Customs, Excise and Gold Tribunal - Calcutta
Jhawar Trading (P) Ltd. And Raj Kumar ... vs Commissioner Of Customs, Calcutta on 8 August, 2001
Equivalent citations: 2002(79)ECC556, 2000ECR600(TRI.KOLKATA), 2002(139)ELT695(TRI-KOLKATA)
JUDGMENT
Archana Wadhwa
1. Both the appeals are being disposed of by a common order as they arise out of the same set of facts and circumstances and out of the same impugned orders passed by the authorities below. Vide the impugned orders the imported zinc scrap has been confiscated with an option to the appellant to redeem the same on payment of redemption fine of Rs. 1,25,000/- (rupees one lakh twenty five thousand). In addition, personal penalty of Rs. 75,000/- (rupees seventy five thousand) has been imposed upon the importing firm M/s. Jhawar Trading (P) LTD. and penalty of Rs. 75,000/- (rupees seventy five thousand) has been imposed upon the second appellant Shri Raj Kr. Jhawar, who is the director of the said firm.
2. The appellant M/s. Jhawar Trading (P) Ltd. imported a consignment declaring the same to be as zinc scrap 'SAVES' and filed a bill of entry on 13.6.99. On the basis of investigation carried out by the officers of Directorate of Revenue Intelligence, Calcutta that the imported goods were actually zinc dross/speleter. Samples were drawn and sent for testing to the chemical examiner, Customs House, Calcutta as also to a private test house, M/s. Intalab Pvt. Ltd. Based upon the reports by the said testing houses that the goods in question were zinc dross and not zinc scrap, the appellants were served with a show cause notice dt. 17.11.99 alleging that the goods correctly fell under Exim Code 26201900 and required a licence. The said show cause notice was adjudicated upon by the Additional Commissioner holding that a specific licence was required for the importation of the goods in question and the appellants having failed to produce the licence has rendered the goods liable to confiscation and themselves to imposition of penalty. According he confiscated the goods and imposed penalties. On an appeal against the above order did not succeed before the Commissioner (Appeals), Hence the present appeal.
3. Shri S.K. Bagaria, ld.adv. appearing for the appellant submits that the entire case of the Revenue is based upon the testing reports of the two laboratories. He submits that the samples were sent to the chemical examiner and M/s. Intalab Pvt. Ltd. by DRI by raising the following queries.:-
(a) The nature and composition of the sample i.e. percentage of zinc.
(b) Whether the sample is zinc scrap "Saves" as per ISRI Specification?
(c) Whether the sample is zinc dross/zinc spelter?
(d) Whether the sample is zinc ash/residues?
4. The test report dt. 19.7.99 of the chemical examiner of Customs House, Calcutta read as under:-
The Test Report dt. 19.7.99 of the chemical examiner, Customs House, Calcutta was as under:-
"The sample is in the form of gray coloured heavy, dense irregular lumps of different shapes and size with tarnished and oxidized surfaces. It is composed essentially of metallic zinc together with iron aluminium, metallic oxide and siliceous matter.
% of total zinc in the sample = 92.4 by weight % of metallic zinc in the sample = 89.9 by weight % of iron in the sample = 3.7 by weight The sample under reference is other than zinc scrap/ash/residue. It appears to be a dross type of material. However, source/origin of the material under reference may also be verified".
The report of M/s. Intalab Private Limited was as under:-
"RESULTS OF ANALYSIS - ON ORIGINAL SAMPLE Total zinc As Zn ... 92.01% LEAD AS Pb ... 3.03% IRON as Fe ... 3.92% ALUMINIUM AS Al ... TRACE The sample is zinc dross/zinc spelter"
5. From the above ld.adv. concludes that the chemical examiner, Customs House has not given a categorical finding that the goods in question are dross. He has only given his opinion that the same appears to be a dross type of material. However, the goods being zinc ash/residue has been fully ousted by the chemical examiner. He submits that both the said results have shown that the goods consisted zinc more than 92% by weight and inspite of a specific query that whether the sample was zinc scrap (SAVES), no answer has been given by either of the two test houses. As such he submits that based upon the said test reported goods cannot be classified under heading 26.20 which cover only ash and residue and nothing else. Further referring to various authoritative text books and dictionaries he submits that dross is basically metal refuse and impurity in melten metal and where the zinc contents are more than 92%, the same cannot be held to be dross. He submits that the said issue came up before the Tribunal in the case of Premier Bass and Metal Works Pvt. Ltd. v. CC-1990(48)ELT 98 wherein the Tribunal held that where the metal contents in the goods varied between 91.38% to 97.03% with very little presence of extraneous metals such as oxide, sulphide, lead, iron etc., the goods have to be assessed as waste and scrap and not as dross. The civil appeal filed by the Revenue against the above decision was dismissed by the Hon'ble Supreme Court as reported in 1995(80) ELT page A-280. Similarly in the case of N.J. International v. CC-1995(79)ELT 665, the goods found to be having metalic contents ranging between 93.8% and 96.4% were held to be waste and scrap and not dross. He also drew the attention of the Bench to the Tribunal decision in the case of Khalidas Sheet Metal Indus. Pvt. Ltd. v. CC-1997 (94) ELT 165 and referred to paragraph 4 of the said order. It is beneficial to reproduce para 4, for better appreciation of the appellants' submission:-
"We have considered the pleas made by both the sides. We observe that chapter 26 carries the heading metal ores, slag and ash. Tariff 2602.04 carries the description slag, ash and residue containing metals or metallic contents. It is seen that this chapter covers the metallic ores or ores which have been processed into concentrates or which have been roasted. During this process certainf slag, ash or residue may emerge which will have the concentration of the metal of much lower order than that may be present in the metallic ores. It is this slag, ash and residue which will be covered under this heading. The goods in question admittedly have not been obtained in the processing of metallic ores but were obtained in the electrolytic process where the zinc sheets after they had served out their purpose from electrocution were taken out as residue. We observe that the NARI circular NF-82 referred to by the appellants carries the heading standard classifications for non-ferrous scrap metals even though the items in this has been described by different code numbers. The classification given in that has to be taken to be that for scrap metals. The appellants on their own have relied upon a document which describes their goods as scrap. IN view of the fact that we have ruled out the classification, under chapter 26 we hold that in the light of our discussions the appellants' goods have been rightly classified under tariff heading 79.01. The appeal is therefore dismissed".
6. In view of the foregoing decisions ld.ad. submits that the issue is decided in their favour and the findings of the authorities below based upon the two test reports which are not clear, are erroneous.
7. He further submits that the original adjudicating authority has held the goods as classifiable under tarif heading 26.20 of the customs tariff which cover ash and residue. The test report of the chemical examiner has clearly held that the goods in question are not ash/residue. He submits that all the documents of the foreign supplier including certificate has described the goods as zinc scrap "SAVES' as per ISRI specification. This fact has not been disputed or found to be incorrect in any of the reports inasmuch as neither of the test report says that the goods are not confirming to ISRI code 'SAVES', in respect of a specific query being put to examiners.
8. He further submits that in any case even if the goods are considered to be dross, the same are freely importable under Exim Code No. 79020000.10. By drawing my attention to the Exim Policy 1997-2000 he submits that the following items are freely importable:-
"790200 00 Zinc waste and scrap 790200 00.10 ZINC SCRAP NAMELY THE FOLLOWING: F Old zinc die cast scrap covered by ISRI code word SAVES .....
.....
Hot dip galvanizers slab zinc dross (Batchprocess) covered by ISRI Code Scrup (minium 92% zinc)-free of skimmings Continuous Line Galvanizing Slab Zinc Top Dross covered by ISRI Code Seal (minium 90% zinc)-free of skimmings continous line galvinizing slab zinc bottom dross covered by ISRI Code Seam (minium 92% zind) - free of skimmings Prime Zinc die casts covered by ISRI Code Shelf (85% zinc) - free from corrosion or oxidation."
9. He has also drawn my attention to the scrap specifications circular 1990 wherein scrub, seal, sean and shelf, the various kinds of dross are defined and explained.
10. I have also considered the submissions made by ld.JDR Shri A.K. Chattopadhyay, who reiterates the reasoning of the authorities below and submits that the impugned orders are based upon the result of the test reports, which should be followed.
11. After hearing both the sides I find that the questions to be decided in the present appeal is as to whether the goods described by the importer as zinc scrap 'SAVES' is in fact zinc dross and whether the same required a specific licence for importation. Admittedly the two test reports in question, as reproduced above have shown the zinc contents to be more than 92%. The chemical examiner of Customs House has not given a definite finding that the goods are zinc dross but has only observed that the same appears to be a dross type of material. Similarly there is no answer to the questions posed by the Revenue that whether the sample described as zinc scrap 'SAVES' is as per ISRI specification or not. The various decisions relied upon by the appellant lay down the ratio that where zinc contents are more than 92%, the goods cannot be classified as zinc dross. The documents relating to the import including the documents of the foreign supplier are also describing the goods as zinc waste and scrap. Nothing concrete has been produced on record by the Revenue to show that the descriptions in the documents is not correct. Accordingly by applying the ratio of the Tribunal decision relied upon by the appellant hold that the goods in question were freely importable.
12. The reasons for holding so also lies in the fact that the zinc dross of various types having zinc contents to the ture of 90% and 92% were freely importable under Exim Code No. 920200.00.10. As such even if the goods are held to be zinc scrap, which I have already held that they are not, the confiscation of the same was not warranted inasmuch as Exim Code referred above allowed the import of the same without any specific licence. In view of the foregoing I set aside the impugned orders confiscating the material in question and imposing penalty upon both the appellants. Both the appeals are thus allowed with consequential relief to them.
(Pronounced)