Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Keshari Steels on 21 March, 1994
Equivalent citations: 1994ECR545(TRI.-DELHI), 1994(71)ELT768(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. These are two appeals. Appeal No. C/738/90-C filed by the Collector of Customs, Bombay, and Appeal No. C/3370/90-C filed by M/s. Keshari Steels.
2. Shortly put the facts of the case are that -
A. No. C/738/90-C - the respondents M/s. Keshari Steels imported a consignment of "Plates (065/4 TSV/Model) 6314/22 for slide Gate Refractory Type 1 QC - Refractory Material (Bricks)" vide Bill of Entry Cash No. 2634 dated 8-5-1987. The goods were assessed under Heading 6902.90 of CTA, 1975 read with Heading 6901.00 of CET, 1985 at the rate of 60% + 40% CVD 15% denying the benefit of Notification No. 242/76-Cus. Subsequently, the respondents filed their refund claim for Rs. 2,32,812/- on the ground that the imported goods are covered under Notification No. 242/76-Cus. Alternatively, it was also claimed that the subject goods be classified under Heading 98.06 read with Notification No. 124/87-Cus. They also claimed that the 5% discount shown in the invoice should be allowed in computation of value. The Assistant Collector vide his Order-in-Original No. S/6-C-4847/87-R dated 19-1-1990 rejected the refund claim observing that for the benefit of either Notification as claimed by the respondents it needs to be verified whether the goods fall within the description "Refractory Bricks of Special Shape and Quality". As the goods are not available, it cannot be ascertained whether these are identifiable part of any furnace and as per the Drawings and Catalogues submitted by the importer (respondents) the subject goods do not fall under the description "Refractory Bricks of Special Shape". He also held that the importers have failed to submit any reason to substantiate their claim for special discount. Against that Order of the Assistant Collector, the respondents filed their appeal before the Collector (Appeals). The Collector (Appeals) vide his Order-in-Appeal set aside the order of the Assistant Collector and allowed the appeal. Hence the present appeal by the Revenue. The respondents, M/s. Keshari Steels in this appeal have also filed their cross-objections.
A. No. C/3370/90-C - In this appeal the appellants M/s. Keshari Steels imported "SANIT PLATES (065/4 TZSY) Model 6314/22 for Slide Gate, Refractories Type 1 QC". The same were assessed under Heading 9806.00 in terms of Notification No. 69/87-Cus. at the rate of 45% + 40% CVD Nil denying the benefit of Notification No. 242/76-Cus. However, subsequently the appellants filed their refund claim in terms of Notification No. 242/76-Cus. which was rejected by the Assistant Collector vide his impugned Order-in-Original No. S/6-B-4846/87-R, dated 5-4-1988 observing that the goods have been assessed under Heading 98.06 and Chapter 98 are not covered by Notification No. 242/76-Cus., dated 2-8-1976. The description shown in the invoice is "SANIT PLATES" and this description is also not covered by Notification No. 242/76-Cus. Against that order of the Assistant Collector, the appellants M/s. Keshari Steels filed their appeal before the Collector (Appeals). The same was rejected by the Collector (Appeals) observing that to avail the exemption under Notification No. 242/76-Cus. the claimant has to prove firstly that the Sanit Plates are Refractory Bricks of special shape or size and, secondly that these Sanit Plates will be used in industrial Ladle Furnace. In the instant case the importer, that is to say, M/s. Keshari Steels has though been able to prove that Sanit Plates are required by him in ordinary ladles, but failed to prove that these ladles are ladles furnaces. Hence the present appeal by the importer, M/s. Keshari Steels.
3. Since in both these appeals a common question regarding the availability of Notification No. 242/76-Cus., dated 2-8-1976 was involved, both these appeals were heard together at the request of the parties.
4. Arguing on behalf of the Revenue (in Appeal No. C/738/90-C), Shri Somesh Arora, learned JDR, submitted that to claim the benefit under Notification No. 242/76-Cus., dated 2-8-1976 it is necessary for the claimant to prove that the goods imported are "Refractory Bricks of special shape and quality for use as component parts of industrial furnaces falling under Heading No. 6902.90 of CTA, 1975 read with Heading No. 6901.00 of CET, 1985". In the instant case the goods imported are described in the Bill of Entry as "Plates for Slide Gate - Refractory Type 1 QC - Refractory Material (Bricks)". Therefore, the goods were assessed as "Plates" and not as "Bricks". Literature produced by the importer, that is to say, M/s. Keshari Steels also shows that the goods are "Slide Plates" and not "Bricks" and since the Notification No. 242/76-Cus. covers "Refractory Bricks of special shape or quality" and the term "Brick" is nowhere defined in the Customs Tariff or in the Notification, the common meaning of the term "Brick" has to be resorted to. As per the Chambers Twentieth Century Dictionary, the term "Brick" means 'baked or burned clay; a shaped block of burned clay, generally rectangular'. In IS-4041-1967, Clause 1614, the term "ladle brick" is defined as "A refractory brick (usually alumins-silicate) used to line ladles". Further in IS-4041-1967, Clause 8, various shape of refractory bricks are described. In this premises, he submitted that since the impugned goods are not refractory bricks, the Collector (Appeals) erred in holding that the imported goods are refractory bricks. He also submitted that since the said Notification No. 242/76-Cus., dated 2-8-1976 grants exemption to "Refractory Bricks of special shape or quality for use as component parts of industrial furnaces", the benefit of the said Notification No. 242/76-Cus. cannot be extended to the subject goods as these are not component parts. In a nutshell, his submission was that the subject goods were imported as spare parts and not as component for erection of furnace in the factory of the respondents, M/s. Keshari Steels and relied upon the decision rendered by this Tribunal in the case of Steel Authority of India Ltd. v. Collector of Customs, 1989 (42) E.L.T. 89, wherein it was held that for an article to be called a part of air industrial furnace it must be something which is incorporated in the construction of the furnace. The teeming ladles using in their construction the present refractory bricks of special quality and shape are receptacles for molten steel. They are not incorporated into, nor are they integral parts of furnaces. The refractory bricks cannot, therefore, be considered as component parts of industrial furnaces. Consequently, the benefit of the Notification No. 242 dated 2-8-1976 is not available in case of refractory bricks and for this view reference was made to the book 'Materials and Technology' (pages 181-182) by J.H. DE BUSSY. He also cited the case of the Collector of Customs v. Hindustan Zinc Ltd., 1992 (57) E.L.T. 473, wherein the same view was reiterated by the Tribunal. He also referred the case of Steel Authority of India Ltd. v. Collector of Customs, 1993 (63) E.L.T. 173, wherein it was again held that Notification No. 242/76-Cus. exempts refractory bricks of special shape or quality for use as component parts of industrial furnaces falling under Heading 69.01/02. Refractory Bricks and Blocks are shown separately in Heading 69.01/02. This itself proves that 'Refractory Bricks' and 'Refractory Blocks' are separate entities and have separate existence and Notification No. 242/76 exempts 'Bricks' and not 'Blocks' and, therefore, the benefit of the said Notification cannot be extended to Carbon Refractories, that is to say, Carbon Blocks for Blast Furnace. He further cited the case of Hindustan Sanitaryware & Industries Ltd. v. Collector of Customs, 1993 (66) E.L.T. 683, wherein this Tribunal again held that the benefit of the said Notification No. 242/76-Cus., dated 2-8-1976 and 112/87-Cus., dated 1-3-1987 is not available to the imported goods therein, that is to say, Specialised Cordierite/Mullite Refractory Special Shapes (Blocks) Batts and further that there is a distinction between 'component parts' and 'spare parts' and, therefore, the refractory bricks imported for future use in the furnace are 'spares' and, therefore, not eligible for exemption under the said Notification Nos. 242/76-Cus. and 112/87-Cus.
5. He also submitted that it is settled law that the burden to prove that his case lies within the exemption notification is on the assessee. Since in the instant case, the importers were claiming the benefit of the said Notification, it was for them to prove that they were entitled for the same, but they have miserably failed to discharge the burden which lay on them and the Department was handicapped to prove the contrary, since the importers in the instant case got the clearance of the goods and subsequently filed their refund claim with the result that no sample could be taken at the time of the clearance.
6. As regards the claim of the importer for special discount, it was submitted by the learned JDR that under Section 14 of the Customs Act, 1962 the value is to be determined on the basis of price of such or like article ordinarily sold or offered for sale. Special discount will not be in the ordinary course of the business. He highlighted that in the instant case importation took place much before the enforcement of the Customs Valuation Rules, 1988 and hence any reference to and placing reliance upon these Rules would be erroneous.
7. In reply, Shri M.N. Advani, learned consultant, faced with the said consistent view of the Tribunal taken in the aforesaid cases, submitted that these decisions require reconsideration, as the distinction drawn between 'spares' and 'components' was not called for, while interpreting the said Notifications 242/76-Cus. and 112/87-Cus. because in these Notifications it is not stated that they exempt refractory bricks of special shape or quality when these are imported for the purpose of initial setting up of industrial furnace. He also drew our attention to the case of M/s. Hatim Carbon Co. (P) Ltd. v. Collector of Central Excise, Bangalore, 1988 (17) ECR 241; and Vidyut Greenbank Castbasalt Pvt. Ltd. v. Collector of Customs, Bombay, 1992 (61) E.L.T. 84; wherein while deciding the question of classification of the subject goods produced by the appellants therein, that is to say, carbon brushes and slot wedges and entitlement of exemption under the Notification, it was held that the distinction sought to be made by the Collector between parts of electric motors and components of electric motors is unreal and, therefore, the assessee in that case were entitled for the benefit of the said Notification. As regards the special discount, he submitted that it was rightly allowed by the Collector (Appeals) for the reasons mentioned by him in his impugned order.
8. We have considered the submissions. This Tribunal after threshing out the case law on the point and referring to the various literature and arguments advanced by the parties held that the refractory bricks for future use in the furnace are 'spares' and are not eligible for exemption under Notification Nos. 242/76-Cus. and 112/87-Cus. See the aforesaid cases of Steel Authority of India Limited v. Collector of Customs, 1989 (42) E.L.T. 89; Collector of Customs v. Hindustan Zinc Ltd., 1992 (57) E.L.T. 473; Steel Authority of India Limited v. Collector of Customs, 1993 (63) E.L.T. 173; and Hindustan Sanitaryware and Industries Limited v. Collector of Customs, 1993 (66) E.L.T. 683. The case of M/s. Hatim Carbon Company (P) Limited v. Collector of Central Excise, Bangalore, supra, and Vidyut Greenbank Castbasalt Private Limited v. Collector of Customs, Bombay, supra, cited by the learned consultant were also referred to in the case of Hindustan Sanitaryware and Industries Limited v. Collector of Customs, 1993 (66) E.L.T. 683, (Paras 3 to 5) and after referring so, this Tribunal finally observed as follows :-
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9. In the light of the aforesaid discussion, we hold that the benefit of the Notification No. 242/76-Cus. and 112/87-Cus. was rightly denied by the authorities below.
10. As regards the claim of the importer, M/s. Keshari Steels, we find that as per the invoice as certified by the suppliers vide their certificate dated 25-9-1987, 5% discount was the normal trade discount allowed to all to meet the international competition. Therefore, we reject the contention of the learned JDR that the importers were not entitled for the said 5% discount being special, and hold that it was rightly allowed by the Collector (Appeals).
11. Before we part, it may be stated that the classification of the subject goods was not disputed before us and the focus was only, as to whether the importers were entitled for the benefit of the Notification Nos. 242/76-Cus. and 112/87-Cus.
12. In the result -
(i) Appeal No. C/738/90-C is allowed to the extent that the respondents M/s. Keshari Steels in this appeal were not entitled for the benefit of exemption Notification No. 242/76-Cus. and 112/87-Cus. However, they were entitled for the benefit of the discount (described as special discount) as held by the Collector (Appeals) in his impugned Order. Consequently, that part of the impugned Order-in-Appeal which allows the claim of the appellants for the special discount is only upheld. The cross objections filed by the respondents also stand disposed of accordingly;
(ii) Appeal No. C/3370/90-C is rejected.