TMI Blog2023 (8) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... crap also contains iron, steel ,etc., as impurities. It is seen that this circular dated 10.05.2016 was not produced before the original or first appellate authority and consequently there is no examination of this circular. It is seen that the circular has been issued after the date of passing of the impugned order. The original Adjudicating Authority will examine the applicability of this circular dated 10.05.2016, and any other circular issued on the subject to the remand directions given in the impugned order and decide the issue a fresh - while doing so it shall be free to decide the nature of product imported by documentary evidence or otherwise on the basis of materials already on record - impugned order modified. - RAJU, MEMBER (TECHNICAL) AND SOMESH ARORA, MEMBER (JUDICIAL) Shri Manish Jain, Advocate for the Appellant Shri. Sanjay Kumar, Smt. Bina D Jani, Superintendent (Authorized Representative) for the Respondent ORDER These appeals have been filed by M/s. Deep recycling, D G Metal Inc Western Impex. 2. The dispute is, if the appellants have imported and used the brass scrap correctly in terms of the provision of Notification No. 52/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, precisely speaking, three different tributaries to the main issue. However, when looked into from the broad perspective, all the issues would converge and it boils down to the single issue, as to whether the appellant, holding 100% EOU status, has properly availed the benefit of the exemption Notification No. 52/2003-Cus supra by showing wastage, which permitted the duty free importation of brass scrap, in legal and proper manner, or not, in the backdrop of circumstances, where the department have taken exception or objected to the fact of higher proportion of the wastage of scrap shown to be generated during the utilisation, which was well beyond the permissible limit of 2%, as laid down under the said Notification, and therefore, customs duty has been confirmed and other corollary actions have been taken and confirmed against such excessive wastage shown in unduly high proportion, as delineated above and as will be dealt with hereunder. 7.3 On the other hand, the appellant have contested that the wastage norms have been fixed by the Norms Committee, which are in two stages, i.e. (i) wastage arising during the course of segregation, and (i) the wastage arising during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 52/2003-Customs, dated the 31st March, 2003, published in the Gazette of India Extraordinary, Part II, section 3, subsection (1) vide number G.S.R. 274 (E), dated the 31st March, 2003, namely: In the said notification,- In the condition (3) of opening paragraph, in sub-condition (i) (d), in clouse (1), after sub-clause (ii), for the proviso, the following proviso shall be substituted, namely: Provided that- (a) where no SION have been notified, the generation of waste, scrap and remnants upto 2% of input quantity shall be allowed; (b) where additional items, other than those given in SION are required as input or where generation of waste, scrap and remnants is beyond 2% of the input quantity, use of such goods shall be allowed on the basis of self-declared ad hoc norms till such norms are fixed on ad hoc basis by the jurisdictional Development Commissioner within a period of three months from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinions about it. This is what the primary contention of the appellant that since, the wastage norms have been eventually fixed by the Norms committee in a statutory manner, there is no reason for the lower adjudicating authority to have gainsaid the benefit of the same and confirmed the demand, ignoring such norms, in respect of brass wastage beyond 2%. 10. On-going through the documents available on record, I find that the appellant, being a 100% EOU, was engaged in manufacturing and export of various Brass parts. In this regard, the appellant, purportedly were having the Letter of Permission (LOP) dated 17.01.2003 issued by the KSEZ. Gandhidham. Annexure- A, describing the manufacturing process adopted by the appellant was also attached to the said LOP wherein, the segregation of the non-ferrous scarp i.e. foundry scrap, was described as an initial stage towards manufacturing process. I also observe that the Development Commissioner, KSEZ vide various permission letters allowed the appellant to clear the specific quantity of waste/ remnants i.e. Iron/ MS Scrap, Rubber Scrap, Dust Waste and Slag, generated in connection with the production, into DTA on payment of full duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed brass scrap 1MT Mixed metal brass scrap with impurities like iron steel, plastic/rubber etc. As per actual verified by Central Excise subject to a maximum of 1.50 MT. B. Wastage Norms for the manufacture of brass items from segregated/processed mixed brass scrap: For the next stages of manufacturing operations for the manufacture of brass items from segregated/processed mixed brass scrap following wastage norms are fixed: Export Item Input Item (after segregation) Description Quantity Description Quantity Brass/Ingots 1MT Segregated/ processed mixed brass scrap 1.08MT Brass/Rods/Solid Sections/Profiles 1MT Segregated/ processed mixed brass scrap 1.10 MT Machined articles/Compom nents/parts/acce ssproes/made out of brass rods/bars/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions granted by the Development Commissioner towards clearance of waste/ remnants viz. Iron/MS scrap/ Rubber scarp/ Dust waste/ Slag, are also obliquely indicative of the fact that segregation activity should be considered as a part of overall manufacturing activities. The said factum also implicitly find support from the Norms Committee, as they have find it appropriate and fit to fix the wastage norms under the provisions of FTP, read with proviso to condition no. 3(d)(1) of the said notification, inspite of clear exclusion of the activity of segregation, as an activity of 'manufacture' w.e.f. 01.04.2002, as clarified under para 9 of Appendix 141-C titled Sector Specific Requirement for EOU units of Foreign Trade Policy 2004-09, thereby meaning, as contended by the appellant, in the first place, the norms for segregation of waste and manufacture therefrom, would not have been fixed at all , if such activity was not permissible under Foreign Trade Policy. I do find substance in the above plea of the appellant and therefore, in principle, I allow such plea, however, that would subject to rigours of this order, as would be dealt with in the forthcoming paras hereunder. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for the manufacture of brass item from mixed brass scrap with impurities like iron and steel Plastic/rubber etc and not applicable for the manufacturer of brass items from normal brass scrap. In view of the above rider, I find that before effectuating the wastage norms as fixed by the Norms Committee, it is very much imperative to first decide whether, the goods imported by the appellant, i.e. brass scrap, is of ilk and nature, which contained impurities like iron and steel, plastic/rubber etc. To ascertain above vital facts, relevant bills of entry, import invoices, bill of ladings etc. may be verified. And, if it is found that, the appellant had imported the Brass scrap, whose description is matching with the verdict given by the Norms Committee, then for such consignment imported container-wise, the benefit of the wastage, as per the Norms Committee should be allowed, or else, the actions confirmed by the lower adjudicating authority in the impugned order/s shall stand confirmed, along with its fallout, in form of various penal actions. Needless to state here the said norms would also not applicable to any item, other than brass scrap, as the norms has been fixed for 'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed brass scrap, with impurities at the first stage of manufacturing. Thus, though the activity of segregation was not satisfying the definition of 'manufacture' in terms of Appendix 14-1-C of the FTP, but being an essential activity towards manufacturing of goods to be exported, the same has been allowed by the DGFT in terms of para 6.8(e) of the FTP. In this regard, I find that it is also not disputed that the segregated non- foundry scrap contains iron steel and plastic/ rubber scarp, which were being cleared by the appellant on the basis of the various quantitative clearance permissions given by the Development Commissioner, KSEZ, Gandhidham. Therefore, in view of above, the averments of the lower adjudicating authority, is, in principle, not sustainable, as the same were generated within the permissible limits, and the clearance of the same is per se admissible under the various quantitative permissions given by the Development Commissioner, KSEZ, Gandhidham. In view of the above, the issue of the activity not amounting to manufacture, is in principle, held to be in favour of the appellant, in light of the discussion hereinabove, however the benefit of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... travention of the stipulated norms, is chargeable to duty and liable for confiscation. Thus, it is clearly indicative of the fact that the excess quantitative consumption norms were worked out on the basis of 'clearance', rather than on the basis of 'generation' during the manufacturing activity. I further find that at para 13.3 of the impugned order, the lower authority had given the reference of the relevant SCN and without giving any findings had held that 10.745 MT of excess brass scrap was utilized and shown as burning loss was not permissible, and therefore, the said quantity was held liable to confiscation under section 111(0) of the Act. In this regard, I find that as the said quantity was worked out on the basis of clearance (as against 'generation basis'), the same could not be treated as a violation of the provisions of the said notification, as it could have been generated during the extended span of period covering may be more than one months. Therefore, in view of above, I am of the view that, in principle, the demand of duty and order of confiscation on the excess quantity of 10.745 MT held by the lower authority is not sustainable, subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner that, in case the imported scrap is in the nature of Honey Scrap then there cannot be any waste coming out of the said scrap and the stage of segregation available in terms of the letter dated 04.05.2011 of the Foreign Trade Development Officer communicating the decision of norms committee cannot be applied. 4. Learned Counsel for the appellant has pointed out that the issue raised by the Commissioner (Appeals) in the impugned order has been clarified by the Circular 1029/17/2016-CX dated 10 May, 2016. He pointed out that the doubt raised by the Commissioner (Appeals) in the impugned order is for verification of the nature of scrap. He pointed out that the Commissioner is not sure if the brass scrap imported by the appellant contains iron, steel, rubber, plastic etc., or not. He is essentially seeking confirmation if the import is covered by the description brass scrap with impurities . The Commissioner (Appeals) has held that the normal brass scrap or honey scrap is pure brass scrap. The implication being that if what has been imported is normally brass scrap or honey scrap then no wastages in the nature of iron, steel or rubber or plastic etc., could arise. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
