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TMI Blog2024 (1) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that the importer was not eligible for the benefit of duty concessions in terms of the said notifications, the learned Adjudicating Authority further, confirmed the differential duty amount against the said four Bills of Entry amounting to Rs. 5,83,25,899/- in terms of Section 28 of the Customs Act and ordered recovery of the same alongwith applicable interest under Section 28AA of the Customs Act. He further held the imported goods liable for confiscation under the provisions of Section 111(m) of the Customs Act, and imposed a fine of Rs. 10,00,00,000/- (Rupees Ten Crore) under Section 125 of the Customs Act, 1962. The learned Adjudicating Authority further imposed a penalty of Rs. 1,00,00,000/- (Rupees One Crore) under Section 112(a) of the Customs Act, 1962. 2. Briefly, stated the facts of the case are that the appellant M/S Jindal Steel and Power Ltd. - a large manufacturer and producer of steel and energy imported 'Coke Breeze' vide above referred four Bills of Entry. The importer classified the goods under CTH27040030 and claimed exemptions from basic customs duty vide Notification No. 21/2002-CUS dated 01.03.2002 and Notification No. 12/2012-CUS dated 17.3.2012 as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igger size, ore lumps are produced, which can be charged in the blast furnace. 5. Two questions that arise for consideration in the matter are: (a) The validity of the show cause notice, having invoked the extended period of limitation, (Section 28(4) of the Customs Act) and (b) Whether imported coke breeze is entitled to the benefit of Nil rate of duty under the impugned notifications at the material time, in accordance with the description of goods as contained in the two notifications. 6. It is not in dispute that both metallurgical coke as well as coke breeze are used as a fuel and reducing agent in the blast furnace or the sintering plant respectively. It is also not disputed that the coke breeze is far smaller in size then the metallurgical coke. The appellant has claimed that both metallurgical coke as well as coke breeze possess the same chemical and physical characteristic but for the size. Thus the issue of concern is whether "Coke Breeze" is "Metallurgical Coke" as understood under Customs Notification No. 21/2002-Cus dated 01.03.2002 (Serial No. 71) and Notification No. 12/2012-Cus dated 17.03.2012, (Serial No. 125) and exempted from levy of basic customs duty as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or proceeding with the adjudication of the matter. "4.1....................I find that Personal Hearing opportunities were extended to the Noticee on 31.01.2019. The Noticee, vide letter dated 31.01.2019 requested for adjournment of the hearing for two months citing the reason that their counsels are occupied with other preparation for the finalization of other matters and also he has to prepare an additional submission for the case. Thereafter 2 nd date was fixed on 26.02.2019 and the notice, vide letter dated 26.02.2019 sought another two months on the same grounds as made previous occasions. From their letters dated 31.01.2019, 26.02.2019 and 11.06.2019, I find that the Noticee every time sought adjournment of two months and on the same ground of pre-occupation of their counsels. Pre-occupation of their counsels are not valid and convincing ground for seeking adjournment for two months each for three consecutive times. The tactics adopted by the Noticee to delay the adjudication process is obvious. Having alleged to evade huge amount of duty, which are allegedly recoverable, it is apparent that they are not keen on early adjudication which could be a possible indicator of weak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the matter and perused the technical literature and other evidence placed on record. At the outset, the appellant refers to the publication of Ministry of Steel which defines metallurgical coke as a type of coke suitable for metallurgical operations-the actual words used therein are "Metallurgical Coke: Not all coke (I) can be used in metallurgical operations for which good quality coke made from specific blend of coking coal is classified as Met Coke". The appellant also refers to a report of the United States Environment Protection Agency's Air Emission Factors and Quantification Norms (AP-42, Fifth Edition, Volume 1 Chapter 12; Metallurgical Industry) wherein, under Section 12.2 of the report, production of metallurgical coke is described as "Metallurgical Coke is produced by destructive distillation of coal in coke ovens prepared coal is "Coked", or heated in an oxygen-free atmosphere until all volatile components in the coal evaporate. The material remaining is a carbon mass called coke. Most metallurgical coke is used in iron and steel industry processes (primarily in blast furnaces) to reduce iron ore to iron. Over 90 percent of the total metallurgical coke production is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no dispute that sintering is a process of metallurgy and sintering is one of the several processes of a metallurgical operation like and amongst several others- mineral dressing, roasting, (sintering), smelting, leaching, electrolysis, pelletizing etc and as to whether sintering is a metallurgical operation is not the question involved in the present appeal, it is pointless to dwell in detail upon what is sintering/extractive metallurgy. 8. The fact on records is that the imported product "Coke Breeze" is used by the appellant in one of their several processes in the sintering plant to produce an agglomerated lump, (which alone can and is put to further use in the blast furnace) (the key metallurgical operation wherein metallurgical coke is put to use). While the appellant has extensively dwelt upon in their petition and in the course of arguments on the process technology of sinter and referred to technological references in this regard, it may be sufficient for the purpose of record to state that in the sintering process coke breeze is mixed with iron ore fines (moistened) and a combustion process initiated. It is informed that about 40-50% of fines generated during mining ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary further describes: "SINTER: Sinter is a clinker like aggregate which is normally produced from relatively coarser fine iron ore (normally - 3mm) mixed with coke breeze (-3mm), limestone dolomite fines (-3mm) and other metallurgical return wastes from the plant. Sinter is a much preferred input/raw material in blast furnaces. It improves BF operation and productivity and reduces coke consumption in blast furnace. Presently, more than 70% hot metal in the world (in India 50%) is produced through the sinter." It is evident that sintering is a process of agglomeration of iron ore and it is categorically referred to in the said glossary as: "Agglomeration of Iron Ore: Iron Ore Fines/blue dust cannot be charged in the blast furnace directly since they block the passage for ascending gas inside the fee. So, they are agglomerated (by igniting at lower temperature causing only interfacial fusion) into larger lumpy pieces with/without addition of additives like limestone, dolomite etc. Two types of agglomerated products are commonly produced/used in the industry namely Sinter and Pellet. Accordingly the process are known as Sintering and Pelletising respectively:" 10.1 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for coke that has been brought to our notice by the appellant is from the Indian Standards relating to coal carbonization product. We note that breeze coke was not referred to therein directly, however it refers to blast furnace coke, foundry coke, pan breeze (to which the coke breeze refers) which has the following, by way of definition/meaning/description, to indicate: "Blast Furnace Coke- See 'Metallurgical Coke'. Blocks coke- Coke which may be broken most readily into approximately cubic pieces. Metallurgical Coke- This typically contains 85-88 percent fused carbon, 9 to 11 percent ash and 2 percent volatiles. Foundry Coke-Hard coke of size over 60 mm depending on the internal diameter of cupola, suitable for use in foundry cupola melting furnaces. Pan Breeze-Coke Breeze recovered from producer ashes. Pan Coke-Coke recovered from producer ashes. " 12. The separate classifications for Metallurgical Coke and Pan Breeze (Coke Breeze) are indeed too conspicuous to ignore: The US International Trade Commission report of March 1994 (publication 274) on metallurgical coke, as a Baseline Analysis of the US Industry and imports relied upon by the appellant, in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by M/s. Rashtriya Ispat Nigam Ltd., Vishakhapatnam Steel Plant (Marketing Department export section) which indicates the product specification as: "1.1. PRODUCT :COKE BREEZE (LOW FRACTION OF LAM COKE) 13.1. To emphasize that coke breeze is actually metallurgical coke (LAM Coke= Low Ash Metallurgical Coke). The appellant also submitted a visit report got prepared by them on the sinter plant and use of coke breeze at M/s. Jindal Steel Power Ltd. Raigarh which delineated this scope of work as this, "SCOPE OF WORK:- * Use of Coke Breeze in Sinter Plant as metallurgical coke defining the use of coke in Blast Furnace and in Sinter Plant to justify that the coke breeze being import by JSPL is metallurgical coke. * Comparative specification of coke breeze used in Sinter and Blast Furnace coke as per standard IS 439:1989. " 13.2. It is apparent that the said report is not prepared with reference to the specifics of the questions as in the present appeal, nonetheless it would be both just and proper to refer to the conclusion arrived at by the team of the visiting members on April 7 and April 8, 2016. The same reads as under: "Conclusions based on the technical details s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han normally contained in other varieties of coke like foundry coke or that used in making of gas or ferro alloys. 15. The learned AR Shri Debnath, on the other hand in support of the department's plea takes us to the following. 15.1 At the outset he refers to the language used in the notification for our consideration. For sake of ready reference the same are reproduced hereunder: (1) Notification No. 21/2002-Cus dt. 1.03.2002. (2) Notification No. 12/2012-Cus dt. 17.03.2012. (3) Notification No. 21/2002-Cus was amended vide Notification No. 4/2003 to read as under: 16. The learned AR specifically referred to circular No. 56/2003-Cus dated 27.06.2003, in support of the department's standpoint, that coke breeze is a distinct commodity and so understood in market parlance, hence not eligible for availing the benefit of duty exemption as metallurgical coke. The learned AR drew special attention to the contents of para 3 and para 4 of the said circular to drive home the point that metallurgical coke and coke breeze were distinct and different products and also commercially understood as two different products, had distinct properties-in particular there calorific value and us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgical Coke to the blast furnace. The Ministry of Steel has recommended that Coke Breeze may be treated as process waste and it has further stated that Coke Breeze (sixe 0 to 12mm) generated up to 5% of the gross Metallurgical Coke may be considered as normal. 3. The matter has been examined Metallurgical Coke and Coke Breeze are commercially understood as two different products. They have different properties (specially calorific value) and uses. Hence, when Metallurgical Coke is filtered to produce Coke Breeze during the process of charging of Metallurgical Coke to the blast furnace, a different product is produced which is chargeable to excise duty under heading 2704.00 which at present has tariff rate "nil". (Even a waste product can be excisable if it has distinct name, character and use). 4. Further, it cannot be said that Coke Breeze generated in the said manufacturing process is unutilized Metallurgical Coke. As stated above Coke Breeze is a different product which arises in the course of overall manufacturing process in which Metallurgical Coke is used as raw material. It cannot be said that part of the Metallurgical Coke, equivalent to Coke Breeze generated, has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly used in the sintering process as it is not fit for metallurgical (blast furnace) usage unlike metallurgical coke. We note that this distinction in size was clearly brought out while referring to the Glossary of Terminology referred to by the appellant issued by the Ministry of Steel Government of India. In fact the Ministry's website Http://Steel.gov.in/ refers to metallurgical coke and breeze coke as hereunder: "Coke is the residual solid product obtained upon carbonization of coking coal. Depending upon property, coke is known as Hard Coke, Soft Coke and Metallurgical Coke. Metallurgical Coke: Not all coke can be used in metallurgical operations for which good quality coke made from specific blend of coking coal is essential. Such coke is classified as Met. Coke." 19. We also note that the Ministry of Commerce and Industry in its findings dated 14 th October 2003 while recommending imposition of anti- dumping duty notified on the metallurgical coke had the following to state: "There are primarily two kinds of processes to manufacturer Met coke: (i) Non Recovery Process In the Non Recovery Process, volatile compounds that are driven off the coal due to heating ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Breeze arises during the process of charging of Metallurgical Coke to the blast furnace and a different product is produced leviable to excise duty under heading 2704.00 (at present has tariff rate 'nil'). Also it is settled law that even a waste product can be excisable, if it has distinct name, character and use. There is nothing to suggest that Coke Breeze generated in the said manufacturing process is unutilized Metallurgical Coke. 21. Circular No. 103/2003-Cus dated 09.12.2003 does make a reference to the concessional rate of duty applicable to Metallurgical Coke under Notn No. 21/2002-Cus Dt. 01.03.2002. Amendment to the said notification vide Notification No. 04/2003-Cus dated 03.01.2003 extended the concessional rate to Metallurgical Coke even in cases where pig iron/steel is manufactured by COREX technology. The said circular, also refers to Circular 56/2003-Cus dated 27.06.2003 clarifying that the contents of Circular 56/2003 will be applicable with effect from 03.01.2003, the date on which the amendment of Notification No. 04/2003-Cus was issued to the Notification No. 21/2002- Cus. The said mega Notification No. 21/2002-Cus, providing effective rates of Customs duty c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... website (http://www.iea.org/interenerstat-v2/meeting/2008/Coal.pdf), of the International Atomic Energy Agency - Harmonization of Definitions of Energy Products and Flows, that defines the two products: Coke Breeze is a by-product of coke manufacture. It is the residue from screening coke and comprises particle sizes less than 10 mm. Note that the coke which is screened may be made from bituminous and sub-bituminous coals including brown coals. Metallurgical Coke (coke oven coke) The solid product obtained from carbonization of coal at high temperature. Coke oven coke is low in moisture and volatile matter and has the mechanical strength to support the blast furnace charge. It is used mainly in the iron and steel industry acting as heat source and chemical agent. 25. The publication-Metallurgical Coke Baseline Analysis of the US Industry and Imports, Publication-2745 March 1994 of the US International Trade Commission, refers to the two products as under: Coke Breeze-The fine screenings from crushed coke used predominantly as a fuel source in the process of agglomerating iron ore. Usually coke breeze will pass through a ¼ inch screen opening. Metallurgical Coke. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent inside the blast furnace. Limestone-calcium carbonate/dolomite- calcium and magnesium carbonate flux are added to the blast furnace for absorption of impurities present in the iron source and/or coke Ash. Besides, hot metal, the blast furnace generates slag, dust, and blast furnace gases. The slag is sold as aggregate for the concrete industry, as a raw material for the cement industry, and is also used as aggregate for road construction. The dust is recycled in the sinter plant as a source of iron. The blast furnace gas is used to heat boilers or stoves within the steel plant. 29. The Encyclopaedia of Materials Metals and Alloys, 2022 describes metallurgical coke as macroporous carbon material of high strength, produced by carbonization of coal blends at temperature upto 1200 C. The metallurgical coke performs significant role in the iron making inside a blast furnace. Apart from its use as a fuel providing heat energy for the endothermic chemical reaction and for melting of the slag of metal, as a chemical reducing agent it provides for reducing gases, as a carbonization agent for the hot metal in the hearth it also provides for solid support medium for the iron-bearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the technical aspects and other facts in respect of coke making process, yielding Coke Breeze. Thus: Coke as stated earlier, is the residual solid product obtained upon carbonization of coking coal. The coke making process starts with bituminous pulverized coal charge which is fed into the coke oven through ports in the top of the oven. After charging, the oven ports are sealed and the coal is heated at high temperatures (1600 to 2300(F) in the absence of oxygen. Coke manufacturing is done in a batch mode where each cycle lasts for 14 to 36 hours. A coke oven battery comprises a series of 10 to 100 individual ovens, side-by-side, with a heating flue between each oven pair. Volatile compounds are driven from the coal, collected from each oven, and processed for recovery of Combustible gases and other coal byproducts. The solid carbon remaining in the oven is the coke. The necessary heat for distillation is supplied by external combustion of fuels (e.g., recovered coke oven gas, blast furnace gas) through flues located between ovens. At the end of the heating cycle, the coke is pushed from the oven into a rail quench car. The quench car takes it to the quench tower, where the ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) on page 486, (doi: 10.1351/goldbook. C01143) Metallurgical Coke is produced by carbonization of coals or coal blends at temperatures up to 1400 K to produce a macroporous carbon material of high strength and relatively large lump size. Note: Metallurgical Coke must have a high strength to support heavy loads in the blast furnace without disintegration. Metallurgical Coke is also used as filler coke for polygranular carbon products. Source: PAC, 1995, 67, 473 (Recommended terminology for the description of carbon as a solid (IUPAC Recommendations 1995) on page 497, (doi: 10.1351/goldbook.M03866). 2. BUREAU OF INDIAN STANDARDS Indian Standard IS 3810 (Part 2): 2003. SOLID MINERAL FUELS-VOCABULARY PART 2 (TERMS RELATING TO SAMPLING, TESTING AND ANALYSIS). Breeze : The undersize after separating the smallest size of graded coke. NOTE: Breeze is usually less than 10mm in size Coke: The solid, agglomerated carbonaceous residue produced by the pyrolysis of coal in the absence of air. 3. BUREAU OF INDIAN STANDARDS Indian Standard, IS 5451:2001 (Reaffirmed -2011) GLOSSARY OF TERMS RELATING TO COAL CARBONIZATION PRODUCTS (First Revision) Coke Breeze - The finer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as normal". "Metallurgical Coke and Coke Breeze are commercially understood as two different products. They have different properties (specially calorific value) and uses. Hence, when Metallurgical Coke is filtered to produce Coke Breeze during the process of charging of Metallurgical Coke to the blast furnace." 7. Ministry of Steel, Govt. of India. http://steel.gov.in/glossary.htm Coke is the residual solid product obtained upon carbonization of coking coal. Depending upon property, coke is known as Hard Coke, Soft Coke and Metallurgical Coke. Metallurgical Coke: Not all coke can be used in metallurgical operations for which good quality coke made from specific blend of coking coal is essential. Such coke is classified as Met. Coke. Coke Breeze is 0-15mm. 8. MINISTRY OF COMMERCE & INDUSTRY, DEPARTMENT OF COMMERCE (DIRECTORATE GENERAL OF ANTI-DUMPING & ALLIED DUTIES) NOTIFICATION, NEW DELHI, the 14th October, 2003, PRELIMINARY FINDINGS During the coke quenching, handling and screening operation, Coke Breeze is produced. It is either reused on site (e.g. in the sinter plant) or sold off site as a by-product. This is under both processes. Met. Coke is produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (MC 2221-A), Washington, DC 20460, September 1995 SIC 331. Coke Breeze is obtained by By-Products recovery process-volatile components of the coke oven gas stream are recovered including the coke oven gas itself (which is used as a fuel for the coke oven), naphthalene, ammonium compounds, crude light oils, sulfur compounds, and coke breeze (coke fines). During the coke quenching, handling, and screening operation, coke breeze is produced. Typically, the coke breeze is reused in other manufacturing processes on-site (e.g. sintering) or sold off-site as a by-product. Coke making: Coal processing in the iron and steel industry typically involves producing coke, coke gas and by-product chemicals from compounds released from the coal during the coke making process coke is carbon-rich and is used as a carbon source and fuel to heat and melt iron ore in iron making. The coke making process starts with bituminous pulverized coal charge which is fed into the coke oven through ports in the top of the oven. After charging, the oven ports are sealed and the coal is heated at high temperatures (1600 to 2300(F) in the absence of oxygen. Coke manufacturing is done in a batch mode whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s like comparing apples and oranges though nonetheless both belong to the category fruits and grow on trees. 38. As coke breeze and metallurgical coke are two distinct distinguishable commercial products and put to disparate uses because of difference in characteristics and also fetch a different price range in the market, therefore it is natural not to characterize breeze coke as metallurgical coke and consider it as eligible for exemption in terms of notifications supra. Also the Indian Standards Sold Mineral Fuel Vocabulary (IS 3810), (Part 2) 2003, in its Section relating to Sampling Testing and Analysis, refers to several varieties of coke-nut-coke, foundry coke, gaseous coke, large coke, petroleum coke, milled coke etc.-each of the term having its own distinguishing character, name, mining process and uses. It defines blast furnace coke (metallurgical coke) and breeze as under: "3.16. Blast Furnace Coke- Strong, large coke for use in blast furnaces. NOTES 1. Blast Furnace coke is generally produced from blends of bituminous coals, which may incorporate additives. 2. Blast Furnace coke usually has a low reactivity to carbon dioxide. xxxxxx 3.19. Breeze- The u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (361) ELT 184 Kar.) For the premise calling for strict construction of provisions pertaining to tax exemption. (viii) UOI V Amazon Seller Services Pvt. Ltd, 2019 (365)ELT 477 Del.) For the premise words in an exemption to be given their natural and normal meaning (ix) State of Gujarat Vs Arcelor Mittal Nippon Steel India Ltd., (2022 (379) ELT 418 SC). For the premise if notification is clear and unambiguous, it cannot be given a purposive interpretation It is settled law that when an expression in an exemption notification is clear and when there is no scope for assuming any ambiguity, nothing shall be interpreted beyond the plain words of the notification. There is nothing by way of intendment or equity in tax matters and regard to be had to the clear meaning of the word, governing solely by the language of the notification. Following decisions render the said proposition: (x) Commissioner of Customs Airport) Mumbai Vs. Dilip Kumar & Company, (2018 (361) ELT.577 SC). (xi) Excon Building Material Manufacturing Co. P. Ltd., Vs. CCE, (2005 (186) ELT 263 SC-3). For the premise interpretation to a notification not borne out of plain words cannot be ascribed to (xii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arely settled by the Tribunal's decision in the case of Midas Fertchem Impex Pvt. Ltd, Vs. Pr. Commissioner of Customs, ACC (Import), New Delhi-2023(384)ELT 397T. Reference may also be had to the landmark case of Umanath Pandey Vs. State of UP (2009(237)ELT 241 S.C), which is nothing short of a monograph on the subject of natural justice. However, in view of what has been incorporated in para 6 of this order, we hold no breach or contravention of natural justice by the lower authorities. In any case, before this Tribunal we are of the view that the appellants have indeed got a fair chance to put up their pleadings. 41. Thus like aforestated, multiple varieties of coke-blast furnace coke (metallurgical coke) and breeze coke are different products and cannot be equated, though may have arisen out of a common mass of bituminous coal. We therefore are of the view that in view of clear and appreciable differences as noted above detailing the difference in technical parameters and usage considerations, the goods imported by the appellant viz. coke breeze is not entitled to the benefit of the exemption notification, 21/2002-Cus dt. 1.3.2002 and/or 12/20112-Cus dt. 17.03.2012 prescribing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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