Custom, Excise & Service Tax Tribunal
Ms Aggarwal Steel Centre vs Commissioner Of Customs Ludhiana on 9 March, 2026
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 61289 of 2018
[Arising out of Order-in-Appeal No. ASR-CUSTM-PRV-APP-26-29-15-16 dated
28.05.2015 passed by the Commissioner (Appeals), Customs and Central Excise,
Chandigarh]
M/s Aggarwal Steel Centre ......Appellant
Godown No.6, Back side Bhambri Kanda,
Amloh Road, Mandi, Gobindgarh,
Punjab - 147301
VERSUS
Commissioner of Customs, Ludhiana ......Respondent
GRFL, G.T. Road, Sahnewal, Ludhiana, Punjab - 141120 WITH
2. Customs Appeal No. 61290 of 2018 [M/s Aggarwal Steel Centre]
3. Customs Appeal No. 61912 of 2018 [M/s Aggarwal Steel Centre]
4. Customs Appeal No. 61913 of 2018 [M/s Aggarwal Steel Centre] [All Arising out of Order-in-Appeal No. ASR-CUSTM-PRV-APP-26-29-15-16 dated 28.05.2015 passed by the Commissioner (Appeals), Customs and Central Excise, Chandigarh] APPEARANCE:
Shri Saurabh Kapoor and Ms. Tanya Kumar, Advocates for the Appellant Shri Anurag Kumar, Authorized Representative for the Respondent CORAM: HON'BLE MR. S. S. GARG, MEMBER (JUDICIAL) HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO. 60228-60231/2026 2 C/61289/2018 & 03 others DATE OF HEARING: 19.02.2026 DATE OF DECISION: 09.03.2026 P. ANJANI KUMAR:
M/s Aggarwal Steel Centre, the Appellants, assail the order, dated 28.05.2015, passed by commissioner of Customs (Appeals).
2. Briefly stated the facts of the case are that the appellants filed a Bill of Entry No. 2764221 dated 20.07.2013 for clearance of 215.370 MT of goods declared as ―Heavy Melting Scrap‖ (HMS) under CTH 72044900. They purchased goods on high sea sale basis from M/s Aggarwal Ispat Udyog, who had imported the same from M/s Najed Liltedweer LLC, Oman, at a declared unit price of USD 360 PMT. On examination by the officers of Shed on 13.08.2013 it was found that all 8x20 containers contained old and used defective pipes having different length and diameter; weight was marginally high at 215.970 MT. The services of Shri Varun Chandok, a chartered Engineer, were commissioned to inspect the cargo. Vide his report, dated 19.08.2013, the chartered Engineer opined that:
The goods comprised mainly of Old & Used pipe cuttings having thickness of approx. 6mm and diameter of approx. 3‖, 4‖ and of varying lengths approx. 14 feet to 17 feet.
The said pipes have been dismantled from a place of working and flame cut in assorted lengths.
The said pipes are usually discarded for certain safety measures and are unfit for original use.
3 C/61289/2018 & 03 others The said pipes are below standard lengths and the marketability depends upon market requirements.
2.1. On completion of examination of the consignment in question, it appeared to the Revenue that the consignments contained old and used pipes, re-rollable material and Heavy Melting Scrap (HMS);
import of old and used pipes is prohibited as per Para 2.17 of Foreign Trade Policy and thus, part of the material i.e. old and used pipes and re-rollable material, which was mis-declared as HMS are rendered liable for confiscation and penalty. The appellants have imported 4 similar consignments, of old and used pipes and/ or re- rollable material, vide Bills of Entry No.2764222, 2764221, 2764303 and 2764267, all dated 20.07.2013, and have agreed for spot adjudication without Show cause Notice. Additional commissioner passed the orders-in-original, all dated, 18.12.2013, confiscating the goods and imposing redemption fine and penalty. The appellants paid the duty and redemption fine and got the goods released. The details of appeals and the orders-in-original are as follows.
Appeal No. Weight Differential Value RF Penalty
in MT Duty (Rs.) (Rs.) (Rs.) (Rs.)
61289/2018 184.345 7,68,308/- 53,90,921/- 5,50,000/- 1,00,000/-
61913/2018 215.970 9,02,076/- 63,15,751/- 6,50,000/- 1,00,000/-
61912/2018 130.740 6,29,861/- 38,23,315/- 3,00,000/- 50,000/-
21.790 5,97,393/-
61290/2018 20.095 86,970/- 5,87,651/- 60,000/- 10,000/-
2.2. On appeals preferred by the appellants, learned Commissioner (Appeals), vide a common impugned order, dated 28.05.2015, 4 C/61289/2018 & 03 others upheld the classification and valuation arrived at by the Original but reduced the redemption fine totally to Rs.6,50,000/-.
3. Shri Saurabh Kapoor, learned counsel for the appellant, reiterates the grounds of appeal and submits that the imported goods--flame cut pipes are rendered unfit for their original use-- were correctly declared as "Heavy Melting Scrap" (HMS) under CTH 72044900; the import was supported by a Pre-Inspection Certificate from the country of origin, certifying the goods as scrap and free from hazardous/war materials; it cannot be said that the goods are "Old & Used Pipes" (6mm thickness, 14-17 feet length); the core of the dispute lies in whether "used pipes" that are "flame cut" and "unfit for use" can be classified as anything other than scrap; Note 8(a) of the Customs Tariff Act, Under Section XV, defines waste and scrap as "metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons; the Chartered Engineer's report explicitly admits the pipes were "discarded" and "flame cut; once a pipe is flame-cut and dismantled from a working site, its integrity as a conduit for fluids is destroyed and thus, rendered definitely not usable for its original purpose; department has erred by prioritizing a visual inspection over a statutory expert certificate; pre-Inspection Certificate cannot be brushed aside unless the Department provides technical proof that the flame-cut segments could be refurbished.
4. Learned Counsel submits that the Appellant declared the goods exactly as described in the commercial invoice and the Pre-
5 C/61289/2018 & 03 others Inspection Certificate; a difference in interpretation regarding the "degree of wear" or "method of cutting" does not constitute a fraudulent mis-declaration; Appellant's willingness to mutilate the goods, as per Section 24 of the Customs Act, 1962, proves a lack of mens rea. He submits that department arbitrarily rejected the transaction value of US$ 360 PMT without following the Customs Valuation Rules; department did not produce any evidence of contemporaneous imports of similar "old and used pipes" at a higher value; the price paid was a fair market price for melting scrap; enhancement of value, on a subjective reclassification as "pipes", which are non-functional, is a violation of the "Transaction Value"
and Rule 3 of the Customs Valuation Rules.
5. Learned Counsel submits that the goods are not prohibited; in the worst scenario, this is a technical dispute over classification; in such cases, the imposition of a high redemption fine and penalty is contrary to the principle of equity, especially when the duty difference is negligible. He relies on the following cases in support of his contentions and submissions.
M/s Eicher Tractors - 2000 (122) ELT 321 (SC) HPCL - 2010 (250) ELT 212 (Bom.) Shanker Raju V/s Union of India as reported in 2011 (271) ELT 492 (S.C.) Hindustan Petroleum Corporation Ltd. V/s Union of India as reported in 2010 (250) ELT 212 (Bom.).
Alfa Packaging V/s Commissioner of Central Excise Vapi as reported in 2006 (194) ELT 81 (Tri Mum).
T A Mohamed V/s State of Kerela as reported in 2011 (263) ELT 202 (Ker) 6 C/61289/2018 & 03 others Videocon Internation V/s Commissioner of Customs as reported in 2010 261 (ELT) 220 (Tri-Mum) CCE Mumbai III V/s Valsons Deying, Bleaching and Printing Works as reported in 2010 (259) ELT 33 (Bom.) Central Board of Dawodi Bhora Community V/s State of Mahrastra as reported in 2010 (254) ELT 196 (S.C.).
6. Shri Anurag Kumar, Learned Authorised Representative, appearing for the Revenue, submits that the Appellant met the Member (Customs), CBEC on 03.09.2013 with a request to decide the case without a written Show Cause Notice; Shri Ved Parkash, Proprietor, admitted the contentions of revenue, during personal hearing on 04.09.2013; the appellant voluntarily deposited the redemption fine of ₹6,50,000/- and penalty of ₹1,00,000/- on 18.09.2013 along with differential duty and got the goods released without a protest. He submits that the goods were mis-declared as ‗Heavy Melting Scrap‖ and ‗Old & Used Pipes' are two distinct commercial commodities with different tariff classifications and market prices; Para 2.17 of Foreign Trade Policy 2009-14 restricts the import of all other second-hand goods; No DGFT authorization was produced; there was mis-declaration of the value and weight; hence, the goods were rightly held to be liable for confiscation and fine and penalties were imposed; as the appellants accepted the appellate authority rightly applied principle of estoppel relying on Vikas Spinners 2001 (128) ELT 143 (Tri-Del).
7. Learned Authorised Representative submits further that 7 C/61289/2018 & 03 others Chapter Note 8(a) of Chapter 72 defines waste and scrap as ―metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting up, wear or other reasons; the Appellant failed to discharge the burden to show that the imported goods are scrap; mere assertion that the intent was to melt the goods is irrelevant; test is ‗usability', not ‗actual use'; when a heading contains both an eo nomine component and a use component, both criteria must be satisfied.
the Appellant declared the goods as per ISRI Code 200-204 but the goods found--pipes of 14-17 feet length, 6mm thickness, 3‖-4‖ diameter--do not conform to the dimensional specifications of ISRI 200-204, which prescribe maximum size of 60‖x24‖ or 36‖x18‖ for charging box size. Old & Used Pipes are ‗second hand goods' and not ‗Second Hand Capital Goods'; appellant's submission on Para 2.33 has no application.
redemption fine imposed is not excessive or disproportionate being less than 10% of the value of goods.
Penalty under Section 112(a) is imposable for improper importation. Mens rea is not a prerequisite.
8. Learned Authorised Representative submits that as the appellant accepted that the goods were mis-declared and undervalued the 8 C/61289/2018 & 03 others impugned orders are maintainable. He relies on the following cases in support of his arguments.
Venus Castings (2000) 4 SCC 206) Indo Deutsche Trade Links [2017 (348) ELT 201 (S.C.)] Virgo Steels 2002 (141) ELT 598 (SC) Welkin Foods (2026) 38 Centax I04 (SC)
9. Heard both sides and perused the records of the case. The brief issue involved in this case is as to whether the used pipes imported by the appellant are eligible to be called as waste and scrap; as to whether there is mis-declaration in the impugned imports; as to whether the impugned order was correct in confirming the mis- declaration and under-valuation and in imposing redemption fine and penalty. The case of the appellant is that they have imported waste and scrap which contained used pipes which as per the report of the Chartered Engineer were cut by using gas and do not serve the original purpose they are manufactured for and that they intended the import for the purpose of melting and have even applied for mutilation for clearance in terms of Section 24 of the Customs Act, 1962. The case of the Department is that the classification of the goods depends on the nature of the goods and not on the purported or intended use of the articles.
10. The contention of the Revenue is that the appellants have accepted the mis-declaration and under-valuation of the goods and have waived the issuance of show cause notice. They have even taken the provisional release of the goods, paid duty along with redemption fine and penalties and therefore, cannot take a turn 9 C/61289/2018 & 03 others around and seek remedy. Learned Authorized Representative for the Revenue submits that the principle of estoppel applies squarely in this case. We find that Hon'ble Supreme Court in the case of Indo Deutsche Trade Links - 2017 (348) E.L.T. 201 (S.C.) held as follows:
3. The brief facts which may be noted are that the respondents herein filed Bills of Entries for the clearance of goods declared as ―Heavy Melting Scrap‖ classifying the same under Heading 7204 of Customs Tariff and benefited under Notification No. 21/20102-Cus. (Sl. No. 200). However, based on Docks Intelligence Unit Report received by the appellant herein to the effect that the goods which were imported are ―Used Rails‖ in the guise of ―Heavy Material Scrap‖, the appellant got the said goods examined and it was found that imported goods were in fact Rails and not Heavy Material Scrap as declared by the respondents. On that basis Order-in-Original dated 12-1-2010 was passed by classifying the goods under CTH 7302 and benefit of the aforesaid Notification No. 21/2002-Cus. (Sl. No. 200) was accordingly denied to the respondents. In this Order-in-Original apart from levying the customs duty, fine as well as penalty was also imposed.
4. Aggrieved by the Order-in-Original, the respondents filed appeals before the CESTAT. Vide impugned order dated 11-2-2014, the Tribunal allowed the appeals holding that the goods would be classified under CTH 7204 as these were in fact ―Heavy Melting Scrap‖ and not ―Rails‖.
5. Mr. Ranjit Kumar, Solicitor General, appearing for the appellant has drawn our attention to letter dated 9-12-2009 which was written by the respondents themselves after the goods were examined by the appellant and found to be Rails. In this letter the respondents had requested to
10 C/61289/2018 & 03 others condone the misdeclaration of the cut Rails as HMS Scrap and even stated that they had declared the value for the HMS Scrap as US$ 350/MT and the respondents further volunteered to correct the value of the cut Rails as US$ 418/MT. This letter clearly shows that the respondents themselves accepted that what was in fact imported was used Rails and not Heavy Material Scrap. The respondents even went to the extent of admitting the misdeclaration of the goods as ―Heavy Material Scrap‖.
6. In these circumstances, the findings of the Tribunal in the impugned order treating, the goods as Heavy Material Strap and not Rails are clearly erroneous
11. We find that the facts of the above case are similar to the impugned case. In the above cited case, the imported HMS was found to be used rails. However, due to the character and nature of the impugned imported goods, the Tribunal held that the goods are to be classified under the respective heading rather than as HMS; Hon'ble Supreme Court has affirmed the findings of the Tribunal. We further find that the above case was followed by the co-ordinate Bench of Ahmedabad in the case of Indian Iron & Metals Pvt. Ltd. - (2023) 8 Centax 243 (Tri.-Ahmd). We also find that the principle of eo nomine (it names the material itself) has been upheld by the Tribunal in the case of Welkin Foods - (2024) 19 Centax 77 (Tri.- Del); the Bench observed that:
10. In the light of above, we need to adjudicate as to whether the goods imported can be called as machine or mechanical appliances covered under chapter 84 or are more precisely & specifically classifiable as the aluminum structures of chapter 76.
11 C/61289/2018 & 03 others The goods imported by the appellant apparently are the aluminium shelves/racks which are imported by the appellant for using the same after integrating with the other two imported goods (drains and automatic watering system) for in mushroom growing. it is also nowhere been denied that the other activities essential for mushroom growing that is the climate control equipments, the compost spreading equipments, the insecticide praying equipments etc. are also to be fastened on the imported aluminium shelves. No doubt, all these machines are to be integrated subsequent to the import but we observe that the goods are imported from the person, who exclusively deals in the structures specific to mushroom growing industry.
The importer-appellant is also in the business of growing mushrooms. There is also no denial to the fact that the aluminium shelves imported cannot be used as any other aluminium structures for any other purpose.
11. From the general rule of interpretation, as discussed above, it is clear that the goods have to be classified to the more appropriate category instead of being covered under the generic category. Chapter 76 is generic to all aluminium structures but chapter 84 is specific for any machine/device of any metal which is used for agriculture purpose. There can be no denial that growing mushroom is an agricultural or horticultural activity and the product imported is crucial and specific for the said activity that the product is specifically designed part of mushroom growing apparatus.
12. No doubt, the goods under Chapter 84 have first to be a machine or mechanical appliance. For the purpose, we foremost look into the dictionary meaning of these words.
13. As per Oxford dictionary machine is a piece of equipment with moving parts that is designed to do a 12 C/61289/2018 & 03 others particular job by the use of power (any kind). Similar is the definition in the Cambridge dictionary. The dictionary meaning of mechanical device is that it is an instrument/apparatus or devise for a particular purpose or use. As already observed above, the aluminium shelves/the impugned goods have no purpose other than a specific one of being used in the mushroom growing industry. Admittedly, the two other imported goods i.e. drain and automatic watering system have to be integrated on these aluminium shelves. Department has admitted these two to be covered under CTH 84369900. Though these two apparatuses alongwith two others are to be integrated on the mushroom shelving, post import but we observe that the aluminium shelve itself is so designed with such specifications, as may permit these specific integrations. The brochure of product Info also mentions the model of the goods as mechanization/planting machine. Thus, we hold that the goods in question is not aluminium shelve in generic but is a mushroom growing rack specifically; though is made of aluminium but it is a mechanical appliance used for agriculture purpose.
14. Chapter 76 is all about anything made of aluminium. On the contrary chapter 84 is about mechanical appliances of whatsoever metal but specific for agricultural use. There is no denial to the fact that the aluminium shelving in question is not known to the common trade parlance as a mere aluminium structure but is specifically known as Mushroom growing rack.
15. Hence, we hold that the goods under question as imported by appellant (mushroom shelving) are classifiable under CTH 84369977. Appellant is held to have rightly classified the same under CTH 84369900. The decisions relied upon by the Department in the case of Saraswati Sugar Mills (supra) is about captive use of iron and steel 13 C/61289/2018 & 03 others structures in the sugar mill and the question adjudicated therein is whether or not these structures could be called as capital goods to entitle the assessee credit of duty paid on those goods. Similarly the extract that China Customs is classifying this product under CTH 7610 is also not that relevant, as the said observations are not binding on the Indian Customs or on the Indian importers. The agricultural equipments are otherwise eligible for duty benefits in Indian scenario. Hence we hold that the appellant has rightly claimed the duty exemption while importing a product which is exclusively for the purpose of agriculture and which otherwise is a mechanical device. With these findings the order under challenge is hereby set aside and the appeal is hereby allowed.
12. We find that in the impugned case, the appellants themselves have represented before Member, Customs, CBEC that they do not want any show cause notice and want to clear the goods as per the contentions of the Department. We find that the appellants have accepted the re-classification and re-valuation arrived by the Department. The appellants have also paid the entire duty, penalty and redemption fine and got the goods released. There is nothing on record to show that they have made any protest in this regard. Therefore, we are of the considered opinion that it is not open to the appellants to agitate the matter again after voluntarily accepting the stand of the Department. We find strength from the decision of Hon'ble Supreme Court in a recent case of Amad Noormamad Bakali in Civil Appeal No. 1000 of 2012, pronounced on 23.02.2026. In the instant case, we find that there was no allegation of any coercion, threat or inducement in the acceptance of the liabilities by the 14 C/61289/2018 & 03 others appellant. There is nothing on record to show that the appellant has either lodged a protest or retracted his statement of version. Duty along with penalty and redemption fine has been paid by the appellants voluntarily at the time of release of goods. Learned Authorized Representative submits that the redemption fine imposed was less than 10% of the value of the goods and the learned Commissioner (Appeals) has further reduced the redemption fine making the total redemption fine Rs.6,50,000/-. The appellants had relied upon the decision of Ahmedabad Bench of the Tribunal in the case of Lucky Steel Industries (2023) 9 CENTAX 409 (Tri. Ahmd.). However, we find that in the case of Lucky Steel Industries we don't find that the appellant therein has accepted the contention of the department. Moreover, the appellant therein, has taken the matter upto Hon'ble Supreme Court, who remanded the matter to the Tribunal. The facts of the case are being different, we don't find that reliance cannot be placed on the ratio of coordinate bench decision in the case of Lucky Steel Industries.
13. However, looking into the facts of the case, nature of the impugned goods, non-specific report of the Chartered Engineer and the timelines taken for clearance of goods, we find that further reduction of redemption fine and reduction of penalty would meet the ends of the justice. In view of the same, we do not find any reason to interfere with the other findings of the impugned order.
15 C/61289/2018 & 03 others
14. Accordingly, the impugned order is modified by reducing the total redemption fine to Rs.2 Lakhs and total penalty to Rs.1 Lakh. All the four appeals are disposed of accordingly, (Order pronounced in the open court on 09.03.2026) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) PK