Custom, Excise & Service Tax Tribunal
Auto Tools International vs Commissioner Of Customs (I), Nhava ... on 18 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/570/06-Mum (Arising out of Order-in-Original No. 19/2006 dated 31.1.2006 in F.No. S/10 Gr.IV//SG/Misc-9/2005 CIU JNCH passed by Commissioner of Customs, JNCH, Raigad) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. Raju, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the 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 : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Auto Tools International Appellant Vs. Commissioner of Customs (I), Nhava Sheva Respondent Appearance:
Shri Prithviraj Choudhary, Advocate, for appellant Shri C. Singh, Assistant Commissioner (AR), for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing: 18.10.2016 Date of Decision: 18.10.2016 ORDER NO Per: M.V. Ravindran This appeal is directed against order-in-original No. 19/2006 dated 31.1.2006 in F.No. S/10 Gr.IV//SG/Misc-9/2005 CIU JNCH.
2. The relevant facts that arise for consideration are the appellant herein had imported drill bits and filed bill of entry dated 10.1.2005 for the clearance of 864 cartons and declared an assessable value of Rs.7,34,337/-. The goods were examined under first check provision and representative samples were drawn as there was a complaint from M/s. Addison & Co. Ltd. and the said sample was sent for analysis to Deputy Chief Chemist. On receipt of the Deputy Chief Chemists report, the said samples were also sent to IIT, Mumbai for evaluation as to whether the said drill bits were manufactured and conformed to specification of high speed steel (HSS) drill bits or otherwise. Show cause notice dated 5.7.2005 was issued for confiscation of the seized goods and also for the demand of duty as also for imposition of penalties. Appellant contested the entire case on merits. The adjudicating authority in the impugned order confiscated the goods, held that the drill bits are of HSS nature and enhanced the value, allowed the redemption of the goods on payment of redemption fine and imposed penalties on the appellant as well as the clearing agent. In appeal before us, the importer is only contesting the findings of the adjudicating authority.
3. Learned counsel would submit that the charge of undervaluation is totally contrary to the factual matrix surrounding the present controversy inasmuch that the confiscation of the goods under Section 111(m) of the Customs Act, 1962, holding that there was an intentional misdeclaration of the goods as not being of HSS is totally incorrect as the two test reports, one by the Jawaharlal Nehru Custom House, dated 4.3.2005 and by IIT, Mumbai, of 29.3.2005, are in favour of the appellant. It is his submission that the non-declaration of the metal contents in the bills of entry per se cannot be considered as misdeclaration under Section 111(m) of the Customs Act. He would submit that the appellant had filed a declaration in the bill of entry based on manufacturers invoice, which has to be accepted by the Revenue unless they adduce evidence to the contrary as has been held by the Tribunal in the case of Sai Impex vs. CC 1992 (62) ELT 616, upheld by the apex court as reported at 1996 (84) ELT A47 (SC), and Finacord Chemicals P. Ltd. vs. CC, Raigad 2003 (157) ELT 537, as upheld by the apex court as reported at 2015 (319) ELT 616 (SC). It is his submission that enhancement of value is also incorrect. Further he would submit that the confiscation ordered under Section 111(d) of the Customs Act, 1962 is also incorrect as the said goods were confiscated on the ground that they were violative of Notification 1/64-Cus. dated 18.1.1964, as the goods bore false trade mark as per Section 28 read with Section 102 of the Trade Marks Act, 1999, registered for trade mark belonging to another entity. It is his submission that the above said notification prohibits import of goods which bear a false trade mark in contravention of the provisions of the Trade and Merchandise Act, 1958, which has been repealed after the passing of Trade Marks Act, 1999 and it cannot be held that Notification 1/64 prohibits imports which contravene the provisions of the Trade Marks Act, 1999. It is his submission that though the adjudicating authority has held that the saving clause under Section 159 of the Trade Marks Act, 1999 can be relied upon, this saving clause is for the notifications which are issued under the Trade and Merchandise Act, 1958, which will not save any Customs notification which had lapsed due to the repeal of the Act.
4. Learned departmental representative would draw our attention to the panchnama and various statements recorded. He would submit that the chemical composition of the drill bits which are imported clearly indicate that the said drill bits conform to the specification of combined percentage of molybdenum, tungsten and vanadium, which would mean that the said drill bits are HSS as whether a drill bit is of HSS or otherwise is solely dependent on the percentage of these three metals.
5. On careful consideration of the submissions made by both sides and perusal of the records, we find that the short point that arises for our consideration is whether the drill bits imported by the appellant have to be considered as drill bits of HSS or otherwise. We find from the records that the entire investigation started with the complaint filed by M/s. Addison & Co. Ltd. against imports of such drill bits. The Deputy Chief Chemist of Jawaharlal Nehru Custom House, after testing the said drill bits, in the report dated 4.3.2005 and 8.4.2005, informed that the drill bits are composed of alloy of iron, chromium, molybdenum etc. and may be considered as high speed steel. Since the said report was inconclusive, the Customs authorities sent the samples to IIT, Mumbai for its evaluation. It would be in the fitness of the case that the said report of the IIT, Mumbai, is reproduced in its entirety, -
Professor B.T. Rao MET:1:6:2004 March 29, 2005 Mr. B.K. Dixit Appraising Officer (CIU/JNCH) Central Intelligence Unit Office of the Chief Commissioner of Customs, Mumbai-II Jawaharlal Nehru Custom House Nhava Sheva, Dist. Raigad Maharashtra 400 707.
Dear Sir, Job No. DRD/MT/BTR-28/04-05 Sub: Testing of representative samples of Drill Bits This has reference to your letter F.No. SG/Misc-9/2005 CIU JNCH dated 31.1.2005 pertaining to Bill of Entry No.780148 dated 10.1.2005 and above job order regarding testing of Drill Bits. There were six pieces of Drill Bits in the sealed packet. Following is the report.
1. Chemical Composition: B/E No. 780148 dt. 10.1.2005 SrNo Size/ marking on Drill Bits C% Si% Mn% P% S% Cr% Mo% Ni% Cu% Co% V% W% 1 1/8 1.00 0.22 0.46 0.017 0.014 4.08 0.88 0.081 0.12 0.17 0.75 5.63 2 17/64 1.00 0.22 0.49 0.020 0.012 4.04 0.81 0.069 0.12 0.22 0.80 4.76 3 1/4 1.00 0.20 0.47 0.020 0.016 4.21 0.89 0.083 0.12 0.17 0.79 5.10 4 4.5 1.05 0.20 0.49 0.020 0.016 4.10 0.94 0.073 0.12 0.19 0.75 5.54 5 5 0.97 0.21 0.49 0.021 0.010 4.19 0.87 0.070 0.12 0.19 0.80 5.17 6 6.5 1.05 0.19 0.49 0.023 0.013 4.00 0.86 0.069 0.09 0.20 0.78 4.60
2. Based on chemical composition the Drill Bits do not conform to any known specification of High speed steel.
3. Drill Bits do not have the strength and hardness of High speed steel. Drill Bits are of mild nature and made of Alloy steel.
4. Please note that this report is for your information only and cannot be quoted to a third party as test certificate from I.I.T. Bombay.
Yours faithfully, (Prof. B.T. Rao) Professor Deptt. of Metallurgical Engg. & Mat.Sciences Indian Institute of Technology Powai, Bombay 400 076. 5.1 It can be seen from the above reproduced report of IIT, Mumbai, that it is categorically stated that the drill bits which are analyzed do not conform to any specification of high speed steel and do not have the strength and hardness of high speed steel and the drill bits are of mild nature and made of alloy steel. Despite such a clear test report of the IIT, the adjudicating authority has held that the goods are liable for confiscation as they are of high speed steel. In our view, the adjudicating authority being not an expert in the matter of composition of the goods which has to be kept in mind while seeking the classification and the rate of duty, could not have gone beyond the report given by an expert engaged by department and that also by IIT, Mumbai. On this point itself, we find that the entire order of the adjudicating authority holding that the drill bits are of HSS nature and needs to be confiscated for misdeclaration of the description as well as the value, seems to be unsustainable and we hold it so.
6. Yet another point as has been raised by the learned counsel that the goods have been confiscated for violation of Notification 1/64-Cus. is erroneous, is also acceptable for the simple reason that the Trade and Merchandise Act, 1958 was repealed in 1999 and the Notification 1/64 was not in conformity with the provisions of the Trade Marks Act, 1999; and another notification was subsequently issued in 2007 by the Government under Customs Act. Once the Act is repealed, the provisions of the said Act which has been borrowed by the Customs notification cannot be applied in the case in hand.
7. In view of the foregoing, we hold that the impugned order is unsustainable and liable to be set aside and we do so.
8. The impugned order is set aside and the appeal is allowed with consequential relief, if any. (Operative part of order pronounced in Court) (Raju) Member (Technical) (M.V. Ravindran) Member (Judicial) tvu 1 2 C/570/06