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2018 (12) TMI 174

Benefit of Concessional rate of duty - N/N. 19/1994-Cus dated 01.03.1994 - import of 15.00 MT “Weak Coking Coal” - weak coking coal having Ash content below 12% or not? - Department has observed that the appellant had wrongly availed the benefits of concessional rate of duty under N/N. 19/1994-Cus in as much as the exemption under subject Notification was specifically for the Coking Coal of Ash Content below 10.29%. - Held that:- It is observed that there is no dispute that the sample is of coal in which ash content is 10.29%. In the bottom of the report it is mentioned as, no specification for weak coking coal with respect to its physico-chemical properties are available in the technical literature. However in the chemical analysis result, it does not show that whether it is weak coking coal or otherwise. Therefore, the test report 65-Cus/97 only confirms that the sample is of coal and Ash content is 10.29%. There is no dispute that the weak coking coal is also specie of coal ash content being 10.29% is well within the parameter prescribed in the entry Serial No of the notification i.e. below 12%. - It can be seen that as per above report the remark of the chemical examine .....

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igible for exemption Notification No. 19/94-cus - appeal allowed - decided in favor of appellant. - Appeal No. C/214/2010-DB - A/12698/2018 - Dated:- 3-12-2018 - MR. RAMESH NAIR, MEMBER (JUDICIAL) And MR. RAJU, MEMBER (TECHNICAL) For Appellant: Shri P. P. Jadeja (Consultant) For Respondent: Shri A. Mishra (A.R.) ORDER Per: Ramesh Nair 1. Brief facts of the case are that the appellant had imported the consignment of 15115.723 M/T Weak Coking Coal falling under Customs Tariff Head, 2701.19 vide Bill of Entry No. F-200 dated. 09.02.1995 in the Bill of Entry they claimed Notification No. 19/1994-Cus dated 01.03.1994. The Bill of Entry was provisionally assessed after drawing the sample and exemption from CVD under Notification No.19/1994-Cus dated 01.03.1094 for want of chemical test result and original document and thereafter clearance was allowed on payment of concessional rate BVD at the rate of 5% ad-valorem. The CRCL, New Delhi, has sent test report, on examination of test result with reference to the description of the consignment declared in the import documents, the department has observed that the appellant had wrongly availed the benefits of concessional rate of duty under No .....

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oods has Ash content 10.29% and moisture content of 8.30% totalling to 18.59%. It is therefore evident that the imported Coal in fact is semi-coking/weak coking coal of the grade Semi-coking coal grade-I as classified by Govt. of India [Ministry of Coal]. 3. He further submits that the sample is required to be drawn in accordance with IS:436, however as regard test report No. 65-cus/97 dated 20.06.1997 of CRCL, New Delhi, there is nothing in record to show that the sample was drawn in accordance with IS:436. On the contrary the Load Port Certificate shows that samples were analyzed as per BS 1016 Standards which is one of the credible and world Vide recognized methods for testing the coal samples. This shows that the analysis of imported goods done by the department was not in accordance with Section 18 of the Customs Act, 1962. In this regard, he placed reliance on the Supreme Court Judgment in the case of TATA Chemicals Limited Vs. C.C., (Preventive), Jamnagar-2015 (320) E.L.T. 45 (S.C) wherein it was held that if the samples drawn are not in accordance with Law and drawn with no regard whatsoever to IS: 436. That IS: 436 would apply but if the methods of testing of any items of .....

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with Ash content below 12%, therefore, the OIA based on end use is beyond the scope of the SCN issued. He submits that as per the developing technology in 1995, weak coking coal is used for generation of energy in co-generation power plant. The appellant also used the said goods for generation of energy. Without prejudice to the above submission, he submits that for imported goods cleared in 1995, the SCN was issued only on 15.05.1998 which is beyond 6 months, hence it is time barred. In support of his submission he places reliance on the following judgments: Sterlite Industries Ltd. 2008 (223) ELT 633 (Tri.Chennai) Radiant cables Pvt. Ltd 2017 (348) ELT 558 (Tri.Hyd) Kamdar associates 2016 (339) ELT 158 (Tri.Ahmd.) Bhagyanagar Metals Ltd 2016 (333) ELT 395 (Tri.LB) Reliance Industries Ltd 2015 (326) ELT 664 (Guj.) Sterlite Industries (India) Ltd. 2014 (311) ELT 91 (Tri.Chennai) Gwalior Alcobrew Pvt. Ltd 2014 (309) ELT 692 (Tri.Del) Goyal Traders 2014 ((302) ELT 529 (Guj.) Raj Petroleum Products Ltd 2013 (292) ELT 125 (Tri.Mum) Ricoh India Ltd 2009 (247) ELT 433 (Tri.Mum) Sah Petroleums Ltd 2009 (246) ELT 716 (Tri.Mum) 5. Sh. A. Mishra, Ld. Deputy Commissioner (AR) appearing on beh .....

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stitution specification ISI: 1448 (P. 31) - 1968 as in force for the time being. From the above notification, at Serial No. 1 exemption is provided to coking coal of ash content below 12%. Accordingly, the coal imported by the appellant should confirm that the coking coal of ash content should be below 12%. The Revenue has decided the matter solely on the basis of CRCL, New Delhi test report No. 65-Cus/97 dated 20.06.1997. The said test report scanned below: From the above report it is observed that there is no dispute that the sample is of coal in which ash content is 10.29%. In the bottom of the report it is mentioned as, no specification for weak coking coal with respect to its physico-chemical properties are available in the technical literature. However in the chemical analysis result, it does not show that whether it is weak coking coal or otherwise. Therefore, the test report 65-Cus/97 only confirms that the sample is of coal and Ash content is 10.29%. There is no dispute that the weak coking coal is also specie of coal ash content being 10.29% is well within the parameter prescribed in the entry Serial No of the notification i.e. below 12%. It can be seen that as per above .....

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19/94-Cus. This identical issue has been considered in the case of Adani Export Ltd Vs. CC, Jamnagar 2010 (249) ELT 93 (Tri.Ahmd.), wherein the following judgment has been passed: Both the appeals are being disposed off by a common order as the same arise out of the same set of facts and circumstances. Appeal No.45/05 is against the order vide which the benefit of Notification No.11/97-Cus dated 01.3.97 stands denied to the appellant in respect of the Weak Coking Coal imported by them and appeal No.C/1206/05 is against the order confirming the demand of duty, as a consequence of passing of the first order. 2. As per facts on record appellant imported Weak Coking Coal and filed a bill of entry on 04.04.97, declaring the Ash Content of the coal less than 12% and under the claim of benefit of concessional rate of duty in terms of Notification No.11/97-Cus. The said notification granted concessional rate of duty, if the Ash Content in the coal is less than 12%. 3. It is seen that at the time of filing of bill of entry, the appellant produced certificate of quality issued by the supplier of the goods at Indonesia and produced by them at the Load Port, certificating the Ash Contents in t .....

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s such the said reports cannot be relied upon. 6. He has further submitted that the cross examination of the inspector, who drew the samples reveals that the samples were not drawn in accordance with the prescribed standards, as he was not aware of the sampling methods prescribed under the relevant standards. In the cross examination of chemical examiner conducted before the adjudicating authority, he has accepted that the test results would vary depending upon the sampling process, the sample itself and the test method adopted by the testing agencies. As such he submits that the inconsistency in the Ash Contents is on account of inaccuracy in the sampling method as also on the basis of time gap and as such the said sample results cannot be relied upon. 7. He has further submitted that the two testing reports produced by the appellant conclusively established that the Ash Content in the said goods is below 12%. On the other hand the two reports produced by the Revenue are contrary to each other in as much as in the Customs House Laboratory, Kandla test report the Ash Contents has been shown as 15.9%, whereas the Dhanbad Laboratory has shown the same to be 13.2%. As such the decreas .....

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House Laboratory, Kandla by the Superintendent under the coverage of letter dated 08.09.97. As rightly pointed out by the learned advocate though the samples were drawn in the month of April 1997, the same were sent for testing purposes in September 1997. There is no explanation coming from the Revenue as to why the samples were kept in the custody of the Revenue for a period of around four months. We further note that while sending the said samples to the chemical examiner the same were described as Low Ash Coking Coal whereas the goods imported by the appellant were Week Coking Coal. The report of the chemical examiner sent on 30.09.97 is as under: Report The sample is coal in the form of black coloured coarse powder. Ash.(ADB)15.9% whether it is Low Ash Coking Coal could not be ascertained here. The duplicate sample may be forwarded to Central Fuel Research Institute, Dhanbad . As is clear from above report a suggestion was made to send the sample for further testing to Central Fuel Research Institute. Accordingly, the sample was sent and a report was received from the said institute on 13.7.1998 i.e. almost after 10 months from the report of the chemical examiner. As per the sa .....

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products could be same or otherwise depending on their parameters. He also clarified that there are many methods like ISI, ASTM etc. available for testing and a small variation is always possible in the results due to the person testing the sample, laboratory situation, instructions, variations etc.. He also accepted that the test results will depend on whether the sampling was proper and homogenous. In cases like Blended Thermal Coals such variations have been observed. He accepted that if sampling has not been done properly there is a likelihood of there being a difference in test results. As is clear from above depositions made by the chemical examiner the variation in Ash Contents would depend upon the method used and most importantly the drawing of sample. As we are all aware coal is in the form of huge and small lumps as also in powder form. The drawing of samples of coal is required to be done in accordance with IS:436. There is nothing on record to show that the sample was drawn in accordance with IS:436. On the other hand the test report of CFRI shows that the quantity of the sample was not representative as per IS:436. In such a situation, can it be said that the samples .....

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lt of National Testing House, Alipur was not made as per specified standards and sending of sample was not proper, the same cannot be held to be acceptable. Similarly, variance in the test results obtained from the chemical examiner and Chief Chemist were not appreciated by the Tribunal in the case of Commissioner of Central Excise, Madurai Vs. Ponjestly Filament (P) Ltd. reported in 2003 (154) ELT 629 (Tri. Chennai) and the test result of IIT New Delhi which was in terms of ISI standard and was got conducted by the assessee was held to be examined by the lower authorities. 16. As we have already observed that the drawing of the samples in accordance with the ISI and testing of the same in accordance with such standards is not forthcoming from the records. Even the two test reports which got conducted by the Revenue are at variance with each other. The remark of Dhanbad Laboratory showing that the sample was not representative as per ISI standards, further places the said report under doubt. The infirmities in the two said reports do not prompt us to place reliance upon the same and to hold that they reflect the correct Ash Contents. 17. We would also like to discuss here the Tribu .....

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rities below. In view of the above, we set aside the impugned orders and allow both the appeals with consequential relief to the appellant. From the above judgment, it is observed that the appellant s case is on much better footing inasmuch as the Ash content in adani s case as per the chemical examiner report was 13.2%, whereas in the present case even as per CRCL, New Delhi report the Ash content admittedly is 10.29 %. The above judgment of adani Exports was taken by the Revenue to the Hon ble Gujarat High Court by way of Tax Appeal No. 141 of 2010 which was dismissed by reporting as, CC Preventive Vs. Adani Exports Ltd, 2013 (295) ELT 678 (Guj.). In case of JSW Steel Ltd Vs. CC, C.EX. & ST, Goa 2016 (343) ELT 717 (Tri.Bom), the coordinate Bench of Tribunal categorically held that no end use conditions are provided in the notification, therefore, the usage cannot be determining factor. In view of these judgments, the finding of the Commissioner (Appeals) regarding end use is incorrect and not acceptable. We also gone through the judgment of Hon ble Supreme Court in the case of Gujarat State Fertilizer Co. (Supra) wherein the Apex Court held that the fertilizer is of genus whi .....

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