also the bill of lading which are at pages 183, 184 and 185, have all arrived at the weight on the said theoretical basis by multiplying the volume (length x breadth x width) into density i.e 7.85. 9.6. The we .....

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o be taken at + 5% / -2.5% and not at 1% as has been adopted by the Respondent. It is only in a case where the difference between the declared weight and the actual weight exceeds the tolerance limits prescribed in the Indian Standards specification can the matter be taken up for adjudication for examining whether any fine is leviable or penalty is imposable. 11. In the facts of the present case it is not in dispute that the difference between the theoretical weight that has been declared on the .....

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volume and also verifying whether the density was 7.85 gm/cm3 as has been mandated in the standards. If there was a difference either in the volume or the density it could have resulted in variation from the declared weight. In any case as long as the variation is within the permissible limits prescribed in the relevant standards the same cannot result in any customs proceedings for alleged mis-declaration of particulars. 13. We further find that the allegation of suppression arrived at by the .....

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