Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri P. Sridharan, Shri ... on 22 May, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : C/11456-11459, C/12633-12636, C/10991, C/11322- 11326, 11460-11463, 12504 and 12406 of 2013 Application Nos. : C/Stay/11296-11299/2013, C/Ors/12831/2013, C/Stay/ 12305-12308, 12199/2013, C/EH/11505/2014 Arising out of : OIO Nos. KDL/Commr/62/2012-13 dtd 28.02.2013, KDL/ Commr/15/2013-14 dt. 30.4.2014, KDL/Commr/10/2013- 14 dt. 19.4.2013 & KDL/Commr/64/2013-14 dt. 28.2.2013 Passed by : Commissioner of Customs, Kandla For approval and signature : Shri S.S. Kang, Vice President Mr. H.K. Thakur, Honble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellant (s) : M/s. PSL Limited Shri C.K. Goel, Shri Ashok Punj, Shri P.S. Mann M/s. Ratnamani Metals & Tubes Limited Shri P.M. Sanghi, Shri R. Ravichandran, Shri Manoj Sanghvi M/s. Welspun Corporation Limited Shri Arunav Baruah, Shri Kirti Sachin Kambli Shri Suresh Darak, Shri L.T. Hotwani, Shri B.K. Goenka, M/s. Tata Steel International Limited M/s. Man Industries India Limited Shri N. Nagrajan, Shri R.C. Mansukhani Shri Abhilesh Ojha Shri Tamal Gupta Represented by : Shri P. Sridharan, Shri Ashok Panda Senior Advocate, Shri Manish Jain, Shri V.S. Nankani, Shri J.C. Patel, Shri Amit Laddha, Shri Jeet Oza, Shri Laxmi Menon, Shri A. Seerazi, Shri Anay Banhatti, Shri T. Vishwanathan, Advocates Respondent (s) : Commissioner of Customs, Kandla Represented by : Shri K.M. Mondal, Special Counsel CORAM : Shri S.S. Kang, Vice President Mr. H.K. Thakur, Honble Member (Technical) Date of Hearing : 20 & 21.03.2014 Date of Hearing : 22.05.2014 ORDER No. A/11989-11008/2014 dated 22.05.2014 Per : Mr. H.K. Thakur; 1. Following Miscellaneous applications, stay applications and appeals have been filed by the appellants with respect to four orders-in-original passed by Commissioner, Customs Kandla:- Sr. No. Stay Application /Misc. Application Name of the Appellants Order In original Number & Date 1. C/S/11296/2013 C/Ors/12831/2013 C/11456/2013 C/S/11297/2013 C/11457/2013 C/S/11298/2013 C/11458/2013 C/S/11299/2013 C/11459/2013 PSL Limited C. K. Goel Ashok Punj P. S. Mann KDL/COMMR/62/2012-13, dated 28/2/2013 2 C/S/12305/2013 C/12633/2013 C/S/12306/2013 C/12634/2013 C/S/12307/2013 C/12635/2013 C/S/12308/2013 C/12636/2013 Ratnamani Metals & Tubes Ltd. P. M. Sanghi R. Ravichandran Manoj Sanghvi KDL/COMMR/15/2013-14, dated 30/4/2013 3. C/10991/2013 C/11322/2013 C/11323/2013 C/11324/2013 C/11325/2013 C/11326/2013 C/12406/2013 Welspun Corp. Ltd Arunav Baruah Kirti Sachin Kambli Suresh Darak L. T. Hotwani B. K. Goenka Tata Steel International Limited KDL/COMMR/10/2013-14, dated 19/4/2013 4. C/11460/2013 C/11461/2013 C/11462/2013 C/11463/2013 Man Industries India Limited N. Nagrajan R.C. Mansukhani Abhilesh Ojha KDL/COMMR/64/2013-14, dated 28/2/2013 2. All the four importer appellants M/s. PSL Ltd, M/s Ratnamani Metals & Tubes Ltd, M/s Welspum Corporation Limited and M/s. Man Industries India Limited imported API 5L PSL 2 x 70 and x80 grades of Hot Rolled Steel coils/plates which were used for making steel pipes for export as per Advance Authorizations issued under Para 4.1.10 and Para 4.1.3 of the Foreign Trade policy read with Notification No. 93/2004-Cus dated 10/09/2004 & 94/2004-Cus dated 10/09/2004. At the time of clearance of the goods under Advance Authorizations all the above four appellants were describing the goods as Prime HR Coils: API 5L PSL2 x70 or x80 and declared the classification under 72083690 of the Customs Tariff Act (CTA). Importer Appellants provided advance authorizations as per Input-Output Norm C-593 issued by offices of DGFT which reads, inter-alia, as follows:- Sr. Export Item Import Item C-593 Carbon Steel Submerged Arc Welded Pipes as per API Grade/ASTM Grade or equivalent Or Hot formed steel bends as per API, ASTM grade or equivalent grade Degree; O-180 Degree 1.Non- Alloy HR Coils/ Plates 2.Welding flux 3. Welding wire 4.Grinding wheel 5.Oil & Lubricants 6.Cutting oil 7.CO2 wire 8. Rust Preventing Oil 9. X-ray film. 2.1 With effect from 2/6/2011 this SION was amended as follows:- S. No. Export Item Import Item C 593 Non-Alloy/ Alloy Steel Submerged Arc Welded Pipes as per API Grade/ASTM Grade or Equivalent OR Hot Formed Steel Bends as per API, ASTM Grade or equivalent grade Degree: 0-180 Degree 1. Non- Alloy Steel HR Coils/Plates, whether of alloy steel or non-alloy steel of relevant grade & thickness 2. Welding Flux 3. Welding Wire 4. Grinding Wheel 5. Oils & Lubricants 6. Cutting Oils 7. CO2 Wires 8. Rust Preventing Oil 9. X-Ray Film 3. The Advance Authorizations issued to the above importers, inter-alia, allowed import of items as follows:- Sr. No. ITCHS Import Item Name 1 72083690 Non Alloy HR Coils/Plates 3.1 It is mainly the case of the Revenue that importer appellants were entitled only to import Non-alloy HR coils/plates falling under CTH 72083690 but they have actually imported other alloy steel of CTH 7225. It is also the case of the Revenue that there was a deliberate mis-declaration on the part of the importer appellants to avoid payment of duty by either filing a wrong certificate for goods as Non-alloy steel or by not providing Mill Test Certificates (MTCs) to the assessing officers. After following the principles of natural justice Hot Rolled coil/plates of API 5L PSL2 x70 & x80 grades of steel were classified as other alloy steel under CTH 7225 by Commissioner Kandla under separate orders-in-original confirming demands with respect to goods cleared from Mundra, Kandla & Mumbai Ports by invoking extended period. Penalties under Section 112 (a), Section 114 AA & 114 A of the CA 1962 were also imposed upon the importer appellants & other individuals for which appeals have been filed as detailed in Para-1 above. All the stay applications, Misc. applications, and appeals were fixed for hearing on 20.03.2014 & 21.03.2014. After completion of the hearing all the appellants were directed to file written submissions within two weeks but the same could be filed only by 17.04.2014. 4. Sh. P. Sridharan (Senior Advocate), Sh. Laxmi Menon (Adv) and Sh. Manish Jain (Advocate) appeared for the appellants in Appeal No. C/11456/2013, C/11457/2013, C/11458/2013, C/114591/2013 and the related Stay/ Misc applications and appeals E/11460-64/2013. Sh. Sridharan made the bench go through Extracts from the reply of the Finance Minister to the debate in the Lok Sabha on the Finance Bill 2008, as per Press Information Bureau release, to drive home the point that before the current period of imports involved in these proceedings there was a sharp increase in the prices of steel items and Govt. of India took following steps to contain the inflationary tendency in the steel market as evident from Finance Ministers speech: (i) To reduce the basic customs duty on pig iron and mild steel products viz. sponge iron, granules, and powders; ingots, billets, semi-finished products, hot rolled coils, cold rolled coils, coated coils/sheets, bars and rods, angle shapes and sections and wires from 5% to Nil. (ii) TMT bars and structurall are commonly used for construction of houses. In order to rein in the price, I propose to exempt the import of this item from CVD, which is currently 14%. (iii) I propose to reduce basic customs duty on three critical inputs for manufacture of steel, i.e. metallurgical coke, ferro alloys and zinc from 5% to Nil. It was also emphasized by the senior advocate that as per GOI press release dated 13.06.2013 flat rolled products of iron and steel, including pipes and tubes, that attracted export duty from 5 % to 15% Ad-val were fully exempted. That all categories of Non-alloy steel were exempted from 5% duty leviable to Nil with effect from 29.04.2008. It was his case that in the realm of lot of incentives given for import and export of steel items it cannot be the rationale of the Government of India to charge import duty on the import of H.R. Steel plates/ coils imported by the appellants because during the relevant period all importers of 5L PSL2 grades were being considered to be Non-Alloy steel by all these who were globally dealing in these grades. In the written submissions and during the hearing it was argued that PSL Ltd. were providing import documents like invoices, packing list, country of origin certificate, original or copy of Mill Test Certificate issued by the manufacturers of the coils and the imported goods were described as Prime Hot Rolled Steel Coils API PSL 2 5L x65 or x70. That appellant PSL Ltd was importing these goods since 2006 and classification was being claimed under CTH 7208 by the appellant which was also being accepted by the revenue. That the said assessments made on the Bills of Entry have not been challenged by the Revenue at any stage and can not be re-opened now by way of demand without contesting the original assessments made. 4.1 That the show cause notice issued to the appellants is also without jurisdiction in view of the Apex Courts judgment in the case of CC Vs Sayed Ali & Another [2011 (265) EL5 17 (SC)] wherein it was held that Commissioner of Customs (Prev) was not competent to issue demand show cause notice under section 28 of the Customs Act 1962. That the ratio laid down by Supreme Court in the above case is applicable to the show cause notice issued by DRI. That further insertion of sub-section (11) to section 28, under the Customs (Amendment & Validation) Act 2011 w.e.f. 16.09.2011 also does not give any legality to the show cause notices issued by DRI before 16.09.2011 as the words this section means only with respect to amended new Section -28(11). 4.2. That rate of customs duty on Alloy steel and Non-alloy steel has always remained same except for the period 29.04.2008 to 18.11.2008. During this period effective basic customs duty on Non-alloy steel of CTH 7225 was 5% whereas CTH 7208 attracted Nil rate of duty. That the CVD rate remained the same throughout. 4.3 That for being considered as other alloy steel all the elements present in steel should be in the percentage ranges as specified in chapter note 1 (f) of Chapter-72, otherwise the steel will remain Non-alloy steel. 4.4. That in the API PSL2 grades imported by PSL Ltd, the alloying elements could be either less than or within the element ranges specified in chapter note-1 (f) of Chapter-72 and such steel grades could be both Non-alloy steel or other alloy steel. That as per ISO 7598 of 1990 ISO 494811-1982 and BSEN 10020-2000 for determining whether the steel is alloyed or unalloyed, the composition given in the standard of specification or ordered specifications shall be considered which usually refers to ladle analysis. That in the absence of a standard of specification or ordered composition, the classification shall be based on the ladle analysis reported by the manufacturer. That MTCs provided by the supplier were based on ladle analysis and not on product analysis. 4.5. That as per para 4.1.3. of the FTP (2004-09) Advance Authorizations are issued to allow duty free imports of inputs which are physically incorporated in the export product. Notification No.93/2004-Cus and Notification No.112/2009-Cus grant exemption to materials imported into India against an advance authorization and Materials have been defined in these notifications to mean raw material, components, intermediates, consumables, catalysts and parts which are required for the manufacture of resultant export product. 4.6 That Notification No. 93/2004-Cus and 112/2009-Cus are not confined to a particular chapter heading of the tariff and notifications apply to all goods falling in the schedule of the Customs Tariff Act. That classification/heading no of the import/export product is not relevant for coverage under the Advance Authorisations. That interpretation of the SION C-593 based on chapter Note 1 (f) of chapter 72 of the CTA is not correct where such a linkage is not provided in SION C-593. 4.7 That ITC HS classification will not be relevant for understanding the scope of the terms used in SION C-593. 4.8 That HR Coil of API grade PSL 2 x 70 imported by appellants is known in trade parlance as non alloy steel as per the internet downloads, copies of which are provided. 4.9 That applying the definition of other alloy steel as per the specifications of chapter Note 1 (f) of Chapter 72 for understanding the scope of Non alloy steel and SION C-593,as attempted by Revenue, will render a portion of SION redundant because other alloy steel goods of API grade PSL 2 x 70 will never make the same grade permissible for import. That accordingly applying the interpretation of chapter note 1 (f) of CTA to the API grades will render at least a portion of SION C-593 redundant as it permits to export pipes of any API grade but will not permit import of the some grades. 4.10 That extended period of limitation is not invokable as PSL Ltd. has provided all the MTCs at the time of importation, as is clear from the examination reports. That with respect to B/E No.221283 dt 13.12.2007 MTC was specifically called for where Molybdenum content was 0.08% which accordingly to chapter note 1 (f) will take it to the category of other alloy steel of CTH 7225. That despite this fact known to the Revenue this consignment was still assessed under CTH 7208 as Non-alloy steel. 4.11 That for determining the goods being prime or seconds/defective invariably MTCs are required to be seen as per procedures under Trade Notices prescribed by the Revenue. 4.12 That classification of imported steel under CTH 7208 was solely claimed on the basis of past assessments made by proper officers with respect to the past imports made by the appellants and that all other importers of the same grades were claiming classification of steel under CTH 7208 without any objection by the department. That as per the invoices of SAIL and Jindal Ispat for API grade PSL2 x 70 having higher percentage of molybdenum are also being classified by indigenous manufacturers under CETH 7208. 4.13 That the allegation against the appellant is that there are 2 sets of MTCs. According to the revenue, fabricated MTCs were given to GAIL and the genuine MTCs as given by the supplier showed different proportion of the elements. The proportion of the elements as per the MTCs given by the supplier was higher than the proportion of the elements as shown in the MTCs given to GAIL by the appellants. That it is never the case of the revenue that fabricated MTCs were given to the customs authorities by the appellants. Further, a perusal of the MTCs given to GAIL also show elements in proportion higher than the percentage prescribed in the chapter note1(f) of Chapter 72 of CTA. Therefore, as per the fabricated MTCs also, the HR Coils would still be classifiable under the Heading Other Alloy Steel. To illustrate, the MTCs reproduced in the SCN at pages 358 and 359 shows that the proportion of Molybdenum in the MTCs in the genuine MTC is 0.1730% and in the fabricated MTC is 0.091%. This proportion in both the MTCs is more than the percentage of 0.08% as prescribed under the chapter note 1 (f). Thus going by the interpretation of the department, coils would still be classifiable as other Alloy Steel under CTH 7225, irrespective of which MTC is referred to. 4.14 That major portion of the duty demand is confined to the CVD payable on the imported goods which could have been fully available as cenvat credit and these was no incentive/ provocation for the appellants to mis-declare the description/classification in the Bills of Entry. 4.15 That in view of the above and the fact that all imported goods have been used in the manufacture of goods duly exported there cannot be any intention to evade the duty hence extended period cannot be invoked, as there was a bonafide belief and prevailing practice that these grades are classifiable under CTH 7208. 4.16 That demands of duty by invoking the bond is not sustainable because of the following:- (i) That in Para 45 and 46 of the impugned order dated 28.02.2013, the Commissioner is invoking the bond for the purpose of demanding duty in respect of the imports made under advance authorizations. (ii) That the customs bonds will be invokable only in those cases where case for short levy is non-fulfillment of post-importation conditions and not other-wise. Where the exemption is being denied for non-fulfillment of threshold condition itself, duty demand cannot be made by invoking the bonds but has to be in terms of Section 28 only. (iii) That in the present case, the case of the revenue is that the raw material imported by the Appellant is not covered by the Advance Authorisations in question. This is therefore clearly a case where the benefit of the Notification is being denied at the threshold itself. It is not a case where in the appellants have violated post importation conditions of the Notification. In such a case, Section 28 alone is applicable. (iv) That in Indian Metals & Ferro Alloys Ltd. Vs. Superintendent, C. Ex & Cus. 2000 (123) ELT 337 (Ori.) affirmed by the Supreme Court in 2002(144) ELT A105 (S.C.) assessee was an EOU. The imported consignments of electrode paste were assessed to nil rate under Notification No.13/81-Cus and goods were warehoused. Exemption was extended on the ground that electrode paste is a raw material. Notification No.13/81, inter alia extended exemption to raw material and did not apply for consumables. Revenue contended that electrode paste is a consumable and not a raw material and hence not eligible for exemption under the Notification. As noted above, assessee was an EOU and goods warehoused. Still High Court held that section 28 applied and since notice was issued beyond six months, it was held to be time barred. Ratio is that for end-use violation alone, bond can be enforced. If alleged illegality is at the threshold stage itself, the same can be corrected only in terms of Section 28 and not by recourse to bond. (v) That the bond furnished by the Appellants provides for situation where export obligation has not been fulfilled etc. That in the instant case, there is also not any allegation that the Appellants have not used the imported goods in the manufacture of the export product or that the same has been diverted. Thus the said bonds do not provide for a situation as contemplated in the instant proceedings. Consequently, even if bond is invoked, it will not be applicable for demanding duty in the instant case. (vi) That there is no proposal to demand duty by invoking the bond executed by the Appellants in terms of the Notification No. 93/04-Cus in the show cause notice dated 28/08/12 in the show cause notices. (vii) That without prejudice to the above, 6 out of the 7 bonds executed by the Appellants have been discharged by the Customs Authorities pursuant to the fulfillment of the Export Obligation and redemption of the Authorizations. Hence, no demand can be raised based on these bonds. 4.17 That cross-examination of CHA to arrive at the conclusion that no MTC was produced, was not extended to the appellants. That the statement of CHA has been disproved by the documentary evidence in the form of examination reports which duly refer to MTCs and Commissioner himself has dropped certain demands of M/s. Man industries where MTCs were found to have been provided. That for the imports through Mundra only the service of this CHA was used by the appellants and his statement cannot be applied to imports through Kandla. 4.18 That in view of the following case laws when a license was valid and export obligations were fulfilled it was held that no duty can be demanded:- (i) Aditya Birla Ltd. Vs. CC Bangalore [2010 (249) ELT 273 (Tri. Bang.)] (ii) Hindustan Lever Ltd. Vs. CC (EP) Mumbai [2012 (281) ELT 209 (Tri- Mumbai)] Further, in view of Bombay High Court order in the case of CC (EP) Vs Hindustan Unilever Ltd. [2012 (285) ELT 500 (Bombay)] customs authorities are not justified in raising objection after the fulfillment of export obligations to the satisfaction of the licensing authorities. It was thus emphasized by the appellant that with respect to Advance Authorizations where export obligations have been fulfilled and licenses redeemed, no action can be taken where there is no fraud, willful misstatement or suppression. 4.19 That as per Customs Appraising Manual a classification given in the bills of entry cannot be considered as willful misstatement as deciding the classification of imported goods is the sole responsibility of the customs assessing officers when the description has been correctly given along with the required import documents. For this purpose learned Sr. Advocate relied upon the following case laws to emphasize that no confiscation of goods or imposition of penalties was attracted on any of his clients:- (i) Merther Plastic Ltd. Vs. CCE [1998 (101) ELT 549 (C)] (ii) ACE Kargowas Pvt. Ltd. Vs. CC [2003 (158) ELT 505] (iii) CC Vs. Maruti Udyog Ltd. [2002 (141) ELT 392] (iv) CC Vs. Guarav Enterprises [2006 (193) ELT 532 (Bombay)] 4.20. That public notice dated 2.06.2011 issued by DGFT amending SION C-593 is only clarificatory in nature and will be applicable to their past clearances also. 4.21 That import under Sr. No.190C of Notification No. 21/2008-Cus is unconditional and is not subject to any post importation condition. Similarly under Notification No. 93/2004-Cus & 112/2009-Cus there is no post-importation condition hence goods are not liable to confiscation under Sect 111 (m) and 111 (o) of the Customs Act 1962 and no penalty is imposable on any of the importers made 114A, & Sec 112 (a) of the Customs Act 1962. 5. Sh. V.S. Nankani (Advocate) Sh. Amit Laddha (Advocate) and Sh. Jeet Oza (Advocate) appeared on behalf of the appellants in appeals and stay and Misc. Applications of Appeal No. C/12633/13, C/12634/13, C/12635/13, C/12636/13, C/10991/13, & C/11323 to 11325/13. Sh. Nankani (Adv.) after adopting the arguments made by Sh. V. Sridharan (Sr. Advocate) made the following additional arguments during the course of the hearings as well as in the written submissions: (1) That the following issues arise in the present appeals of the appellants: (i) Whether the expression other alloy steel defined in Note 1(f) of Chapter 72 of the Customs Tariff Act, 1975 covers alloy as well as non-alloy steel covers only other alloy steels? (ii) Whether Advance licences/ authorizations issued under Standard Input Output Norms [C-593 of SION] or under Adhoc Norms cover duty free import of H.R. Coils API Grade 5LPSL2 x70 imported by the Company as per Annexures B, B-1, B-2, B-3 to the Show Cause Notice dated 17/20.02.2012.? (iii) Whether the decision of the Norms Committee is final and binding on the Respondents? (iv) Whether the Company is entitled for exemption in terms of Notification No. 93/ 2004-Cus dated 10.09.2004 and Notification No. 94/ 2004-Cus dated 10.09.2004 in respect of the said goods imported under the 52 advance licences/ authorizations? (v) Whether duty can be demanded by invoking the extended period of limitation in terms of the proviso to Section 28(1) of the Customs Act, 1962. (vi) Whether duty can be demanded from the appellants under the said Notifications? (vii) Whether the said goods are liable for confiscation under Section 111 (m), and Section 111 (o) of the said Act on account of mis-declaration? (viii) Whether the appellants are liable for penalty under Section 114A and 112 of the Customs Act, 1962? (2) That as per the stand taken by the Revenue the imported consignments contain Niobium, Manganese and Molybdenum more than the percentages specified in chapter Note 1 (f) of chapter 72 of the CTA, whether individually or collectively. That Revenue has not lead any evidence of an expert to substantiate the reclassification of the imported goods for which classification has been earlier accepted under CTH 7208 when MTCs for the contemporary imports of the same grades, imported by other importers were available with the Revenue. That a change of classification of imported steel with a change of mind, without having additional evidence, is not permissible when the original assessments of the imported goods were never challenged by the Revenue. (3) That a combined reading of chapter note 1 (d), 1 (e) and 1 (f) of chapter 72 of the Customs Tariff Act convey that every steel is an alloy steel and that all steels other than stainless steel are classifiable as other alloy steel. That as per the subheading notes to chapter-72, when read with steel production contained in chapter 72 of HSN Explanatory Notes Other alloy steel will include both non-alloy steel and alloy steels other than stainless steel. That definition of other alloy steels as per chapter Note 1 (f) of chapter-72 of CTH is wide and comprehensive to cover both alloy and non alloy steels. (4) That when two views on an issue are possible then, in the matters of classification the view in favour of the importers should be preferred, as held by Apex court in the case of Poulose and Mathen Vs Collector of Central Excise [1997 (90) ELT 264] and Sun Export Corporation Vs CC Bombay [1997 (93) ELT 641]. That by applying the ratio of these judgements, classification of imported steel imported by the importers under CTH 7208 was correct. (5) That domestic manufacturers of same grade of steel, like Steel Authority of India, also classify these grades of steel with similar chemical compositions under CETH 7208 as Non-Alloy Steel. (6) That cross-examination of CHA Mr. Ketan Mehta was not allowed by the adjudicating authority when appellants wanted to establish that MTCs were never asked by the proper officers during examination. (7) That there is no dispute that importers imported and declared the steel as HR Coils API Grade 5L PSL2 x70 in the bills of entry which were subsequently used in the manufacture of finished goods duly exported by the appellants. That as per Para 4.1 of the FTP (2004-09) Advance Authorizations are issued to import of inputs required for manufacture of export goods. Further, it was argued that para 4.1.3 of FTP provides that Advance Authorizations are issued to allow duty-free imports of inputs which are physically incorporated in the export products. That it is an admitted fact that HR Coils API Grade 5L PSL2 x70 is not only required for export production but also is physically incorporated in the manufacture of welded pipes duly exported by the appellants and foreign exchange against the said exports made has been realized. (8) That at this stage, it is relevant and important to examine the eligibility of the appellant to import any type of steel alloy or non-alloy under Advance Authorization. There are two methods by which Advance Authorizations can be applied for and granted. Para 4.4 of the Handbook of Procedure 2004-09 provides that where Standard Input-Output Norms (SION) have been published, an application in the prescribed form along with documents mentioned therein shall be submitted to the concerned Regional Authority for grant of Advance Authorizations. Para 4.4.2 of the Handbook further provides that where the norms have not been published, an application in the prescribed form along with documents mentioned therein shall be furnished to the concerned Norms Committee (NC for short), where the original copy of the application is filed with the concerned Regional Authority and a self-attested copy of the same is filed with the NC. Advance Authorizations in such cases are issued by Regional Authority (RA) as per NC recommendations. This is called ad-hoc route/method. As far as the Company is concerned, either under the SION or under the ad-hoc route, the Company was eligible for issue of Advance Authorizations. While the 52 Advance Authorizations, which are the subject matter of the present case have all been issued under the SION, the Company had applied for and obtained Advance Authorization also under the ad-hoc method, as is evident from the Statement dated 07.05.2010 of Suresh Darak (pg. 191 Vol I/PB) and the letter dated 10.01.2012 written to DRI (pg. 338 Vol I/PB). The ultimate test whether the Advance Authorization is issued under SION or on ad-hoc basis, is that the holder of Advance Authorization is allowed to import only what is required for export production and/or what is to be physically incorporated in the export product. That this is the criteria for grant of Advance Authorizations, and that criteria cannot be changed at the time of import, when it has to be ascertained whether the goods imported are to be allowed for duty-free clearance under Advance Authorization. The test of eligibility to import cannot change at the time of issuance of the Advance Authorization and at the time of assessment. However, two different yardsticks applied to ascertain the coverage of the goods by an Advance Authorization, one at the time of issue of Advance Authorizations and the other at the time of actual import, would not only defeat the object and purpose of FTP, but also invariably result in conflict or diversion of views between Governmental authorities, viz. the Licensing Authority under FTP or the Foreign Trade (Development and Regulation) Act, 1992 and the Officers of Customs under the Customs/ Customs Tariff Acts. It is settled law, as held in the following amongst other cases, that any interpretation which furthers the object and purpose of the law, must be preferred over the one which defeats the same: (a) Oblum Electrical Industries Pvt. Ltd. Vs Collector [1997 (94) ELT 449] (b) Commissioner Vs. Rupa & Company [2004 (170) ELT 129] That without prejudice to the above, the use of alternate inputs is permissible under Duty Exemption/Remission Schemes covered by Chapter 4 of FTP. Advance Authorizations is part of Chapter 4 of FTP. Appellant placed reliance on Policy Circular No. 30 (RE-05)/2004-2009 dated 10.10.2005 and Policy Circular No. 72 (RE-08)/2004-2009 dated 24.03.2009 in both of which, the DGFT has clarified that alternative inputs are permissible for import. It was argued that assuming whilst denying that the said goods imported by the company are alloy steel, the fact that the Licenses/Advance Authorizations bear the description non-alloy steel does not prevent the Company from importing alloy steel as alternate inputs so long as what was imported by the appellant was capable of being used in the export products. As a matter of fact, the said goods imported by the Company have actually been used in the manufacture of export products. On this ground also, the appellant is eligible to import duty-free goods under the 52 Advance Authorizations under the Customs exemption notifications. (9) That present appellant M/s Welspun approached Norms Committee (NC) of DGFT vide letter dated 06.04.2012 (page 550 Vol II/ of Paper Book) for clarification and NC vide letter dated 16.05.2012 conveyed the decision dated 02.05.2012 of the NC to the appellant as follows:- For the purpose of redemption of 52 Advance Authorizations as under, import of Alloy or Non-Alloy HR Coils/Plates is permitted provided that EO has been fulfilled by the firm by export of pipes made out of same grade of steel. There shall be no change in the norms of consumption of steel HR Coils/Sheets. (10) That NC is a part of the Ministry of Commerce under the office of DGFT and as per para 2.5 of FTP is conferred powers to deal with issues in relation to all aspects of SION and are the competent authority under FTP/DGFT. (11) That since the decision of NC was not being given effect to, this appellant filed Writ Petition No. 2240 of 2013 in the Honorable Bombay High Court, inter alia, also challenging therein the Order dated 11.09.2013 passed by Additional DGFT, Mumbai, and by an Order dated 20.11.2013, while admitting the Petition, the Honorable High Court was pleased to pass the following Order: 11. Having heard learned Counsel for the parties on question on interim relief, we are of the view that in the facts and circumstances of the case and particularly having regard to decision of Norms Committee dated 2 May 2012, this is a fit case for granting interim stay against operation and implementation of the order dated 11 September 2013 of the Additional DGFT (Ex. M). It is ordered accordingly. Consequently, the communication dated 4 October 2013 of the Assistant DGFT on behalf of the Additional DGFT at EX. A to the Affidavit in reply dated 14 October 2013 would also stand suspended 12. It is clarified that pendency of the Writ Petition and the above interim order shall not come in the way of the respondent authority considering the petitioners request for examining the grade of material imported and exported which obviously means that alloy and non-alloy are not to be treated as grades. That the above mentioned Orders of the Honorable Bombay High Court and of the Additional DGFT, were tendered at the time of hearing and it is significant to note that the Honorable Bombay High Court has also in the Order dated 20.11.2013 put the issue beyond doubt that reference to the word grade (which word is appearing in SION as well as the decision of the NC) does not refer to alloy or non-alloy. Obviously, the word Grade referred to in decision of Norms Committee means API or ASTM Grade since the relevant entries C-593 in the SION talks about API or ASTM Grade. The appellant has also declared the Grade in the Bills of Entry and Shipping Bills as API grade. Pursuant to the Order dated 20.11.2013 of the Honorable Bombay High Court, by letter dated 27.02.2014, the office of the Joint DGFT, Vadodara has confirmed that the Company has exported goods of the same grade as imported by it under the Advance Authorizations. A copy of the said letter dated 27.02.2014 was also tendered at the time of hearing. (11) That the Commissioner has referred to the affidavit filed by the Deputy DGFT, Mumbai (wrongly recorded as DGFT in the impugned Order) in Writ Petition (Lodging No. 2031 of 2012) filed by the Company in the Honorable Bombay High Court to conclude that it is the DGFTs contention that alloy steel is not permissible for import under advance authorizations bearing the description non-alloy steel. The reference to this affidavit in the impugned Order is misleading and/or irrelevant for the following reasons: (a) The said affidavit does not deal with the decision of the NC at all; (b) The Deputy DGFT is subordinate to NC and therefore, bound by the decision of the NC which the Deputy DGFT cannot ignore; (c) Subsequently, as aforesaid, the Honorable Bombay High Court has passed the Order dated 20.11.2013 which put matters beyond doubt that the NCs decision is to be implemented and that API Grade, as per NCs decision, cannot be referred to mean alloy or non-alloy steel. As such it was argued that no reliance whatsoever can be placed on the said affidavit-in-reply which in any case is overridden by the decision of NC, who as aforesaid, is the highest Competent Authority under Para 2.5 of FTP. Needless to add that the decision of the NC is final and also binding including on the Customs Authorities. Reliance is placed on the following decisions: (a) Navjyoti International Vs. Commissioner of Customs 2004 (177) ELT 875 (b) Bharat Steel Corporation Vs. Commissioner of Customs 2005 (186) ELT 565 (c) Ashok Enterprises Vs. Commissioner of Customs 2005 (186) ELT 496 (d) Hindustan Lever Limited Vs. Commissioner of Customer of Customs 2012 (281) ELT 241 (12) That appellants have produced invoices/ Mill Test Certificates (MTCs) of TISCO where same grades having same chemical composition manufactured by domestic industries have been treated as non-alloy steel of CETH 7208. (13) That MTCs are required to be seen by assessing officers where consignments are declared as prime or defective and, therefore, in order to ascertain the correctness of such description/declaration it is for the proper officer to call for the MTCs from the appellants for arriving at the correct assessments. This is evident from standing order No. 7837 dated 05.02.2004 issued by Commissioner of Customs (Imports) Ballard Estate, Mumbai. Similar standing orders/public notices have been issued by other Custom Houses as well. The Proper Officer in the present case did not call for MTCs. That apart from that it is a matter of record that contemporary imports of other importers, where the MTCs were available before the assessing officers, the steel was still assessed and classified under CTH 7208. That this is a matter of record and is evident in the case records of M/s Ratnamani Metals, M/s PSL Limited and M/s Man Industries which were heard together. The examination orders and the examination reports in the case of contemporary imports show that despite verifying the MTCs Proper Officer did assess the imported steel of these grades under CTH 7208 as non-alloy steel. That there are a number of instances where this importer and the other three importer appellants imported the same grade from the same supplier and received in the same ship, which were assessed under CTH 7208. It was thus argued that non-production of MTCs by this importer did not mean any willful misstatement/ suppression of material information with intention to evade payment of duties. (14) That it is also settled law that in taxing statutes words which are undefined are to be given a meaning based on commercial understanding and trade parlance. That the expression non-alloy steel cannot be said to exclude API Grades, particularly when API Grades refer to maximum percentages of the alloying elements and Chapter Note 1(f) refers to the minimum percentages resulting into an overlap of the two parameters in so far as the chemical composition of various elements in the steel is concerned. It was appellants case that API Grades could thus, include both alloy and non-alloy steels and that by the computer printouts in trade parlance globally API Grades are considered as non-alloy steel. (15) That extended period is not invokable as the true and correct description of the imported grades were reflected in the bills of entry on the basis of past clearances made by the importers and the assessments of the same grades were also done under CTH 7208 which have not been challenged by the revenue in appeal. That making of a correct classification of the imported goods is the responsibility of the Assessing Officers and a classification head shown by the importers can at the most be considered as a claim of classification. (16) That custom bonds executed by the importers with the revenue had the following clauses: (i) I/We, the obligor(s) shall observe all the terms and conditions of the said Notification (ii) I/We, the obligor(s) shall observe all the terms and conditions specified in the Authorization (iii) I/We, the obligor(s) shall fulfill the export Obligation as specified in the said notification and the Authorization and shall produce evidence of having so fulfilled the export obligation within 30 days from the expiry of the specified export obligation period to the satisfaction of the Government (iv) in the event of failure to fulfill full or part of the export obligation as specified in the said notification and the Authorization, I/We, herein undertake to pat the customs duty but, for the exemption and also interest @ 15% per annum, thereon forthwith from the date of payment of duty and without any demur, to the Government That as all the export obligations for the majority of the advance authorizations have been fulfilled and in majority of the cases, bonds have also been cancelled, therefore, no recovery can be made by enforcing the customs bonds executed by the importers at the time of clearance of goods availing exemption notifications. (17) That as per Bombay High Courts order in the case of Repro India Ltd Vs. UOI [2009 (235) ELT 614] export goods cannot be burdened with taxes as the intention of the government during the relevant time was to contain inflation in steel products and also to have zero-rated exports. (18) On the issue of imposition of penalties on the individuals and confiscation of imported goods it was argued that a reference has been made to the statement dated 13.05.2010 of Mr. B.K. Goenka, Chairman of the appellant that he admitted that the appellant has made a blunder. Similar reference has been made to the Statements of other Officers of the Company that the said goods imported by the company by the Company was alloy steel. These Officers were shown Chapter Note 1(f) to Chapter 72 and MTCs, and in response thereto, stated that the said goods were alloy steel. None of the Officers, including the Chairman of the Company are competent, legally or otherwise, to deal with the interpretation of Note 1(f) to Chapter 72. These officers were also not competent to interpret the FTP and the said Notification, the true meaning and legal effect of which has been set out herein above. It therefore, follows that the statements of the Officers, including the Chairman are not at all inculpatory. These issues involved in the present case are pure question of law which relate to interpretation and construction of Chapter Note 1(f) to Chapter 72, including sub-notes thereof, HSN Explanatory Notes, provisions of Chapter 4 of FTP and the terms and conditions of the said Exemption Notification. Besides, as stated herein, the appellant did not declare the said goods to be alloy or non-alloy steel. The Company correctly declared and described the said goods to be of API grade and it is well settled that classification is a function of the Proper Officer. The burden of classification of imported goods is on the Department. It is a trite law, that mere claim for classification does not amount to mis-declaration in view of the decision of the Honorable Supreme Court in the case of Northern Plastics Ltd. Vs. Collector of Customs 1998 (101) ELT 549. It is therefore, submitted that there is no mis-declaration at all by the appellant and hence, not only is the duty demand not sustainable on this account, but also the said goods are not liable for confiscation under Section 111(m) or Section (o) of the said Act. Consequently, neither the Company nor the individuals are liable for penalty under the said Act. As far as Section 111(o) of the said Act is concerned, the provisions thereof are otherwise not applicable since export obligation stands discharged. The duty free goods have been utilized in the production of the export goods. There is no diversion. The fact is also reconfirmed in para 8 of the said order dated 09.07.2013 by the Revenue. There is, therefore, no violation of any post clearance condition and hence, provision of Section 111(o) has been wrongly invoked. As far as individual officers of the Company are concerned, the reasons for imposition of penalty on them are totally misconceived. The Company is professionally managed where no individual has any personal gain. All the officers have duly discharged their duties without intent to evade payment of customs duty or violated the provisions of the said Act or conditions of the Advance Authorizations. The work of the Company is divided into departments, such as marketing and sales which looks for exports, supply and procurement of raw materials and customs clearance and delivery up to the factory. The departments concerned with the export orders and supply chain, which applies to persons like Lal Hotwani, Arunav Barua and Kirti Kamble do not deal with the customs clearances and have not made any declaration which have been alleged to have rendered the goods liable for confiscation under Section 111(m) of the said Act. So also the customs clearance department which involves persons like Suresh Darak had no knowledge of the MTCs which were not forwarded to them. The chart prepared by Mr. Suresh Darak mentioning a duty liability of Rs 42 crores was made by him after the investigations were started with respect to other appellants to understand for himself the potential duty liability. No adverse inference can be drawn on the basis of this chart. In any case, no case can be made upon the appellant in the absence of MTCs since it has been shown from the records that irrespective of the MTCs, the goods have still been classified under CTH 7208. As such, none of the persons have done or omitted to do any act, the omission or commission of which has rendered the goods liable for confiscation or abetted any such act. None of the individuals are, therefore, liable for penalty. The penalty under Section 144AA is also not leviable since none of the persons concerned have knowingly or intentionally made, signed or used or caused to be so, any declaration/statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of the act. Section 144A is, therefore, not applicable. Reliance is placed on the decision of the Tribunal in Z.U. Alvi Vs. Commissioner [2000 (117) ELT 69]. 6. Shri V.S. Nankani (Advocate) also made following additional arguments with respect to appeals filed by M/s Ratnamani Metals &Tube Ltd and its employees: (1) That this importer seeks to adopt the submissions made by M/s Welspun Corp Ltd. (2) That vide order dated 18.07.2013, the Joint DGFT Ahmedabad has held that the imports of alloy steel as well as non-alloy steel are permissible under Advance Authorization issued under SION Entry C-593 &C-2004. That Joint DGFT Ahmedabad has further held that as long as what is imported and exported are of the same grade (i.e. API Grade) the imports of same grade is permissible. (3) That by Public Notice No. 35 (RE-2013)/ 2009-14 dated 30.10.2013 the DGFT as per powers conferred under Para 2.4 of FTP, have clarified as under with regard to newly added Para 4.1.15: 1. Where both export and import have been completed prior to 01.08.2013, such cases will not be covered under Notf. No. 31 dated 01.08.2013 (as amended), irrespective of whether the concerned authorization (AA/DFIA) has been redeemed or not. (4) That the appellant has submitted the required MTCs at the time of clearance of goods which is evident from the examination reports submitted by the contemporary importers that there is no suppression/misstatement of facts. (5) That in spite of the MTCs produced by the appellants before the Assessing Officer, the classification of the imported steel was still made under CTH 7208. (6) That in the event of conflict between the documentary evidence (in the form of examination reports) and statement dated 16.03.2012 of CHA, the former shall prevail as per the following case laws: (a) R.P.Industries vs. Collector [1996 (82) ELT 129 (Tribunal)] (b) Philip Fernandes vs. Commissioner [2002 (146) ELT 180 (Tri.Mum.)] (7) That as aforesaid no penalty on individuals is warranted as none of them got any undue or illegal financial gain in his personal capacity. That none of the individuals did anything or ommitted to do any act which rendered the imported goods liable to confiscation and accordingly no penalty is imposable on the individuals under Section 112 (a) and/or Section 114AA of the Customs Act 1962. 7. Shri Ashok Panda (Sr. Advocate) appearing on behalf of the Appellant Shri B.K Goenka during the course of the hearing as well as through written submissions made the following arguments for not imposing any penalty: (1) That this appellant being chairman and Managing Director of the Company, does not look after the day-to-day business and is not responsible in relation to declarations made in the import documents with respect to import and export made against Advance Authorizations. (2) That learned Adjudicating Authority has also held following in Para 60.1 of the Adjudication Order dated 19.04.2013 while not imposing any penalty upon Shri P.K Goenka under Section 114AA of the Customs Act 1962, which will also hold good for non imposition of penalty upon him under Section 112 of the Customs Act 1962:- So far as Shri B.K. Goenka is concerned, no evidence suggesting his intentional making, signing, using or causing to make, sign or use of any declaration, statement or document is available on record. Thus, I do not find his direct involvement in obtaining fake certificates from the manufacturer, mis-declaration of the goods in the bill of entries etc. In view of the above Im not inclined to impose penalty on Shri B.K. Goenka, Chairman and Managing Director of M/s Welspun Corp. Ltd. Under Section 114AA ibid. (3) That in view of the above findings there was no justification in imposing penalty upon Shri B.K. Goenka under Section 112 (a) of the Customs Act 1962 (4) That in view of the following case laws also no penalty is attracted on the individual appellants:- (i) Rakesh Arora vs. Commissioner of Customs [2012 (276) ELT 181 (Del.)] (ii) Dayaram Agarwal vs. Commissioner of Central Excise [2007 (218) ELT 33 (Tri-Ahmd)] (iii) Ld. Commissioner vs. Praveen Ahuja [2008 (226) ELT A103 (Guj.)] (iv) Praveen Ahuja vs. Commissioner of Customs [2002 (149) ELT 356 (Tri.-Del.)] 8. Shri J.C. Patel (Advocate) appearing on behalf of appellant Shri Tamal Gupta borrowed the arguments made by the other Senior Advocate and emphasized that no penalty is attracted as Shri Tamal Gupta has not signed any document furnished before the Customs Authorities. 9. Shri A. Sheerazi (Advocate) and Shri Shri Anay Banhatti (Advocate) appearing on behalf of the Tata Steel Industries Limited (Appeal No. C/12406/2013) made the following arguments during the course of hearing as well as through written submissions:- (a) That appellant was only required to co-ordinate between appellant Welspun Corporation Limited and the local office of Corus entity in the country in which the manufacturing mill or trader was located. (b) That when a request for a certificate of imported goods being Non-Alloy Steel was received, the same was forwarded to Corus China office. When such certificates were obtained and forwarded by the manufacturer the same were forwarded to the appellant and the appellant was forwarding the same to Welspun Corporation Limited. (c) That the discussion whether or not the certification requested by Welspun Corporation Limited should be given was left entirely to the manufacturing Mill. (d) That there is no finding by the adjudicating authority that appellant in any manner sought to influence the grant of any such certificate form the manufacturing Mill. That where the manufacturing Mill refused to issue such certificates requested by a buyer then the decision of the manufacturing Mill was communicated by the appellant to the buyer. (e) That all the six certificates suggesting Non-Alloy Steel nature of imported goods were proposed to the manufacturing Mill (viz. Taiyuan) and that it is not Departments case that appellant had issued the said certificate. (f) That technical specifications of the imported goods were directly negotiated between Welspun Corporation Limited and the manufacturing Mill and these issues were not within the knowledge of the appellant whether the imported goods were Alloy Steel or Non-Alloy Steel. (g) That in the present facts appellant has neither made, signed or used the subject certificates nor caused the certificates to be made, signed or used and therefore, no penalty can be imposed either under Section 112(a) or Section 114AA of the Customs Act, 1962. 10. Shri K.M. Mondal (Special Counsel) appearing on behalf of the Revenue, during the course of hearing as well as through the written submissions, made the following arguments:- (a) That each of the four importer appellants imported Alloy Steel in the guise of Non-Alloy Steel by declaring the classification under CTH 7208 contrary to the items allowed under Advance Authorisations and/ or Advance Authorisations for Annual requirement and wrongly availed the benefit of customs exemption notifications by willfully mis-declaring the description and the classification of imported goods. That all the importer appellants had imported alloy steel of CTH 7225 as per Chapter note 1(f) of Chapter 72 of the Customs Tariff. (b) That for deciding the classification of the steel items imported by the appellants Mill Test Certificates (MTCs) were required to be provided to the customs authorities which was not provided except one case of M/s. PSL and one case of M/s. Man Industries India Limited. That only during investigation MTCs were obtained from the importer appellants and on examination of MTCs, it was found that Steels imported had the characteristics of Alloy Steel as per Chapter Note 1 (f) of Chapter 72 of the Customs Tariff Act as niobium and molybdenum percentages were within the specified ranges of Chapter note 1(f). That argument of Welspun Corporation Limited with respect to sub-heading note 1(f) of Chapter Note 72 of the Customs Tariff Act is misplaced in as much as the proportion of lead as 0.1% or more when read with Chapter note 1(f) will mean that for non-alloy steel the lead percentage will be from 0.1% to 0.4% only and thereafter, the steel will become an Alloy Steel. (c) That it is also contended that even before amendment of SION C-593 by Public Notice No. 51 (Re-2010) 2009-14 dated 02.06.2011, appellants were eligible for import of alloy steel under Advance Authorisation in terms of Para 4.7 of the Hand Book of Procedure, 2009-2014. In this connection, Advance Authorisation No. 3410026017 dated 31.12.2009 was cited by the learned Counsel for Welspun. This Advance Authorisation permits import of Non-Alloy HR Coils/ Plates against the export item Carbon Steel Submerged Arc Welded Pipes as per API Grade/ASTM Grade or equivalent : Under this Advance Authorisation, M/s. Welspun imported a consignment of Hot Rolled Steel Coils: API 5Lx70 grade and cleared the same under bill of entry No. 148482 dated 19.02.2010. Relevant MTC pertaining to this consignment shows that the percentage composition of niobium and molybdenum present in the steels conforms to the percentage composition of niobium and molybdenum as per Chapter note 1(f). When this MTC is compared with the MTC cited earlier, there will be no doubt that the goods covered by the earlier MTC were nothing but alloy steel only. (d) That the fact of imported goods being alloy sttel has been admitted by the responsible officials of the appellant companies in their statement as follows:- Statements of Officials of Welspun: (i) In his statement dated 06.5.2010, Shri Suresh Darak, the then Vice President (Exim) has, inter-alia, admitted that the imported material was nothing but alloy steel; that even before investigation by the DRI, he was aware that the imports from TISCO, China through M/s. Corus International Pvt. Limited were alloy steels and the exemption from basic customs duty under Notification No. 21/2002-Cus vide Sr. No. 190C read with Notification No. 56/2008-Cus was not available. Hence, he had calculated the differential duty of Rs. 42.81 Crores as per the work sheet recovered from his cabin during the search. Shri Darak had also reiterated this fact in his statement dated 07.5.2011. (ii) In his statement dated 12.5.2010, Shri L.T. Hotwani, the then Director (Supply Chain Management) had, inter-alia- stated that HR Steel Coils API 5L PSL2 X70 Grade imported from TISCO, China through M/s. Corus International were alloy steels against Advance License authorized for import of non-Alloy HR Coils/ Plates, he replied that though he was aware that the said goods were alloy steels, he never conveyed the same down to the officers under him. (iii) In his statement dated 13.5.2010, Shri Balkrishna Goenka, Chairman and Managing Director of M/s. Welspun had, inter-alia, stated that the imported API grade steel coils/plates were alloy steels only because the same were needed for manufacture of API grade pipes for gas and petroleum industry. During recording of his statement, he was shown certain certificates claimed to have been issued by M/s. TISCO, China and obtained through M/s. Corus International certifying that the said API 5L PSL2 X 70 grade of steel was non-alloy steel. On being asked as to why these false certificates were submitted to Customs when the goods imported were actually alloy steel, he stated that the same had been done in order to fulfill the Advance License obligations and admitted that a blunder had been committed by his Company. In this connection, Shri Balkrishnas letter dated 18.5.2010 addressed to the DRI, New Delhi is also very noteworthy. In Para 10 of the said letter, Shri Balkrishna has stated The API grade X-70 as per the chemical composition is always an Alloy Steel, though we have been declaring this grade on the Bill of Entry it was always classified under ITC 7208 which is for Non-Alloy Steel. (iv) In his statement dated 21.05.2010, Shri Arunav Baruah, the then Asstt. Vice President (Procurement), had, inter-alia, stated that he was aware that API 5L PLS2 X70 steel coils/ plates imported by the Company were nothing but alloy steel. When he was shown the certificates issued TISCO, China and obtained through M/s. Corus International certifying that the said coils were non-alloy steel coils, he stated that his EXIM department had requested him to get a certificate from Corus International stating that if the goods were to be cleared, the said certificate would be required. (v) In his statement dated 19.6.2010, Shri Anuj Nigam, the then EXIM Head had, inter-alia, stated that during his stint in Welspun, he had pointed out to Shri Arunav Baruah that the goods imported were alloy steel but the License was for non-alloy steel, still Shri Baruah replied that the goods were non-alloy steel and he would provide a certificate to that effect from the manufacturing Company. Regarding non-submission of MTCs to Customs, he stated that as the MTCs were voluminous, the CHA was given certificate from the manufacturer certifying that the goods are non-alloy steels. (vi) In his statement dated 12.6.2010, Shri Tamal Gupta, General Manager (Global Positioning) of M/s. Corus International India Pvt. Limited had, inter-alia, stated that his company had supplied API grade of Steel Coils/ Plates manufactured by TISCO, China to WCL; that Shri Arunav Baruah or Shri L.T. Hotwani of Welspun was to communicate for procurement and finalization of the API grade of steel. He further added that API X70 5L PSL2 grade of steel imported from TISCO, China and supplied to WCL was Alloy Steel as per Customs HSN as the said grade of steel plates/ coils were containing alloying elements. On the supply of non-alloy steel certificates, Shri Tamal Gupta stated that he had once confronted Shri Baruah with the question as to why they required a certificate of Non-Alloy Steel when the product was Alloy Steel. To that Shri Baruah had replied that it was required for their customer and it was none of his business to ask. (vii) In his statement dated 12.5.2010, Shri Ketan Shah, Branch Manager of CHA firm M/s. Thakker Clearing Agency Pvt. Limited, Gandhidham had, inter-alia, stated that he never submitted MTCs with import documents to Customs department as he did not receive the same from the importer. He clarified that WCL used to forward a certificate supposedly issued by the manufacturer of the imported steel certifying that the goods were nothing but Non-Alloy steels and that the said certificates were given to him by Shri Deepak Thokle of WCL. When he was shown the Country of Origin Certificates in respect of certain Bills of Entry wherein the HAS Code was mentioned as 72253000, he stated that they never thought of classifying the goods under CTH 72253000 as per Country of Origin Certificate as the importer had asked them to present the Bills of Entry as per previous Bills of Entry only. Statement of Official of Ratnamani Metals (viii) Shri Ravinchandran, the then Asstt. Genral Manager in his statement dated 06.10.2010 had, inter-alia, stated that as per the conditions of the Advance License, his Company was allowed to import only the Non-Alloy Steel, but they imported Alloy Steel and hence import of Alloy Steel against the Advance License allowing import of Non-Alloy Steel was not proper. In his further statement dated 09.3.2012, Shri Ravichandran stated that he had given letters to Customs certifying that the import consignments were Non-Alloy Steel, but the said letter was given without ascertaining whether the steel was Alloy Steel or non-Alloy Steel. He further stated that the said letters were given as per consultation with Shri Manoj Sanghvi, Business Unit Head of the Company. He also admitted that it was wrong on their part to import X70 grade of steel using the Advance License allowing Non-Alloy steel. (ix) Shri Manoj Sanghvi, the Business Unit Head, in his statement dated 03.2.2011 had, inter-alia, stated that though the import documents of Bill of Entry No. 32700 dated 19.01.2010 were not mentioning the grade of steel imported, but he was aware of the grade as the same was imported for GAIL project for which X70 grade steel was required; that he used the Advance License allowing import of X56 grade of steel for duty free import of X70 grade of steel presuming that both could be used for one another. He also admitted that it was wrong on their part to give certificate of Non-Alloy steel when the goods were Alloy Steel. In his further statement dated 09.4.2012, he had stated that they have imported grades of steel other than those allowed under the Advance Authorisation and that they were aware of the mis-match of the grade of steel in export and import as the Advance Licenses were obtained by his company on post export basis. As regards import of Alloy Steel using Advance License for import of Non-Alloy Steel, he stated that he had already deposited an amount of Rs. 2.5 Crores in respect of Bill of Entry No. 32700 dated 19.01.2010 and would discuss with management before making further commitment. (x) Shri P.M. Sanghvi, CMD of the Company in his statement dated 13.04.2012 had, inter-alia, stated that his family is the promoter of the Company and that Shri Manoj Sanghvi, his son is a Business Head of the Company. He is answerable for all these activities and he reports to him (P.M. Sanghvi). (e) Statement of Officials of Man Industries (xi) Shri N. Nagrajan, the then General Manager (Operation) of the firm in his statements dated 01.12.2009 and 21.12.2009 had, inter-alia, stated that as per Chapter note 1(f) of Chapter 72 of the Customs Tariff, the goods imported vide bills of entry number 125570 dated 27.6.2008, 126772 dated 05.08.2009 and 124259 dated 16.05.2008 were Alloy Steel and there was mistake to take exemption which was available only to Non-Alloy Steel. Though he was not with the company during the period 29.04.2008 to 18.11.2008, he was with the company before and after the said period when the planned duty evasion took place. He was well aware that under the SION norms C-593, only Non-Alloy Steel was permitted to be imported, despite that he used the Advance license for import of Alloy Steel. (xii) Shri Abhilesh Ojha, the then General Manager (Accounts & Taxation) in his statement dated 04.3.2010 had, inter-alia, stated that as per Chapter Note 1(f) of Chapter 72 of the Customs Tariff Act, 1972, any one of the elements found in proportion to or more than that would render the product as alloy steel. (xiii) Shri Ramesh Mansukhani, the chairman of the Company in his statements dated 10.08.2011 and 07.05.2012 had, inter-alia, stated that after going through the Mill Test Certificates as well as the relevant Chapter Note of the Customs Tariff, the goods appeared to be classifiable as Alloy Steel and that exemption of BCD was not available to Alloy Steel. As regards imports of Alloy Steel using the Advance License authorizing duty free import of Non Alloy Steel, he admitted that Alloy Steels were imported under these Licenses. (xiv) Shri Jagdish Mansukhani, the then Vice Chairman of the Company is also the promoter of the Company. In his statement dated 04.07.2011 he, inter-alia, stated that he was aware of the ongoing investigation on imports of Alloy/ Non-Alloy Steel, but did not give any direct answer. Statements of Officials of PSL Limited (xv) Shri P.S. Mann, the then General Manager in his statement dated 14.12.2009 had, inter-alia, stated that his Company had imported API PSL2 X70 5L grade of steel coil in the year 2008 as it was required for executing the pipe-line contract of GAIL; that he was shown the Chapter note 1(f) of Chapter 72 of Customs Tariff Act, 1975 and also the MTCs of bills of entry cleared at Mundra and on being asked whether the goods merited classification as Alloy steel or not, he stated that he had not compared the chemical composition of the product with the Chapter Note so closely for classifying the product as his technical person said that the goods were nothing but Non-Alloys steel. It was also pointed out to him that Molybdenum & Niobium in the MTC pertaining to the consignment of BE No. 127724 dated 04.09.2008 was encircled and on being asked as to who had done that, he stated that his department had not encircled the same as generally MTCs were not required by his department and the same used to go directly to QC Department. In his further statement dated 09.8.2012, he stated that his company had, till date, paid duty of Rs. 25,50,80,984/- on the imports of Alloy Steel during the period 29.04.2008 to 18.11.2008. On being asked as to why and how Alloy steel was cleared using the Advance License permitting Non Alloy Steel, he merely stated that he never went into such details and carried on the practice followed since long. (xvi) Shri C.K. Goel, the then resident Director, in his statement dated 21.06.2010 had, inter-alia, stated that after going through the Chapter Note 1(f) of Chapter 72 of the Customs Tariff Act, 1975 and presence of percentage of elements in the MTCs, the H R Coils merited to be classified as Alloy steel only and admitted that his Exim Department failed to notice that exemption of the Notification No. 21/2002 (Sr. No. 190C) was not available on these bills of entries. (xvii) Shri Ashok Punj, Managing Director of PSL Limited in his statement dated 11.08.2010 had, inter-alia, stated that his company had executed the VAJAIPUR DADRI BAWANA PIPELINE project of GAIL (India) Limited for which they imported API X70 PSL2 5L grade steel coils/ plates. He was shown the import documents along with MTC and Chapter Note 1(f) of Chapter 72 of the Customs Tariff and asked whether the coils supplied by Corus International qualify to be Alloy Steel or not he stated that he was not a metallurgically competent person and hence could not comment on the issue. However, he stated that from the reading of the Chapter note and Mill Test Certificate, it appeared to be other alloy steel only. With regard to manipulation of MTCs, he stated that both the Mill Test Certificates of the same Certificate number could have originated from the manufacturer. (e) That the contention of the appellant Welspun Corporation Limited, that as long as the raw materials imported have been used in the manufacture of resultant export product, there is no irregularity and benefit of Notification No. 93/2004-Cus dated 10.09.2004 is admissible in view of the definition Materials defined in the customs exemption Notifications. It was his case that arguments of the appellants on this issue are not acceptable in view of the following: (i) Definition of materials as given in the Notification No. 93/2004-Cus cannot be read in isolation. (ii) The opening Para of the notification states that the Central Govt. exempts materials imported into India against an advance License or Advance Authorisation issued in terms of Para 4.1.3 of the Foreign Trade Policy. (iii) The notification is subject to various conditions. Condition No. (i) states that the description, value and quantity of materials imported are covered by the said license or authorization and the said license or authorization is produced before the proper officer of customs at the time of clearance for debit. (iv) The materials covered by the license or the Authorisation are Non-Alloy HR Coils/ Plates. (v) Therefore, alloy steel cannot be imported against an Advance License or Advance Authorisation which permits import of non-alloy steel only. (vi) The notification is to be read along with the Advance License or Advance Authorisation. That is precisely the Advance Licensing Scheme. (vii) Since Alloy Steel is not covered by the advance Authorisation, the benefit of exemption under the notification will not be available. (f) That reliance placed by the appellants on the case laws in the case of Durgadatta Mishra vs. Commissioner of Customs (Exports Mumbai [2007 (214) ELT 356 (5)] and Commissioner of Customs Calcutta vs. G.C. Jain [2001 (269) ELT 307 (SC)] are not applicable to the facts and circumstances of the present appeals. (g) That contentions of the appellants that amendment of SION C-593 under DGFT Public Notice No. 51 (RE-2010)/2009-2014 dated 02.6.2011 is retrospective is not correct by virtue of the express language of this public notice. (h) That the clarification dated 06.6.2012 given by the Norms Committee decision has no relevance as the power to issue clarification is vested only in the DGFT under Para 2.3 of the FTP as follows: 2.3. The decision of DGFT shall be final and binding on all the matters relating to interpretation of Policy or Provisions in HBP v1, HBP v2 are classification of any import/ export policy in the ITC (HAS). (i) That norms committee has not dwelt upon the aspect of mis-declaration and misrepresentation on the part of the appellant at the time of import and that observation of Norms Committee, which is subordinate to the DGFT, will have no consequence. It was also his case that as per affidavit of Shri Daya Shankar, Dy DGFT on behalf of DGFT, filed before the Apex Court, the stand of the DGFT has been clearly brought out. (j) That it was the common submission of the appellants that they have utilized the imported material in the manufacture of the resultant export product and by exporting the same they have fulfilled their export obligations. The DGFT authorities have issued EODCs and the Advance Licenses/ Authorisations have also been re-deemed. Therefore, the customs authorities have no jurisdiction to deny the benefit of exemptions. This submission deserves to be rejected for the following reasons:- (i) Except in the case of Welspun, Advance Authorisations have been cancelled ab-initio by the Additional Commissioner DGFT by two separate orders in respect of Man Industries and PSL Limited. (ii) Learned Counsel for Ratnamani submitted that by a subsequent order dated 18.7.2013, the Jt. DGFT, Ahmedabad has amended 3 Advance Authorisations ab-initio to cover the value of related bills of entry. Import item description of Sr. No. 1 of Advance Authorisation has also been modified by including the words alloy/non-alloy in place of non-alloy. Therefore, in the case of Ratnamani, no serious objection could be taken. (iii) Learned Counsel ignores the fact that in the case of Ratnamani, imports were affected during the period April 2007 to April 2010. Therefore, modification of the Advance Authorisation by including the words alloy/non-alloy in place of non-alloy will have prospective application only i.e. with effect from 18.7.2013. (iv) Even otherwise, the customs authorities can take independent action against the Advance Authorisation holder for any misrepresentation, mis-declaration and default detected subsequently. Section 12 of the Foreign Trade Act provides that No penalty imposed or confiscation made under this Act shall prevent the imposition of any other punishment to which the person affected thereby is liable under any other law for the time being in force. Taking note of this provision and in particular the decision of the Hon'ble Apex Court in Sheshank Sea Foods Pvt. Limited [1996 (88) ELT 626 (SC), the Hon'ble Madras High Court in the case of South India Exports vs. Jt. Director of Foreign Trade [2004 (177) ELT 57 (Mad)] has held that even if the redemption of the Licenses is completed still there would be power in the customs authorities to effect the investigation or as the case may be, enquiries to see whether there was any evasion of the customs duty. Therefore, the discharge of the export obligation per se cannot put an end to the whole story. (k) That it was the common submission of the appellants that the demand of duty is barred by limitation. It was contended that they had not suppressed any fact from the department. The goods imported were described in the Bills of Entry as per the import invoice. The goods were allowed clearance by the Customs authorities after necessary examination. Therefore, in the facts of this case, the extended period of limitation under Section 28 of the Customs Act, 1962 is not available to the department. This contention cannot be accepted for reasons more than one. It is established on record that they had imported Alloy Steel in the guise of Non-Alloy Steel. These are two different products even as per the DGFT. By giving wrong description of the goods, they have availed the benefit of exemption under the relevant notifications viz. Notification Nos. 93/2004-Cus and 94/2004-Cus both dated 10.09.2004. Except in one case of PSL Limited and one case of Man Industries, the appellant had not submitted MTCs in order to evade detection of the real nature of the goods. (i) That at the time of clearance of the goods, the appellant had executed bonds binding themselves to pay on demand an amount equal to the duty leviable but for the exemption contained therein on the imported materials in respect of which the conditions specified in the notification have not been complied with together with interest at the rate of 15% p.a. from the date of clearance of the goods. The first condition of the notification is that the description, value and quantity of the material imported are covered by the License. The goods imported were found to be Alloy HR coils/ plates, while Advance Authorisation permitted to import of Non-Alloy HR coils/ Plates. Thus, the fist condition of the notification has not been complied with. Consequently, the appellants are duty bound to pay the Customs duties forgone on such imports. Further, the Notification does not prescribe any time limit for demanding the duty foregone. Therefore, the duty demand cannot be said to be bared by limitation. The extended period of limitation has, therefore, been rightly invoked in each of the cases. (ii) That it was contended by the learned Counsel that they had declared generic name of the product i.e. API 5L PSL2 X 70 grade H R Coils and that they never mis-declared as non-alloy steel, which is factually incorrect. Though they have declared the product by their generic name, the CTH declared by them was 7208. Chapter 72 of the Customs Tariff has categorized the classification of steel in four parts, i.e. : (I) Primary Materials; product in granule or powder form (II) Iron and Non-Alloy Steel (III) Stainless Steel (IV) Other Alloy Steel; Hollow Drill Bars and Rods, of Alloy or Non-Alloy Steel. The declaration of CTH 7208 by the appellants falls under Part-II of Chapter 72 of the Customs Tariff Act which is for Iron and Non-Alloy Steel. To be more specific to the tariff description, it is Flat Rolled Product of Iron or Non-alloy Steel . The Corresponding entry of the product as alloy steel falls under part IV of the Customs Tariff under Chapter Heading 7225 which is for other alloy steel. (iii) That it was contended by the learned Counsel for Welspun that they have always declared the product as imported. In todays World, the specification of the product is available very easily through internet and anybody can see the specification and find out whether it is alloy steel or non-alloy steel. He also referred to the specification of API X 70 grade steel stating that the said specification always mentions the maximum percentage of the elements required to be present in the said grade of steel. Hence non-submission of MTCs cannot be regarded as willful suppression of fact. (iv) That in this connection, attention may be drawn to the statement submitted by the learned Counsel of Welspun at the time of hearing showing the chemical composition of API specification. Though the source of the said statement had not been mentioned, the maximum weight in percentage terms of each element has been prescribed. The percentage of Molybdenum has been shown as 0.5% (Maximum). The word maximum clarifies that the presence of the said element could be up to 0.5%. The customs Tariff prescribes that percentage of the said element equal to or more than 0.08% to qualify the product as alloy steel. It means the presence of the said element, as per API specifications submitted by the learned Counsel, could be below the proportion as shown in the Customs Tariff Note 1(f) of Chapter 72, it would be alloy steel and if the proportion is below that, it would be non-alloy steel. Hence without the knowledge of actual percentage of the elements available in the particular steel, merely on the basis of API specification, it cannot be confirmed whether the said steel is alloy steel or non-alloy steel. The actual percentage of the elements can only be ascertained from the MTC which was never submitted by Welspun, thus suppressing the fact of actual nature of the goods. Therefore, extended period of limitation has been rightly invoked. (v) That though in some cases, the Country of Origin Certificate filed with the Bills of Entry showed the classification of the goods as 72253000, the appellants chose not to declare the same. It was contended by the learned Counsel for the appellants that it was the duty of the assessing officers to determine the correct classification of the goods. However, that does not absolve them of their responsibility to indicate the correct classification and the failure of the assessing officers cannot take away the extended period of limitation particularly when the MTCs were suppressed from the department. Instead, the appellant M/s. Welspun submitted certain Certificates claimed to have been obtained from the manufacturers through Corus International certifying that the goods are Non-Alloy Steel although they knew that the goods are Alloy Steel only. In the face of these facts, the appellants cannot be heard to say that the extended period of limitation is not available to the department. Confiscation : (l) That it was the common submission of the appellants that they had declared the goods as per the import invoice and claimed the classification of the same under Chapter Heading 7208 of the Custom Tariff. Claiming classification under a particular Heading, even if it is found to be incorrect, does not amount to mis-declaration. In this connection, learned Counsel for Welspun relied upon the decision of the Hon'ble Apex Court in the case of Northern Plastic Limited vs. Commissioner of Customs & Central Excise [1998 (101) ELT 549 (S.C.)] and the decision of the Hon'ble Tribunal in the case of Stylo Footwear vs. Commissioner of Customs, Coimbatore [1995 (80) ELT 157 (Tri.)] holding that claiming classification of the goods under a particular Heading or benefit of exemptions in the Bills of Entry does not amount to mis-declaration. Hence the provisions of Section 111(m) of the Customs Act, 1962 are not applicable. Consequently, the goods cannot be confiscated under the said provisions on the charge of mis-declarartion of goods. (m) It is submitted that the appellants were well aware of the fact that the gods imported were Alloy Steel and not Non-Alloy Steel for which they obtained Advance Authorisation from the DGFT. Though they knew that exemption will not be available to Alloy Steel, they deliberately indicated classification under Chapter Heading 7208 meant for Non-Alloy Steel. In some of the Country of Origin Certificates, the classification of the goods was shown as 72253000, but they ignored the same and classified the goods under Heading 7208. It was a case of deliberate attempt to conceal the fact. Had it not been so, they would not have suppressed the Mill Test Certificates which are essential to ascertain the exact nature of the goods. This is certainly a case of mis-declaration of the goods to get undue benefit of exemption under the notifications. Therefore, the Commissioner has rightly ordered confiscation of the impugned goods under Section 111(m) & (o) of the Customs Act, 1962. Penalties : (n) That from the facts of the case as elaborated herein before, there cannot be any manner of doubt that the appellants were guilty of suppression of facts as regards the Mill Test Certificates which were crucial for ascertaining the exact nature of the goods. The appellant- Companies including their officials were aware that the goods imported were Alloy Steels only, still they deliberately declared the same as Non-Alloy Steel under Chapter Heading 7208. Consequently, they cannot escape from the liability to penalties imposed on them. The Commissioner has, therefore, rightly imposed penalties on the appellants and their officials. (o) That in view of the forgoing, the appeals filed by the appellants deserve to be dismissed. 11. Heard all the appellants, Shri K.M. Mondal (Special Counsel) for the Revenue and also perused the case records of the appeals and the written/ oral submissions made during the course of proceedings after allowing the stay applications and miscellaneous applications heard all these appeals which are being taken up for disposal under this common order. Preliminary objection taken by the appellants that provisions of sub-Section (ii) of Section 28 of the Customs Act, 1962 are not applicable to the show cause notices issued before 16.09.2011, is not acceptable as the amendment carried out under the Customs (Amendment and Validation) Act, 2011 uses the word Section which has to mean the entire Section 28 of the Customs Act, 1962, because amendment carried out inserted a sub-Section (ii) to the main Section and not a Section. Therefore, the argument taken on jurisdiction by the appellants is rejected. On merits, all the four importer appellants in these appeals were importing Hot Rolled Steel Coils/ Plates of API 5L PSL2X70 and X80 grades under Advance Authorizations issued by the competent authorities of DGFT under Para 4.1.10 and Para 4.1.3 of the Foreign Trade Policies applicable at the relevant time. After the case was booked by DRI against importer appellants, parallel proceedings were also initiated by the office of Additional Director General Foreign Trade, Mumbai and Joint DGFT Ahmedabad against the following Advance Authorizations issued to the present appellants M/s Man Industries (India) Limited, M/s PSL Ltd., M/s Ratnamani Metals & Tubes Ltd. and M/s Welspun Corpn. Limited: Welspun Corporation Limited Ratnamani Metals and Tubes Ltd. Man Industries (India) Ltd. PSL Ltd. S. No. .Advance Authorization No S. No. Advance Authorization No. S. No. Advance Authorization No. S. No Advance Authorization No. 1. 3410014136 27. 3410019072 1. 0810059887 1. 031042737 1. 0310438433 2. 3410014534 28. 3410019073 2. 0810070806 2. 0310435447 2. 0310439802 3. 3410014623 28. 3410019074 3. 0810067839 3. 0310435548 3. 0310439800 4. 3410016019 30. 3410019124 4. 0810068758 4. 0310436872 4. 0310441546 5. 3410016020 31. 3410019159 5. 081007387 5. 0310447253 5. 0310443820 6. 0310387110 32. 3410019160 6. 0810070762 6. 03104453941 6. 0310541220 7. 3410016353 33. 0310450398 7. 0810065487 7. 0310453939 8. 3410016638 34. 3410021447 8. 0810072433 8. 0310456810 9. 3410016675 35. 0310450080 9. 0810071203 9. 0310488412 10. 3410016998 36. 0310450240 10. 0810048127 10. 0310489400 11. 3410017005 37. 0310451560 11. 0810057198 11. 0310533865 12. 0310408777 38. 0310451141 12. 0810083159 12. 0310491550 13. 3410017544 39. 3410019907 13. 0810083160 14. 3410017940 40. 0310450245 14. 0810068759 15. 3410017939 41. 0310450565 15. 0810076642 16. 3410018043 42. 0310451187 16. 0810067632 17. 3410018272 43. 0310451408 17. 0810072408 18. 3410018270 44. 3410020100 18. 0810073871 19. 3410018682 45. 3410020220 20. 3410018683 46. 3410021584 21. 3410018700 47. 3410021585 22. 3410018701 48. 0310451032 23. 0310429077 49. 0310451876 24. 3410019071 50. 3410025174 25. 0310434315 51. 3410024383 26. 0310434202 52. 3410024155 12. In the present appeals mainly following issues are required to be deliberated:- (i) What will be the correct classification of the API 5L PSL2x70 and x80 grades imported by the importer appellants? (ii) Whether the Advance Authorizations produced before the Customs Authorities covered the grades imported by the importer appellants? (iii) Whether there is willful mis-declaration on the bills of entry by the importer appellants in order to evade payment of customs duty or to take any undue financial advantage and whether the demands issued to the importer appellants are time barred? (iv) Whether DGFT and its subordinate officers have powers under the Foreign Trade Policy to amend/modify the Advance Authorizations retrospectively when export obligations with respect to majority of advance Authorizations have been fulfilled and accordingly Licences have been redeemed & customs bond also cancelled? (v) Whether penalties under the Customs Act, 1962 are imposable upon the appellants in these proceedings? 13. On the issue of imported grades, and their classification, as outlined in Para 12(i) above, the Revenue is of the argument that these grades imported were Other alloy steels falling under CTH 7225 as per Chapter Note 1(f) to Chapter 72 of the Customs Tariff Act, 1985. On the other hand, all importer appellants are of the view that before the period of present dispute also these grades, imported by the importers, were being imported and classified under Customs Tariff Head 7208 and no objection was raised by the Revenue at the time of their clearances. Before we deliberate this issue it is relevant to glance through Chapter Note 1(f) to Chapter 72 of the Customs Tariff Act reproduced below: 1. In this Chapter and, in the case of Notes (d), (e) and (f) throughout this Schedule, the following expressions have the meanings hereby assigned to them: (a) (b) .. (e) Stainless steel: Alloy steels containing, by weight, 1.2% or less of carbon and 10.5% or more of chromium, with or without other elements. (f) Other alloy steel Steel not complying with the definition of stainless steel and containing by weight one or more of the following elements in the proportion shown: - 0.3% or more of aluminium - 0.0008% or more of boron - 0.3% or more of chromium - 0.3% or more of cobalt - 0.4% or more of copper - 0.4% or more of lead - 1.65% or more of manganese - 0.08% or more of molybdenum - 0.3% or more of nickel - 0.06 or more of niobium - 0.6% or more of silicon - 0.05% or more of titanium - 0.3% or more of tungsten (wolfram) - 0.1% or more of vanadium - 0.05% or more of zirconium - 0.1% or more of other elements (except sulphur, phosphorus, carbon and nitrogen), taken separately. 13.1 The stand of the Revenue that if any one of the elements is more than the limits prescribed in Chapter Note 1(f) above then the steel will be a category of Other alloy steel. On the other hand appellant importers are of the view that all the elements when present in the steel imported by them, should be more than the limits prescribed, for the steel to become Other alloy steel. As in the steel consignments imported by them percentage of all the elements is not more than the percentage limits prescribed for each element in Chapter Note 1(f), therefore, the steel consignments imported by them remain a category of Non alloy steel that the relevant API SL PSL2 grades were being classified by importers earlier and also understood in international trade as Non alloy steel only. Appellants relied upon Order No. M/ 948-949/ 13/ CSTB/ C-I, passed by CESTAT Mumbai, in the case of Tata Motors Ltd. Vs. Commissioner of Customs (Imports), Mumbai-I where Member (Judicial) has taken a view that all elements in a steel when present should be more than the limits prescribed in Chapter Note 1(f) of Chapter 72. In this regard we are of the view that all the elements specified in Chapter Note 1(f) are existing in varying percentages in the Iron obtained from Iron Ore. Any steel made out of Iron obtained from Iron Ore will thus contain these elements (in both alloy steel and non alloy steel) and if the percentage limits of all these elements are opined to be essential in an alloy steel as per Chapter Note 1(f) proportion, then there will be no steel for classification under Alloy steel & all steels will be Non alloy steel. By following that interpretation a Stainless Steel, defined in Chapter Note 1(f) of Chapter 72, will also not be an alloy steel because it will have other elements also. Such alloying elements will thus be specifically required to be added to a steel to get required properties in an alloy steel in addition to other metallic elements naturally present in Iron Ore. Accordingly we hold that if any one of the elements specified in Chapter Note 1(f) to Chapter 72 in a steel, imported by importer appellants, is within the specified limit mentioned therein then that steel will be considered as Other alloy steel. When the grades imported by the importer appellants had Niobium (Nb) and Molybdenum (Mo) elements as per the limits specified in Chapter Note 1(f), theoretically those grades were required to be classified under Customs Tariff Head 7225, as even opined by importer appellants when these facts were confronted to them by the investigating agency. 14. The next point for consideration is whether the Advance Authorizations produced before the Customs Authorities covered the grades imported by the importer appellants. In this regard it is relevant to see the export items permitted to be exported by SION C-593. The description of Export Item under this SION, inter alia, reads as follows: Carbon Steel Submerged Arc Welded Pipes as per API Grade/ ASTM Grade or equivalent The above description of Export item does not use the expression Other alloy steel or Non alloy steel whereas the corresponding Import Item under SION C-593 does talk of Non alloy steel 14.1 As per API (American Petroleum Institute) Specifications for Line Pipe [given in Table-5 (Welded Pipe) of API Specification 5L/ISO 3183], PSL2x70 & x80 quality could have the following chemical composition when compared with other alloy composition and the same percentages are also reflected in the procurement specifications of the importer appellants: S. No. Name of element Maximum percentage weight in steel possible as per API Standard Minimum percentage weight required to be become Other alloy steel as per Chapter Note 1(f) of Chapter 72 of the Customs Tariff Act, 1975 1. Aluminium -
0.03
2. Boron
-
0.0008
3. Chromium 0.5 0.3
4. Cobalt 0.12 0.3
5. Copper 0.5 0.4
6. Lead
-
0.4
7. Manganese 1.70 1.65
8. Molybdenum 0.5 0.08
9. Nickel 0.5 0.5
10. Niobium Sum of Nb, V, Ti concentration shall be less < 0.15 0.06
11. Silicon 0.45 0.6
12. Titanium Sum of Nb, V, Ti concentration shall be less < 0.15 0.05
13. Tungsten (Wolfarm)
-
0.3
14. Vanadium Sum of Nb, V, Ti concentration shall be less < 0.15 0.1
15. Other elements (except sulphur, phosphorus, carbon and nitrogen) 0.50 % maximum for Cb, 0.50% maximum for Nickel, 0.50% maximum for Chromium and 0.50% maximum for Molybdenum 0.1 From the above comparative data it is evident that percentage of Nb & Mo in PSL2x70 & x80 grades could be lower than the limits Specified in Chapter Note 1 (f) of Chapter 72 of CTA or these could be more than the minimum limits specified in Chapter Note 1(f) which is not known to the appellants at the time of placing orders. Therefore, in API PSL2 x70 & x80 grades of steel internationally, both non alloy steel of CTH 7208 & Other alloy steel of CTH 7225 could exist. This distinction has neither been made nor clarified in the Export Item under SION C-593. As per the Foreign Trade Policy in Para 4.1.3 of Foreign Trade Policy 2009-14 what is exported is required to be allowed as an import item. There was thus a practice to allow API PSL-2 x 70 & x80 grades to be cleared duty free under Advance Authorisation as per SION 593, whether the same were Non alloy steel or Other alloy steel by treating them as goods of CTH 7208, as if correct classification of these grades was not at all relevant for the purpose of allowing exemption from Customs duty when imported against such advance authorizations. Necessary amendment was brought into effect from 02.06.2011 by the DGFT to SION C-593. By virtue of Para 2.3 of the Foreign Trade Policy & Handbook of Procedures (2009-2014) it may be appropriate to examine whether the amendment carried out in SION C-593 with effect from 02.06.2011, is a clarificatory amendment having retrospective effect or will have only a prospective effect. As a matter of fact one of DGFTs subordinate office of the Joint Director General of Foreign Trade, Ahmedabad, in Order-in-Original F. No. 08/ F-3/ 03/ AM 13/ ECA dated 18/07/2013 in the case of M/s Ratnamani Metal & Tube Ltd. (Para16) has taken a view that Public Notice No. 51/ (RE 2010) 2009-2014 date 02/06/2011, modifying SION C-593, is clarificatory in nature. Joint DGFT has accordingly amended all Advance Authorizations and dropped the proceedings against M/s Ratnamani Metals & Tubes Ltd., which also include the Advance Authorizations for which present proceedings are in progress. On similar set of facts Additional Director General of Foreign Trade, Mumbai has held the imports improper and has canceled the Redemption Certificates and Advance Authorizations issued to M/s Man Industries (India) Ltd. and PSL Ltd. with respect to cases falling in her jurisdiction. However Advance Authorization with respect to M/s Welspun Corp Limited have not been cancelled ab-initio. M/s Welspun Corpo. Limited went in appeal to the Honble Mumbai High Court against Order ECA File No. 03/ 02/ 001/ 00169/ AM 10/ Enf Wing/ 214 dated 11.09.2013 and Mumbai High Court has passed the following interim order dated 20.11.2013 in WP No. 2240/ 2013 filed by M/s Welspun Corporation Ltd.:-
11. Having heard learned Counsel for the parties on the question of interim relief, we are of the view that in the facts and circumstances of the case and particularly having regard to decision of the Norms Committee dated 2 May 2012, this is a fit case for granting interim stay against operation and implementation of the order dated 11 September 2013 of the Additional DGFT (Ex. M). It is ordered accordingly. Consequently, the communication dated 4 October 2013 of the Assistant DGFT on behalf of the Additional DGFTat Ex. A to the Affidavit in reply dated 14 October 2013 would also stand suspended.
12. It is clarified that pendency of the Writ Petition and the above interim order shall not come in the way of the respondent-authority considering the petitioners request for examining the grade of material imported and exported which obviously means that alloy and non-alloy, are not be treated as grades. 14.2 It is also relevant to observe from the case records that there were a total of 52 Advance Authorizations issued to M/s Welspun Corpn Ltd. for which Norms Commission Committee decision dated 02/05/2012 was mentioned in the Honorable High Court Order. Out of these 52 Advance Authorizations, 16 pertained to the office of the Additional DGFT, Mumbai and 36 pertained to Joint DGFT, Vadodara. All 36 Advance Authorizations pertaining to Joint DGFT Vadodara have been verified and found to be correct for accepting fulfillment of the export obligations as per Norms Committee decision dated 02/05/2012. From the above facts available on records technically the Advance Authorizations produced before the Customs assessing officers were not valid for the import of Other alloy steel at the time of importation but looking to the provisions of Foreign Trade Policy and the subsequent acts of the offices of DGFT, necessary curative action was taken in favour of some of the importer appellants by the appropriate authorities in the interest of exports and export obligations with respect to certain Advance Authorizations have been accepted. However, the matter has not reached finality till date in view of the conflicting views expressed by the authorities under DGFT & due to the fact that the matter is subjudice before the Mumbai High Court but the defects in Advance Authorisations seem rectifiable.
15. Next issue for consideration before us is whether appellants have made a willful mis-declaration on the Bills of Entry in order to evade payment of customs duty or to take any undue financial benefits. In this regard it is the case of the Revenue that the act of all the importers by declaring CTH 7208 in the Bills of Entry amounts to wilfull mis-declaration with intention to evade duty. It was also the case of the Revenue that some of the Certificates of Origin were indicating the CTH as 7225 which was thus known to the importer appellants. Further with respect to imports made by M/s Welspun Corporation Limited it was strongly argued by the Learned Special Counsel appearing on behalf of the Revenue that this importer gave certificates of the imported steel from manufacturer indicating the same as Non alloy steel and also that appellant did not enclose Mill Test Certificates at the time of examination of the goods. To counter this claim the Advocate appearing on behalf of M/s Welspun Corporation Ltd. argued that Certificate of Origin in certain cases were also showing CTH as 7208. Regarding giving a certificate from the supplier of goods as a Non alloy steel was only as per the international understanding that PSI grades are considered as Non alloy steel by the manufacturers of the grades. It was also Appellants case that Mill Test Certificates were not submitted as these were not asked for and also due to the fact other importers also receiving same grades of steel, from same supplier sometimes in the same vessel, did provide the Mill Test Certificates. That even certificates of origin given by the appellant along with other customs documents to the Assessing Officers, were indicating the steel of CTH 7225. By giving such certificates also appellants have not suppressed any information from the department with any intention to evade duty. It was therefore, correctly claimed by the importer appellants that there was no intention to evade any duty. The intention to evade duty can also not be attributed as the imported steel was used by the appellants in the manufacture of steel pipes which have been duly exported containing the grades of steel imported. In this regard reliance placed by importers on Para 3 of the Customs Appraising Manual at page 20 which is relevant and reproduced below:
3. Declaration of tariff classification.
The Bill of Entry can be filed by an importer himself or he can have it processed through his Clearing Agent who is authorized and holds a Custom House Agents Licence. Whereas the Bill of Entry as mentioned above contains various columns relating to the goods, their value and their assessment under Customs Tariff as also Central Excise Tariff (for countervailing duty), it is not obligatory under the Customs Act that while presenting to Customs the importer or his Clearing Agent must indicate in the Bill of Entry the correct Customs Tariff Heading or customs duties or c.v. duties leviable or total duty leviable on the goods sought for clearance against the Bill of Entry. However, an indication of Customs Tariff Heading and Exemption Notification, if any, which the importer feels may be applicable to his goods is normally expected to be given at the time of presentation in the relevant column of the Bill of Entry to enable allocation of the Bill of Entry to proper Group/ Appraiser and to expedite its processing.
In case the Customs Tariff Heading or Central Excise Tariff Heading under which the party feels his goods will be covered are not finally accepted by the Deptt. appropriate classification under the Customs & Central Excise Tariff would be made in the Appraising Group without any action against the Importer.
The Board considers that section 29 S.C.A. (Now Section 17 and 46 of C.A.62) are not a sufficient authority for requiring importers to furnish the Tariff classification although there is no obligation in asking them how their previous imports were classified and ascertaining from them the details regarding the use and composition of the articles imported.
(F. No. 70 (12)-Cus.I/53. C.B.R.. New Delhi. Dt. 22.8.53) 15.1 It is evident from the above Para of the Appraising Manual that a classification head can be given by the importer so that it is helpful to send the import documents to the concerned Appraising Group. Such a classification declared in Bills of Entry can only be considered as a claim of classification by the importers, as held in Para 22 & 23 by the Apex Court in the case of Northern Plastic Ltd. Vs. Collector of Customs & Central Excise [1998 (101) ELT 549 (S.C.)] reproduced below:
22. As the goods imported by the appellant were? being used and intended to be used as Cinematographic Film, the appellant had described them as Cinematographic Films covered by sub-heading 3702.20. No attempt was made by the customs authorities either before the Collector or before CEGAT to show that the goods imported by the appellant were ordinarily not used as Cinematographic Films or were not intended by the appellant for such a use. Moreover, looking to the Heading 3702 and its sub-heading, it does not appear that such goods were intended to be covered by sub-heading 3702.90. As regards the claim for exemption in payment of countervailing duty the appellant had stated that it was entitled to the benefit under Notification No. 50/88-C.E. The declaration made by the appellant has been found to be wrong by the Collector and CEGAT on the ground that there was a separate exemption notification in respect of jumbo rolls for Cinematographic Films. While dealing with such a claim in respect of payment of customs duty we have already observed that the declaration was in the nature of a claim made on the basis of the belief entertained by the appellant and therefore, cannot be said to be a misdeclaration as contemplated by Section 111(m) of the Customs Act. As the appellant had given full and correct particulars as regards the nature and size of the goods, it is difficult to believe that it had referred to the wrong exemption notification with any dishonest intention of evading proper payment of countervailing duty.
23. We, therefore, hold that the appellant had not misdeclared the imported goods either by making a wrong declaration as regards the classification of the goods or by claiming benefit of the exemption notifications which have been found not applicable to the imported goods. We are also of the view that the declarations in the Bill of Entry were not made with any dishonest intention of evading payment of customs and countervailing duty. 15.2 In the light of above law laid down by the Apex Court in the present imports made by the importer appellants a declaration given with respect to classification of steel as CTH 7208 in the Bills of Entry, cannot be considered as wilfull mis-declarations with intention to evade customs duty, in the absence of any other corroborative evidence. In the present proceedings, as brought out during the course of hearings based on examination reports, the Mill Test Certificates for the imported grades, during the relevant time, were available with the assessing officers on which the composition of various elements were clearly reflected. Secondly, as per the website downloaded literature of suppliers of API 5L x 70 PSL2, relied upon by the appellants, these grades of steel were being indicated as Non alloy steel. Further, as per the tax invoices of Steel Authority of India Limited (SAIL) API 5L PSL 2 x 70 grade of steel manufactured by SAIL in India is also being classified under CETH 7208, when as per Mill Test of this grade manufactured by SAIL percentage of Molybdenum (within the limits prescribed under Chapter Note 1(f) of Chapter 72 of CTA) is 0.144. Adjudicating authority has also dropped demands where MTCs were produced during the assessments which convey that production/non-production of MTCs was not relevant for the classification of imported grades of steel during the relevant assessment period and the impugned grades were considered classifiable under CTH 7208, where MTCs were produced, for allowing duty-free clearances under the Advance Authorizations. The argument made by the Advocate of M/s PSL Limited is thus acceptable that the changes alleged to have been made by this appellant in the MTCs will not make any difference, so far as alleged fraud and willful mis-statement is concerned, because in both the MTCs, the percentages of elements remain within the percentages of elements specified in Chapter Note 1(f) of Chapter 72 of the CTA. It is observed by us that revenue is unable to bring on record that MTCs were manipulated by M/s PSL Ltd. or its employees. Further admission of non-alloy nature of imported steel grades by the appellants will not help the Revenues case because at the time of placing orders the exact percentages of various alloying elements are not known which can be seen only at the time of actual import of steel grades as per the MTCs. The records of the examination reports were produced before us which indicate that during examination of the consignments of these grades MTCs were called by the Assessing Officers. Even after examination of these MTCs Assessing Officers have not questioned the classification of the imported steel grades under CTH 7208 or also did not raise any query that the grades imported are not covered by the Advance Authorizations as per SION C-593. On this issue a dissenting view has also been expressed by a CESTAT Member in the case of Tata Motors Ltd Vs. Commissioner of Customs (Imports), Mumbai (Order No. M/ 948-949/ 13/ CSTB/ C.I dated 19/03/2013- 17/06/2013) that a steel can be considered only as Other alloy steel if all the elements present in a steel are more than the percentage ranges specified under Chapter Note 1(f) of Chapter 72 of the CTA. Under these circumstances, there could be a bona fide view harboured by the importers that API 5L x70 PSL 2 grade is classifiable under CTH 7208. In view of the above no malafide can be attributed on the part of the appellants and it cannot be held that imported goods were liable to confiscation or the importer appellants and other appellants were liable to penal action under the Customs Act 1962.
16. On the issue of time barred nature of the demands against the importer appellants adjudicating authority has held that the demands are not time barred as all these importers have executed bonds under the Customs Exemption Notifications which can be invoked for realizing customs duty along with appropriate interest specified in the notifications, when goods are found to be not properly imported as per the Advance Authorizations and the conditions specified in the exemption notifications. In spite of the above observation made by the adjudicating authority he went ahead to confirm the duty under section 28 of the Customs Act, 1962 invoking extended period and did not enforce the bonds executed by the importer appellants at the time of clearance of imported goods under Advance Authorizations. In the background of Paras 15, 15.1 and 15.2 there is no intention on the part of other importer appellants to willfully mis-declare the classification of imported steel under CTH 7208. This view is further fortified by the fact that the entire imported materials were used in the manufacture of resultant export produce duly exported and also due to the fact that all those dealing with API 5L PSL2 x70 & x80 grades globally (including SAIL) also consider these grades to be classifiable under CTH/ CETH 7208. All the appellant importers have been importing these grades of HR Coils from 2000 onwards under CTH 7208 as per SION Code C-593. On this ground also it cannot be said that these importers had any malafide intention to deliberately declare a wrong classification in the Bills of Entry to get undue financial advantage when such a classification practice was in vogue before the period of demand in the present proceedings. Accordingly extended period of five years available under Section 28 of the Customs Act, 1962 cannot be invoked in the imports made by M/s Welspun Corp Ltd., M/s Ratnamani Metals & Tubes Ltd. and M/s Man Industries India Ltd. and penalties cannot be imposed upon these importers and others related with these imports under the Customs Act, 1962. Appeals filed by the appellants are, therefore, required to be allowed.
17. The last point required to be deliberated in these appeals is whether DGFT and its subordinate offices have the powers under the Foreign Trade Policy to amend the Advance Authorizations issued when the export obligations with respect to majority of them have already been fulfilled and Advance Authorization/ Customs Bonds also redeemed/ cancelled. It is the case of the importer appellants that Norms Committee under the DGFT is the Apex Authority for issue/ amendment of the Advance Authorizations and formulation of new SION. For further discussion on this issue it will be relevant to see the provisions of Foreign Trade Policy contained in Para 2.3, 2.5, 4.1.3, 4.1.4 and corresponding provisions contained in Para 4.4, 4.4.2, 4.7 and 4.8 of Handbook of Procedures, which are reproduced below:
Relevant Paras of FOREIGN TRADE POLICY 2009-2014 2.3 Interpretation of Policy If any question or doubt arises in respect of any provision contained in FTP, or classification of any item in ITC (HS) or HBP v-1 or HBP v2 or Schedule of DEPB Rates (including content, scope or issue of authorization there under) said question or doubt shall be referred to DGFT whose decision thereon shall be final and binding.
2.5 DGFT may pass such orders or grant such relaxation or relief, as he may deem fit and proper, on grounds of genuine hardship and adverse impact on trade.
DGFT may, in public interest, exempt any person or class or category of persons from any provision of FTP or any procedure and may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting committees as under:-
Sl. No Description Committee
(i) Fixation/ modification of product norms under all schemes Norms Committee
(ii) Nexus with Capital Goods (CG) and benefits under EPCG Schemes EPCG Committee
(iii) All other issues Policy Relaxation Committee (PRC) 4.1.3 Advance Authorisation An advance Authorisation is issued to allow duty free import of inputs, which are physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalyst which are consumed/ utilised to obtain export product, may also be allowed. DGFT, by means of Public Notice, may exclude any product(s) from purview of Advance Authorisation.
Duty free import of mandatory spares up to 10% of CIF value of Authorisation which are required to be exported/ supplied with resultant product are allowed under Advance Authorisation. Advance Authorisations are issued for inputs and export items given under SION. These can also be issued on the basis of Adhoc norms or self declared norms as para 4.7 of HBP v1.
4.1.4 Advance Authorisations are exempted from payment of basic customs duty, additional customs duty, education cess, anti-dumping duty and safeguard duty, if any. However, import of supplies covered under paragraph 8.2 (h) & (i) will not be exempted from payment of applicable anti-dumping and safeguard duty, if any.
Relevant Paras of HANDBOOK OF PROCEDURES 4.4 Advance Authorisation Where SION have been published, an application in ANF 4A, along with documents prescribed therein shall be submitted to RA concerned.
4.4.2 In case where norms have not been published, an application in ANF 4B, along with prescribe documents, shall be furnished to the concerned Norms Committee (NC) at DGFT Headquarters for fixation of Norms.
In such cases, original copy of application along with prescribed fee shall be filed with RA concerned and a self attested copy of same shall be filed with NC.
Authorisation in such cases shall be issued by RA as per NC recommendation.
NC shall also function as a recommendatory authority for SION. DGFT may notify such norms.
4.7 Self Declared Authorisations where SION does not exist RA may also issue Advance Authorisations, where SION are not fixed, based on self declaration and an undertaking by applicant for a final adjustment as per Adhoc/ SION fixed by NC.
4.8 Standardisation of Adhoc Norms For standardisation of norms, an application may be made by manufacturer exporter or merchant exporter tied to supporting manufacturer, duly filled in with complete data. Such applications shall be made to NC in ANF 4B.
4.9 Modification of SION An application for modification of existing SION may be filed before the NC by manufacturer exporter or merchant exporter, tied to supporting manufacturers, in Form ANF 4B.
4.10.1 Revision of SION by NC NC may identify SIONs which in its opinion are required to be reviewed. Exporters are required to submit revised data in ANF 4B for such revision. It is mandatory for industry/ exporter(s) to provide production and consumption data etc. as may be required by DGFT/ EPC for revision of SION. Otherwise, applicant shall not be allowed to take benefit of Advance Authorisation scheme. 17.1 From the above Foreign Trade policy provisions it is observed that the basic aim of duty free exemption schemes under the Foreign Trade Policy is to enable importers to import duty free inputs whichever are used in the manufacture of finished goods which are subsequently exported without payment of duty. All the above duty exemption schemes are, therefore, put in to practice for Zero Tax Exports. There are a number of provisions/ procedures available under the Foreign Trade Policy to achieve Zero Tax Exports and the background for such exports incentive schemes cannot be to burden the export products for a particular period with additional burden of customs duties due to procedural latches, as attempted by the Revenue, when there was a practice and reasonable understanding globally that the grades imported by the appellants could be Non alloy steel. However, this aspect whether amendment carried out in SION C-593 was clarificatory/ retrospective and whether the Advance Authorizations can be amended retrospectively by the authorities working under Foreign Trade Policy; as done by Joint DGFT Ahmedabad in his Order F. No. 80/ F-3/ 03/ AM 13/ ECA dated 18.07.2013 or not as done by Order F. No. 03/ 02/ 001/ 00169/ AM 10/ Enf. Wing/ 214 dated 11/09/2013 passed by Additional DGFT, Mumbai; is the subject matter of litigation before various Appellate Authorities under the Foreign Trade Policy. Orders passed by Additional DGFT Mumbai in the case of M/s Welspun Corpn Limited has been stayed by the Honble Bombay High Court under order dated 20/11/2013 in WP No. 2240 of 2013. However, Honble High Court has not stopped DGFT authorities to examine appellants request for examining the grade of material imported and exported as per Norms Committee Order dated 02/05/2012 in case No. C-2 of M/s Welspun Corp. Ltd. After High Courts Order on the issue Joint DGFT, Vadodara in his Order No. 34/ 10/ 171/ 00003/ AM 14/ WELSPUN/ LIT/ 4307 dated 27/02/2014 has followed the decision dated 02/05/2012 of Norms Committee and held that export obligations under 36 out of a total 52 Advance Authorizations issued to M/s Welspun Corp. Ltd. have been fulfilled. Nothing has been brought on record before us to indicate as to what is the status of orders date 10/09/ 2013 and 12/09/ 2013 passed by Additional DGFT, Mumbai from F. No. 03/ 02/ 001/ 00033/ AM 13/ Enf. Wing/ & F. NO. 03/ 02/ 001/ 00032/ AM 13/ Enf. Wing/ respectively and pertaining to M/s PSL Ltd. and M/s Man Industries India Ltd. respectively. A uniform view on the issue is required to be taken by the appropriate authority under Foreign Trade Policy provisions whether Advance Authorizations issued to the importers in these proceedings can be cancelled ab-initio or can be modified/ amended ab-initio. In case it is held by the appropriate Appellate Authorities under the Foreign Trade Policy that Advance Authorizations issued to the importer appellants deserve to be cancelled ab-initio then in that situation revenue also will be empowered to recover the duty amounts and interest according to the Customs Bonds executed by the importer appellants and demands will not be time barred as held by the adjudicating authority. It has been laid by Honble Supreme Court in Para 17 of the judgment in the case of Atul Commodities Pvt Limited vs. CC Cochin [2009 (235) ELT 385 (S.C.)] that if any doubt or question arises in respect of interpretation of Foreign Trade Policy or in the matter of classification of any item of the ITC (HS) or in the Handbook, the said question or doubt shall be referred to DGFT, whose decision thereon shall be final and binding. Above view is supported by the view expressed by CESTAT in the following case laws:
(i) Commissioner of Customs (Gen), Mumbai Vs. AKM Trading Corporation [2007 (208) ELT 406 (Tri. Mumbai)];
(ii) CC Hyderabad Vs. Goel Enterprises [2005 (179) ELT 509 (Tri. Bang.)]
(iii)CC Hyderabad Vs. Sanghi Spinners (P) Ltd. [2007 (209) ELT 43 (Tri. Bang.)]
(iv) Hindustan Lever Limited vs. CC(EP), Mumbai [2012 (281) ELT 241 (Tri. Mumbai] In this regard it is relevant to reproduce Para 6.3 of the case law of Hindustan Lever Limited vs. CC (EP), Mumbai (supra) suggesting where appellant has violated any terms and conditions of the licenses, Revenue should have referred the matter to the Licensing Authority for appropriate action rather than taking action suo-motu;
6.3?The next issue for consideration is whether once the licensing authority certified that export obligation has been fulfilled whether such certification is final and binding on the Customs authorities? This issue came before this Tribunal in the case of Navjyothi International v. Commissioner of Customs, Chennai, cited supra. In that case the Revenue sought to deny the benefit of Customs duty exemption under Notification No. 30/97-Cus., dated 1-4-1997 and 51/2000-Cus., dated 27-4-2000 under DEEC scheme wherein the importer had undertaken imports under seven quantity based advance licences issued by the DGFT and had fulfilled the export obligation. This Tribunal in that case held as follows :
With regard to licence conditions, the licensing authority has certified full discharge of export obligation by the appellants. The adjudicating authority under the Foreign Trade (D&R) Act has found no violation of licence conditions on their part and its order has been accepted by the Revenue. Hence the Revenue cannot be seen to be critical of that order, nor can the DR be heard to argue against it. It goes without saying that the case law cited by ld. SDR cannot improve the Revenues case or plight. The Revenues allegation was that the appellants had violated conditions (vii) and (viii) of Notification 30/97 and similar conditions of Notification 51/2000. But, in this regard, the DGFTs order has taken the wind out of the Revenues sails. In the result, the charge of breach of conditions of the Customs Notifications does not survive. An identical view was held by this Tribunal in the case of Bharath Steel Corporation v. Commissioner of Customs, Chennai, and Ashok Enterprises v. Commissioner of Customs, Chennai, cited supra. A similar issue came up for consideration before this Tribunal in the case of Kukar Sons (Indo-French) Exports Ltd. v. Commissioner of Customs, Jaipur. In that case the Revenue alleged violation of conditions of Notification No. 204/92-Cus. by the appellants as they failed to realise the sale proceeds of exported goods. The DGFT, which is the competent authority in the matter of advance licences, had already redeemed the bank guarantee and legal undertaking furnished by the appellants after considering the fulfilment of export obligation by the assessee. This Tribunal held as follows :
Once a bank guarantee and legal undertaking has been redeemed by the competent authority and no action is being taken by the competent authority, therefore, we find this finding is not sustainable in view of the decision of the Honble Supreme Court in the case of Titan Medical Systems Pvt. Ltd. (supra). The Honble Supreme Court held that once an advance licence was issued and not questioned by the licensing authority, the Custom authorities cannot refuse exemption on an allegation that there was any misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. The ratio decidendi laid down in the above judgments applies to the facts of the present case. In the instant case also, the licensing authority has accepted the fulfilment of export obligation and have issued export obligation discharge certificates and have discharged the appellants from any further obligation. That being the position, the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the advance licensing scheme. If at all they felt that the appellant had violated any of the terms and conditions of the licences, they should have referred the matter to the licensing authority for appropriate action rather than taking action suo motu
18. From the above observation made by us there are sufficient indications that an Advance Authorization issued for a particular export product can be ratified by Norms Committee by way of fixing Ad-hoc norms or the Advance Authorizations can be modified by the appropriate authorities under the Foreign Trade Policy in order to meet the requirements of the export promotion schemes. If the Revenue had objected to the ineligibility of the imported grades of steel against the advance authorizations produced at the time of imports, probably importer appellants could have approached the competent authorities under the Foreign Trade Policy for a rectifying action. Alternatively, the importer appellants could have decided to pay duty and claim its reimbursements by way of other schemes like CENVAT Credit, Rebate or Drawback. When importer appellants and their employees were having so many alternative schemes to make zero tax exports, there does not seem to be any motive to willfully mis-declare the classification or suppress any information with intention to evade duty, from the Assessing Officers to claim an ineligible exemption when there was a longstanding practice of classifying the same grades of steel under CTH 7208. In several imports even after examining the MTCs produced/obtained from the importer appellants also Assessing Officers have not affected any change in the classification of steel or raised any objection that Advance Authorization does not cover the imported grades. The audit checks available with the Revenue cannot be considered to be insufficient to hold that non payment of hundred of crores worth of duty liability will not be subjected to any verification even after the clearances are made under a self-removal procedure. No action seems to have been proposed against the Assessing Officers who have classified the imported grades under CTH 7208 even where the MTCs were either produced by the appellants or were called for from the appellants. Further, from the plain language of Chapter Note 1(f) of Chapter 72 of the CTA it may be very convenient to say that imported steel grades in these proceedings were Other alloy steel as even admitted by Shri B.K. Goenka, Shri L.T. Hotwani and other employees of the importers during investigation who are not the metallurgical experts having sufficient knowledge the interpretation of Foreign Trade Policies. It has also been categorically admitted that these individuals were not dealing with the day to day assessments of the imported goods. Practice of Customs clearance of the same grades of steel under similar Advance Authorizations right from 2000 onwards, clearly convey that classification of impugned grades was not considered important by the Assessing Officers in view of the export incentive schemes under Foreign Trade Policies read with Customs exemption notifications availed by the importer appellants. The most important aspect of the export incentive schemes under Advance Authorizations is that the same grade of steel (whether non-alloy or alloy steel) when exported in the exported goods the same grade of steel was eligible for import by the importer appellants. Same observations have been made by Honorable Bombay High Court in its Order dated 20.11.2013, in the case of WP No. 2240 of 2013 filed by M/s Welspun Corpn. Limited, that alloy and non-alloy steels are not to be treated as grades. In view of the above, these appeals filed by the appellants cannot be decided against them on the basis of few admission statements of the individuals who were not involved in the practice of Customs clearances and were also not the metallurgical experts. The assessments made by the Assessing Officers on the Bills of Entry have not been challenged by the Revenue and the assessments already made cannot be opened only on the basis of a change in the mind of an authority based on a different interpretation when all the material facts were also within the knowledge of the Assessing Officers.
19. In the light of legal position explained and interpreted above we allow the appeals filed by the appellants to the extent indicated hereinabove by setting aside the Orders-in-Original passed by the Adjudicating authority.
(Pronounced in the Court on 22.05.2014) (H.K. Thakur) (S.S. Kang) Member (Technical) Vice President ..KL 31 76