Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Sameer Industries, M/S Agarwal ... on 23 September, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT:
II
Appeal No.C/258 to 271/2007
Arising out of: OIO No.KDL/Commr/16/2007, dt.29.3.07
Passed by: Commissioner of Customs, Kandla.
For approval and signature:
Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. B.S.V. Murthy, Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Sameer Industries, M/s Agarwal Metals & Alloys,
M/s Bhavna Metals, M/s Dhakad Metal Corporation,
M/s Electro Traders, M/s Jaidev Alloys P. Ltd.,
M/s Jai Ambe Corporation, M/s Metal Link Alloys Pvt. Ltd.,
M/s Mamta Metals, M/s The Standard Agro Engineers,
M/s Raja Zinc Pvt. Ltd., Shri Sanjay M. Dave, M/s Sunder Metals P. Ltd.
Respondent:
CC Kandla Represented by:
Shri Willingdon Christian, Adv. for Assessee; Shri Rajendra Nagar, SDR for Revenue.
CORAM:
MRS. ARCHANA WADHWA, MEMBER (JUDICIAL) MR. B.S.V. MURTHY, MEMBER (TECHNICAL) Date of Hearing:23.09.10 Date of Decision:
ORDER No. /WZB/AHD/2010
Per: Mrs. Archana Wadhwa:
All the appeals are being disposed off by a common order as they arise out of the same impugned order passed by the Commissioner, vide which he has confiscated the scrap imported by M/s Sameer Industries, M/s Raja Zinc Pvt. Ltd., and M/s Metal Link Alloys Pvt. Ltd. In respect of other appellants, the penalties stand imposed upon them in terms of provisions of Section 112 (a) of the Customs Act, 1962, on the ground that the consignment of imported scrap was not accompanied by a pre-shipment inspection certificate. We shall be dealing separately the two issues involved.
2. All the appellants imported various types of scraps viz. Aluminum scrap, Copper scrap, Brass scrap, Steel scrap etc and cleared the same to various actual users in DTA. In respect of M/s Sameer Industries, M/s Raja Zinc Pvt. Ltd., and M/s Metal Link Alloys Pvt. Ltd, the copper cable scrap druid grade, stand confiscated by the Commissioner, on the ground that the said appellant did not have the valid import licences from DGFT and they also imported the goods in contravention of provisions of Hazardous Waste (Management and Handling) Rules, 1989, as they were not registered with Central Pollution Control Board (CPCB). Similarly, the plastic scrap imported by M/s Raja Zinc stand confiscated on the ground that the same required a specific licence from DGFT and as plastic scrap is also covered under Hazardous Waste (Management and Handling) Rules, 1989, DGFT licence is a pre-condition for import of such plastic scrap.
3. Arguing on behalf of M/s Raja Zinc Pvt. Ltd., and M/s Metal Link Alloys Pvt. Ltd, the learned advocate draws our attention to Chapter 74 of ITC(HS) classification of export/import items. Heading 7404 00 19, under which the druid grade copper scrap stand classified by the authority, shows the policy condition as restricted import and permitted as per licencing note. The import licencing notes is to the effect that the import of copper wire covered under IRSI Code druid is permitted without licence to unit registered with Ministry of Environment & Forest. As such, submits the learned advocate that inasmuch as M/s Raja Zinc Pvt. Ltd., and M/s Metal Link Alloys Pvt. Ltd, are the units which were admittedly registered with CPCB for obtaining and processing for specified items listed in their registration certificate, the condition of production of licence was not required to be adhered to by them. He draws our attention to the observations made by the Commissioner, wherein he admits such registration, but held that inasmuch as no valid licence for import of hazardous waste from DGFT was produced, the goods are liable for confiscation.
4. After hearing the learned SDR on the above issue, we find merits in the contentions raised by the learned advocate. In the case of M/s Raja Zinc Pvt. Ltd, the Commissioner has confiscated the copper cable scrap druid grade totally valued at Rs.5,63,561/- along with copper scrap valued at Rs.5,28,100/- and plastic scrap valued at Rs.1,52,994/-, with an option to re-deem the same on payment of redemption fine of Rs.4.20 lakhs. As we have already observed that they are not required to produce any licence in respect of import of druid grade copper scrap, in terms of the policy conditions as discussed above, the said scrap was not required to be confiscated. Similarly, the confiscation of the copper scrap can also not be upheld inasmuch as the same is importable without any licence. As regards plastic scrap, the learned advocate has fairly agreed that the same required a licence and the same was not produced by M/s Raja Zinc Pvt. Ltd. As such, we uphold the confiscability of the plastic scrap totally valued at Rs.1,52,994/-.
In view of the above discussion, the confiscability of druid grade copper scrap and copper scrap is set aside. Confiscation of the plastic scrap is upheld. As the value of the same is Rs.1,52,994/-, the redemption fine of Rs.50,000/- (Rupees Fifty Thousands only) is fixed for the same. Further, as no licence was produced by the said appellant, he is liable to penalty which is adjudged as Rs.10,000/- (Rupees Ten thousands only)
5. For the reasons as recorded in the case of M/s Raja Zinc Pvt. Ltd., confiscation of the druid grade copper scrap imported by M/s Metal Link Alloys Pvt. Ltd, with an option to redeem the same on payment of redemption fine of Rs.30 lakhs cannot be upheld. The same is, accordingly, set aside and his appeal is allowed with consequential relief.
6. M/s Sameer Industries have imported the druid grade copper scrap, copper scrap and finished goods of imported cable peeling scrap. Learned advocate fairly agree that the said unit is not registered with CPCB and as such, the import licencing note to Chapter 74 would not be available to them. However, he submits that since the said unit is located in SEZ, they are entitled to import of all types of goods except prohibited items, in terms of Para 7.2 of Chapter 7 of EXIM Policy, 2004. Alternatively, he submits that import of druid grade copper scrap was declared to be restricted item only with effect from 21.3.05, as per the report of Honble Supreme Court Monitoring Committees letter dt.21.3.05, and no fault can be pinned in respect of scrap already imported. He also draws our attention to various communications entered into by the said appellant with Ministry of Commerce, Ministry of Environment & Forests, to show that the matter was not free from doubt prior to import by M/s Sameer Industries, in which case, the confiscation of the same was not justified. In any case, he submits that the Commissioner has imposed redemption fine of Rs.1.20 crores, by considering the total value of the imported goods as Rs.3,06,79,688/-. By drawing our attention to the various documentary evidences on record, indicating that the correct value of the goods is only to the tune of Rs.60,14,224/-, he submits that the redemption fine is required to be reduced.
7. We have heard the learned SDR in the case of M/s Sameer Industries. Learned SDR draws our attention to Para 4.5 of Commissioners impugned order, where a reference stand made to the Joint Director, Ministry of Environment & Forest, who have vide their letter dt.25.2.05 has observed that the provisions of Hazardous waste Rule are applicable to 100% EOU and to all units located in FTZ, SEZ etc. As regards wrong adoption of the assessable value and fixing the quantum of redemption fine of Rs.1.20 crores, learned SDR fairly agrees that the same appears to be a mistake on the part of the Commissioner.
8. We find that even though M/s Sameer Industries is located in SEZ, they were required to observe and follow the provisions of Hazardous Waste (Management and Handling) Rules, 1989, as clarified by the Joint Director of Ministry of Environment and Forests, as also by DGFT New Delhi vide their letter dt.14.2.05. The provisions of policy relied upon by the learned advocate are also to the effect that the SEZ unit may import goods without payment of duty, provided they are not prohibited items of ITC(HS), but if permission is required for import under any other law, the same shall be applicable. As such, even though the goods in question were not prohibited items, the permission required under Hazardous Waste (Management and Handling) Rules, 1989, was applicable to imports made by them. However, we agree with the learned advocate that there was no clarity in the above issue as the goods imported by the appellant were also cleared by the Customs authorities and the matter taken up by the appellant at the higher level in the Ministry of Commerce, Ministry of Environment & Forests, and it was only subsequently that an opinion about the applicability of the said Rule was found. The above factors should act as mitigating factors against the appellant for the purpose of fixing of redemption fine and penalty. We also note from the Panchnama drawn on 9.3.05 that the value of the goods imported items by M/s Sameer Industries is to the tune of Rs.3,06,79,688/- as held by the Commissioner. The mistake seems to have been occurred inadvertently on account of taking the value of the copper scrap as Rs.2,74,06,071/- instead of correct value being Rs.27,40,607/-. We also agree with the learned advocate that the ordinary copper scrap totally valued at Rs.19.84 lakhs approximately did not require any licence or registration with CPCB and as such the same cannot be held liable for confiscation. On account of all the above factors, though we held that the druid grade copper scrap is liable for confiscation, we reduce the redemption fine from Rs.1.20 crores to Rs.3 lakhs (Rupees Three lakhs only) and determine the penalty amount as Rs.50,000/- (Rupees Fifty Thousands only). As M/s Sameer has been penalized, we find no justifiable reason to impose separate penalty on Shri Sanjay Dave, partner of M/s Sameer Industries. The same is accordingly set aside.
9. As regards penalties imposed upon all the other appellants for non-production of pre-shipment inspection certificate, the appellants have contended that in majority of the cases, the entire quantity was imported (by way of purchase from SEZ unit M/s Sameer) before issuance of the Boards circular dt.18.10.04 requiring production of pre-shipment inspection certificate. From the details of the bills of lading produced on record, it is seen that except for 5 consignments which were imported in the month of November, 2004, all other consignments were imported prior to 18.10.04. The quantities of scrap were cleared by the importer after 100% examination and there is nothing on record to show that the same contain any war material etc. The goods, after clearance were cleared to DTA unit who have used the mixed scrap for melting or re-rolling purpose. Our attention stand drawn to various decisions of the Tribunal as detailed below:
a) 2009 (236) ELT 445 (Guj.) CC Vs. Senor Metals Pvt. Ltd.
b) 2010 (97) RLT Online 501 (CESTAT) Arun Vyapar Udyog Ltd Vs CC
c) 2006 (77) RLT 252 (CESTAT) Moolchand Steels Pvt. Ltd. Vs. CC
d) 2008 (85) RLT 872 (Guj.) CC Vs. Moolchand Steels Pvt. Ltd.
10. In view of the fact that either the bills of lading are prior to Boards circular dt.18.10.04 or are immediately after that or the contracts were entered earlier and in view of the law declared in the decision of the Tribunal and in absence of any war material having been found in the imported consignment of the scrap, we do not find any justifiable reason for imposition of penalties upon the appellants. The same are, accordingly, set aside.
11. In the nut shell, apart from upholding the confiscation of the scrap imported by M/s Sameer Industries and plastic scrap imported by M/s Raja Zinc Pvt. Ltd., with reduced redemption fines of Rs.3 lakhs (Rupees Three Lakhs only) & Rs.50,000/- (Rupees Fifty thousands only) and penalties of Rs.50,000/- (Rupees Fifty thousands only) and Rs.10,000/- (Rupees Ten thousands only) respectively, the impugned order is, otherwise, set aside.
12. All the appeals are disposed off accordingly.
(Pronounced in Court on _________________________)
(B.S.V. Murthy) (Archana Wadhwa)
Member (Technical) Member (Judicial)
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