Customs, Excise and Gold Tribunal - Delhi
Speco Industrial Corpn. vs Commissioner Of Customs on 22 July, 2003
Equivalent citations: 2003(90)ECC78, 2003ECR619(TRI.-DELHI), 2003(157)ELT284(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in these two appeals filed by M/s. Speco Industrial Corporation is whether the goods imported by them are heavy melting scrap classifiable under sub-heading 7204.49 of the First Schedule to the Customs Tariff Act as claimed by them or under Heading 72.08/72.09 of the Tariff as classified by the Commissioner in both the impugned orders and whether the assessable value is liable to be enhanced.
2. Shri Sudhir Malhotra, learned Advocate, submitted that the appellants had imported heavy melting scrap other than re-rollable scrap, stainless steel or hot-rolled steel from M/s. Scrap Mould International Corporation Ltd., Dubai and sought clearance of the same at concessional rate of duty under Notification No. 17/2001-Cus., dated 1-3-2001 or Notification No. 21/02, dated 1-3-2002; that on examination by the Customs Officers in the presence of the independent witness and authorised representative of the appellants, the impugned goods were found to be defective/secondary sheets of iron and steel, hot and cold re-rolled mixed together, of varying thickness width and length; that Shri J.S. Oberoi, Chartered Engineer has opined that the consignments are in the form of hot/cold rolling sheets of varying length, width and thickness; that the material are rejection of some cold-rolling mills and most of the material is rusted and even pitted also; that the Chartered Engineer has also opined that a lot of material is in the form of end-cuttings/sheet scrap fit for melting only. He, further, submitted that Shri Rajesh Shori, Chartered Engineer, also in his report dated 29-1-2002 has stated that the consignment consists of ferrous metallic pieces of various size, length, width and thickness; all the material contained in the container are HR/Cold re-rolled flat ferrous metallic pieces, the material is rejection and end-cutting of some ferrous rolling unit and the whole of the consignment is fit for melting. He contended that the Adjudicating Authority has not appreciated the opinion of experts as characteristics of consignment given by expert categorically substantiated that the impugned goods fall under the category of scrap falling under Heading 7204; that the impugned goods are not sheets but rejection arisen during the manufacturing from ferrous rolling material; that the EXIM Code 72044901 of ITC (HS) Classification also corroborates classification of impugned goods under Heading 7204; that the said Code reads as under : "Defective sheets of iron and steel"; that it is thus apparent that the defective sheets are classifiable under Heading 7204 as per ITC (HS) classification and no ITC restriction has been laid down therein. He finally submitted that the price have been loaded without any evidence of contemporaneous import or any evidence on record to substantiate that there was undervaluation of the goods; that the goods were imported at arms length and prices were sole consideration; that Shri J.S. Oberoi has opined rate of HR Sheets/cuts and CR sheets/cuts at Rs. 11.50 per Kg. and Rs. 12.50 per Kg. respectively; that Chartered Accountant is not expert for quoting price of the imported goods he being a technical man; that even assuming the price quoted by him are correct, the sale prices are market prices inclusive of duty and other expenses which require to be deducted to arrive at CIF price; that moreover, Adjudicating Authority has taken the price at Rs. 12 and Rs. 13.50 per Kg. which are higher than the price mentioned by Shri J.S. Oberoi; that they have acted bonafidely and did not have any intention to evade payment of duty.
3. Countering the argument Shri V. Valte, learned Senior Departmental Representative, submitted that Shri J.S. Oberoi, Chartered Engineer, after examining the goods as imported by the appellants, has opined that "the material received is in the form of sheets - mixture of hot/cold re-rolled and of varying length, width and thickness, etc. The material is secondary/defective". He, further, mentioned that Shri J.S. Oberoi has clearly opined that "the sheets are neither fit for rolling nor for re-rolling nor for melting and are saleable as such."; that Shri Rajesh Shori, in his statement dated 14-2-02, has stated that sheet cut pieces can fetch higher price than the melting scrap and added that due to cost factor it is not viable to melt sheet cuttings/cut pieces; that Shri Neeraj Agarwal in his statement dated 14-2-02 has stated that he did not want to contest the original report of Shri J.S. Oberoi as he had given his report after complete examination of the goods; that Shri Neeraj Agarwal agreed that the goods under import were cut pieces of sheets, secondary/defective; that as such it has been admitted by the appellants that the goods imported by them were not melting scrap. Reliance has been placed on the decision in the case of Cenlub Industries Ltd. v. Commissioner of Customs, New Delhi - 2001 (132) E.L.T. 206 (Tri.), wherein it has been held that once the charge was not contested before Adjudicating Authority, plea regarding same could not be raised before the Appellate Tribunal. Finally, learned Senior Departmental Representative submitted that as the goods have been misdeclared, the value shown in the invoice cannot be termed as corresponding to the goods and that accordingly the Commissioner was justified in enhancing the value.
4. We have considered the submissions of both the sides. The Chartered Engineer, Shri J.S. Oberoi, who has examined the goods has clearly opined in respect of imported goods covered under both the impugned orders that the material received is in the form of sheets/cuttings, a mixture of hot/cold re-rolled sheets and of varying lengths/width (1 1/2 ft. and 6 ft.) and thickness of 1.5 mm to 4 mm. The Chartered Engineer has further opined that sheets are neither fit for re-rolling nor for melting and are saleable as such. We also observe that even Shri Rajesh Shori, whose statement was recorded on 14-2-02, has stated that due to cost factor it was not viable to melt sheet cuttings/cut pieces. The learned Adjudicating Authority has specifically mentioned in the impugned Order No. 6/2002 that Neeraj Agarwal representative of the appellants, had stated that he did not want to contest the original report by Shri J.S. Oberoi. Heading 72.04 of the Customs Tariff applies to ferrous waste and scrap; re-rolling scrap ingots of iron and steel. As it is apparent from the Inspection report of the Chartered Engineer that the imported material is in the form of sheets which may be secondary or defective, these cannot be classified under Heading 72.04 of the Tariff. As these are sheets of varied thickness, length and width. They have been correctly classified under Heading 72.08 of the Tariff. The EXIM Code 72044901 will be applicable only to those sheets of iron and steel which will satisfy criterion of re-melting scrap as the main Heading 7204 in EXIM Code covers "re-melting scrap ingots of iron or steel; ferrous waste and scrap." Accordingly, we hold that the classification ordered by the Commissioner under both the impugned orders is correct. However, we agree with the learned Advocate that no material or evidence has been brought on record to show that the prices declared by the appellants are not correct price or these have been undervalued. As per Rule 4 of the Customs Valuation Rules, 1988, the transaction value has to be accepted as assessable value unless and until one of the ingredients mentioned in Sub-rule (2) of Rule 4 is present. We observe from the impugned order that the Commissioner has enhanced the value only on the ground that the goods were misdeclared and therefore, the price mentioned in invoice does not correspond to the goods. The Revenue has thus not succeeded in establishing that the prices were undervalued by the appellants. We, therefore, set aside the enhancement by the Commissioner in the assessable value. Accordingly, we reduce the redemption fine from Rs. 1.25 lakh to Rs. 50,000/- and from Rs. 1.5 lakh to Rs. 75,000/-. We also reduce the penalty as under :
In Appeal No. 594/02, we reduce penalty from Rs. 1.20 lakh to Rs. 60,000/- and in Appeal No. 595/02, we reduce the penalty from Rs. 50,000/- to Rs. 25,000/-.
5. Both the appeals stands disposed of in the above terms.