Custom, Excise & Service Tax Tribunal
Hindalco Industries Ltd vs Commissioner Of Customs-Ahmedabad on 12 March, 2015
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad ****
Appeal No : C/11069-11070,11799/2014 (Arising out of OIA-34-36/2014/CUS/COMMR-A-/AHD DATED 21/01/2014, OIA-34-36-2014-CUS-COMMR-AAHD DATED 21/01/2014 passed by Commissioner of CUSTOMS-AHMEDABAD) Hindalco Industries Ltd Commissioner of CUSTOMS-AHMEDABAD : Appellant (s) Vs Commissioner of CUSTOMS-AHMEDABAD Hindalco Industries Ltd : Respondent (s) Represented by:
For Appellant (s) : Shri T. Vishwanathan Advocate, Shri Manish Jain Advocate For Respondent (s): Shri J. Nagori, Authorised Representative For approval and signature:
Mr. P.K. Das, Honble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
MR. P.K. DAS, HONBLE MEMBER (JUDICIAL) MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing/Decision: 12.03.2015 Order No. 10251-10253/2015 dated 12/03/2015 Per: H.K.Thakur;
These appeals have been filed by appellant M/s. Hindalco Industries Ltd. Dahaj, Bharuch, as well as the Revenue against OIA No. 34 to 36/2014-cus/Commissioner (A)/AHD dated 21.01.2004.
2. Sh. T. Vishwanathan. (Advocate) and Sh. Manish Jain (Advocate) appeared on behalf of the appellant and also filed written submission Sh. T. Vishwanathan (Advocate) argued that appellant imported copper concentrates failing under CTH 2603 00 00 and claimed the benefit of Notification No. 24/2011-Cus. Dated 01/03/2011. That as per this exemption notification an assay certificate from the mining company is required to be furnished for getting deduction of the value of gold & silver content contained in the copper concentrate. That appellant is getting copper concentrate directly from the mining companies as well as through the traders. That the assay certificate available at the time of import from the mining company is provisional. That samples are taken at the time of import for finding final content of gold & silver by the mining company or the trader as the case may be. That the final assay certificate given by the mining company as well as the trader may contain gold & silver content more or less than what was available in the provisional assay certificate. That in the case of Import directly from the mining company the final certificate given by mining company is considered for finalization of value and also the benefit of Notification No. 24/2011-Cus. dated 01/03/2011 is extended. That when the import is made through the trader the final certificate given by the trader is not given effect as Notification No. 24/2011-Cus. Dated 01/03/2011 talks of only assay certificate given by the mining company. It is thus the case of the appellant that the final assay certificate given by the trader should be taken into consideration while giving value deduction an account of gold & silver. It was also the case of the appellants advocate that benefit of Notification No. 24/2011-cus. Dated 01/03/2011 can not be denied.
3. Sh. J. Nagori (AR) appearing on behalf of the Revenue argued that Notification No. 24/2011-cus. Dated 01/03/2011 does not recognize a final assay certificate given by the traders as it talks only of assay certificate given by the mining company. It was his case that department appeal should be allowed as commission (A) was not correct while allowing two options to the appellant while remanding the case to the Adjudicating Authority and that the benefit of Notification No. 24/2011-cus is not available to the appellant when final assay certificate is issued by any person other than the mining company.
4. Heard both sides and perused the case records. For better appreciation of the issue Notification No. 24/2011-cus dated 01/03/2011 is reproduced below:-
In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts copper concentrates falling under the tariff item 2603 00 00 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975), when imported into India, from so much of the duty of customs as is equivalent to the duty of customs leviable on the value of gold and silver contained in such copper concentrate, subject to the condition that the importer produces to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, an assay certificate from the mining company specifying separately, the value of gold and silver content in such copper concentrate.
Illustration.- If the total value of copper concentrate is ` 100 and value of gold and silver in that copper concentrate is ` 40, basic customs duty shall be computed on the value of ` 60 only. However, the total value of ` 100 shall be taken into account, for the purposes of levy of additional duties of customs leviable under section 3 of the Customs Tariff Act, 1975.
5. Under the impugned OIA dated 21/01/2014 first appellate authority has remanded the case back to the adjudicating authority after passing the following observations for finalising the provisional assessments in para 17.8 of the OIA:-
17.8. Careful scrutiny reveals that the appellant claimed exemption under Notification No. 24/2011-Cus dated 01.03.2011 from payment of basic customs duty on the value of gold and silver contained in the imported copper concentrate. They are following a special method of valuation of copper concentrate as per standard international practice. However, in this process, the transaction value is determined after subsequent assay of copper concentrate. This method is found to be acceptable by the respondent department. It, However, creates a quandary because of contradiction between valuation and application of effective rate of duty by a notification, which does not recognize any assay report except that of a mining company. In other words, for the determination of transaction value series of further testing/assay is a sine qua non as per contract, the exemption on the value of gold and silver content strictly requires relying only and only the assay report of the mining company. While provisional assessment remains harmonious on this aspect, the final assessment falls into contradiction. Indeed, the appellant had requested to accept the final invoices issued by the supplier and assay certificate issued by the mining company for assessment and allow duty exemption on value of Gold & Silver content considering the fact that the final assay is determined on fairly accepted international practice. I find that the appellant cannot, tread two baths simultaneously. Such assessment, as suggested by the appellant, would be inherently fallacious. There cannot be one assay report for determination of transaction value and another for determination of rate of duty/exemption from duty. It must be realized that the assessment of copper concentrate requires ascertainment of copper contents as well as contents of gold and silver. While effective rate of duty is applied to the value of copper concentrate, exemption notification is applied to gold and silver content (its respective total weights and value in consignment-value is relevant where duty is ad valorem on those two metals). Hence, if assay report of subsequent to import is taken into account, there would indeed be a transaction value as per contract, but the appellant would fail to meet the strict requirements of the Notification No. 24/2011-Cus dated 01.03.2011 for exemption from payment of basic customs duty on the value of gold and silver contained in the imported copper concentrate. To this extent, adjudicating authority has rightly denied the benefit while finalizing assessment based on final invoice. If the appellant seeks exemption under Notification No.24.2011-Cus in respect of value of gold and silver contained in the imported copper concentrate, they cannot change the assay value and hence, will have to determine value for payment of duty on copper concentrate based on assay report of the mining company, and not on the basis of post-import assay reports. If this is not done in this manner, there would be a different value of copper concentrate, gold and silver for payment of duty on copper concentrate and a different value for exemption on gold and silver vide notification No.24.2011-Cus dated 01.03.2011. It may put appellant in adverse condition, especially in this particular case where the value of copper concentrate decreased and value of gold and silver increased, there may be reverse price changes in the international trade as well, to sum up, the appellant will have to get his assessment finalized based on transaction value (in tune with other terms of their contract) based on assay report of the mining company, and avail benefit of Notification No.24.2011-Cus dated 01.03.2011 for exemption from payment of basic customs duty on the value of gold and silver contained in the imported copper concentrate OR pay duty on the basis of final invoice (which is issued on the basis of load-port sampling/post-import assay reports of supplier), and forgo exemption on gold and silver contents in terms of Notification No.24.2011-Cus, supra. Since, this aspect would require appropriate finalization of provisional assessments, based on appellants stand on the issue, it would be necessary to set aside the impugned orders and remit it back for finalization based on option given in writing by the appellant to the original authority. Needless to mention that the original authority shall follow the principles of natural justice by according a reasonable opportunity to the appellant to submit any documents (including a revised invoice based on assay report of the mining company, if they so wish) and to explain and defend their case.
6. Notification No. 24/2011-cus dated 01/03/2011 does not contemplate an option to be given by an importer to either stick to provisional assay certificate percentage or final assay report. However, it is correctly pointed out by Learned AR that Notification No. 24/2011-cus only talks of an assay certificate from the mining company to specify separately the contents of silver & gold. There is no objection by the department for accepting final assay certificate when imports are directly from the mining company when Final assay certificate of the mining company is accepted both for finalising provisional assessments and for allowing exemption under Notification No. 24/2011-cus. However, it will be unfair if appellant is disallowed exemption when final assay certificate is given by an agency other than the mining company, but Notification No. 24/2011-cus does not provide for such acceptance. Under the circumstances Revenue could have also got the contents in the copper concentrate determined by getting the samples tested either from central Revenue Laboratory or any other approved testing agency. Appellant will be eligible to the exemption in such imports also. For a feasible solution it will be appropriate to take the value content of gold & silver, either in the provisional assay certificate or in the final assay certificate produced by the appellant, which ever is less, for allowing the benefit of Notification No. 24/2011-cus when final assay certificate is given by an agency other than the mining company. The directions contained in the OIA dated 21/01/2014 passed by the first appellate authorities are accordingly modified to that extent for the purpose of remand proceedings.
7. In view of the above observations appeal filed by the Revenue is dismissed. The appeal filed by the appellant is modified partly to the extent indicated in para-6 above.
(Dictated & Pronounced in Court)
(P.K. Das) (H.K. Thakur) Member (Judicial) Member (Technical)
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