Custom, Excise & Service Tax Tribunal
M/S.Hinduja Foundries Ltd vs Commissioner Of Customs on 2 February, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNALSOUTH ZONAL BENCH
CHENNAI
Appeal Nos.C/EH/40874/2015, C/40928/2014
[Arising out of Order-in-Appeal C.Cus.No.385/2014 dt.10.3.2014 passed by the Commissioner of Customs (Appeals], Chennai
M/s.Hinduja Foundries Ltd Appellant
Versus
Commissioner of Customs,
Chennai (Port Import) Respondent
Appearance:
Shri N Viswanathan, Advocate For the Appellant Shri R.Subramaniyan, AC (AR) For the Respondent CORAM :
HonbleShriR. Periasami, Technical Member HonbleShriP.K. Choudhary, Judicial Member Date of Hearing/Decision: 2.2.2016 FINAL ORDER No. 40188/2016 Per P.K.Choudhary Miscellaneous application is listed today for early hearing.
2. The Ld. Counsel Shri N.Viswanathan, Advocate appearing on behalf of the appellant assesse submits that the issue relates to import of Used damaged cut rails for melting (melting scrap) classifiable under 7204 4900 and thereby denying the benefit of exemption under Notification No.12/2012, S.No.332.
3. He further submits that the issue is no more res integra and has already been decided by this Tribunal in the appellants own case reported in [2013 (288) E.L.T. 571 (Tri. Chennai)
4. After allowing the application of early hearing, the appeal itself is taken up for hearing. The Adjudicating Authority classified the subject goods under CTH 73.02 of the Customs Tariff and denied the benefit of notification No.12/2012-Cus Serial No.332.
5. The Commissioner (Appeals) in his order upheld the order of the adjudicating authority.
6. Since the subject goods are being regularly imported by the appellant company through the Chennai Port and are consumed at their foundry at Sriperumbudur on a day to day basis and the issue is of recurring nature and this Tribunal has dealt the entire issue and allowed the assessees appeal. The relevant paragraphs of the Tribunals order are re-produced for appreciation of facts as under:-
"17.?The last mentioned Circular dated 17-1-2006 has been struck down by the High Court of Madras in the case of Madras Steel Re-rollers Association (supra) and by the High Court of Punjab and Haryana in the case of Gurudev Overseas Ltd. It is to be noted that the Courts did not give any ruling on the merits of the issue. The circular has been struck down for the reason that it takes away the freedom of adjudicating authority to decide the issue on merit.
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20.?Classification of similar has been subject matter of many decisions of the Tribunal and Courts. Some of which are given below :
(i) Tata Iron and Steel Company v. CCE - 1995 (75) E.L.T. 3 (S.C.). This decision held that rails, billets, plates, axles channels, etc., are to be treated as scrap. However this decision is in the context of the Central Excise Tariff which was in force prior to 1986 which Tariff was not based on HSN.
(ii) Sujana Steels Ltd. v. CCE - 2000 (115) E.L.T. 539 (Tri.) classifying used and rusted pipes under 72.04 in preference to Heading 73.04. This decision does not examine the issue of difference between melting scrap and re-rollable scrap.
(iii) Patiala Castings Pvt. Ltd. v. UOI - 2003 (156) E.L.T. 458 (P & H). The decision is in relation to rusted, pitted and perforated pipes. This decision is focused on the release of the goods. It does not raise the issue that the goods could be re-rolled and for that reason would not be classifiable under Heading 72.04.
(iv) A.P. Steel Re-rolling Mills Ltd. v. CCE - 2004 (175) E.L.T. 580 (Tri.-Bang.) - classifying assorted iron scrap in different forms and shapes under Heading 72.04.
(v) CCE v. Rimjhim Ispat Ltd. - 2005 (183) E.L.T. 283 (Tri.-Del.) old and used rails classifying old and used rails under Heading 72.04. Here the argument considered is that only a small portion of the goods were found to of doubtful nature. The exclusion for re-rollable scrap under Heading 72.04 is not considered.
(vi) Shriram Metals & Alloys Pvt. Ltd. v. CC - 2006 (200) E.L.T. 274 (Tri.-Chennai) - classifying ribbed, rusted rods under Heading 7204.43. Here it is noteworthy that the classification of goods was claimed as re-rollable scrap falling under Heading 72.04 and eligible for exemption under S. No. 201 of Notification 21/2002-Cus. This S. No. got omitted by Notification 26/2003, dated 1-3-2003 Against this S. No. there was a condition which described the scope of re-rollable scrap and the description specifically covered items of the type considered in this case. So it is clear that in 2002 when this notification was issued the Ministry was of the view that re-rollable scrap would fall under CTH 72.04.
(viii) Shiva Ispat Udyog v. CC - 2010 (254) E.L.T. 297 (Tri.-Kol.) - rules that used railway axles are classifiable under CTH 72.04. This decision does not examine the exclusion mentioned in HSN Notes for Heading 72.04 and the distinction between re-rollable scrap and melting scrap.
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22.?In the present case the competing Headings are 72.04 for scrap and 73.02 for rails. Notes under Heading 73.02 nowhere specifically state that old and used rails cut into small pieces are classifiable under this heading. Revenue is taking umbrage under the part of the sentence in HSN Notes that heading covers all lengths of such rails including bullhead rails, flange (or flat-bottomed) rails, grooved tram rails, slot rails for electric tramways and conductor-rails etc. irrespective of their intended use. It is seen that the intended use is amplified to mean overhead transporters, mobile cranes, etc. Obviously the Note is not dealing with the intended use of re-rolling or melting.
23.?Further we note that the heart and soul of this dispute is not whether the impugned item is rails or scrap. The actual dispute is whether the item is a melting scrap or re-rollable scrap for the purpose of Notification 21/2002-Cus. This issue is being fought by Revenue raising the classification of the goods mentioned in the Notification. In fact this dispute is not only in respect of used and cut pieces of rails but in respect of railway axles, used pipes and various other types of used articles which also could be re-rolled. The difference in the case of used rails is that the item is specifically mentioned in HSN Notes under Heading 72.04 for the purpose of excluding it. The meaning of the expressions melting scrap or re-rollable scrap are not defined in the Customs Tariff or HSN notes though the HSN notes makes a mention that waste and scrap which can be rolled into other products without melting to recover metal is excluded from Heading 72.04.
24.?In the above background we take into consideration the following,-
(i) The decisions quoted in Para 20 above classifying such goods in Heading 72.04 which decisions have come to stay and many other decisions also are given based on the said decisions. The logic running through these decisions is that old and used articles of iron and steel not serviceable for use as the original article will get classified as scrap falling under CTH 72.04.
(ii) A decision to deal differently with cut and used rails as compared to used railway axles is not consistent with the matter in dispute.
(iii) There has been no change in the Tariff descriptions or description in notification which would warrant a change in practice. In such a situation it is necessary to maintain consistency.
(iv) Another agency concerned with import of goods namely DGFT is of the view that the goods are classifiable under Heading 72.04. It is desirable to maintain consistency in classification for the purpose of deciding import policy and levying customs duty.
(v) Between the two competing Headings of 72.04 and 73.02 argued before us we consider Heading 72.04 to be more appropriate.
(vi) The goods were in fact used in melting.
25.?So we come to the conclusion that there is no reason to deny the classification claimed by the appellant for the goods to be under Heading 72.04 or to consider the goods not to be Melting scrap of Iron and Steel as described in Notification 21/2002-Cus. (S. No. 200). It follows that confiscation of the goods and penalty imposed in the impugned order becomes not maintainable.
26.?So we allow the appeal by setting aside the impugned orders of the lower authorities with consequential benefits to the appellant."
7. By following the earlier decision of this Tribunal in appellant assessees own case on similar facts, we set aside the impugned order and appeal is allowed with consequential benefits to the appellant. Miscellaneous application accordingly stands disposed of.
(Dictated and pronounced in open Court)
(P.K. CHOUDHARY) (R. PERIASAMI)
Judicial Member Tehnical Member
RKP
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