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TMI Blog2002 (6) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of the goods and offered its redemption on payment of fine of Rs. 10 lakhs under Section 125 of the Customs Act. He further imposed a penalty of Rs. 2.50 lakhs under Section 112(a) of the Customs Act. 3. Aggrieved by this order passed by the Commissioner of Customs, the appellant herein filed an appeal (C/Appl/343/01) along with an application for waiver of pre-deposit and stay of the recovery of the amount and also prayed for out of turn hearing in the facts and circumstances of the case. This Bench of the Tribunal vide Final Order No. 1721/2001, dated 3-10-2001 set aside the adjudication order passed by the ld. Commissioner with the direction that the case should be readjudicated in the light of the observations made by this Hon'ble Tribunal and it was specifically observed that the ld. Commissioner ought to have given reasons why such experts opinions was not acceptable to him. It was however open to the Commissioner to have called the experts for cross-examination or to elicit further details from them. It was also open to the Commissioner to have called upon these experts to examine the consignment and also take samples for tests so that if there was any doubt lingerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Bansal Industries, No. 10, Anand Parbhat, New Delhi-5, filed a Bill of Entry No. 017169, dt. 21-5-2001 for clearance of goods declared as 72.635 MTs of TFS w/w Defective Sheets 0.33 mm and lighter temper and 152.239 MTS tin plate w/w defective sheets. The goods were imported from M/s. Fer Export s.a. vide invoice Nos. 0103/31 and 0103/31 (supplementary invoice) dated 14-5-2001. The total value of the goods was declared as US$ 86,770.84 Bill of Entry was assessed by adopting the value of US $ 220 for tin free defective sheets and US $ 465/MT for tin plates defective under DEPB Scheme. Importers produced DEPB licence No. 410015218, dt. 13-6-2001 for a value of Rs. 2,68,767/- equivalent to basic customs duty on 72.635 MTs of TFS defective sheets. An amount of Rs. 23,04,423/- was paid towards additional duty on TFS defective sheets and total customs and additional duty on 152.239 MTs tin plates defective sheets. 3. When the goods were examined on 4-7-2001 there arose a doubt whether the item can be considered as waste/defective as declared by the importer. The matter was referred to National Metallurgical Laboratory (NML), Chennai, for their expert opinion. The NML vide their lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny reasons for their opinion and if necessary the National Metallurgical Laboratory experts can be called for cross-examination. The Hon'ble CEGAT further directed that the correct nature of the goods should be redetermined on the basis of the importer's expert opinion and National Metallurgical Laboratory report. On the basis of these directions the experts of the importers namely, Dr. K. Prasad Rao, Professor and Head of Department of Metallurgical Engineering, Dr. N. Krishna Raj, Consultant Metallurgist and Dr. V. Mohan, Proprietor of M/s. V.M. Enterprises were given an opportunity to examine the goods. National Metallurgical Laboratory was also requested to be present at the time of examination. The goods were examined by a team consisting of Dr. K. Prasad Rao, Dr. N. Krishna Raj and Dr. V. Mohan. No representative from National Metallurgical Laboratory was present. The team after examination of the goods gave a report with the following observation :- "17 packages of tin plate sheets and 18 packages of tin free steel (TFS) sheets were examined (35 out of 159 packages making up to more than 20% sampling as stipulated in ISO 1111-1:1983, Section 9.1). The package Nos. and the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who also wanted to cross-examine the scientists of National Metallurgical Laboratory. Accordingly, Shri A.S. Sundar Rajan, Advocate, cross-examined Dr. S. Srikanth, Scientist-incharge of National Metallurgical Laboratory on 22-11-2001. He also gave two written submissions dated 26-11-2001 and 28-11-2001. In the written submission dated 26-11-2001 he objected to the fact that National Metallurgical Laboratory scientist was absent on the day when others experts examined the goods. In his written submission on 28-11-2001 he pointed out that the latest report of the team consisting of Dr. K. Prasad Rao and others indicated that the goods were not prime and they were only assorted and unassorted waste-waste as per clause 2.5.6 of IS 10340-1982. Further regarding the cross-examination of Dr. S. Srikanth of National Metallurgical Laboratory he submitted that it was clear that Dr. Srikanth had not examined the goods personally nor tested any of the parameters required to come to the conclusion that the goods were prime. The National Metallurgical Laboratory did not refer to any of the BIS specifications or any other international specifications and the report of National Metallurgical Labo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imensions, different thickness of different finish. The tin plate waste/waste was canalised item in the earlier import policies. Even in the latest Import Policy under Notification No. 31 (RE-99)/1997-2002, dt. 1-11-99 it was appearing as one of the items where floor prices have been fixed. The Advocate also submitted that the contemporaneous imports vide Bills of Entry Nos. 328677, dt. 4-6-2001 and 334551, dt. 3-7-2001 have been relied on for fixing the price of goods at a price of US $ 442 and US $ 550 PMT. He pointed out that this pertained to import of Tin Plate prime quality of a single dimension whereas the subject goods were of different dimensions, thickness, finish as is evident from the packing specifications. Therefore, by no stretch of imagination the present import can be compared with the above-mentioned bills of entry. Therefore, there was no justification in enhancing the value beyond US $ 465 PMT for Tin Plate waste-waste which was the floor price fixed by the Government of India. Further he submitted that no two consignments of waste-waste can be compared. 6. Shri A.S. Sundar Rajan and Smt. Shakthi Thyagesh, Advocates, again appeared for a final personal hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered as prime material. So Dr. Prasad Rao described the NML findings as inconsistent and contended that the goods were other than prime material. This was concurred by other 2 experts Shri R.N. Krishna Raj and Dr. V. Mohan. 10. This report was examined by the Scientist at NML who explained that when they stated that tin-free sheets did not have visual surface defects, they meant that they were suitable for lacquering and printing. They confirmed that on opening 13 packages of tin-free sheets, they could not find any surface defects and, therefore, based on mere scratches or wrinkles on a few sheets, the entire material cannot be declared as seconds. They stated the definition of the prime grade tin-free steel in IS 12591-1988 was that at the time of dispatch, it was free from defects readily visible to the unaided eye. Mere presence of a few minor handling marks in a large consignment caused during the transit and handling, which can be easily removed did not affect the suitability for lacquering and printing over the entire surface on the sheets and cannot render the goods as a lower grade. When they mentioned 'no visual defects', they implied only insignificant defects were pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NML Scientist also examined the final report of the group led by Dr. Prasad Rao and gave his opinion during the cross-examination. It may be specifically mentioned that during the examination of the cargo by the group led by Dr. Prasad Rao, the NML Scientists were not present. Later, when it was offered to the importers that a common examination could be organized, the Advocate of the importers did not agree and, therefore, no combined cross-examination was conducted. 12. I find that the Hon'ble Tribunal has stated that in view of the lack of meeting point among the experts, it may be worthwhile to get the matter referred to a third party. However, it was felt that bringing a third expert into the matter will not resolve the problem because any opinion expressed by a third expert would also be contested by one of the present experts, ie., NML or by Dr. Prasad Rao. I have also examined in detail the contentions of the Advocate on behalf of the importers submitted by his letter dated 28-11-2001. The Advocate has chosen to attack the qualification of Dr. S. Srikanth, the NML Scientist and the method adopted by him instead of trying to meet the conclusions given by Dr. Srikanth. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered as waste-waste. 13. I find that the submissions of the Advocate are merely echoing the final report submitted by the experts nominated by him. Their final opinion has already been reproduced as above. They have after examination of the goods came to the conclusion that the goods, both tin plate and tin free steel are waste-waste because the tin plate has roll marks, pin holes, wrinkles, etc. and tin free sheets are of different sizes, finish, etc. Because of the varying sizes, tempers, finish, they came to the conclusion that these are waste-waste. However I find though they have stated that the tin plates are of assorted sizes they have not indicated the exact number of packages which were examined by them. The Annexure I of their final report dated 5th Nov., 2001 appear to be only about handling marks which were observed by NML Scientists also during their initial inspection but the NML were clearly of the opinion that these marks did not render them of lower grade. In fact the Bureau of Indian Standards Specification also clearly mentions that handling marks caused during transit cannot render the goods as lower grade goods. Dr. Prasad Rao is not very clear whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iform sizes and thickness and finish having no surface defects except perhaps some handling marks. Therefore, clearly the conclusions of Dr. Prasad Rao are not based on detailed facts given by the NML. Secondly it would set a wrong precedent if one large consignment as in the present case is treated as of lower grade merely because there are differences in sizes and finishes in the packages. The grade of the goods, as rightly pointed out by the NML, should be based on the actual condition of each sheet and whether the sheet can be used for the purpose for which it is meant. From this angle, I am in agreement with the conclusions of the NML. Therefore I hold that the entire consignment of tin free sheets and 70% of the tin sheets have to be considered as prime grade and 30% of the tin sheets have to be considered as waste-waste. 16. The next question is regarding the fixation of the value for assessment. In view of the fact that the valuation of the importer was incorrect and the goods found to be other than what was declared, the declared value cannot be treated as the correct transaction value for the purpose of assessment. Therefore the value has to be determined by means of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this ground alone the order is liable to be quashed. The Commissioner failed to read and understand the order of this Hon'ble Tribunal wherein specific direction had been given and also it has been recorded that the order was passed after hearing both sides, whereas the Commissioner erroneously concluded that the order was passed after hearing the appellant alone. The Commissioner failed to appreciate and consider the fact that earlier his only objection was that the experts produced by the importer had not seen the goods which deficiency was cured by the subsequent visual examination and their report confirming that their earlier conclusions are correct. The Commissioner failed to appreciate and consider the fact that in these proceedings the competency, expertise and unimpeachable integrity of the experts produced by the appellants have not been questioned. The Commissioner failed to appreciate and consider the fact that the cross-examination of the signatory to the report of NML had failed to establish his knowledge, academic or professional, and also the fact that he did not physically inspect the goods. The Commissioner failed to appreciate and consider the fact that the NML ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner misdirected himself in dealing with the NML's report rather than the joint report of the experts produced by the appellant herein. In other words, he violated the remand order of this Hon'ble Tribunal. The Commissioner failed to appreciate and give proper weightage to the unbiased, independent and authoritative opinion of the Indian Institute of Technology which was decisive of the disputed questions. The Commissioner failed to appreciate and deal with the affidavit filed by Dr. Krishnaraj, whose report he chose to ignore. The Commissioner failed to appreciate and consider the report of Dr.V. Mohan, an ex-employee of NML, whose report was not faulted by the NML. The Commissioner failed to appreciate and consider the fact that Dr. Srikanth on his own volition, chose to appear for cross-examination knowing very well that his contribution to the report was NIL. Therefore, the errors of omission or commission committed by him during cross-examination are his own. In other words, he could have chosen to field any one of his subordinates who could have probably answered many of the questions with facts and figures. The Commissioner failed to appreciate and consider the ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of natural justice. This also demonstrates the bias with which the customs dealt with the case. The Commissioner even failed to read the report of the NML, which specifically stated that homogenous lot of 20,000 sheets have to be segregated according to the quality and dimensions which was not done in this case. The Commissioner failed to appreciate that instead of dealing with the issues on merits the Commissioner choose to direct his attack on the Advocates and recorded that the Advocate was merely echoing the final report of the expert. The Commissioner failed to appreciate that the Advocate was representing the appellant and the views of the experts and therefore he was duty bound to do what he was alleged to have done. The Commissioner failed to appreciate and give any rationale grounds for the appellant to accept and pay for a consignment as prime when the same consisted of mixed lot of goods. The Commissioner failed to appreciate and consider the fact that his observations on the valuation have already been faulted by this Hon'ble Tribunal and he reiterated the same without any basis. Further in the earlier proceedings the Commissioner invoked Rule 6 whereas in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defective sheets 0.33 mm and lighter Temper and Tin Plate WW defective sheets and 152.239 MTs of Tin Plate WW defective sheets. He further submitted that the supplier by mistake had loaded tin plate waste along with tin free sheet waste. Therefore they prayed for permission to file the Bill of Entry on the basis of the revised invoice indicating the correct entry. The Commissioner referred the matter to the National Metallurgical Laboratory (NML), a Govt. Organisation for opinion on the goods. The goods were inspected and based on the inspection report the scientist incharge issued a report. The appellant's were aggrieved with this report. Therefore, they sought opinion from 3 of the experts of IIT, Chennai namely Dr. N. Krishnaraj, Consultant, Metallurgist, Dr.V. Mohan, Proprietor of M/s. V.M. Enterprises and Dr. Prasad Rao, Head of the Department of Metallurgy, IIT, Chennai. All the three experts had given detailed report and have commented extensively in the light of the technical literature and ISI specifications and have opined that even in terms of the report of the NML, the item is assorted waste/waste. Shri K. L. Rekhi, ld. Consultant took us to page 49 of the paper book w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question asked from the Advocate, Dr. Srikanth, Scientist of the NML had stated that the basis for the above answer is subscribed in IS 12591-1988 and IS 1993-1993 for verification of grades. Ld. Consultant Shri K.L. Rekhi took us to pages 73 and 74 of the paper book and specifically to para 2.5.1, 2.5.2 and 2.5.3 and pointed out the various explanation given in the Indian Standard Glossary of Terms for Cold Reduced Tin Plate and Cold Reduced Black Plate and that the expert opinion given by Dr. Srikanth is not matching to the Indian Standard as deposed by him during the cross-examination. Ld. Consultant also took us to para 2.5.3.1, 2.5.3.2, 2.5.3.3 about 3rd grade opinion of the description mentioned in the Indian Standard are matching to the goods to the period given by them. Therefore the opinion given by the scientist of the NML cannot be relied upon. He also invited our attention to page 42 of the Order-in-Original in which it has been made clear that they have imported unasorted size and none of their product are of uniform lot. He therefore invited our attention to para 4 of the order in which they have produced expert opinions from Department of Metallurgical Engineering, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and they had to be categorised as waste-waste. Even NML has certified them to be of 3rd grade quality. He further submitted that there is no dispute on classification and dispute is limited to the value of the product and also the finding that the goods are of prime quality. Ld. Consultant submits that no authority has supported the view of the Department that they are prime quality product. He also invited our attention to para 12 of the Order-in-Original and informed us that the direction to the Commissioner in view of lack of the meeting point among the experts was to get it referred to the 3rd party. The Commissioner did not act on this direction of the Hon'ble Tribunal who felt that bringing a 3rd expert into the matter will not resolve the problem because any opinion expressed by a third expert would also be contested by one of the present experts that is NML or by Dr. Prasad Rao. He, therefore, submitted that the direction as contained by the Hon'ble Tribunal has not been followed by the Commissioner by giving some justification. He also invited our attention to page 78 of the paper book and informed that it has been mentioned that they had imported one consignment and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by the Apex Court in the case of HMM Ltd. v. CC as reported in 1995 (96) E.L.T. 497 (S.C.) and since they did have any mala fide in the importation of these goods, the transaction were transparent and no penalty can be imposed on them. 10. Ld. SDR Shri G.S. Menon reiterated the findings contained in the order passed by the ld. Commissioner and submits that the goods are other than waste-waste. The opinion of Dr. Srikanth, Scientist of NML who constituted the panel and who is the senior most scientist cannot be faulted with as the NML is an autonomous organisation and his report has to be accepted. He invited our attention to packing list at page 191 and para 9 of the order passed by the ld. Commissioner. He further submitted that the floor price of 465 US $ MT is same for all the goods and they have already paid duty at the rate of 465 US $ MT. 11. We have considered the submissions made by both the sides and come to a conclusion that the Department has not chosen to refer the matter to the 3rd expert since there was difference of opinion between the scientists of NML and the experts of IIT, Madras who had given reports favourably to the assessee. We also find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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