Customs, Excise and Gold Tribunal - Mumbai
Salasar Fortune Marketing (I) Ltd., ... vs Commissioner Of Customs on 21 January, 2004
Equivalent citations: 2004(166)ELT353(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. The brief facts of the case are that M/s. Pet Plastics Ltd. situated in Kandla Special Economic Zone (herein after referred to as KSEZ) purchased certain consignments of Unglazed Porcelain Tiles, Glazed Floor Tiles, Unglazed Floor Tiles from the other appellants M/s. Salasar Fortune Marketing (India) Pvt. Ltd. on High Sea sale basis and filed the documents for clearance of the same, at the Kandla Customs House, for trans-shipment to the Special Economic Zone, Kandla. Samples were drawn from the consignment and on basis of the test reports a view was taken that the goods are of Chinese origin and would attract anti dumping duty under Noftn. No. 50/2002 dt. 02.05.2002. allegations of mis-declaration of goods as "Glazed Floor Tiles" effected as the Chemical Examiner's report found them to be semi-vitreous glassed tiles. The goods were also found to be having the mark "NEW ZHONG YUAN". Therefore, the goods though imported from Singapore and Malaysia were considered to be of Chinese origin manufactured by M/s. New zhong Yuan Ceramics Co. Ltd. in China relying upon the webside"http:www.newzhongyuan.com/ehome.jsp?brandCode=B". On basis of these allegations, entire consignment covered by the T.P.s as filed were seized, under the reasonable belief that they were liable for confiscation under Section 11(m). Show cause notice was issued to the appellants herein above who are besides the two companies, Shri Vinod Kumar Sharma, the Director of M/s. Salasar Fortune Marketing (I) Ltd and Shri Ritesh Vakil, the authorised signatory of M/s. Pet Plastic Ltd.
2. The Commissioner, after hearing the appellants ordered-
a) Release of Glazed floor ties covered under the Bill of Entry No. 1175 dt. 19.07.2002 and T.P. No. 1309 of the same date to M/s. Pet Plastics Ltd. on payment of duty as applicable.
b) confiscation of the remaining quantity of unglazed porcelain tiles under the Bill of Entry No. 1174 dt. 20.07.2002 and Bill of Entry No. 1287 to 1292 all dt. 01.08.2002 under the provisions of Section 111(m) ordered and gave a option to M/s. Pet Plastics Ltd. was given to redeem the same on payment of fine of Rs. 15,00,000/- in lieu of confiscation. Full duty of customs along with the anti dumping duty as applicable in terms of the Noftn. No. 50/2002 dt. 02.05.2002 was demanded.
c) Penalty of Rs. 5,00,000/- on M/s. Pet Plastics Ltd., Rs. 7,50,000/- on M/s. Salasar Fortune Marketing (I) ltd., Rs. 2,00,000/- on Shri Ritesh Vakil, authorised signatory of M/s. Pet Plastics Ltd., and Rs. 2,00,000/- on Shri Vinod Kumar Sharma, Director of M/s. Salasar Fortune Marketing (I) Ltd. under Section 112A were also imposed.
Hence these appeals.
3. After hearing both sides and considering the material on records, it is found that -
a) No grounds have been arrived at as to how the goods imported from Malaysia and Singapore are similar, If at all goods under report are similar then they have to be treated in the same fashion as goods covered by Bill of Entry No. 1175 dt. 19.07.2002 imported from China which have been imported by the same person and ordered to be released by the very said impugned order, by the Adjudicator.
b) The test report dt. 29.07.2002, relied upon, reads as follows :
"the sample is in the form of a Tile size 50.0 cm x 50.0 cm x 8.2 mm having creamish smooth surface on one side. It is made of Vetrified Ceramic material (Porcelain type). Whether glazed or otherwise could not be ascertained."
From the above it is evident that tiles cannot be made of 'vetrified ceramic material', since process of vitrification could be only on manufactured title and not on material used in the manufacture of such tiles. Commissioner's order does not explain how it is concluded the tiles are made from vitrified material. It is found that the respondents has found as under :
"The importers plea that the goods to be termed as vitrified tiles should have "low porosity (less than 0.5% water absorption) and termed vitreous, as published in the Encyclopedia of Industrial Chemical Analysis by Snell is correct is as much as defining the goods as vitrified. However, I am of the opinion that the Chief Examiner would have followed the specification/criteria for testing the goods before coming to the conclusion of the sample is of vitrified/porcelain."
The highlighted portion indicated that the Adjudicator himself is doubtful and presumes about the fact of the Tests to have been performed. The Technical Literature at page No. 191 of Vol. 19 of "Encyclopedia of Industrial Chemical analysis" by Snell and "Industrial Ceramics" by Felix singer and Sonuja S. Singer, which was submitted during the hearing, is completely being ignored in coming to the findings. They thus cannot be upheld.
c) According to this Technical book, porcelains are one which have no porosity and are termed as 'vitreous ware' whereas 'earthen ware' and 'stone ware' are highly porous, without the test of porosity, as found by the Adjudicator, the determination of nature of the goods was not called for, especially when the Chemical Examiner has not given any analysis or the method applied to come to conclusion that the broken pieces of the tile was 'made of vitrified ceramic material". The test reports, therefore, have to be rejected.
d) HSN notes (A) (2) describes ceramic material other than of porcelain or China as follows :
"A wide range of white or coloured ceramics (earthenware, majolica, delft-ware, etc). The body is porous and must be glazed to make the articles impermeable eg. with transparent or opaque glazes such as white or coloured metallic oxides). Earthen ware, etc., is made from finely seized clays mized with water. It has a fine grained body obtained by firing to a higher temperature than in the case of pottery made from common clay; it differs from porcelain or china because it is not completely vitrified."
This aspect has completely been ignored.
e) There is no evidence whatsoever in the notice and from the order it cannot be found, how the goods under import are other than Industrial tiles on which alone anti dumping duty could be imposed by Noftn. No. 50/2002 dt. 02.05.2002. The Show Cause Notice alleges that the tiles are manufactured by a Company, which is having units all over the world including China. In that view of the matter, the investigating officers had to establish and discharge the burden that the impugned goods were manufactured and/or started their origin and journey from China, to bring in the levy of anti dumping duty. It is a fact that the tiles under seizure did not show any inscription like "Made in China" or any other marking to indicate the same. Further, there is no material on record to show that the terms "NEW ZHONG YUAN" as marked, in this style observed on the goods, was a Branch name of Trade name exclusive to the said manufacture in China only. It is alleged that manufacturer has plants all over the world and it is thus a trans-national manufacturer. Goods, even if the term as found is a Brand name/Trade name inscribed on the subject goods that cannot ipso facto lead to a conclusion that the subject goods originated in China. Since a trans-national Company would use a global Brand name or Trade name that by itself will not indicate that the goods have originated in a particular political territory.
f) The appellants had produced certificates of country of origin from the foreign suppliers that the goods were produced or purchased in Malaysia. This certificate was not certificate of country or origin and was thus rejected by the Adjudicator by coming to the conclusion that the same was not proper and/or issued by a competent authority. The appellants had relied upon Customs Tariff (Identification Assessment and Collection of Anti-Dumping duty articles and For Determination of Injury) Rules, 1995. These Rules do not prescribe any specific parameters to hold an import to be originating in or exported from People's Republic of China or prescribe any competent authority. Therefore, there is no reason to disregard supplier's certification in absence of any rules framed to determine the country of origin as in the other cases for eg. Customs Tariff (Determination of Origin of the UAR and Yoguslavia) Rules 1976. In view of the same, country of origin determination in this case, that the goods have originated in or exported from People's Republic of China cannot be established for shipments made from Malaysia and Singapore.
g) The Noftn. No. 50/2002 dt. 02.05.2002, on a perusal would apply and anti-dumping duty would be attracted only when all the three conditions are met -
(i) Goods should be vitrified or porous tiles.
(ii) They should be other than Vitrified Industrial Tiles.
(iii) They should be originating in or exported from People's Republic in China or United Arab Emirates.
In the present case, in view of the findings herein above, the conditions are not being met. The levy of duty under this Notfn. has to be established by Revenue. The interpretation of a notification which levies duty, has to be strictly made. The investigators and the adjudication order have failed in that respect. The levy of anti-dumping of the subject goods is therefore not upheld.
h) The importers are situated in a SEZ, anti-dumping duty levied under Section 9A of the Customs Tariff Act, 1975 vide para 2 (A) which reads as folllows :
"Notwithstanding anything contained in sub-section (1) and sub-section (2), a notification issued under sub-section (1) or any anti-dumping duty imposed under sub-section (2), unless specifically made applicable in such notification or such imposition, as the case may be, shall not apply to articles imported by a hundred per cent export-oriented undertaking or a unit in a free trade zone or in a special economic zone."
Duty, in a case, could not be imposed on goods imported by SEZ unit. When anti-dumping duty on the subject goods imposed could not be levied and the imports were being made by the unit in Kandla, SEZ. The gods were to be transferred to the SEZ under TP permits filed, as no duties were required to be paid for imports made into the Sez by a unit, there would be no reason to arrive at any mens era on the part of the importer to mis-declare and/or evade the duty. The SEZ areas are well guarded with an elaborate systems and procedure which is required to be followed, to remove the goods from the SEZ into the Domestic Tariff Area. Therefore, the allegations that there was a plan to evade anti-dumping duty and the goods were to be removed to the Domestic Tariff Area cannot be upheld. Further such planned evasion would be a presumption, if not an assumption that the goods would have been clandestinely removed from the SEZ are with connivance of the customs staff and the SEZ security personnel. Duties and penalties imposed on presumptions and assumptions cannot be confirmed. Such orders are required to be set aside.
4. In view of the findings orders are set aside and appeals allowed in the above terms.