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TMI Blog2024 (8) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and enhanced the assessable value and demanded differential duty of Rs. 1,34,405/-. The Original Authority allowed Appellant to redeem the goods on payment of Rs. 3,00,000/- as fine and Rs. 1,00,000/- as penalty. Aggrieved by said Order, appeal was filed before the Commissioner (Appeals) and after considering the findings of the Original Authority, Appeal was rejected. Aggrieved by said Order, present appeal is filed. 2. When the appeal was taken up for hearing, learned Counsel for the Appellant draws our attention to the documents including sale contract dated 06.04.2009, invoice issued by overseas supplier dated 06.04.2009, relevant pages of the Hand Book of Procedure related to import of metallic waste, Scarp, etc., Appendix file showing the list of inspection and Certificate of Origin issued by M/s. Atlas Metals Trading Co., LLC, and Pre shipment certificate, etc., showing that the goods imported by the Appellant are Heavy Melting Scrap and it was subject to 100% visual inspection during loading process. 3. The learned counsel further submits that due to the heavy pressure from the department and as the goods were incurring huge amounts as demurrage and container detention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Alloys and Metal Test Services, Mumbai were ignored. Also, the request of the appellants for mutilating the goods before clearance was also not allowed. It is the contention of the appellants that by nature steel melting scrap is likely to have some defective secondary parts or articles. However, the supplier treated the same as scrap only. It is a matter of fact that the said scrap was utilised in their factory for melting only. Therefore, denying the classification and the exemption are bad in law. 5. We find that the appellants have a point in their favour. We find that the adjudicating authority has not explained as to why various certificates submitted by the appellants were not accepted. It is not known as to why the department has not allowed the request for mutilation of the goods before clearance. Chartered Engineer's examination was also not ordered. This being the factual milieu, we find that department cannot reclassify the goods unilaterally on the basis of the examination report of officers alone. Technical opinion given by the pre-inspection certificate and by M/s. Alloys and Metal Test Services, cannot be disregarded. Also the fact that all the shipping documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o arrive at such conclusion is that in common parlance the length of TMT rods in the market is from 11 to 12 mtrs (33 to 36 ft.) and the length of the rods imported range from 3 ft. to 15 ft. and are cut end pieces of assorted sizes. Since the cut ends do not have proportionate size they have very limited usage. When we fail to understand how this can be the basis for concluding that the goods are not HMS, we are not able to find any cogent reason for discarding the pre-inspection certificate in toto. The jurisdictional High Court in the case of CC, Chennai v. Kamatchi Sponge & Power Corpn. Ltd. - 2016 (337) E.L.T. 73 (Tri.-Chennai) in similar set of facts had upheld the order passed by Tribunal, which set aside confiscation and penalty. The relevant portion is reproduced as under: "We also find that the Revenue preferred CMA against the Tribunal's order before the Hon'ble High Court of Madras and the High Court of Madras in their order reported in 2014 (305) E.L.T. 377 (Mad.) upheld the above Tribunal's order and dismissed the CMA filed by Revenue. The relevant paragraphs of the Hon'ble High Court of Madras order are reproduced as under: 12. The Appellate Tribunal, after consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ratio of the Hon'ble Madras High Court decision and this Tribunal decision (supra), we uphold that the goods imported are "Heavy Melting Steel Scrap" and we do not find any infirmity in the order of LAA. Accordingly, the impugned order is upheld and we direct the Customs to allow clearance after mutilating the goods under Customs supervision as per LAA's order. Accordingly, the Revenue's appeal is rejected. 6. The learned Authorised Representative for the Revenue reiterated the findings of the lower authorities and relied upon the following case laws: (i) Prime Steel Processors vs. CC, Ludhiana: 2022 (380) ELT 203 (Tri.-Chan.) (ii) Assistant Commissioner of Customs, Ludhiana vs. Aman Alloys Ltd.: 2011 (271) ELT 200 (P & H) (iii) Veer Enterprise vs. CC, Kandla in Customs Appeal No. 10601 of 2013 vide Final Order No. A/10410/2023 dated 7.3.2023. 7. Heard both sides. It is an admitted fact that as per the Import Policy import of scrap is permissible by complying with certain conditions and the Appellant had complied with the conditions as prescribed. We also find that pre-shipment inspection certificate issued by accredited agency under para 2.32(i) of Handbook of procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under Customs Tariff Heading 7204 4900 vide Bill of Entry No. 243717 dated 15.04.2009. On examination, it is found that 22.920 MTs were of channels and 47.200 MTs of iron rods of assorted size and cannot be considered as HMS scrap. The Appellant submitted that the goods were imported as per the Policy condition prevailed at the time of import and to support the declaration, they have produced certificate from accredited agency and they were not aware of the fact that it contained iron rods and channels. The Original Authority vide Order-in-Original dated 11.06.2009 rejected the value adopted for scrap and adopted contemporaneous value to the rods and channels and demanded differential duty of Rs. 1,34,405/-. The Original Authority also held that the goods were liable for confiscation and accordingly allowed the Appellant to redeem the goods on payment of Rs. 3,00,000/- as fine and Rs. 1,00,000/- as penalty. Aggrieved by the said Order, the appellant filed an appeal and the Commissioner (Appeals) in the impugned order held that since the enhanced value was accepted at the time of assessment appeal against the valuation cannot be filed as there was no grievance in relation to va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the matter of M/s Mangalam Alloys: 2020 (374) E.L.T 810 (Tri. Mumbai): "4. Heard both sides and perused the records of the case. Brief point to be decided in this case is as to whether heavy melting scrap HMS imported by the appellants can be classified as serviceable parts and thus, exemption availed needs to be denied. On the basis of the examination conducted at the time of clearance, department opined that the impugned goods were secondary/defective/rejected stock, comprising of stainless-steel U and C channels of grade 410 (magnetic) and HR coils/strips of grade 410 (magnetic). The appellants submit that the examination report was not given to them. Learned AR submits that as the show cause notice was waived by the appellants, the examination report could not be given to them. The appellants further submitted that no examination by a Chartered Engineer was conducted; pre-shipment inspection certificate and certificate issued by M/s. Alloys and Metal Test Services, Mumbai were ignored. Also, the request of the appellants for mutilating the goods before clearance was also not allowed. It is the contention of the appellants that by nature steel melting scrap is lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Order was for supply of HMS for use in their factory. The proforma invoices described the goods as HMS. Again the invoices issued by supplier described the goods as HMS/Re-Rollable scrap. The pre-shipment test reports by the internationally accepted agency M/s. Worldwide Inspection Services - SARL certified that the imported goods are metallic scrap as per internationally accepted parameter for such classification. The said agency is approved by DGFT. The appellant had filed Bill of Entry based on these documents. On examination, the Chartered Engineer has opined that out of 232.85 MTs, only 34.91 MTs of twisted rods were having less than 5 ft. Length and balance quantity of 197.915 MTs was cut/end pieces of TMT rods. Thus quantity of 34.91 MTs having less than 5 ft. alone was treated as HMS by department and the balance quantity was reclassified as CTH 7214 99 90 and thereby denied the benefit of notification. The basis for the Chartered Engineer to arrive at such conclusion is that in common parlance the length of TMT rods in the market is from 11 to 12 mtrs (33 to 36 ft.) and the length of the rods imported range from 3 ft. to 15 ft. and are cut end pieces of assorted sizes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said circumstances, the Court can come to a conclusion that the things which are in question cannot be couched as usable things. 12. The Appellate Tribunal, after considering the available materials on record, has rightly found that the things in question are nothing but scrap materials. Under the said circumstances, the respondent has been directed to pay duty on the basis of scrap materials and in view of the discussions made earlier, this Court has not found any acceptable force in the contention put forth on the side of the appellant and altogether the present Civil Miscellaneous Appeal deserves to be dismissed. 13. In fine, this Civil Miscellaneous Appeal deserves dismissal and accordingly is dismissed without costs." The ratio of the High Court decision and this Tribunal's decision (supra) is clearly applicable to the present case as the issues are identical and also considering the fact that there is no misdeclaration by appellant as seen from the purchase order/sales contract and sales confirmation report and pre-shipment inspection certificate, wherein appellants have placed orders for supply of 1000 MTs of HMSS, and imported the said goods and cleared in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngth and 47.200 MTS of iron rods of assorted length is not under dispute. Therefore, out of 212.13 MTS declared as HMS scrap 70.120 was rods/channels and balance was scrap. The value declared for scrap obviously cannot be the value for Iron rods and Channels and hence contemporaneous price had to be adopted. The original authority reclassified the goods and has adopted the lowest value of Rs. 20 per kg. which was accepted by the appellant vide his letter dated 30.4.2009. The fact that the import documents all suggested it is metal scrap will not in any way disprove the examination report where the goods were physically examined and inspected. 15. The Commissioner based on the observations of the original authority that they are actual users and for the first time this kind of misdeclaration was noticed set aside confiscation and penalty but the classification was upheld based on the Chapter headings of Chapter 72 read with note 8 of section XV of first schedule of the Customs Tariff Act. The appellant has not disputed the fact that some of the declared items were rods and channels and now they cannot claim that they are nothing but scrap. Note 8 of Section XV which reads as: "8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to be satisfactory, an order of re-assessment has to be passed under Section 17(4). Section 128 has not provided for an appeal against a speaking order but against "any order" which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts". Since it is an appealable order even though the appellant has accepted the value and paid duty one could file an appeal." 18. In view of the above discussions supra since the goods are found to be rods and channels the classification of the goods is upheld under CTH 7215 for rods and CTH 7308 for Channels. Once the classification changes the question of assessing at the scrap value does not arise and accordingly the value of the rods and channels are to be re-determined. The appellant is also aggrieved that the adjudicating authority has taken Rs. 20 per kg as contemporaneous import price instead of Rs. 19 per kg. the value suggested by the appellant is for the period 3.1.2009 to 10.2.2009 but the import happened on 15.4.2009 and hence the adjudicating author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment, it was noticed that it contains 22.920 MTs of channels approximately of 3 meter length and 47.200 MTs of iron rods of assorted length which could not be considered as scrap. Consequently, the iron rods were classified under CTH 72159090 and channels classified under CTH 73089010 and appropriate differential duty was demanded. In calculating the duty, contemporaneous import prices of iron rods and channels taken was @ Rs. 20 per kg. and the total consignment value was recalculated Rs. 38,09,600/-, in which the value of iron rods and channels calculated was Rs. 14,02,400/-. The differential duty worked out at Rs. 1,34,405/-. The appellant discharged the differential duty, waived issuance of show-cause notice requesting that a lenient view to be taken in the matter. Consequently, the adjudicating authority confirmed the assessable value of 47.200 MTs of iron rods and 22.920 MTs of channels as Rs. 14,02,400/- ; directed confiscation of the said goods under Section 111(m) of the Customs Act, 1962 with an option to redeem the same on payment of fine of Rs. 3.00 lakhs and imposed penalty of Rs. 1.00 lakh under Section 112(a) of the Customs Act, 1962. Aggrieved by the said order, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be under CTH 7215 9090 and CTH 7308 9010, respectively. 24. On the issue of determination of value of the goods is concerned, it is noticed that initially for the entire 212.13 MTs of "Heavy Melting Steel scrap" imported, the value was declared as Rs. 36,01,729/-. After change in the classification, the adjudicating authority has applied contemporaneous import price of Rs. 20/- per kg. for 22.920 MTs of channels and 47.200 MTs of iron rods against the imported scrap price of Rs. 16.97 per kg. The appellant claimed that the contemporaneous import value should be adopted as Rs. 19/- per kg. However, no evidence has been placed by the appellant in support of their claim. On going through the records, I do not find any discrepancy in the said enhancement of value of the iron rods and channels based on contemporaneous import, once the classification of the scrap has been changed with regard to total quantity of 70.12 MTs. of channels and iron rods. Therefore, I agree with the findings of the learned Member(Technical) on the issue of determination of value based on the contemporaneous import price of iron rods and channels. 25. In the result, in my opinion, (i) the imported iron r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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