Customs, Excise and Gold Tribunal - Tamil Nadu
Calcutta Iron & Steel Co. vs Commissioner Of Customs, Chennai on 5 September, 2001
ORDER
Shri S.L. Peeran
1. This appeal arises from order in Original No. 64/97 CAU dated 30.6.97 passed by the Commissioner of Customs, Chennai holding that the imported item is not heavy melting scrap as disclosed in the two Bills of Entry (BE) NO. 55041 dated 9.11.95, and 51371 dated 17.10.95 and it does not fit into the description of advance licence issued under DEEC scheme which are valid for duty free import of non alloy melting scrap. He has held the item to be not classifiable as declared under Chapter heading 7204 carrying duty of 40% plus 15%. He has held the item to be classified under sub heading 8455.30 of the Customs Tariff as rolls for re-rolling mills and not as heavy melting scrap and charged duty @ 25% plus 15. He has imposed a redemption fine of Rs 3,00,000/- and penalty of Rs 1,00,000/- besides duty of Rs 14.23.600/- Out of this duty demand, Rs 4,57,892/- voluntarily paid by the appellants was adjusted.
2. At the outset Shri AS Sunderarajan, learned Counsel, accompanied by Miss Sakthi, Counsel submitted that show cause notice had been issued only for two Bills of Entry cited supra. The Commissioner has erred in taking into consideration the past clearances with regard to three Bills of Entry which were not the subject matter of adjudication or show cause notice and confirmed the duty demand and thus the order is required to be set aside. He further pointed out that in the Bills of Entry they had declared the item to be heavy melting scrap rolls for re- rollable mills. He contends that there was no mis declaration and they had declared the description of the material. He pointed out that the burden of classification is on the Revenue and the Commissioner's finding that there was misdeclaration in so far as the tariff item is concerned, is beyond the scope of law. He in this regard relied upon the judgment of the Hon'ble Supreme Court in the case of Union of India vs. Garware Nylons Ltd. Reported in 1996 (87) ELT 112 (SC). He contends that the Commissioner has proceeded to hold that the appellants did not challenge the goods in the form of re-rollers and also the expert opinion. He pointed out that this was challenged and the expert who had given his opinion had been cross-examined. The expert in the course of cross examination gave an opinion that the item is neither a heavy melting scrap nor rejected scrap damages scrap damages scrap nor rolls for rolling. He pointed out that this is the answer given by the expert during cross-examination and the department chose to classify the goods under sub-heading 8455.30 as rolls for re-rolling mills attracting duty of 25% plus 15%. He pointed out that the appellants have not paid the duty voluntarily. They have paid the duty under pressure. He pointed out that the appellants have not disputed the valuation but only the classification of the item. HE pointed out that evidence had been produced by them which has not been looked into by the Commissioner. He also referred to the opinion report of the SGS India Limited dated 20.6.1996 which is filed at page NO. 192 of the paper book which is a report on the findings on the imported consignment. He further pointed out that the expert who was cross-examined was confronted with this text report. The report of findings are as follows:
Pointing out to the evidence and the Affidavit, the learned Counsel submitted that the impugned order is not a speaking order as there is not application of mind and hence the classification adopted besides imposition of redemption fine and penalty is required to be set aside.
4. Heard Shri A.Jayachandran DR, who supported the order and submitted that although the show cause notice did not refer to the two Bills of Entry, but the Commissioner has clearly recorded in his order that the past clearances by the three Bills of Entry can also be subject to the proceedings. He submits that the expert in his opinion at page 102 has stated as follows:
"The rolls have been used except one roll, as such there is no grooves cut on the barrel of the rolls. The composition of the rolls whether it is indefinite Chilled Rolls or Cleared Chilled Roll will be known only after analysis of the sample. This rolls can be used as such.
He referred to the above opinion and submitted that the item cannot be treated as heavy melting scrap as the item was in rolls and therefore, the classification adopted by the department is correct and the item require advance licence and the evidence produced did not tally with the imported goods and therefore the order of confiscation and imposition of penalty is justified.
5. In counter the learned Counsel submitted that the item is under OGL and it is only for duty exemption advance licence is required.
6. On consideration of the submissions made we agree with the first point referred to by the learned Counsel that the adjudicating authority should confine himself to the allegation made in the show cause notice. The Commissioner in the finding portion of the order that the issue pertained to importation of the goods declared as heavy melting scrap pertaining to two BEs No. 55041 dated 9.11.95 and 51371 dated 17.10.95. However, during the course of discussion, he has noted about the earlier clearances made by the appellant and has proceeded to determine the liability arising there from. The Commissioner has expressed a view on a matter which was not the subject matter of the show cause notices while recording order about confirmation of demand. This is clearly violative of the principles of natural justice as the past clearance was not a subject matter of the present proceedings and the same is required to be quashed and we order accordingly.
7. In so far as the declaration made by the appellants is concerned, the Commissioner has examined the Bills of Entry and the appellants (sic) gave a clear description as rolls for re-rolling mills and it is stated in the Bills of Entry that it is heavy melting scrap. Therefore, the expert in his opinion, already extracted, in his cross examination has clearly agreed with the appellants that the item is not rolling. Further we notice that the report of findings of SGS India Ltd dated 20.6.96 extracted above, has not been taken into consideration by the Commissioner. Therefore, the learned Commissioner finding that there was no dispute with regard to item being in rolls and classifiable as heavy melting scrap, is not as per the evidence on record. There is a clear error committed by the Commissioner in coming to this conclusion. Therefore, we have to set aside the impugned order with regard to confiscation and remand the matter for de novo consideration. The learned Counsel has made a submission that the item can be freely imported under OGL and therefore, redemption fine and penalty are not imposable as there was no deliberate mis declaration in the matter. This aspect of the matter is required to be scrutinized in the light of the declaration made by the appellants in the Bills of Entry and the supporting evidence which are relied upon by the appellants and also the expert opinion and his answer during cross-examination are material for coming to a conclusion as to whether the item is to be used for re-rolling purposes or not. In this view of the matter, the issue pertaining to correct classification has to be re-determined and further their prayer that there is no scope for imposing penalty and redemption fine is required to be re-examined. The Commissioner shall confine himself to Bills of Entry which are the subject matter of the show cause notices.
(Dictated and pronounced in open Court)